IN   THE   HIGH   COURT   OF   SINDH   AT   KARACHI

First Appeal No. 19 of 2012

Present:                

Mr. Justice Aqeel Ahmed Abbasi

Mr. Justice Syed Saeed-ud-din Nasir.

 

Date of hearing                 04.03.2015

Appellants:-                       1.       Combine Products.

2.       Fawad Wahab.

3.       Waseem Hashmi.

4.       Maqsood Ahmed Khan.

Through Mr. Muhammad Idrees Sukhera,

Advocate.

 

Versus

 

Respondents:-                  M/s.  SME Leasing Limited.

                                        Through Mr.Abdul Shakoor, Advocate

 

 

J U D G E M E N T

SYED SAEED-UD-DIN NASIR, J:           The appellants have filed the instant appeal under Section 22(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 impugning the validity of Ex-parte Order dated 02.5.2009, Judgment dated 14.12.2010 and Decree dated 15.06.2011passed by the learned Banking Court No.III, Karachi in Suit No.392 of 2008.

1.       Brief facts of the case are that the respondent at the request of the appellants No.2 and 3 granted lease facilities via (A) Lease Facility 1 to the tune of Rs.1,125,000 in respect of Tofee Machine, Cooling Table, Karhai, Gas Burner and other equipments vide sanction letter No.SMEBLtd/Leasing/IM/02 dated 09.03.2002 on purchase price of Rs.1,639,082/- repayable in 36 monthly lease rentals at the rate of Rs.37,628/- per month and subsequently was restructured for 4 years under Codicil to Lease Agreement No.048 dated 12.12.2003 repayable in agreed monthly installments. (B) Lease Facility 2 to the tune of Rs.1,500,000/- in respect of Bazooka Machine vide sanction letter No.SMEBLtd/ Leasing/IM/-02 dated 18.03.2002 on purchase price of Rs.2,415,910/- repayable in 36 monthly lease rentals at the rate of Rs.50,171/- per month and subsequently was restructured for 4 years under the Codicil to Lease Agreement No.049 dated 12.12.2003 repayable in agreed monthly installments. The appellants in lieu of the said facilities executed various documents vide Lease Agreement No.048dated 25.03.2002, Codicil to Lease Agreement/Account No.048 dated 12.12.2003, Lease Agreement No.049 dated 08.04.2002, Codicil to Lease Agreement/Account No.049 dated 12.12.2003, Amendment in Lease Agreement dated 25.03.2002 Amendment in Lease Agreement dated 08.04.2002 letter of revival dated 25.03.2002 letter of revival dated 08.04.2002 demand promissory note dated 25.03.2002 demand promissory note dated 08.04.2002 personal guarantees dated 25.03.2002 personal guarantees dated 08.04.2002 and sale agreement dated 08.04.2002.

2.       The respondent filed the suit for recovery of Rs.2,498,899/- with following prayers:-

a)       “Recovery of the sum of Rs.3,498,899/- (Rupees threes million four hundred ninety eight thousand eight hundred ninety nine only) from the appellants.

 

b)       Cost of finds in terms of Section 3 Financial Institution (Recovery of Finances) Ordinance, 2001 on the decretal amount from the date of default.

 

c)       Delivery of leased assets to the respondent for sale in market.

 

d)       Attachment and sale of the personal properties and assets of the appellants for the recovery of the decretal amount.

 

e)       Cost of the suit.

 

f)        Such other or further relief(s) that this honorable court may consider just and proper in the circumstances.”

 

3.       The summons were issued through all four prescribed modes for service against the appellants at the address given by the respondent in the title of the plaint, however, the service of summons through publication in two daily newspapers namely Dawn dated 06.1.2009 and Jang dated 06.12.2008 was held good and the suit was ordered to proceed exparte against the appellants by the learned Banking Court No.III vide order dated 14.01.2009 and the respondent herein was directed to file affidavit-in-exparte proof along with detailed breakup of amount due and payable by the appellants herein and original documents. Thereafter the appellants appeared before the learned Banking Court No.III and filed an application under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for the grant of unconditional leave to defend the suit on 26.01.2009. The appellants also filed an application under Section 5 of the Limitation Act read with Section 10(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, praying therein that the delay in filing the application for leave to defend the suit may be condoned as the same could not be filed in time as the appellants were never served with Court Notices and had no knowledge of the institution of the suit, therefore, they could not appear before the learned Banking Court No.III at Karachi to obtain leave within prescribed time.

4.       The reason as stated in the aforesaid application by the appellants was that they came to know about the filing of the recovery suit before the Banking Court No.III only when the Recovery Officer called the appellant No.2 on his cell phone on 24th January, 2009 at about 0910 PST and asked for the monthly recovery as it was due on 24th of every month.

5.       Learned counsel appearing for the appellants has drawn attention of the Court to the Order Sheet of the Banking Court No.III at Karachi dated 14.1.2009, which reads as under:-

“Case called. Counsel for the plaintiff is present. Summons were issued by all four prescribed modes for service against the defendants. Summons were served upon defendants through publication in two daily newspapers “Dawn” dated 06.12.2008 and “Jang” dated 06.12.2008. However, summons were not served through personal service by Bailiff as well as Registered Post/Courier Service. 30 days statutory period for filing of leave to defend application has been expired. No leave to defend application filed on behalf of the defendant. Therefore, suit shall proceed exparte against the defendant. The plaintiff bank is directed to file complete statement of breakup on next date of hearing. Case put off to 18.02.2009/”

 

6.       Perusal of the aforesaid Order Sheet reveals that service of summons was held good upon the appellants only through publication in two daily newspapers namely Dawn dated 06.12.2009 and Jang dated 06.12.2008. However, admittedly, summons were not served upon the appellants through any one of the other modes i.e. through personal service by bailiff, registered post/courier service or by way of pasting on the given address. Thereafter, the learned Banking Court No.III, Karachi, after expiry of 30 days of publication ordered that 30 days statutory period for filing of leave to defend application has expired, therefore, the suit shall proceed exparte against the defendants. Learned Banking Court No.III also directed the plaintiff bank to file complete statement of breakup of the amount due and payable by the defendants to the plaintiff on the next date of hearing.

7.       On 26.1.2009 Mr. Idrees Sukhera, Advocate filed the application for leave to appear and defend the suit, an application under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001along with an application for condonation of delay under Section 5 of the Limitation Act. 1908 read with Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 along with Vakalatnama, which was heard and dismissed by the learned Banking Court No.III, Karachi vide order dated 02.5.2009.

8.       Mr. Idrees Sukhera, Advocate has interlia argued that since service of summons was held to be good on the defendants/appellants only through publication in Newspapers, whereas no notice was served upon the appellant through any other mode of service, the learned Banking Court had ample discretion to extend the time for filing an application for leave to appear and defend the suit if satisfied that the defendants did not have knowledge of filing of the suit by the plaintiff. It has further been submitted by learned counsel that the appellant had a prima facie case for grant of leave to defend application, however, through impugned order, has been deprived of a right of fair trial and to defend the case on merits. For the sake of convenience Section 10(2) and proviso of the same are reproduced as under:-

 

“10(2)           The defendant shall file the application for leave to defend within thirty days of the date of first service by any one of the modes laid down in sub-section (5) of section 9:

          Provided that where service has been validly effected only through publication in the newspapers, the Banking Court may extend the time for filing an application for leave to defend if satisfied that the defendant did not have knowledge thereof”

 

9.       The learned  counsel appearing for the respondent, while contradicting the arguments advanced by the learned counsel for the appellants has inter alia argued that despite the fact that the summons was ordered through all four prescribed modes for service against the defendants, however, the service was held good upon the defendants only through publication, which is good service under the law i.e. under Section 9(5) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 and if the defendants failed to file application for leave to appear and defend the suit under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 within 30 days, his defence is liable to be struck of and the suit is liable to be decreed against the defendants. At the end of his arguments the learned counsel for the respondents submitted that the defence of the appellants was rightly struck off by the learned Banking Court No.III and the suit was rightly decreed. He further submitted that the appeal is liable to be dismissed. While concluding his arguments, he placed reliance on 2002 SCMR 476 (Simnwa Polypropylene (Pvt) Ltd. V. National Bank of Pakistan) wherein it is held that service on the defendant in any one of the modes prescribed in Section 9(3) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances), Act 1997, the similar provision in the earlier statute which was in pari materia with Section 9(5) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 shall be deemed to be valid for the purpose of service.

10.     We have heard the arguments of the learned counsel for the parties, perused the material available on the record of the case and have come to the conclusion that admittedly the service of summons was validly affected only through publication through the aforesaid two newspapers on the present appellants on 06.12.2008 though summons were issued by all four prescribed modes against the present appellants. The Banking Court No.III, Karachi vide order dated 14.1.2009 held the service good on the appellants and after passing exparte orders against them upon expiry of 30 days statutory period for filing of leave to defend application, ordered that the suit should proceed exparte against the appellants. Therefore, the aforesaid case law cited by the learned counsel for the respondent will lend no support to his case inasmuch as the same is silent as far as concession contemplated by proviso to Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 is concerned.

11.     The appellants filed their leave to defend application under Section 10 of the Financial Institutions (Recovery of Finances), Ordinance, 2001 along with application for condonation of delay under Section 5 of the Limitation Act, 1908 read with Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 on 26.1.2009 i.e. 21 days after the period of limitation had expired according to the learned Banking Judge, after holding the service good on the appellant only through publication. In these circumstances we are of the view that the Banking Court No.III, Karachi though rightly held service good on the appellants under Section 9(5) of the Financial Institutions (Recovery of Finances), Ordinance, 2001, however it should have taken lenient view while deciding the application for condonation of delay filed by the present appellant under Section 5 of the Limitation Act, 1908 read with Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 as the summons were not served through normal mode of service upon the appellants and were got served only through publication, whereas, the proviso of Section 10(2)  confers ample powers on the Banking Court to condone the delay in filing the application for leave to appear and defend the suit when the service is made through publication in the Newspapers.

12.     Under the Financial Institution (Recovery of Finance) Ordinance, 2001, where service upon a party has been effected through normal modes of service, except substitute service through publication in the Newspaper, it is incumbent upon such party to make an application under Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 within a period of 30 days from the date of service to the Banking Court asking for leave to defend the suit. However, such application shall contain valid reason for seeking condonation of delay, and the matter shall contain substantial triable issues which may provide a plausible defence in favour of such party. However, where service is effected only through publication on such party in the Newspaper, the Banking Court has been authorized in terms of proviso to Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001, to extend time for filing an application for leave to defend the suit upon being satisfied that the defendant requesting for condonation of delay in filing leave to defend application, did not have any knowledge about the pendency of proceedings against him before the Banking Court.

13.     We have also observed that the learned Banking Judge while dismissing the application of the appellant for condonation of delay vide; impugned order dated 02.05.2009 has treated the same only as an application under Section 5 of the Limitation Act, 1908 whereas the said application was also read with Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001. However, the learned Banking Judge has totally ignored the possibility of giving concession to the appellant as contemplated by proviso to Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 and has stated in the said order that “The explanation put forth by the defendant is not confidence inspiring to invoke the jurisdiction under Section 5 of the Limitation Act as each day’s inability to come to the Court has not been set forth  - - - - - -“ . We see no reason as to why the concession of proviso to Section 10(2) supra was not taken into consideration while deciding this application.

14.     The object and intention of the legislature by insertion of proviso to Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 is that a concession with respect to limitation be provided inasmuch as there is a possibility that an aggrieved party might not have read such publication in the Newspaper and would have genuinely acquired knowledge through some other source, after the publication of the notice, when the period of limitation for filing an application under Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 had already elapsed.

15.     These provisions with regard to service upon the defendant as contemplated by Section 9(5) and 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001 are not to be read disjunctively from the rule of natural justice “audi alterm partem” which is to be read into every statute regardless of whether or not the same is contemplated in the statute. The Courts are required to interpret every provision of a statute in such a manner that it should suppress mischief and advance remedy and not the other way around. A similar view has been taken by the learned Single Judge of the Hon’ble High Court in the case of Khuda Bux Vs. Banking Court No.2 Multan reported in 2000 CLC 1013 in a case of Banking jurisdiction.

 

16.     Having given anxious consideration to the facts and circumstances of the case we are of the considered view that the findings of the learned Judge of the Banking Court are erroneous and against the spirit of Section-9 and proviso to Section 10(2) of the Financial Institutions (Recovery of Finances), Ordinance, 2001. The application for leave to defend the suit was dismissed by the Banking Court without any proof of service upon the defendant and as such the learned Judge of the Banking Court acted in a haste while dismissing the same and decreeing the suit.

17.     Moreover, after insertion of Article 10-A into the Constitution of the Islamic Republic of Pakistan by 18th Amendment to the Constitution and which is to be read into every law of the land, every individual of the state is entitled to fair trial and due process. Under Article 4 of the Constitution, every individual of state is entitled to be dealt with in accordance with law as well.

18.     We have come across similar situation, as prevailing in the instant case, when the Banking Court without making an effort to get the defendant(s) served through ordinary modes of service as provided even in the Banking Law, in a haste, or at the instance of the plaintiff directly resort to substitute mode of service through publication and also hold such service as valid and good service upon defendant, once the citation is published in the Newspaper, and if no leave to defend application is filed within prescribed period of limitation starting from the date of publication, it proceeds to decree the suit. We may observe that the learned Banking Courts shall always endeavour to first exhaust all possibilities of service on the defendant through first three modes of service while resorting to substitute mode of service through publication so that service through other modes should not totally become redundant, and shall as a last resort, publish the citation in the Newspaper, if service could not be effected on the defendant by first three modes. This will not only reduce multiplicity of litigation and delay in disposal of case(s), but will also meet the requirements of principle of natural justice and right of fair trial as enshrined under the Constitution of Islamic Republic of Pakistan.

19.     The learned Banking Court, in the instant case, while dismissing the application through mechanical process, had itself caused multiplicity of proceedings, which should be avoided at any cost, whereas it also caused delay in disposal of the case, which is against the spirit of special law with regard to recovery of loans advanced by the financial institutions and as such the order was perverse.

20.     In view of facts and circumstances of this case and the legal position as stated hereinabove by consent of learned counsel for the parties, instant appeal was heard and disposed of at Katcha Peshi stage, and vide our short order dated 4th March, 2015, we allowed the appeal and set aside the impugned ex-parte order dated 02.5.2009 passed on the leave to defend application, set aside the Judgment and Decree dated 14.12.2010, and 15.06.2011 respectively and remanded the case to the learned Banking Court No.III to decide the same on merits afresh, after providing opportunity of hearing to the appellants in accordance with law, and above are the reasons of our short order dated 04.3.2015.

 

 

JUDGE

                                                                     

JUDGE

Fida, P.S.