J U D G M E N T

Date of hearing : 05.03.2014

Appellant : Through Mr. Haleem Siddiqui Advocate ______

Respondent No.5 : Through M/s Abdul Shakoor and Jameela Siraj Advocates

Syed Hasan Azhar Rizvi J: Being aggrieved and dissatisfied with the order passed on 17.04.2014 by the learned Judge, Banking Court No.V, Karachi in Suit No.33/2012 whereby the plaint was returned to the Appellant/Plaintiff for filing it before the Court having plenary jurisdiction in terms of Order 7 Rule-10 CPC.

The brief facts of the case are that the Appellant is a Banking Company. Respondent No.2, who is the sole proprietor of Respondent No.1 approached the Appellant/bank for grant of “Murahaba Finance Facility” for an amount of Rs.45.00 Million (Rupees Forty Five Millions only) for procurement of assets from local market as well as import. Respondent No.2 being a sole proprietor of the Respondent No.1 executed Murahaba Facility Agreement with the Appellant/Bank. Respondents Nos.2 and 3 furnished their personal guarantees as security for repayment of the finance facility upto aggregate amount of Rs.150,000,000/- (Rupees One Fifty Millions only) availed by the Respondent No.1. Respondent No.2 being a sole proprietor/Chief Executive Officer of Respondent No.1 opened the current account at Appellant’s Bank in the name of the Respondent No.1 and thereafter, authorized to the Respondent No.4 his brother to operate the said account and do all the business pertaining to proprietary concern. Respondent No.5 was the Muccadam vide agreement dated November 24, 2011 to keep the pledged goods under its locks and keys. The Appellant granted the aforesaid finance facility to the Respondent No.1 but the Respondents had committed default in payments to the Appellant’s Bank in terms of the agreement. Appellant filed a Suit No.33/2012 in the Banking Court No.V at Karachi for recovery against the Respondents. Summons were issued to the Respondents through all modes provided under the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as “Ordinance, 2001) including publication in two newspapers daily “Jang” dated 07.02.2012 and daily “Dawn” dated 08.02.2012. Service upon Respondents was declared good but only Respondent No.5 filed application for leave to defend on 27.02.2012. Since the Respondents Nos.1 to 4 had failed to file leave to defend application within stipulated period, hence the Banking Court by order dated 12.03.2012 declared the Respondents Nos.1 to 4 exparte. The Banking Court by the impugned order returned the plaint to the Appellant/Plaintiff for filing it before the Court having plenary jurisdiction in terms of Order 7 Rule 10 CPC. Hence, this Appeal.

Learned Counsel for the Appellant argued that the learned Judge Banking Court No.V, Karachi has failed to consider that the Respondents Nos.1 to 4 availed the finance facility from the Appellant and the Appellant has rightly filed the Suit under section 9 of the Ordinance, 2001 in the Banking Court. He urged that learned Trial Court has failed to consider that the Court itself held the service good upon the Respondents Nos.1 to 4 and declared them exparte by order dated 12.03.2012. Learned Counsel for the appellant submitted that the Banking Court heard the learned Counsel for the Appellant and Respondent No.5 on 19.03.2012 and adjourned the matter for orders on applications, in the meantime Counsel for the Respondent No.5 filed his personal affidavit alongwith memo of High Court Appeal No.279/2010 and order-sheet but copies of the same were not supplied to the learned Counsel for the Appellant and the Appellant was condemned unheard on the particular point raised by the learned Counsel for the Respondent No.5 in his personal affidavit and thereby learned Banking Court had snatched the right for deletion of name of Respondent No.5 from the array of the defendants of the said suit as no opportunity of being heard was provided to the Counsel for the Appellant before passing the impugned order on 17.12.2012. Learned Counsel for the Appellant further submits that the Appellant impleaded Respondent No.5 as a party in the banking suit on the basis of case law reported in 2011 CLD 234. Learned Counsel for the appellant further submitted that in view of judgment passed by the Divisional Bench of this Court in the case of M/s Moghul and sons versus NIB Bank Ltd. and another reported in 2012 CLD 1915, wherein this Court has held that Bank’s legal remedy against Muccaddam, if any, was under original civil jurisdiction, therefore, suit under Financial Institutions (Recovery of Finances) Ordinance, 2001, was not maintainable and the Banking Court had no jurisdiction to pass judgment and decree against Muqqadam. He further contended that the Banking Court ought to have decreed the suit against the Respondents Nos.1 to 4 but the impugned order passed by the learned Judge Banking Court is perverse, illegal, unlawful, based on surmises, conjectures and has been passed without applying judicial mind, hence the same is not sustainable under the law.

Learned Counsel for the Respondent No.5 are agreed with the contentions raised by the learned Counsel for the Appellant and have no objection if the impugned order is set-aside.

We have heard Mr. Abdul Haleem Siddiqui Advocate for the Appellant, M/s Abdul Shakoor and Jameela Siraj Advocates for the Respondent No.5 and perused the material available on record carefully.

It is apparent from the record available before us that the finance facility was granted to the Respondent No.1 while Respondents No.2 and 3 were the guarantors and the Respondent No.4 was managing the affairs of the Respondent No.1. Respondents Nos.1 to 4 were duly served in the Banking Court as is evident from the diary sheet dated 03.03.2012 and 12.03.2012, photocopy of the certified copy of the same is enclosed at page-513 with the memo of Appeal. Notices, after filing of the present Appeal, were also issued to the Respondents Nos.1 to 4 through all modes including publication in daily “Jang” Karachi and daily “Dawn” both dated 01.11.2012. Respondents Nos.1 to 4 have failed/avoided to contest the present Appeal also as they have done in past before the Banking Court.

In view of commission of default of obligation relating to finance facility provided under the finance agreement, which Respondents Nos.1 to 4 have failed to comply with. The Banking Court did not pass any appropriate order in accordance with law against the Respondents Nos.1 to 4 and had passed impugned order to return the plaint in terms of Order 7 Rule 10 CPC against all the Respondents. Impugned order is patently illegal and requires interference.

Above are the reasons of our short order dated 05.03.2014 whereby following order was passed:-

“For detailed reasons to be recorded later on, present Appeal is allowed. Case is remanded back to the trial Court and shall be deemed to be pending against the respondents Nos.1 to 4 only. Trial Court is directed to decide the case strictly in accordance with law”.

J U D G E

Karachi

Dated: ___________ J U D G E