Order Sheet

 

IN  THE  HIGH  COURT  OF  SINDH  AT  KARACHI

 

Suit No. B – 159 of 2010

 

 

Plaintiff                      :   Deutsche Bank AG, through

    Mr. A. M. Basit Essani Advocate.

 

Defendant                 :   Fateh Textile Mills Limited, through

                                        Dr. Muhammad Farogh Naseem Advocate.

 

 

Dates of hearing      :   31.10.2013, 24.12.2014, 22.12.2015 and 30.05.2016.

 

 

ORDER ON C.M.A. No.12893 of 2010

 

 

NADEEM AKHTAR, J. – This application has been filed by the defendant under the proviso of Section 10(2) of the Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001 (‘the Ordinance’), praying that the delay, if any, in filing the application for leave to defend be condoned.

 

2.         The facts relevant for the purposes of this application are that this Suit was instituted on 08.10.2010 by the plaintiff under Section 9 of the Ordinance against the defendant for recovery of Rs.114,150,993.58 and cost of funds with effect from 11.07.2010. An application bearing CMA No.10318 of 2010 was filed by the plaintiff on 09.10.2010 under Section 16 of the Ordinance, praying for a restraining order against the defendant from transferring, alienating, charging, etc. the hypothecated goods, and further seeking attachment of the same and appointment of a receiver in respect thereof. According to the plaintiff, process under Section 9(5) of the Ordinance was issued to the defendant by all four modes. On 06.12.2010 the defendant filed CMA No.12894/2010 seeking unconditional leave to defend the Suit, as well as CMA No.12893/2010 praying that the delay, if any, in filing the application for leave to defend, be condoned. Counter affidavit has been filed by the plaintiff to the defendant’s application for condoning the delay to which affidavit-in-rejoinder has been filed by the defendant.

 

3.         Dr. Muhammad Farogh Naseem, learned counsel for the defendant, contended that summon and notice in this matter were received by the defendant on 05.11.2010, therefore, the application for leave to defend filed on 06.12.2010, is within time. He further contended that on 03.12.2010, the Chairman of the defendant was informed by an advocate that publication had also been effected in this Suit ; after receiving this information, he made personal efforts and managed to confirm from the internet that publication was effected on 27.10.2010 ; and the said publication escaped the attention of the defendant and its officers. Without prejudice and in addition to his above contentions, he submitted that summons have not been issued in this Suit in the manner prescribed by Section 9(5) of the Ordinance as the mandatory requirement of service of the summon by the Banking Court simultaneously through the four modes prescribed in Section 9(5) ibid was not fulfilled. He further submitted that since service upon the defendant through registered post A.D. and courier service was not undertaken by the Banking Court, no service was effected under law. He pointed out that summons were issued by ordinary registered post and not by registered post acknowledgement due as specifically provided for in Section 9(5) ibid, and the purported courier and postal receipts do not bear the address of the defendant. Regarding publication in newspaper, he argued that provisions of Section 9(5) ibid and the principle of law that service effected by any one of the prescribed modes is deemed to be valid service, will not apply in the instant case as the same applies only when summons are issued by the Banking Court simultaneously through all four modes prescribed in Section 9(5) ibid and in strict compliance thereof. He further argued that in any event service cannot be held good merely on the basis of publication when service through other modes is doubtful in view of Mubarak Ali V/S First Prudential Modaraba, 2011 SCMR 1496, Messrs Sitara Rice Trading and another V/S United Bank Limited and another, 2011 CLD 254 and Messrs Aamer Enterprises (Pvt.) Ltd., and 3 others V/S Messrs United Bank Limited and another, 2009 CLD 342. He also argued that in case of any doubt in relation to the service of summons, discretion should be exercised in favour of the defendant as held in Mst. Zarina Shamim V/S Zarai Taraqiati Bank Limited through Manager, 2007 CLD 1371.

 

4.         Learned counsel for the defendant further contended that as per the title of the plaint and the summons issued by the Banking Court, the registered office of the defendant-company is in Hyderabad and only its branch office is situated in Karachi. He submitted that despite this position, service upon the defendant was admittedly not effected at its registered office in Hyderabad, but was allegedly effected at its branch / liaison office at Karachi, which cannot be deemed to be proper service under law mainly for two reasons ; firstly, as no service could have been effected at the defendant’s branch / liaison office at Karachi when its registered office was in Hyderabad ; and secondly, as service was never effected upon the defendant-company through its authorized / principal officer or Chief Executive, as the Suit has not been filed against the defendant through any of such officers. He pointed out that no application under Order XXIX Rule 2 CPC was filed by the plaintiff, and the requirements thereunder were also not fulfilled by the bailiff. He further submitted that the alleged service upon the defendant on 25.10.2010 was void as summons were received by the telephone operator of the defendant posted at its branch office in Karachi, who was not authorized or competent to receive summons. By pointing out that another set of summons was delivered to the defendant on 05.11.2010, he contended that under the law of limitation period should be computed from the date of delivery of the second summons, and accordingly the application for leave to defend filed by the defendant is within time. In support of the above submissions, he placed reliance upon (1) Commissioner of Income-Tax, North Zone, West Pakistan V/S Messrs Muhammad Idris Barry & Co., PLD 1967 S.C. 49, (2) Safiullah Siddiqui V/S Karachi Electric Supply Corporation Limited, 1997 SCMR 926, (3) Messrs Quetta Silk Center through Sole Proprietor and 2 others V/S Muslim Commercial Bank Limited through Branch Manager / General Attorney, 2003 CLD 254, (4) Muhammad Azwar Siddiqui V/S Chief Executive Union Leasing Ltd., and 21 others, 2006 CLD 946 (Lahore), (5) Hassan Ara and 8 others V/S Bank of Punjab through Manager, 2006 CLD 1502 (Lahore), (6) Nazir Hussain and another V/S Bank of Punjab through Manager, 2007 CLD 687, (7) State Life Insurance Corporation of Pakistan V/S Nasim-e-Sahar through legal heirs, 1992 CLC 563, (8) Messrs Famy Ltd. V/S Commissioner of Sales Tax, 2002 PTD 102, (9) Muhammad Samin Jan V/S Messrs Ferozsons Laboratories Ltd., Nowshera and 2 others, PLD 1972 Peshawar 133, and (10) Asiatic Steam Navigation Co. Ltd., V/S Tribhawandas & Co., AIR 1923 Sind 111. In the end, learned counsel for the defendant prayed that the application for condoning the delay be allowed as technically limitation for filing the application for leave to defend by the defendant has not yet begun in view of non-service of summons and non-compliance of Section 9(5) ibid, and the application for leave to defend, filed by the defendant by way of abundant caution, be heard and decided on merits.

 

5.         On the other hand, Mr. A. M. Basit Essani, learned counsel for the plaintiff, contended that the defendant was all along aware about these proceedings as its counsel had participated in the proceedings undertaken by the Nazir of this Court in pursuance of the order passed on 12.10.2010 for preparing inventory of the hypothecated stocks ; the record clearly reflects  that summons were duly served through bailiff on 25.10.2010 and publication was effected on 27.10.2010, therefore, there is no reason or justification for treating 05.11.2010 as the date of service and/or for computing the limitation from the said date ; all assertions by the defendant regarding non-compliance of Section 9(5) ibid are incorrect and misleading as summons were issued through all four modes prescribed therein ; the grounds on which the defendant is seeking condonation of delay are untenable and frivolous ; the defendant has not been able to explain or justify the delay in filing application for leave to defend ; and, in such circumstances, discretion cannot be exercised in favour of the defendant. In support of his above submissions, he relied upon (1)  Messrs S. Malik Traders and another V/S Saudi Pak Leasing Company Ltd., 2009 CLD 171, (2) Mst. Hajra Bibi V/S Zarai Taraqiati Bank Limited (ADBP) through Manager, 2006 CLD 261, (3) Khawaja Muhammad Bilal V/S Union Bank Limited through Branch Manager, 2004 CLD 1555, and (4) Messrs International Chrome Tannery and 3 others V/S United Bank Limited,  2008 CLD 1329. Learned counsel for the plaintiff prayed for dismissal of this application for condonation of delay as well as the application for leave to defend filed by the defendant being barred by limitation.

 

6.         I have heard the learned counsel for the parties at length and with their able assistance have also examined the material available on record as well as the law cited by them at the Bar. Section 9(5) of the Ordinance provides the procedure and modes of service of summons in a Suit filed under Section 9 of the Ordinance. It provides that on a plaint being presented to the Banking Court, summons in Form No.4 in Appendix ‘B’ to the Code of Civil Procedure or in such other form as may be prescribed from time to time, shall be served on the defendant (i) through the bailiff or process-server of the Banking Court,     (ii) by registered post acknowledgement due, (iii) by courier, and (iv) by publication in one English language and one Urdu language daily newspaper. It is significant to note that except for publication in newspapers, all the first three modes have one distinctive and common feature that a written report / confirmation must come on record before the Banking Court to ascertain service or non-service of summons on the defendant, either through the bailiff and courier service or by acknowledgement due of the registered post. From the above, the intention of the lawmakers is clear that before proceeding further in the Suit, there must be sufficient and reliable evidence before the Banking Court in order to ascertain as to whether the summons were duly served upon the defendant or not, or if he had refused to receive the same.

 

7.         The other significant feature of Section 9(5) ibid is that the provision of service of summons on the defendant simultaneously through the four modes prescribed therein, is mandatory because of the word shall used therein. Section 9(5) ibid further provides that service duly effected through any of the said four modes, shall be deemed to be valid service for the purposes of the Ordinance. I am of the firm view that this principle shall apply only in cases where strict compliance of Section 9(5) ibid is made as provided therein, and not where all the prescribed modes are not adopted simultaneously or where any one or more of them is found to be defective or incomplete. My above view is fortified by the case of Asif Kudia V/S Messrs KASB Bank Limited, 2014 CLD 1548 = 2015 CLC 1734, decided by a Division Bench of this Court, of which I was incidentally a member. It was held inter alia in the above-cited case that by not sending the summons through registered post acknowledgement due as specifically provided in Section 9(5) ibid, mandatory compliance thereof was not made and as such summons were not issued in accordance thereof ;the bailiff’s report was not available on record to confirm service or non-service of summons on the defendant ; and therefore, the defendant was not served in a valid and proper manner.

 

8.         Coming back to the instant case, record shows that summons were issued to the defendant through the bailiff only at its branch office at Karachi and not at its registered office in Hyderabad, therefore, no report of the bailiff is available on record to show that the defendant was served at its registered office. Summons were issued through registered post and courier service, and were also published in Urdu daily ‘Jang’ and English daily ‘Dawn’ on 27.10.2010. It is to be noted that the full and correct name of the defendant (Fateh Textile Mills Limited) and its complete address are not mentioned in any of the two receipts dated 27.10.2010 purportedly issued by the postal authorities. The said receipts simply state Fateh Textile Karachi and Fateh Textile Hyd. Likewise, in the two receipts dated 27.10.2010 purportedly issued by courier service, only Fateh Textileis mentioned, and the addresses of Karachi and Hyderabad are not mentioned at all. It is important to note that the postal receipts available on record show that the summons were sent through ordinary registered post and not through registered post acknowledgement due, as required under Section 9(5) ibid. As such, the acknowledgement that should have been obtained by postal authorities from the defendant is not available on record. Similarly, no delivery confirmation from the courier service is available on record. Thus, there is no evidence on record to establish whether the summons purportedly issued through postal and courier service were actually sent or not at the addresses of the defendant, particularly at its registered office in Hyderabad, or the same were received at the said addresses.

 

9.         Regarding the alleged receipt of summons on 25.10.2010 by the telephone operator of the defendant, I have noticed that the office copy thereof available in the Court file bears a rubber stamp of the Karachi office of the defendant, which is admittedly not the registered office of the defendant as is evident from the title of the plaint. It is not the case of the plaintiff that the said telephone operator was duly authorized by the defendant to receive summons. In this context, I may refer to Rule 2 of Order XXIX CPC which specifically relates to service on corporation. It provides that subject to any statutory provision regulating service of process, where the Suit is against a corporation, the summons may be served (a) on the secretary, or on any director or other principal officer of the corporation, or (b) by leaving it or sending it by post addressed to the corporation at the registered office, or if there is no registered office then at the place where the corporation carries on business. Needless to say that by virtue of Section 7(2) of the Ordinance, the provisions of Order XXIX Rule 2 CPC are fully applicable to the proceedings in Suits filed under the Ordinance.

 

10.       It is an admitted position that the defendant, being a public limited company, falls within the definition of corporation, its registered office is in Hyderabad and it has only a branch office in Karachi as disclosed in the title and stated in paragraph 2 of the plaint, and the summons received on 25.10.2010 were not received at the registered office of the defendant or by any of its secretary, director or other principal officer. In view of the admitted position noted above and also as the mandatory requirements of Section 9(5) ibid of sending the summons at the registered office of the defendant through bailiff and by registered post acknowledgement due were not fulfilled, I am of the considered view that summons in the instant matter were not issued in the modes and manner prescribed in Section 9(5) ibid, and service on the defendant was not effected in a valid and proper manner as provided therein, or in terms of Order XXIX Rule 2 CPC. This opinion formed by me is supported by the case of Mubarak Ali V/S First Prudential Modaraba, 2011 SCMR 1496, wherein the Hon’ble Supreme Court was pleased to hold that It is only when the summons are duly served and service is held to be satisfactory by the Court, further proceedings in the suit could be taken, but in the instant case in our view the service upon the petitioner was not at all duly effected, therefore all the proceedings initiated or taken thereafter cannot have sanction of law hence are liable to be struck down / set-aside. The case of Mubarak Ali supra decided on 04.01.2007 was followed by the Hon’ble Supreme Court in Civil Petition No.19-K/2009 (M/S Axle Products Limited V/S M/S Allied Bank of Pakistan Ltd.) decided on 10.02.2009.

 

11.       I have already held that the principle that service duly effected through any of the four modes prescribed in Section 9(5) ibid is deemed to be valid service for the purposes of the Ordinance, can be applied only in cases where strict compliance of Section 9(5) ibid is made as provided therein and not where all the prescribed modes are not adopted simultaneously or where any one or more of them is found to be defective or incomplete. Therefore, service on the defendant in the instant matter cannot be deemed to be proper service in terms of Section 9(5) ibid merely on the basis of publication of summons in newspapers. In this context, reference may be made to Saifullah Siddiqui (supra) relied upon by the learned counsel for the defendant, wherein the Hon’ble Supreme Court was pleased to hold that notice having not been directly served upon the respondent-company’s registered office, its service in their law officer’s office could not be regarded as good service as the law officer’s office could not be deemed to be the registered office of the company. In view of the above, the cases cited and relied upon by the learned counsel for the plaintiff are of no help to him. With due respect to him, his contention that the defendant was aware all along about these proceedings as its counsel had participated in the proceedings undertaken by the Nazir of this Court, cannot be accepted. The said appearance of the defendant’s counsel without issuance of summons in compliance of the mandatory requirements of Section 9(5) ibid and without proper service on the defendant in terms thereof, did not make the said mandatory provision inconsequential or redundant, which was to be complied with in any event to enable the Court to proceed further in the matter as held by the Hon’ble Supreme Court in Mubarak Ali supra. Moreover, record reveals that summons were not waived by the defendant at any stage.

 

12.       The contention of the learned counsel for the defendant that another set of summons was delivered to the defendant on 05.11.2010, therefore, limitation should be computed from the date of delivery of the second summons, is not tenable as record shows that on 05.11.2010 only notice of the plaintiff’s CMA No.10318/2010 under Section 16 of the Ordinance, and not the summons, was received by the Karachi office of the defendant. However, I am inclined to agree with his contention that technically speaking limitation for filing the application for leave to defend by the defendant has not yet begun in view of non-service of summons and non-compliance of Section 9(5) ibid. Therefore, the question of condoning the delay in filing the application for leave to defend by the defendant, does not arise.

 

13.       Before parting with this case, I may observe that in the facts and circumstances noted above, the plaintiff should have been directed by this Court to get the summons issued afresh in strict compliance of Section 9(5) ibid. However, such direction is not being given to the plaintiff as, in my humble opinion, the office is equally responsible for not issuing summons by registered post acknowledgement due and also at the registered office of the defendant in Hyderabad through the bailiff of the learned Banking Court or any other learned Court in Hyderabad. Office is directed to be careful in future.

 

14.       As a result of the above discussion, since the defendant has already filed CMA No.12894/2010 seeking unconditional leave to defend the Suit, the application in hand is disposed of with no order as to costs by ordering that the defendant’s said CMA No.12894/2010 shall be heard and decided on merits in accordance with law.

 

 

 

 

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J U D G E