IN THE HIGH COURT OF SINDH, KARACHI

Ist Appeal No.84 of 2026

[ Mst. Mehmooda v. M/s. JS Bank Limited ]

PRESENT:

Mr. Justice Arshad Hussain Khan

Mr. Justice Amjad Ali Sahito

Appellant :	In person
Date of Hearing:	15.10.2026
Date of Decision:	15.10.2026

JUDGMENT

ARSHAD HUSSAIN KHAN, J: Through the instant First Appeal, preferred under Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as “the Ordinance”), the Appellant has called in question the ex-parte judgment dated 18.12.2024 and decree dated 19.12.2024 passed by the learned Banking Court No.II, Karachi, in Banking Suit No.228 of 2024, whereby the suit instituted by the Respondent Bank for recovery of Rs.255,466.55 was decreed against the Appellant to the extent of the principal amount of Rs.160,000/-, along with cost of funds and costs of the suit. Being aggrieved, the Appellant has preferred the instant appeal seeking setting aside of the impugned judgment and decree.

2. Briefly, the facts giving rise to the present appeal are that the Respondent Bank instituted Banking Suit No.228 of 2024 against the Appellant for recovery of Rs.255,466.55 on account of an alleged default in repayment of a personal finance facility styled as “JS Cash Asaan Personal Installment Loan”, amounting to Rs.160,000/-. Upon institution of the suit, summons were issued to the Appellant through the prescribed modes, including Bailiff, registered post A/D, courier service and publication in two newspapers, namely Nawai Waqt and The News, both dated 06.09.2024. The Bailiff reported that the Appellant had left the address furnished in the plaint and that a copy of the summons had been affixed thereon, whereas the courier service reported that the address was incomplete. The learned Banking Court, however, treated the publication of summons in the aforesaid newspapers as sufficient service in terms of Section 9(5) of the Ordinance. Since the Appellant did not file an application for leave to defend within the prescribed statutory period, the suit was ordered to proceed ex-parte vide order dated 02.11.2024. Subsequently, the learned Banking Court passed the impugned judgment and decree.

3. The Appellant, appearing in person, vehemently assailed the impugned judgment and decree, primarily on the grounds of defective service and fraudulent procurement of the alleged finance facility. She submitted that she neither applied for nor availed the loan in question and that her personal particulars, biometric credentials and signatures were fraudulently misused by third parties. She further contended that the Respondent Bank furnished an incorrect residential address in the recovery proceedings despite having knowledge of her correct particulars, thereby depriving her of an opportunity to contest the suit and seek leave to defend. In support of her assertions, she referred to FIR No.127 of 2023, registered on 08.07.2023 under Sections 420, 468, 471 and 34 PPC, much before the institution of the banking suit, wherein she had complained of fraudulent misuse of her identity in connection with the disputed finance facility. She also pointed out that the address mentioned in the FIR differs from the address furnished in the loan documentation and relied upon by the Respondent Bank in the recovery proceedings.

4. The Appellant further relied upon the decision of the Banking Mohtasib Pakistan, rendered subsequent to the passing of the impugned judgment and decree, whereby serious discrepancies were identified in the loan application and verification process undertaken by the Respondent Bank. She submitted that the Banking Mohtasib, after examining the relevant documents and hearing the parties, directed the Respondent Bank to settle the disputed finance facility and issue a No Objection Certificate confirming that no claim remained outstanding against her. She further referred to the decision dated 11.09.2025, whereby the President of Pakistan dismissed the representation preferred by the Respondent Bank and upheld the decision of the Banking Mohtasib. According to the Appellant, these subsequent developments substantiate her consistent assertion that the alleged finance facility was fraudulently obtained in her name and that she was neither the borrower nor the beneficiary of the loan proceeds. She, therefore, prayed that the impugned judgment and decree be set aside and that she be afforded an opportunity to contest the Respondent Bank's claim in accordance with law.

5. None appeared on behalf of the Respondent Bank when the matter was called. The record reflects that, on an earlier date of hearing, Mr. Mahmood Farooq Channa, Advocate, had entered appearance on behalf of the Respondent Bank and undertaken to file his Vakalatnama. However, despite the lapse of considerable time, no Vakalatnama has been placed on record, nor has anyone appeared to assist the Court on behalf of the Respondent Bank. We have, therefore, proceeded to examine the matter with the assistance of the Appellant, who appeared in person, and on the basis of the available record.

6. We have considered the submissions advanced by the Appellant and examined the impugned judgment, the proceedings before the learned Banking Court and the documents annexed to the memorandum of appeal. The following point arises for determination:

Whether, in the peculiar facts and circumstances of the case, the impugned ex-parte judgment and decree warrant interference in appellate jurisdiction, having regard to the circumstances surrounding service of summons, the Appellant's prior complaint concerning fraudulent procurement of the finance facility, and the subsequent decisions of the Banking Mohtasib Pakistan and the President of Pakistan, relating to the same transaction?

7. Before examining the controversy on merits, it is appropriate to address the maintainability of the instant appeal. Section 22(5) of the Ordinance expressly recognizes the right of appeal against an ex-parte decree passed by a Banking Court. Consequently, the mere availability of a remedy before the Banking Court for setting aside an ex-parte decree does not, by itself, render an appeal under Section 22 incompetent. The Appellant has invoked the statutory appellate jurisdiction of this Court, and the challenge to the impugned judgment and decree is, therefore, required to be examined within the scope of the powers conferred by the Ordinance.

8. Turning to the question of service, the record reveals that summons were issued through all prescribed modes, including publication in two newspapers, namely Nawai Waqt and The News, both dated 06.09.2024. It is equally evident that personal service could not be effected, as the Bailiff reported that the Appellant had left the address furnished in the plaint, whereas the courier service reported that the address was incomplete. The learned Banking Court, relying upon newspaper publication, treated the Appellant as duly served under Section 9(5) of the Ordinance and subsequently proceeded ex-parte against her. It is pertinent to observe that the said provision recognizes newspaper publication as an independent mode of service, and service duly effected through any one of the prescribed modes is deemed valid. Therefore, the mere failure of personal service through Bailiff or courier would not, by itself, invalidate service effected through newspaper publication.

9. Nevertheless, the circumstances surrounding the address furnished by the Respondent Bank assume significance in the present case. The Appellant has consistently maintained that the address appearing in the loan documentation was incorrect and that she had never resided at the address relied upon by the Bank. The record further reflects that FIR No.127 of 2023 was registered on 08.07.2023, prior to the institution of the recovery suit, wherein a different residential address was mentioned. Although the existence of a different address in the FIR does not conclusively establish defective service, it lends relevance to the Appellant's objection concerning the correctness of the particulars furnished by the Respondent Bank. These circumstances require consideration while determining whether the statutory requirements governing service were duly satisfied and whether the Appellant was afforded an effective opportunity to contest the claim.

10. More importantly, the Appellant's grievance is not confined to service of summons. She has categorically denied having obtained or benefited from the alleged finance facility and asserted that the loan was procured through fraudulent misuse of her identity and personal credentials. The registration of FIR No.127 of 2023, much before the institution of the banking suit, demonstrates that the Appellant had raised allegations concerning the disputed transaction prior to the commencement of recovery proceedings. Although the registration of an FIR does not constitute proof of the allegations contained therein, it is a material circumstance indicating that the genuineness of the finance transaction had been disputed independently of the subsequent ex-parte decree.

11. The controversy assumes further significance in view of the subsequent proceedings before the Banking Mohtasib Pakistan. A perusal of the decision annexed to the memorandum of appeal reveals that the Banking Mohtasib, after examining the relevant documents and hearing the parties, identified several material discrepancies in the loan application and verification process undertaken by the Respondent Bank. These included incorrect particulars concerning the Appellant's residential address, mobile number, dependents, email address, residential status and mother's name, besides discrepancies in the signatures appearing on certain loan documents. The Banking Mohtasib specifically observed that, except for the particulars appearing on the Appellant's CNIC, other material information contained in the loan documentation was incorrect.

12. Significantly, the Banking Mohtasib also referred to the Respondent Bank's own Fraud Risk Management Unit examination report, which disclosed the involvement of one Ms. Vijay Lakshmi in the origination of the disputed finance facility. It was further recorded that the said individual had admitted her involvement in the fraudulent transaction and acknowledged that the loan proceeds had been received by her niece, Ms. Nitto Vania. Having considered these circumstances, the Banking Mohtasib, in exercise of powers under Section 82D of the Banking Companies Ordinance, 1962, read with Section 9 of the Federal Ombudsmen Institutional Reforms Act, 2013, advised the Respondent Bank to settle the disputed finance facility, issue a No Objection Certificate to the Appellant confirming that no claim remained outstanding against her in respect of the loan, and report compliance forthwith.

13. The Respondent Bank challenged the aforesaid decision by preferring a representation before the President of Pakistan. The record reflects that the representation was heard on 11.09.2025, when Mr. Ali Abbas Naqvi, Advocate, appeared on behalf of the Respondent Bank, whereas the Appellant appeared in person. Upon consideration of the matter, the competent authority found no infirmity in the decision of the Banking Mohtasib and dismissed the representation. It was specifically observed that the person involved in the alleged fraudulent transaction had confessed her involvement and that this fact was within the knowledge of the Respondent Bank. The authority further observed that the Bank ought to have implemented the decision of the Banking Mohtasib instead of preferring an unjustified representation. Accordingly, the decision of the Banking Mohtasib was upheld, and the Respondent Bank was directed to pay Rs.25,000/- to the Appellant towards her travelling expenses. The said recommendations were approved by the President of Pakistan.

14. The aforesaid developments cannot be regarded as inconsequential. The Banking Mohtasib, upon examination of the Respondent Bank's own documentation and verification process, identified material irregularities concerning the disputed finance facility and directed the Bank to settle the same without any further claim against the Appellant. The Respondent Bank challenged that decision before the President of Pakistan but remained unsuccessful. Although these decisions were rendered subsequent to the passing of the impugned judgment and decree, and no fault can therefore be attributed to the learned Banking Court for not considering them, they nevertheless have a direct bearing upon the controversy concerning the Appellant's liability under the alleged finance transaction. Their legal effect, however, must be examined in accordance with law, including the question of the Banking Mohtasib's jurisdiction to entertain the complaint after the passing of the decree and the status of any subsequent proceedings challenging the Presidential decision.

15. It is also relevant that the Appellant has appeared before this Court in person, without the assistance of any counsel, and has annexed the decisions of the Banking Mohtasib and the President of Pakistan to the memorandum of appeal without filing a formal application for their admission as additional evidence. Ordinarily, documents merely annexed to a memorandum of appeal do not automatically become part of the evidence. Nevertheless, the procedural omission on the part of an unrepresented litigant ought not, by itself, prevent the Court from examining whether such material may be received in accordance with law, particularly where it concerns subsequent proceedings between the same parties relating to the very transaction forming the basis of the impugned decree. The admissibility and evidentiary value of such documents must, however, be determined in accordance with the applicable procedural requirements, without dispensing with the Respondent Bank's right to contest the same.

16. We are conscious that the proceedings under the Ordinance are governed by a special statutory framework intended to ensure expeditious recovery of finances advanced by financial institutions. At the same time, the procedure prescribed thereunder cannot be divorced from the requirement that liability must arise from a legally enforceable finance transaction. In the present case, the Appellant has consistently disputed the very foundation of the Respondent Bank's claim. Her allegations were raised through criminal proceedings before the institution of the recovery suit and subsequently received support from the findings recorded in proceedings before the Banking Mohtasib, which were affirmed upon representation before the President of Pakistan. These circumstances raise substantial questions concerning the genuineness of the finance transaction, the identity of the person who obtained and received the loan proceeds, and the Appellant's liability thereunder.

17. The question before us is not whether the Appellant has conclusively established fraud or whether the Respondent Bank's claim is necessarily unfounded. Rather, the question is whether, having regard to the peculiar circumstances emerging from the record, the controversy ought to be determined after affording the parties an opportunity to place their respective cases before the learned Banking Court in accordance with the special procedure prescribed by the Ordinance. The subsequent statutory decisions, though not available at the time of passing of the impugned decree, disclose matters directly concerning the underlying transaction which have not been subjected to judicial examination in the recovery proceedings. The allegations of fraudulent procurement of the finance facility, the discrepancies in the loan documentation and the question of receipt of the loan proceeds by third parties are matters requiring determination on the basis of legally admissible evidence rather than being conclusively resolved in appellate jurisdiction.

18. In the peculiar circumstances of the case, we are of the considered view that the interests of justice would be better served by remitting the matter to the learned Banking Court for reconsideration in accordance with law, rather than determining the disputed questions of fact for the first time in appeal. Such a course would enable the learned Banking Court to examine the Appellant's objections concerning service, the genuineness of the finance transaction and the legal effect, if any, of the subsequent decisions of the Banking Mohtasib and the President of Pakistan. It would also afford the Respondent Bank an opportunity to establish its claim and contest the material relied upon by the Appellant. The remand would not amount to acceptance of the allegations of fraud, nor would it dispense with the statutory requirements governing an application for leave to defend.

19. Consequently, for the foregoing reasons, the instant First Appeal is allowed. The impugned ex-parte judgment dated 18.12.2024 and decree dated 19.12.2024 passed by the learned Banking Court No.II, Karachi, in Banking Suit No.228 of 2024 are set aside, and the matter is remanded to the learned Banking Court for fresh adjudication in accordance with law. The Appellant shall appear before the learned Banking Court on the date to be fixed by the office and shall be afforded an opportunity to seek leave to defend in accordance with Section 10 of the Ordinance. The learned Banking Court shall determine such application in accordance with law and, if leave is granted, proceed to adjudicate the suit on merits after affording the parties an opportunity to produce their respective evidence. The learned Banking Court shall also consider the admissibility, relevance and legal effect of the decisions of the Banking Mohtasib Pakistan and the President of Pakistan, including any question concerning their jurisdiction or subsequent challenge, strictly in accordance with law.

It is clarified that the observations made herein are confined to the circumstances warranting reconsideration of the matter and shall not influence the learned Banking Court in determining the respective rights and liabilities of the parties. Having regard to the age and nature of the controversy, the learned Banking Court shall make every endeavour to conclude the proceedings expeditiously, preferably within ninety (90) days from the date of receipt of this judgment.

In the above terms, the instant First Appeal stands disposed of alongwith pending applications, with no order as to costs.

JUDGE

Naveed PA