IN THE HIGH COURT OF SINDH AT KARACHI
Ist Appeal No. 121 of 2010
and Ist Appeal No. 03 of 2011
Order with signature of Judge
Mr. Justice Nadeem Akhtar
Mr. Justice Aftab Ahmed Gorar
Ist Appeal No.121/2010:
For Katcha Peshi :
Ist Appeal No.03/2011 :
1. For orders on CMA No.1778/2013 :
2. For Katcha Peshi :
3. For orders on CMA No.30/2011 :
Appellant : Asif Kudia, through Mr.Abbadul Hussnain Advocate.
Respondent No.1 : KASB Bank Limited, through
Mr. Muhammad Zubair Quraishy Advocate.
Respondents 2 to 7 : Called absent.
Dates of hearing : 24.09.2013, 03.12.2013, and 29.05.2014.
J U D G M E N T
NADEEM AKHTAR, J. – This common judgment shall dispose of Ist Appeal No.121/2010 and Ist Appeal No.03/2011 filed by the appellant against two separate orders passed by Banking Court No.II at Karachi in the respondent No.1’s Suit No.121/2009. In Ist Appeal No.121/2010, the appellant has impugned the order passed on 07.08.2010 whereby his applications under Section 12(2) CPC for setting aside the ex-parte order, and under Section 151 CPC for staying the proceedings, were dismissed ; and, through Ist Appeal No.03/2011, he has challenged the order passed on 10.12.2010, whereby the applications under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance of 2001 (‘the ordinance’) seeking unconditional leave to defend the Suit, and under Section 5 of the Limitation Act, 1908, for condoning the delay in filing the same, were dismissed.
2. The relevant facts of the case are that respondent No.1 filed Suit No.121/2009 (old Suit No.2073/2009) on 15.10.2009 against respondents 2 to 7 and the appellant for recovery of Rs.28,656,720.00 in the Banking Court No.II at Karachi. Respondent No.2 was sued as the principal borrower ; whereas, respondents 3 to 7 and the appellant were sued as the guarantors of respondent No.2. On 21.10.2009, summons were ordered to be issued through all modes for 24.11.2009, when the matter was adjourned to 02.12.2009 for filing of the application for leave to defend as the statutory period of 30 days had not expired. Since no application for leave to defend was filed by any of the defendants, it was ordered on 02.12.2009 that the Suit will proceed ex-parte against them. On 25.01.2010, the appellant / defendant No.7 filed an application praying that respondent No.1 / plaintiff be directed to supply to him copies of the plaint and annexures thereto. An order was passed on this application on the same day by the Banking Court directing the plaintiff to provide the requisite copies to the appellant. Two other applications were also filed by the appellant on the same day, one under Section 12(2) CPC for setting aside the ex-parte order passed against him, and the other under Section 151 CPC for staying the proceedings till the decision of the said application. Counter affidavits to both these applications were filed by respondent No.1, to which the appellant filed his affidavits-in-rejoinder. On 08.02.2010, the appellant filed his application for leave to defend, copy whereof was received by the respondent No.1’s counsel on the same day, who filed the replication on 03.04.2010. On 16.08.2010, the appellant filed an application for condoning the delay in filing the application for leave to defend, on which notice was ordered on the same day.
3. Through the order passed on 07.08.2010, which has been impugned in Ist Appeal No.121/2010, the aforesaid applications filed by the appellant under Section 12(2) CPC and under Section 151 CPC were dismissed ; and, vide order dated 10.12.2010, which has been impugned in Ist Appeal No.03/2011, the applications for leave to defend the Suit and for condoning the delay in filing the same, were dismissed.
4. Mr. Abbadul Hussnain, learned counsel for the appellant, submitted that the ex-parte order passed against the appellant on 02.12.2009 was a void order as service upon him was not effected through any of the modes prescribed in Section 9 of the Ordinancein view of the fact that respondent No.1 / plaintiff had given wrong address of the appellant in the title of the Suit ; and, the purported publication was effected in newspapers with wrong address of the appellant. He contended that due to this reason, the appellant was completely unaware about filing of the Suit against him by respondent No.1 ; and, he came to know about this fact for the first time in Criminal Complaint No.32/2009 filed by respondent No.1before the same Court, wherein warrants had been issued against him and respondent No.7. He further contended that as soon as the appellant came to know about the Suit, he filed therein the above mentioned applications, including the one for providing to him copies of the plaint and its annexures. He also contended that the bailiff had not submitted his report nor was there any report available on record to show that the summons were received by the appellant ; and, despite the application filed by the appellant for the certified copy of the bailiff’s report, the same was not provided to him. It was urged that before passing the ex-parte order, the Banking Court should have directed the plaintiff to file fresh / correct address of the appellant. It was further urged that no evidence was on record to show either refusal or non-service of the summons ; there was nothing on record before the Banking Court to hold the service good upon the appellant ; in fact, no order was ever passed for holding the service good upon the appellant ; and, without first holding the service good upon him, the ex-parte order could not be passed.
5. The learned counsel argued that the record clearly shows that the appellant had not received the copies of the plaint and the annexures filed therewith till 25.01.2010, and on his application, the Banking Court directed the plaintiff on 25.01.2010 to provide the said copies to him ; therefore, the contention of the appellant was accepted by the Banking Court, and accordingly the limitation for filing the application for leave to defend had commenced from 25.01.2010. He further argued that in the above circumstances, the application for leave to defend filed by the appellant on 08.02.2010 was not barred by limitation, and the same was wrongly dismissed on this ground. As to the application for condoning the delay, the learned counsel submitted that the same was filed by way of an abundant caution. It was urged that the applicant’s counsel was not heard by the Banking Court when the applications for leave to defend and for condoning the delay in filing the same were dismissed, and the impugned order dated 10.12.2010 was passed in his absence and without hearing him. It was further urged that this fact can be ascertained from the said impugned order which does not show the presence of the appellant’s counsel on the date of hearing. The learned counsel argued that both the impugned orders were obtained by respondent No.1 through misrepresentation and fraud by giving wrong address of the appellant, and by deliberately preventing the appellant from appearing before the Court. In the end, it was urged that both the impugned orders are liable to be set aside so that the matter may be decided on merits.
6. In support of his above submissions, the learned counsel relied upon the cases of (1) Farzand Raza Naqvi and 5 others, 2004 SCMR 400, (2) Messrs Naeem Associates, through Proprietor and 6 others V/S Allied Bank of Pakistan Limited through Branch Manager, 2004 CLD 1672, (3) Haji Muhammad Yaqoob Akhtar V/S Habib Bank Ltd. and others, 2009 CLD 1699, (4) Monazam Bibi and 2 others V/S Zarai Taraqiati Bank Ltd. through Branch Manager, 2006 CLD 836, (5) United Bank Limited V/S Messrs Exim International and 7 others, 2012 CLD 471, (6) Fazal-e-Rabbi V/S Judge Banking Court and 4 others, 2010 CLD 972, (7) Saleem Ahmed V/S Zarai Taraqiati Bank Limited through Manager, 2007 CLD 872, (8) Messrs Liaqat Flour and General Mills through partners and 3 others V/S Messrs Muslim Commercial Bank Ltd., 2007 CLD 188, and (9) Khadim Hussain and 12 others V/S Gul Hassan Tiwano and 3 others.
7. Mr. Muhammad Zubair Quraishy, learned counsel for respondent No.1, vehemently opposed these appeals by raising a preliminary objection that the same are not maintainable in law, as both the impugned orders are interlocutory orders and not final orders, judgments or decrees. He submitted that it is well-settled that service through any of the modes prescribed in Section 9 of the Ordinance is deemed to be proper service upon the defendant, and the defendant cannot take the plea that he was not served through any particular mode. He further submitted that it is not the case of the appellant that summons were not issued through all the prescribed modes, therefore if he was not served through the other modes, even then service through publication in newspapers was rightly deemed to be proper service upon him by the Banking Court. He contended that since the appellant admittedly did not file his application for leave to defend within 30 days from the date of publication, his application was rightly dismissed being barred by time. He also contended that no appeal lies against the order of dismissal of an application under Section 12(2) CPC. In support of his submissions, Mr. Quraishy relied upon (1) Messrs Simnwa Polypropylene (Pvt.) Ltd. V/S Messrs National Bank of Pakistan, 2002 SCMR 476, (2) Messrs Huffaz Seamlen Pipe Industries Ltd. and 2 others V/S Messrs Security Leasing Corporation Ltd, 2002 SCMR 1419, (3) Javaid Tanveer Mughal V/S Agricultural Development Bank of Pakistan through Branch Manager and 3 others, 2004 CLD 748, and (4) National Bank of Pakistan V/S Messrs West Pakistan Tanks Terminal (Pvt.) Ltd., 2000 CLC 896.
8. In his rebuttal, learned counsel for the appellant submitted that these appeals are maintainable as the implications of the impugned orders are final in nature because no determination of the appellant’s valuable rights has taken place nor can his said rights be determined in the Suit in view of the impugned orders. As his alternate submission, he submitted that in view of the peculiar facts and circumstances of this case, these appeals can be converted into Constitutional Petitions by this Court in order to meet the ends of justice. He further submitted that it is well-established that the High Court has vast powers not only to mould the relief, but also to convert proceedings to any other remedy. He invited our attention to CMA No.1778/2013 filed by the appellant in Ist Appeal No.03/2011, praying that the said appeal be treated as a Constitutional Petition for advancement of justice. In order to substantiate this particular contention, the learned counsel relied upon the cases of (1) Karamat Hussain and others V/S Muhammad Zaman and others, PLD 1987 Supreme Court 139, (2) Muhammad Yusuf V/S Mst. Kharian Bibi, 1995 SCMR 784, (3) Capital Development Authority, Islamabad through its Chairman, 1994 SCMR 771, (4) Muhammad Aslam (through his L.R.) V/S Wazir Muhammad, PLD 1985 Supreme Court 46, (5) Mst. Amina Begum and others V/S Mehar Ghulam Dastgir, PLD 1978 Supreme Court 220,(6) Messrs United Bank Limited through authorized attorneys V/S Banking Court No.II and 2 others, 2012 CLD 1556, (7) Messrs Habib Bank Limited through authorized officers / attorneys V/S Messrs Victor Electronic Appliances Industries (Pvt.) Ltd. and another, 2011 CLD 1571, (8) Messrs Mumtaz Traders and 3 others V/S Messrs Habib Bank Limited and another, 2009 CLD 169, (9) Bank of Punjab V/S International Ceramics Ltd. and 4 others, PLD 2013 Lahore 487, (10) Ms. Rahima Iqbal V/S Banking Court No.II and 2 others, 2008 CLD 338, (11) Investment Corporation of Pakistan and 5 others V/S Judge, Banking Court No.I, Multan and 9 others, 2006 CLD 1161, and (12) Khadim Hussain and 12 others V/S Gul Hassan Tiwano and 3 others, 2013 CLD 981.
9. We have heard the learned counsel for the parties and have also examined the law cited by them at the Bar. In order to ascertain the factum of service of summons, the R&P of the Suit was called vide order passed on 08.10.2013, which was minutely examined by us with the able assistance of the learned counsel for the parties. Before discussing our observations with regard to the R&P, we would like to discuss briefly the four modes of service of summons stipulated in Section 9(5) of the Ordinance, which provides that on a plaint being presented to the Banking Court, summons in the prescribed form shall be served upon 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 would be advantageous to note that, except for publication in newspapers, all the first three modes have one distinctive and common feature, that is, a report confirming service or non-service of summons must come on record, 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 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 refused to receive the same. 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. We are of the firm view that this principle shall apply only in cases where compliance of Section 9(5) ibid is made as provided therein, and not where all the prescribed modes are not adopted simultaneously or any one or more of them is found to be defective.
10. The perusal of the R&P revealed that summons sent to the appellant through courier service were returned with the remarks that the appellant had shifted from the address at which the summons were sent ; summons were sent to the appellant through ordinary registered post instead of sending the same through registered post acknowledgement due, due to which there was nothing on record to show that the summons were duly served upon him, or he had refused to receive the same ; and, the bailiff had not submitted his report nor was there any report by him available on record to show that the summons were received by the appellant, or he had refused to receive the same. Thus, as far as the appellant was concerned, there was no evidence on record to show refusal on his part, or non-service or proper service of the summons upon him. By not sending the summons through registered post acknowledgement due as specifically provided in Section 9(5) ibid, the mandatory compliance of the said Sub-Section was not made ; and, by passing the ex-parte order against the appellant despite the said non-compliance, the Banking Court committed a grave illegality. The R&P also confirmed that respondent No.1 / plaintiff was directed by the Banking Court on 25.01.2010 to supply copies to the appellant, and this order was passed on the application filed by the appellant on 25.01.2010 seeking such direction.
11. It is to be noted that the learned counsel for respondent No.1 / plaintiff did not controvert any of the above facts revealed by the R&P, particularly the report of the courier service that the appellant had shifted from the address disclosed in the plaint, and not sending the summons through registered post acknowledgement due. He only insisted that publication in newspapers was sufficient service upon the appellant in terms of Section 9 of the Ordinance. There is no doubt that under Section 9(5)ibid, service through any of the modes prescribed therein is deemed to be a valid service, but this argument of Mr.Quraishy would have been acceptable had the summons been published with the correct address of the appellant, and had the summons been sent to the appellant through registered post acknowledgement due. The modes in which the summons were issued were defective due to the incorrect address of the appellant in the publication, which was of no consequence, and also as the same were not issued through registered post acknowledgement due as specifically provided in Section 9(5) ibid. Therefore, we are not inclined to agree with the learned counsel for respondent No.1 as the mandatory provisions of Section 9(5) ibid for issuance of summons were not complied with. Due to this reason, the cases of Messrs Simnwa Polypropylene (Pvt.) Ltd. (2002 SCMR 476) supra and National Bank of Pakistan (2000 CLC 896) supra relied upon by the learned counsel for respondent No.1, have no bearing to the present appeals.
12. From the above, it is clear that the appellant was not served through any of the modes prescribed in Section 9(5) ibid, and he received copies of the plaint and its annexures on 25.01.2010 in pursuance of the order passed on his application by the Banking Court. The learned Banking Court ought to have noticed this important aspect as it was duty-bound to ensure that service was properly effected upon the appellant, or he had deliberately avoided to receive the summons. However, instead of applying its mind by taking note of the above facts, which were admittedly on record, the ex-parte order was passed in a mechanical manner. We agree with the learned counsel for the appellant that service upon the appellant could not be held good and the ex-parte order could not be passed in the above circumstances. The learned counsel is also correct in saying that, before declaring the appellant ex-parte, no order was ever passed by the Banking Court for holding the service good upon him, as we have not been able to find any such order in the R&P. We have also noticed that the date of knowledge of the appellant has nowhere been mentioned in the impugned orders. The above shows that the learned Banking Court failed to exercise the jurisdiction that was vested in it by law, as the ex-parte order was passed in a mechanical manner without ensuring due compliance of the mandatory provisions of Section 9(5) ibid, without ensuring proper service upon the appellant, and without holding the service good upon him. The law cited by the learned counsel for the appellant on this point fully supports his case.
13. In the above context, we may refer to an unreported case decided on 04.01.2007 by the Hon’ble Supreme Court in Civil Petition Nos.139-K/2006 and 273-K/2006 (Mubarak Ali V/S First Prudential Modaraba), wherein the ex-parte decree against the defendant / customer was set aside on the ground that the bailiff had reported that the defendant was not residing at the address given in the plaint ; and, it was held 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 was followed by the Hon’ble Supreme Court in Civil Petition No.19-K/2009 (M/S Axleproducts Limited V/S M/S Allied Bank of Pakistan Ltd.) decided on 10.02.2009. It is, therefore, held that the summons in the present case were not issued in accordance with Section 9(5) ibid ; the appellant was not served as required under Section 9(5) ibid; service upon the appellant was never held good ; without first holding the service good upon the appellant, no further proceedings could be taken in the Suit nor can any adverse order be passed against him ; the ex-parte order against him is not sustainable and is liable to be struck down / set-aside; and, his application for leave to defend was within time.
14. It appears that the learned counsel for the appellant has rightly pointed out that he was not present nor was he heard when the order dated 10.12.2010 was passed, which has been impugned in Ist Appeal No.03/2011. We have noticed that the presence of the appellant’s counsel was not marked in the said order, and only the counsel representing respondent No.1 / plaintiff and respondent No.7 / defendant No.6 were present on that date. The contention of the learned counsel for the appellant is further supported by the fact that the said order is completely silent as to the submissions of the appellant. Interestingly, a perusal of the said order shows that it was not passed on the applications filed by the appellant, but was passed on the applications filed by respondent No.7 / defendant No.6 for leave to defend and for condonation of the delay, which were dismissed. Thus, the applications filed by the appellant for leave to defend and for condonation of the delay, were never taken up or decided, and the same are still pending before the Banking Court. It appears that the said applications filed by the appellant were not heard because of the ex-parte order passed against him earlier.
15. Vide order dated 07.08.2010, which has been impugned in Ist Appeal No.121/2010, the appellant’s applications under Section 12(2) CPC for setting aside the ex-parte order, and under Section 151 CPC for staying the proceedings, were dismissed by the Banking Court on the ground that the appellant had failed to show that respondent No.1 / plaintiff had played fraud upon the Court, or had misrepresented the facts. The other consideration, that found favour with the learned Banking Court while dismissing the said applications, was that process was issued simultaneously through all the prescribed modes ; and, the proceedings in Suit were under a special enactment, which could not be treated as ordinary proceedings. The findings of the Banking Court would not have been so had the record pertaining to the service upon the appellant been properly examined. The application filed by the appellant under Section 12(2) CPC ought to have been treated by the Banking Court as an application for setting aside the ex-parte order, as the appellant had specifically prayed therein for such relief. It is well-settled that if a wrong provision of law is mentioned in the title of an application, the same can be ignored and the application can be treated to have been filed under the relevant provision. In fact, the Banking Court ought to have set aside the ex-parte order suo motu in view the non-compliance of the mandatory provisions of Section 9(5) ibid. Here once again the learned Banking Court failed to exercise the jurisdiction that was vested in it by law. We have already held that the ex-parte order against the appellant is not sustainable; therefore, it cannot be allowed to remain in the field whether any element of misrepresentation or fraud was there or not on the part of respondent No.1.
16. It has been held time and again by the Hon’ble Supreme Court and High Courts that the Superior Courts have inherent and Constitutional powers to remedy and correct the wrongs committed by subordinate courts, and the High Court has vast powers in its inherent jurisdiction not only to mould the relief, but also to convert an Appeal, Constitutional Petition or Revision to any other remedy. The law cited on this point by the learned counsel for the appellant is fully applicable in the instant appeals. In this context, reference may be made to the case of Syed Ghazanfar Hussain through Legal Heirs and others V/S Nooruddin and others, 2011 CLC 1303, decided by a learned Division Bench of this Court which has a binding effect on us. We may also refer to Mst. Mubarak Salman and others V/S The State, PLD 2006 Karachi 678, which is also binding on us, whereinit was held inter alia by a learned Division Bench of this Court that once it has been found that Presiding Officers of the Courts have abused the process of the Court, then it is incumbent upon the Superior Courts, and it is one of the duties of the Superior Courts, to correct such wrongs of the subordinate courts by exercising whichever powers available with them either inherent, supervisory, revisional or Constitutional powers, either on the application of any party or under its suo motu jurisdiction ; the reason being that it was the act of the Court done in the abuse of process of Court, that is to be corrected by the Court itself or by the Superior Court as soon as it is brought to its notice through any source ; and,except for the superior Courts, there is no other authority which can correct such act of the subordinate courts.
17. Regarding the objection as to the maintainability of these appeals, we have already held that the learned Banking Court failed to exercise the jurisdiction that was vested in it by law, and the modes of service adopted by it were not in accordance with the mandatory provisions of Section 9(5) ibid. Therefore, the ex-parte order passed against the appellant and the order dated 07.08.2010 impugned in Ist Appeal No.121/2010 are liable to be set aside. In Habib Bank Limited (2011 CLD 1571) supra, a learned Division Bench of this Court was pleased to allow the Constitutional Petition against an interlocutory order passed by the Banking Court, by holding that no appeal or Constitutional Petition is provided in the Ordinance against an interlocutory order, but this Court in its extraordinary jurisdiction has power to correct the wrong, particularly where no efficacious remedy is available to the aggrieved party. In Messrs United Bank Limited (2012 CLD 1556) supra, wherein an interlocutory order passed by the Banking Court for consolidation of two Suits was challenged, a Division Bench of this Court held that Constitutional jurisdiction of this Court can be invoked by an aggrieved party who has no other remedy, and Constitutional Petition was maintainable as the Banking Court had failed to exercise the jurisdiction which was vested in it by the Ordinance. Both the above cases decided by the Division Benches of this Court are binding on us. In Bank of Punjab (PLD 2013 Lahore 487) supra, it was held by a learned Division Bench of the Lahore High Court that Constitutional Petition would be maintainable in exceptional circumstances in order to meet the ends of justice where the petitioner could show a blatant illegality in the impugned order, such as the Banking Court had not followed the express mandate of law or had exercised its powers outside the jurisdiction conferred upon it.
18. We deem it necessary to clarify that Constitutional jurisdiction of the High Court cannot be invoked against every interlocutory order passed by the Banking Court, nor can every appeal against such orders be converted into a Constitutional Petition. Such discretion and inherent powers are to be exercised by the High Court keeping in view the facts and circumstances of each case, and particularly in cases where gross and blatant violation of any of the provisions of the Ordinance is apparent in the impugned order for which no remedy is available to the aggrieved party, or where the impugned order is passed by the Banking Court by exercising such jurisdiction which was not vested in it by law, or where the Banking Court fails to exercise the jurisdiction which was vested in it by law.
19. As a result of above discussion, these appeals are converted into Constitutional Petitions ; the ex-parte order dated 02.12.2009 passed by the Banking Court in Suit No.121/2009 against the appellant is hereby declared as illegal and without jurisdiction ; and, the order dated 07.08.2010 impugned in Ist Appeal No.121/2010 is hereby set aside. Regarding Ist Appeal No. 03/2011, since we have held that the application for leave to defend filed by the appellant was within time and the same has not yet been heard or decided by the Banking Court, the learned Banking Court is directed to decide the said application strictly in accordance with law as expeditiously as possible after affording full opportunity of hearing to the parties. Accordingly, CMA No.1778/2013 is allowed, and CMA No.30/2011 stands disposed of in the above terms. Let the R&P be returned to the Banking Court for further proceedings in terms of this judgment.
J U D G E
J U D G E