ORDER SHEET

HIGH COURT OF SINDH, KARACHI

      

SUIT NO. 233 of 2007

   Date                           Order with signature of Judge.

 

 

Date of hearing:    2.3.2011

 

Plaintiff       :         Trustees of the Port of Karachi

 

Defendants :         M/s. Fatima Sugar Mills Limited and others

 

 

Mr. Safdar Mehmood Advocate for the Plaintiff

 

Mr. Shaiq Usmani Advocate for the defendant No.1

 

 

1.For hearing of C.M.A NO. 4332/2008

 

2.For hearing of C.M.A NO. 5759/2009

 

3.For hearing of C.M.A NO. 5760/2009

 

4.For hearing of C.M.A NO. 1291/2008

 

5.For hearing of C.M.A NO. 5761/2009

 

6. For Issues        

 

 

Hearing of C.M.A  No.2, 3, 5 & 6, deferred by consent.

 

C.M.A No.1 & 4 heard.

 

 

Muhammad Ali Mazhar, J.-  By this order I intend to dispose off C.M.A NO. 4332/2008 filed by the plaintiff under Section 14 (1) of the Limitation Act and CM.A No.1291/2008, filed by the defendant No.1 under Section 151 C.P.C.  The plaintiff has filed this suit for recovery of money and prayed as follows:-

 

a.       Decree the suit for Rs.3,855,595.00 in favour of the plaintiff against the defendants jointly and severally with further interest/mark-up 14% per annum from 1st January 2007, as mentioned in the Bank Guarantee till payment.

 

b.       Award costs of the suit to the plaintiff and

 

d.       Grant any other relief(s) to the plaintiff which this Honourable Court may deems fit and proper

 

 

2. The facts forming the background of the present suit are that the plaintiff is a statutory organization functioning under the Karachi Port Trust (KPT) Act, 1886. The defendant No.1 is a company engaged in the business of import and export. The defendant No.1 imported certain equipments and machinery by establishing Letter of Credit through defendant No.2. The release of the goods at the Port at Karachi became subject matter of litigation. However, the customs authorities were ordered by the Lahore High Court to allow release of the machinery/goods subject to submission of a Bank Guarantee in favour of the customs department by the Defendant No.1. Consequently, the defendants submitted Bank Guarantee for Rs. 3.5 Million and got the goods released. At the time of final hearing, the Lahore High Court held that it has no territorial jurisdiction to decide the petition and returned it to defendant No.1.

 

3. The plaintiff vide letter dated 19th February 2004 called upon the defendant No.1 to pay the amount. The defendant No.1 did not make the payment but filed a Constitutional Petition No. D-373 of 2004 in this Court at Karachi on 3rd March, 2004 and got stay order. This constitutional petition was later dismissed vide order dated 18th February 2005, the order was challenged in the Supreme Court then the matter was remanded to the Sindh High Court. On remand, this court heard the petition and vide order dated 27th September 2006, set aside the amount claimed on account of liquidated damages observing that KPT may file a suit for recovery of liquidated damages (mentioned in the Bank Guarantee) within three months but did not set aside the amount of storage charges and demurrage. This Court in the order also extended the validity period of the Bank Guarantee.

4. The defendant No.1 has filed C.M.A NO. 4332/2008, under 151 CPC in which it is inter alia contended that the divisional bench of this Court vide its judgment dated 27.9.2006 passed in C.P. No.     D-373 of 2004 specifically directed that the suit for recovery of liquidated damages be filed within three months from the date of order. The Court had further observed in the order that if suit is not filed within a period of three months, then the order for extension of bank guarantee in respect of liquidated damages shall stand vacated automatically.

 

5. It is further averred in the application that instead of filing the suit in this court, the plaintiff had filed a suit for recovery in the Banking Court when they had neither any relationship of borrower nor of a customer with the Defendant No.3 which is essential for filing a suit sunder Financial Institution (Recovery of Finances) Ordinance 2001. The plaintiff negligently filed the suit in the Banking Court and also sought return of their own plaint through filing an application and the Banking court itself did not do so of its own volition. The suit thus having been filed in the wrong jurisdiction due to plaintiffs’ negligence and its re-presentation in this court on 24.02.2007 does not make the suit a continuation of the original suit filed in the Banking court on 21.12.2006. The suit was filed on 24.2.2007 in this Court i.e. about five months after the order dated 27.9.2006.

 

6. The plaintiff filed its counter affidavit in which it is inter alia contended that the suit was filed with bona fide intention in the Banking Court at Karachi on 21st December 2006, within the time granted by the High Court. The reason of filing the suit in the banking court was to recover bank guarantee which had become a subject matter in C.P.No. D- 373 of 2004 filed by Defendant No.1. The suit was filed and received by the Registrar, Banking Court-I, Karachi on 21st December 2006 and numbered as Suit No. 08 of 2007. The same remained there till 12th January 2007, whereafter it was sent to Banking Court No. II which received the case file on 12th January 2007, and renumbered it as Suit No. 03 of 2007. The Banking Court asked the plaintiff to file this plaint in the Sindh High Court after submitting an application for return of plaint. The Banking court returned the plaint thereafter it was filed in this court. The defendant No.1 had filed the written statement almost after one year on 26th January 2008 but did not take any plea that bank guarantee is liable to discharged due bona fide error of instituting the suit in banking court. It is further mentioned in the courter affidavit that at this stage issues need to be settled for the trial in which the present controversy can be reduced in a separate issue. After adducing evidence, it will be determined whether the Bank Guarantee can be discharged or not. The plaintiff had filed the suit in the Banking Court keeping in view Section 7 (4) of the Financial Institution (Recovery of Finance) Ordinance 2001.

 

7.The plaintiff has also filed C.M.A No.4332/2008, under Section 14 (1) of Limitation Act in which it is prayed that the time spent in the Banking Court would be excluded for limitation purpose and the delay if any may be condoned in refilling the case in this Court. It is reiterated in the supporting affidavit that the Registrar, Banking court-I Karachi received the plaint. The same remained there till 12th January 2007, thereafter, the Banking Court asked the Plaintiff to file this plaint in this court after submitting an application for return of plaint.

 

8. In response to this application, the defendant No.1 has filed its counter affidavit and denied that suit was filed with bona fide intention in the banking jurisdiction. This court in Constitution petition specifically directed that the suit for recovery of liquidated damages be filed within three months. The Banking Court had no jurisdiction to entertain the suit of the plaintiff under Financial Institution (Recovery of Finances) Ordinance, 2001. It is obvious that the plaintiff negligently filed the suit in the Banking Court and then sought return of their own plaint through filing an application. The suit had been filed in the wrong jurisdiction due to plaintiffs’ negligence. The instant suit has been filed for the alleged recovery of liquidated damages against the defendant No.1,  therefore, filing suit in Banking Court was sheer negligence on the part of the plaintiff despite having knowledge of nature of alleged recovery which is a case of purely civil nature for which only this court has jurisdiction.

 

9. Heard the arguments of learned counsel. The learned counsel for the defendant No.1 argued his application moved under section 151 CPC on the sole ground that the recovery notice dated 19.2.2004 issued by the plaintiff was challenged in CP No. D-373 of 2004 which was decided on 27.9.2006 and the learned divisional bench of this Court held that the KPT cannot on its own enforce recovery of liquidated damages in spite of such stipulation in the bank guarantee. The KPT may file a suit for recovery of liquidated damages and the notice dated 19.2.2004 to the extent of the payment of liquidated damages was struck down with further clarification that striking down of the notice for recovery of liquidated damages shall not affect the right of KPT to file the suit for the recovery of liquidated damages. It was further ordered that the bank guarantee shall remain in force and its validity was extended till final outcome of the suit of KPT. The divisional bench further observed that if the suit is not filed within three months, then the order for extension of bank guarantee in respect of liquidated damages shall stand vacated automatically. The learned counsel further argued that since the plaintiff had wrongly instituted the suit in the banking court and thereafter on its motion applied for return of plaint and then instituted the suit in this Court therefore, the period in which the suit had remained pending in the banking court and thereafter the plaint was returned and instituted in this Court will not amount a continuation of original proceedings and for the purposes of filing the suit, the actual date on which the suit was presented in this court will be treated the actual date of institution of this suit which is much after three months granted by this Court, therefore, in all fairness, the plaintiff is entitled for the discharge of bank guarantee.

 

10. The learned counsel on the application moved under section 14 of the Limitation Act by the plaintiff argued that the application is not maintainable as the plaintiff has failed to demonstrate that the suit in banking court was being prosecuted in good faith therefore, the plaintiff is not entitled for the benefit of exclusion of time of proceeding continued in a court without jurisdiction.

 

11. Conversely, the learned counsel for the plaintiff argued that under a bonafide mistake and without any negligence on the part of plaintiff a suit was filed in the Banking Court under the bonafide belief that it has been rightly instituted under the provisions of Financial Institution (Recovery of Finances) Ordinance 2001, and as soon as it came into the knowledge of plaintiff, the plaintiff had moved an application under order 7 Rule 10 CPC in the Banking Court-II at Karachi in which it was clearly mentioned that under a bonafide mistake regarding the jurisdiction, the plaint may be returned to the plaintiff for presentation the same before the court having jurisdiction. This application was moved on 20.2.2007 and on the same date, the learned Presiding Officer, Banking Court-II returned the plaint on 20.2.2007 and without wastage of any time, the suit was instituted in this Court on 24.2.2007. The learned counsel for the plaintiff further argued that the plaintiff was prosecuting the suit in the banking court with due diligence and immediately upon knowing the defect of jurisdiction, an application was moved under order 7 rule 10 CPC for the return of plaint, therefore, separate application has been moved under section 14 of the Limitation Act with the prayer that the time consumed in the banking court may be excluded. In support of his arguments, learned counsel for the plaintiff relied upon the following case law:-

 

1. 1992 CLC 22 ( Muhammad Sharif Khan v. Mst. Manzoora Begum). In this case, it was held that provision of S.14, Limitation Act, 1908, being a mandatory provision of law, its benefit could be given to a party concerned on a mere reference to the subject-matter contained therein which would be sufficient for the Court to consider being duty bound, even though S.14, Limitation Act, 1908, was not specifically mentioned by the party concerned, there being no separate application for the purpose. Plaintiff having been pursuing proceedings before District Judge and High Court under bona fide mistake of law, period of limitation should have been reckoned afresh and delay should have been condoned.

 

2. 1997 CLC 768 (Muhammad Ali v. Imdad Hussain). In this case, the learned single judge of Lahore High Court held that question of pecuniary jurisdiction and trial by a wrong forum would amount to technical error justifying benefit of S.14, Limitation Act, 1908 to be extended to affected litigant. Plaintiff alone being not responsible for pursuing his remedy in wrong court but defendant and court equally were responsible for continuation of lis in wrong forum, plaintiff would be entitled to benefits of S.14, Limitation Act, 1908.

 

3. NLR 1996 CLJ 31 (Sher Muhammad, etc v. Ismatullah, etc). In this case, it was held that conditions which are necessary to exclude time consumed in proceedings before a wrong forum are: (i) that proceedings are founded on same cause of action, and (ii) that earlier proceedings were prosecuted in good faith in a Court which for want of jurisdiction, or other cause of a like nature did not entertain earlier proceedings. Court should not refuse benefit of S.14 merely because plaintiff does not file application under section  14 or does not show any ground for exemption from limitation in plaint. Application under section 14 can be considered by trial Court even if not specifically mentioned in plaint. Benefit of S. 14 is extended only where plaint returned for want of jurisdiction is filed in Court of competent jurisdiction. S. 14 would not apply when plaintiff instead of filing returned plaint files a fresh suit.

 

12. After hearing the prose and cons advanced by the learned counsel for the parties I have reached to the conclusion that the learned divisional bench in its order did not fix any limitation for filing the suit but only passed the order that if suit is not filed within a period of three months, then the bank guarantee furnished by the defendant would be automatically discharged. The condition for filing the suit within a period of there months was imposed merely for the reason that in the order, the learned divisional bench held that for the purposes of recovery of liquidated damages, the KPT has to file a suit for recovery of liquidated damages and since the period of bank guarantee was extended till adjudication of the suit, if any, therefore, in order to expedite the proceedings and to ensure the expeditious disposal, the learned divisional bench allowed three months time to KPT for filing the suit with further caution that if no suit is filed within the stipulated period, the banking guarantee will be discharged automatically.

 

13. The limitation for filing suits is governed by the Limitation Act and under Section 3 of the Limitation Act, it is clearly provided that subject to provisions contained in section 4 to 25, every suit instituted, appeal preferred and application made after the period of limitation, described, therefor by the first schedule shall be dismissed, although limitation has not been setup as a defence.  There is unanimity of the view among the superior courts that because of the mandatory nature of Section 3 of the Limitation Act, the court before which any suit, appeal or application instituted, preferred or made is obliged to dismiss the same although the question of limitation may have not been setup as a defence.

 

14. In the present case, the plaintiff in paragraph 12 of the plaint has described the cause of action and it is stated that the cause of action had arisen on number of dates from time to time and has finally arisen on 27th September 2006 when this Court in constitution petition observed that the plaintiff may file a suit for recovery of liquidated damages within three months of its judgment. In fact the cause of action was accrued to the plaintiff on 19.2.2004 when the letter was written to the Manager Allied Bank of Pakistan in which it was stated that as per set procedure, the bank guarantee cannot be returned unless KPT dues are cleared and in the same letter a request was made to ABL for the pay order in the sum of Rs.5,690,791/- including liquidated damages as on 20.2.2004. It is the same letter which was the subject matter of constitution petition also in which the learned divisional bench while setting aside the demand of liquidated damages and extending the validity of bank guarantee, directed the plaintiff to file suit for recovery of liquidated damages within three months.

 

15. The plea of the plaintiff is that the suit for recovery in the banking court was filed under the bona fide belief but subsequently on its own application, the plaint was returned and suit was instituted in this court. The defendant No.1 has not filed any application under order 7 Rule 11 CPC with the prayer that the suit is barred by the limitation but in the application under section 151 CPC only a plea has been taken that the bank guarantee is liable to be discharged as the suit was not filed in this Court within the stipulated period allowed by the divisional bench in its judgment.  

 

16. The bone of contention between the parties is whether the bank guarantee should be discharged as the plaintiff failed to institute the suit within the stipulated time, on the contrary the plaintiff takes the position that the suit was filed in the banking court initially due to bonafide mistake and immediately upon returning the plaint the suit was rightly filed in this Court. The controversy between the parties cannot be resolved without adducing evidence as issue raised is a issue of mix question of law and fact in which both parties must be allowed to lead evidence and to prove whether the suit in banking court was filed due to bonafide mistake or the return of plaint by the baking court will not be treated continuation of proceedings and limitation for filing suit will be considered or treated from the date of presentation of the plaint in this court and during the period when the suit was pending in the banking court will not be counted. All this controversy requires evidence and in order to sift grain from chaff, it would be in the interest of justice that instead of outrightly discharging the bank guarantee, the court should frame specific issue covering the present controversy. Since the matter is also being fixed for settlement of issues, therefore, in order to provide fair opportunity to both the sides, a separate issue may be framed.

 

17. The plaintiff and defendant No.1 both have filed their proposed issues and I could have easily settled the issues but three miscellaneous applications filed by defendant Nos. 2 and 3 are pending adjudication including an application under order 9 Rule 7 CPC for setting aside the order dated 24.3.2008 whereby the defendant Nos. 2 and 3 were declared exparte therefore, prior settlement of issues the disposal of applications filed by defendant Nos. 2 and 3 is also necessary. Since no body was present for the defendant Nos. 2 and 3 on 2.3.2011, therefore, by consent the hearing of Civil Misc. Applications listed at Serial No.2, 3, 5 and settlement of issues was deferred.

 

18. The bottom line of this discussion is that the controversy raised by the defendant No.1 in CMA No. 1291 of 2008 moved under section 151 CPC cannot be decided without evidence. So far as the CMA No. 4332 of 2008 moved under section 14 of Limitation Act is concerned, I am of the firm view that it only germane to the computing the limitation prescribed for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceedings whether in a court of first instance or in a court of appeal against the defendant shall be excluded where the proceedings is founded upon the same cause of action and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature is unable to entertain it.

 

19. The defendant No.1 in his application or the written statement nowhere stated that the suit is barred by time but main reason for claiming the discharge of bank guarantee is that the plaintiff wrongly filed the suit in banking court and failed to file the suit in this court within three months from the date of divisional bench judgment. The limitation for filing the suit of different nature and upon different causes of actions is always regulated and governed by means of the Limitation Act, therefore, an important characteristic of the case can not be lost sight that the learned divisional bench of this court did not fix the cutoff point of limitation for filing the suit but only allowed an opportunity to commence the suit within a period of three months  for the reason that in its judgment, the bank guarantee was extended, therefore, the time granted by the divisional bench can not be considered the time allowed under the Limitation Act for filing the suit.

 

20. Since I have already observed that the burning question cannot be decided without evidence. A matter of concern whether the suit was filed in the banking court with bona fide intention or with sheer negligence or the plaintiff was prosecuting the suit in the banking court in good faith. In all conscience, this is mix question of a law and fact, therefore, in my view, the plaintiff in all fairness is entitled to lead evidence to prove its bona fides and instead of technical knockout, it would be in the interest of justice to decide the case on its own merits. At this juncture, I would like to quote a landmark judgment reported in PLD 1963 Supreme Court 382 (Imtiaz Ahmed v. Ghulam Ali and others), in which the honorable Supreme Court has held that the proper place of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights. All technicalities have to be avoided unless it be essential to comply with them on grounds of public policy. The English system of administration of justice on which our own is based may be to certain extent technical but we are not to take from that system its defects. Any system, which by giving effect to the form and not to the substance defeats substantive rights, is defective to that extent. The ideal must always be a system that gives it every person what is his.

 

21. The upshot of this discussion is that the controversy raised in the instant applications require evidence, therefore, both the parties at the time of settlement of issues may suggest specific issue regarding the present controversy which can be decided after leading the evidence. Both the applications are disposed of in the above terms.

 

 

Karachi:-

Dated. 25.5.2011                                                           Judge