IN THE HIGH COURT OF SINDH, KARACHI

Ist Appeal No.07 of 2025

[ Syed Mazhar Abidi v. United Bank Limited ]

Ist Appeal No.92 of 2025

[ United Bank Limited v. Syed Mazhar Abidi ]

PRESENT:

Mr. Justice Arshad Hussain Khan

Mr. Justice Amjad Ali Sahito

12.08.2026

Mr. Muhammad Ali Lakhani, Advocate for appellant in Ist Appeal No.07 of 2025 and for respondent in Ist Appeal No.92 of 2025.

Mr. Noor Nabi, advocate for respondent in Ist Appeal No.07 of 2025 and for the appellant in Ist Appeal No.92 of 2025.

O R D E R

ARSHAD HUSSAIN KHAN, J: By this common order, we propose to dispose of First Appeal No.92 of 2025, preferred by M/s United Bank Limited [the “Bank”], and First Appeal No.07 of 2025, preferred by Syed Mazhar Abidi [the “Customer”], as both appeals arise out of and call in question the same judgment dated 18.12.2024 and decree dated 10.01.2025 passed by the learned Banking Court No.III, Karachi, [the “Banking Court”] in Suit No.128 of 2014.

2. The essential facts giving rise to these cross-appeals are that the Bank instituted Suit No.128 of 2014 against the Defendant/Customer under the Financial Institutions (Recovery of Finances) Ordinance, 2001 [the “Ordinance 2001”] , seeking recovery of Rs.1,170,292.03 along with mark-up in respect of a Finance/Murabaha facility. During the pendency of the suit, the hypothecated vehicle was repossessed and subsequently auctioned by the Bank, whereafter the Customer filed an application under Section 16(3)(b) of the Ordinance, 2001, claiming compensation on account of the alleged unlawful repossession and auction of the vehicle. The said application was subsequently disposed of by the learned Banking Court, against which the Customer preferred First Appeal No.46 of 2001 before this Court. The said appeal was disposed of with a direction to the learned Banking Court to consider and adjudicate the Customer’s claim for compensation at the time of passing the final judgment and decree. Thereafter, the Customer’s application for leave to defend was dismissed vide order dated 06.07.2023. However, vide the impugned judgment dated 18.12.2024, the learned Banking Court dismissed the Bank’s suit as being barred by limitation, without recording evidence on the question of limitation and without adjudicating the Customer’s claim for compensation, despite the specific direction issued by this Court in the earlier appeal. Consequently, both parties have approached this Court: the Bank through First Appeal No.92 of 2025, seeking a decree in its favour, and the Customer through First Appeal No.07 of 2025, seeking adjudication of his claim for compensation under Section 16(3)(b) of the Ordinance, 2001.

3. Learned counsel for the Bank contends that the suit was instituted well within the prescribed period of limitation, particularly when the finance facility was repayable over a period of 84 months and was to mature in June 2013. He further submits that once the Customer’s application for leave to defend had been dismissed, the learned Banking Court was required to proceed in terms of Section 10(12) of the Ordinance, 2001, and pass a decree in favour of the Bank, rather than dismissing the suit on the ground of limitation. Conversely, learned counsel for the Customer supports the finding of the learned Banking Court that the suit was barred by limitation in view of the statement of account produced by the Bank. He, however, submits that the learned Banking Court committed a material procedural illegality by failing to adjudicate the Customer’s claim for compensation under Section 16(3)(b) of the Ordinance, 2001, despite the specific direction of this Court in First Appeal No.46 of 2021 that such claim be considered and decided at the time of final disposal of the suit.

4. During the course of arguments, learned counsel for both parties, by consent, submit that the impugned judgment and decree were passed without a proper factual inquiry into the disputed questions of law and fact, particularly with regard to the actual date of default, the question of limitation, and the Customer’s claim under Section 16(3)(b) of the Ordinance, 2001. They, therefore, jointly request that the impugned judgment and decree be set aside and the matter be remanded to the learned Banking Court for fresh adjudication, after affording both parties a fair and reasonable opportunity to lead evidence on all disputed issues, including the aforesaid questions.

5. In view of the consensus arrived at between learned counsel for the parties, the impugned judgment dated 18.12.2024 and decree dated 10.01.2025 passed in Suit No.128 of 2014 are hereby set aside, and the matter is remanded to the learned Banking Court, for fresh adjudication. The Customer’s application for leave to defend shall be treated as having been unconditionally allowed. The learned Banking Court shall accordingly frame appropriate issues arising from the pleadings of the parties, particularly with regard to the question of limitation and the Customer’s claim for compensation under Section 16(3)(b) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, and, after affording both parties a fair and reasonable opportunity to lead evidence, decide the suit afresh on merits strictly in accordance with law. Consequently, both the instant First Appeals, along with all pending applications, stand disposed of in the above terms, with no order as to costs.

JUDGE

Naveed PA