' Instant single judgment shall decide the present appeal (R.F.A. No,814 of 2002) as well as connected appeal (R.F.A. No,815 of 2002), as common questions of law and facts are involved in both the appeals and they have arisen out of identical judgments.
2. The appellants/plaintiffs through the filing of the present appeal, have assailed the judgments and decrees dated 31-10-2002, whereby the learned Judge Banking Court, rejected the plaints, in separate suits, filed by the appellants, for declaration, mandatory injunction and rendition of accounts, in exercise of its powers under Order VII, rule 11, Civil Procedure Code.
3. Precisely stated, the facts giving rise to the filing of these appeals are that the appellants filed separate suits for declaration, mandatory injunction and rendition of accounts, against the respondents, before the learned Judge Banking Court, at Lahore. Pursuant thereto, the learned Judge Banking Court issued summons to the respondents, as required under section 9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and thereupon the respondents filed applications, seeking leave to defend the suit, which were contested by the appellants by way of filing the replies. However, the learned Judge Banking Court, after hearing arguments on the said applications, instead of deciding the said applications, proceeded to reject the plaints, in purported exercise of jurisdiction under Order VII, rule 11, Civil Procedure Code, in both the suits, filed by the appellants, vide judgments and decrees dated 31-10-2002, hence the present appeals.
4. According to the office report, notices of these appeals were sent to the respondents for today and the presumption under the law is that the same deemed to have been served upon the respondents. Despite service the respondents are absent and none has entered appearance to represent them, thus, they are proceeded ex parte.
5. Learned counsel for the appellant, while relying upon the judgment rendered by the Division Bench of this Court in R.F.A. No,185 of 2002, has subMitted that the learned Judge Banking Court, while hearing the applications for leave to defend the suits, could not have legally rejected the plaints. His further submission is that the impugned judgments and decrees are not sustainable under the law, as the same were passed in complete oblivion of the facts and law on the subject.
6. Record of both the cases have been received today under the directions of this Court and we have examined the same with the assistance of the learned counsel for the appellants. Record of R.F.A. No,185 of 2002 was also summoned and perused.
7. We find that the controversies and the legal questions, involved in the present appeals and R.F.A.
No,185 of 2002, are identical. This Court, while deciding (R.F.A. No,185 of 2002), dilated upon the legal questions, also involved in this case and held as under:-- "Upon the examination of the record of the case and the perusal of the impugned judgment, we find that the approach of the learned Banking Court, to say the least, in rejecting the plaint, is perfunctory and cannot be countenanced under any stretch of imagination. By passing the impugned judgment the learned Banking Court has in fact gone outside the scope of section 10(8) of the aforenoted Ordinance.
' Admittedly, the respondents filed an application seeking leave to defend the suit, which was to be decided by the learned Banking Court either way. Upon filing an application for leave to defend the suit by a defendant, the Banking Court, as per the provisions of section 10(8) of Ordinance, 2001, shall grant the defendant leave to defend the suit, if it finds that the substantial questions of law and facts have been raised in respect of which evidence needs to be recorded. It has nowhere been provided under section 10 of the aforenoted Ordinance, which deals with the application to leave to defend, that while hearing the application for leave to defend the suit, the learned Banking Court is competent to straightway reject the plaint. There cannot be any cavil to the proposition that the Banking Courts, which were established under section 5 of Ordinance, 2001, are the creature of the statute and, of course, are bound by the provisions of that statute. If the learned Banking Court was of the view that substantial questions of law and facts have been raised by the respondents, then, at best, leave to defend could have been granted to the respondents, but to our mind, no way, at that point of time, either the suit or the plaint could have been dismissed/rejected, as has been done in the present case. While deliberating upon the similar issue, the Honourable Sindh High Court in a case reported as Messrs Platinum Insurance Company through Chief Execute v. Messrs Highways Bridge, Contractor International (Pvt.), Ltd. And another (1997 M LD 2394) has held as under:-- ' Order XXXVII, rule 3----Suit in summary jurisdiction---Court before grant of leave to defend suit could neither dismiss suit, nor reject plaint, nor pass any adverse order against plaintiffs on objection/assertions of defendant-- -Such question, however, could be considered at final hearing of suit---No case was made out for grant of conditional leave---Defendants were, however, granted leave to defend suit subject to furnishing bank guarantee in suit amount within specified period'."
8. There is another aspect of the case. Perusal of the order sheet manifests that after the presentation of the plaint, learned Banking Court, issued summons to the appellants, as provided under the law, in response thereto applications for leave to defend the suits were filed by the respondents and these applications were adjourned for filing replications and replies to the stay applications, which were, however, submitted on 6-8-2002. Thereafter the cases were adjourned for hearing arguments on the said applications, which were addressed on 24-10-2002 and 30-10- 2002, thereupon applications were adjourned to 31-10-2002 for the announcement of the orders, and on this date the impugned judgments were passed and the plaints were rejected. It flows from the above narrative that from the very inception, the main suit was never fixed for hearing and the entire proceedings were undertaken by the learned Banking Court on the aforenoted applications for leave to defend the suits. While dealing with this aspect of the case, Division Bench of this Court, in the aforenoted case of "Sajid Saleem v. S.B.F.C. Etc.", has held as under:-- "We are of the view that the suit at that stage was not pending before the learned Banking Court and the proceedings were undertaken only on an application for leave to defend the suit. As the suit was not fixed for hearing, therefore, the learned Banking Court could not have rejected the plaint, as has erroneously been done in the present case. It is settled law that the defendant cannot even file any ancillary/interlocutory application and have no right to defend the suit, unless he is allowed by the Court to defend the suit. Reference can be made to a case reported as Messrs United Distributors Pakistan Limited v. Ahmad Zarie Services and another (1997 M LD 1835), wherein it has been held that till such time as leave to defend was granted, defendant could not even file interlocutory application in order to agitate the point of jurisdiction of Court etc. As noted above, the learned Banking Court at the maximum could have granted leave to defend the suit to the respondents and thereafter decided the case in accordance with law. Undoubtedly, after the grant of leave and treating the leave application as written statement, the respondents were within their rights to have filed an application under Order VII, rule 11, Civil Procedure Code and if the Court reached the conclusion that the case falls under any of the clauses of Order VII, rule 11, Civil Procedure Code, of course, plaint could have been rejected, but in no way before the grant of leave to defend the suit."
9. We have examined the impugned judgments and are of the firm view that the same were passed in clear conflict with the express provisions of Ordinance, 2001, and thus, we are inclined to interfere in the said judgments and decrees.
10. Upshot of the above discussion is that both the appeals are allowed and judgments and decrees dated 31-10-2002 are set aside with no order as to costs. The result would be that the suits titled "Malik Sultan Mehmood v. SME Bank Limited etc." and "Tariq Mehmood v. SME Bank Limited etc." shall be deemed to be pending before the learned Judge Banking Court, who is directed to, at the first instance, decide respondent's applications for leave to defend the suit and if leave to defend the suit would be granted then of course the main suit shall be decided by the learned Judge Banking Court, in accordance with law.