' MIAN SAQIB NISAR, J.---Briefly, the facts of the case are that on 6-4-2000 the respondent-Bank brought a suit for the recovery of a sum of Rs.31,42,420 inter alia against the appellant. The appellant applied for leave to appear and defend on 8-6-2000. The written reply to application was filed by the Bank on 5-7-2000, while the matter was yet pending when the provisions of Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001 (the Ordinance) were enforced on 30-8-2001. As per section 10(12) of the said Ordinance the defendant-appellant was obliged to file a fresh application within a period of 21 days, either from the date of the enforcement of law or from the first date of hearing whichever was later. Petitioner, was granted permission by the learned Banking Judge to file an amended application for leave to appear and defend, on 1-10- 2001. However, the said application was filed on 23rd October, 2002 which is one day later than the time prescribed by law. On account of this delay the learned Banking Judge through the impugned judgment and decree dated 24-1-2002 dismissed the application for leave to appear and defend filed by the appellant and decreed the suit to the extent of the suit amount, minus the liquidated damages.
2. Learned counsel for the appellant states that the provisions of section 10(12) of the Ordinance ibid are not mandatory in nature and even if an application had been filed after the delay of one day the suit ipso facto could not have been decreed. It is further contended that notwithstanding the above, the appellant had already made application for leave to appear and defend which was pending and such application could have been treated by the Banking Judge as an application as envisaged by section10(12) of the Ordinance. On both counts it is stated that the judgment and decree is illegal and without lawful authority.
3. Confronted with the above learned counsel for the respondent states that the appellants themselves had sought; permission of the Court to file amended application for leave to appear which in view of the Ordinance was granted on 1-10-2001 and as a result, the appellant had to file application for leave to appear and defend within 21 days. Having failed to do so within 21 days, the suit therefore, was liable to be decreed straightway, as there was no valid application for leave to appear and defend before the Court on 23-10-2002 being barred by time, there was no application for condonation of delay and even otherwise the provisions of section 5 of the Limitation Act are inapplicable to the proceedings under the Ordinance. Learned counsel for the respondent has also brought to the notice of this Court, that some of the judgment-debtors have already withdrawn their applications for setting aside ex parte decrees which they had filed before the learned Banking Judge. The properties belonging to such judgment-debtors which were auctioned had been released on account of negotiations between them and the auction purchasers and that the property of the appellants was also put to auction and the sale has already been confirmed by the learned Banking Court/Executing Court, as no objection petition had been filed by the appellants.
Thus in such situation the remand of the case would be a futile exercise.
4. Confronted with the above learned counsel for the appellants concedes that the appellants would not seek the setting aside of the sale of the property made in the auction proceedings.
However, whatever the sale amount has been received by the respondent-Bank, in case the suit of the Bank is dismissed they would be entitled to the amount so realized from the auction price.
5. We have heard the learned counsel for the parties. So far as the provisions of section 10(12) of the Ordinance are concerned, suffice it to say that such provisions are not mandatory as far as the pending cases are concerned where the leave applications had already been filed by the defendants and were pending adjudication. The rationale behind the filing of fresh leave application in such cases, was that either the defendants may add some new ground to the leave application, or for the reasons that these applications were to be treated as the written statements in the eventuality the leave was granted. However, if no leave application was moved, it is not the spirit of law, that the application already on the record should be ignored and the suit be decreed.
In such circumstances, the Court would deem the pending application as the one filed under the Ordinance and was supposed to decide the same in accordance with law.
6. In view of the above, we hold that the learned Court below has committed an illegality in straightway striking off the defence of the appellants, considering as if no leave application had been filed by the applicants and automatically granted a decree in favour of the respondents.
Therefore, by setting aside the impugned judgment and decree the case is remanded to the learned trial Court, with the direction to decide the application of the appellants for leave to appear and defend already pending. It is further clarified that as far as sale of the appellants property by the Executing Court in favour of the auction purchaser which admittedly has been confirmed would not be effected on account of the setting aside of the judgment and decree. This has also been conceded by the counsel for the appellants and also whatever amount the Bank has realized may be taken into account for settling the dispute between the parties. At this stage counsel for the other co-defendants/judgment-debtors have also attempted to agitate the matter. But we are afraid that they have not challenged the decree before us, however, their right available to them under the law on account of this judgment shall not be prejudiced.