MAULVI ANWAR-UL-HAQ, J. - The respondent No. 1 filed a suit for recovery of Rs. 15,120,358.51 on 14.4.1997 against the appellants under Section 9 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance, 1997 (hereinafter to be referred to as the Ordinance).
According to the contents of the plaint upon a request made by the appellants, the respondents extended a finance facility of Rs. 22 millions to the appellant No. 1 vide an agreement executed between the appellant No. 2 and the respondents on 14.9.1993. The agreement was to the effect that the respondents would be deemed to have purchased the assets from the appellants and the latter would be so deemed to get back the assets from the former for an amount equal to the purchase price plus mark up at the rate of 0.61 paisas per Rs. 1000/- per day to be calculated on daily product basis. The plaint narrates that this facility was utilized by appellant No. 1. All the appellants provided the securities detailed in para 4 of the plaint to secure the said facility, it has been alleged that in July, 1994 appellant No. 1 started defaulting but then rectified the default but again started defaulting in August, 1995. Upon the said default a notice was served on 22.12.1996 and since the said amount remained unpaid the suit was filed. The learned Trial Court issued notice calling upon the appellants to show-cause as to why not the suit be decreed. in their reply the appellants took several objections. They alleged that Mst. Hajaran Begum cited as defendant No. 4 in the suit had died in the year 1989; that Mst. Shahida Perveen cited as defendant No. 3 has nothing to do with the loan facility in question; that no person by the name of Humaira Yasin cited as defendant No. 5 exists and no such person is partner of appellant No. 1; that Aqeel Ahmad cited as defendant No. 6 is not the partner of appellant No. 1; that M/s. G.A. Steel Re-rolling Mills cited as defendant No. 8 obtained a loan amounting to Rs. 22 millions against security of prize bonds valuing Rs. 28,750,000/- that the said loan stands paid and the said security has not been returned; that a suit has already been filed for the recovery of the said amount of the prize bonds and the return of title documents in respect of the land mentioned in the plaint and as such the suit is liable to be stayed; that the respondents are guilty of suppression of facts; that the suit is based on forged and fake documents; that the respondents had obtained the signatures of appellant No. 2 on various blank forms in the year 1986 but without his consent the same were filled up on a later date and are being utilised for the purposes of the present suit; several discrepancies were pointed out in the documents accompanying the plaint; that the mark-up is against Injunctions of Islam.
On merits it was denied that any loan was obtained on or after 14.9.1993. it was averred that a loan was advanced in the year 1986 which was liquidated, in its rejoinder by respondent No. 1 the factum of death of Mst. Hajaran Begum was not denied. The other averments made in the reply by the appellants and referred to above, were, however, denied. The learned Banking Court No. 4, Lahore after hearing the counsel for the parties proceeded to hold that the appellants have not made out a case for grant of leave to defend the suit and as such the suit was decreed as prayed for with the observation that in case the defendant No. 4 is found to be dead then only those properties of her legal heirs would be put to auction which they inherited from her.
2. We have heard Ch. Muhammad Bakhsh, learned counsel for the appellants and Malik Muhammad Rashid Awan, learned counsel for the respondent No. 1. Record summoned from the Trial Court has also been examined with the assistance of the learned counsel for the parties.
3. In view of the order we propose to pass, after so hearing the parties and perusing the record, we do not intend to delve in detail on merits of the grounds taken by the appellants to seek leave to defend the suit as also the contents raised in the plaint and in rejoinder to the reply of the appellants to the notice issued by the learned Banking Court, lest the same might prejudice any of the parties in the course of trial of the suit which is to be conducted by the Trial Court.
4. Learned Trial Court has observed in the impugned order that the counsel for the appellants has not produced any case-law in support of the contentions raised by them or any supporting evidence which could prove that the documents were blank and they were filled later on. We do not find ourselves in agreement with the said observations of the learned Trial Court. Suffice it to say that the pleas of facts are not proved by the case-law but evidence is to be led in support thereof and the same could have been produced only if the appellants had been given an opportunity to lead the same. A perusal of the impugned order shows that whereas the learned Trial Court rejected the contentions of the appellants for reasons stated above, the plaint was taken as a sacrosanct document whereas on the same reasoning the pleas of the respondents were liable to be rejected.
5. We have minutely examined the documents appended with the plaint and we feel that the pleas raised by the appellants do make out a plausible defence to the suit. Although the suit has been filed and is to be decided under the provisions of the said Ordinance (later repealed by Banking Companies (Recovery of Loans, Advances, Credits and Advances Act (XV of 1997) yet the fact remains that the suit is governed by the provisions of Order XXXVII, CPC with some changes made therein as to the time for making application for leave to defend and also unconditional grant of leave upon acceptance of application to leave to defend the suit. We further add here that the legislature, while enacting the said law was conscious of the rampant practice of obtaining blank documents pertaining to the loan facilities and then filling up the same at convenience, it was precisely for this reason that Section 17 of Act XV of 1997 was enacted, it is by now a well-settled proposition of law that an application for leave to defend is to be scrutinized only to determine as to whether the facts stated therein do constitute a real issue or a sham one. in the present case we find that the appellants had right away denied the provision of the loan facility as alleged in the plaint. They have made serious allegations in their application/reply to show-cause notice which, in our opinion,, are not illusory but do constitute real issues which need to be tried in their merits.
Reference may be made to the case of Fine Textile Mills Ltd. Vs. Haji Umar (PLD 1963 S.C. 163) wherein the Supreme Court approved the rule laid down in the case of Kodak v. Alpha Film Corporation (1930) 2 K.B. 34) that at the stage when leave to defend is sought a Judge is not to try the action; he is to see that there is a bona fide allegation of a triable issue, which is not illusory; he need not be satisfied that the defence will succeed; it is enough that such a plausible defence is verified by affidavit. While approving the said rule Mr. Justice Hamoodur Rehman (as his Lordship then was) observed as follows:- "In a suit of this nature where the defendant discloses upon his affidavits facts which may constitute a plausible defence or even show that there is some substantial question of fact or law which needs to be tried or investigated into, then he is entitled to leave to defend."
We do find that the said leave application/reply to show- cause notice was supported by an affidavit of appellant No. 2 who is also stated to be a partner of appellant No. 1.
6. For the reasons stated above, we allow this R.F.A., set aside the judgment and decree under appeal and grant leave to the appellant to defend the suit filed by the respondent No, 1 against them. The case is accordingly remanded to the learned Trial Court for the said purpose which shall proceed to decide the suit expeditiously in accordance with law and intent of the said Act XV of 1997. The parties are left to bear their own costs.