Meezan Bank Ltd vs Syed Hassan Mehmood Shah

HCJD A -3 8

JUDGMENT SHEET

IN THE LAHORE HIGH COURT

BAHAWALPUR BENCH

BAHAWALPUR

JUDICIAL DEPARTMENT

RFA No.176 of 2021 (Meezan Bank Ltd. & others versus Syed Hassan Mehmood Shah)

JUDGMENT

Date of hearing 24-01-2022

Appellant by Mr. Muhammad Basi t Baba r Chughtai, Advocate.

Respondent by Sh. Zaheer ud Din Babar, Advocate.

SULTAN TANVIR AHMAD, J:– Through instant Regular First Appeal filed under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the “Ordinance”), the appellants have challenged validity of order dated 14-09-2021 passed by learned Judge Banking Court, Bahawalpur, (the “Banking Court”).

2.Precise facts of the case are that respondent filed suit for declaration and permanent injunction with respect to Car (Suzuki Alto) bearing No.LEA-19/A-1554 (the “leased vehicle”) against purported repossession of the leased vehicle. Appellants filed application in terms of section 10 of the Ordinance for grant of unconditional leave to defend the suit. Upon filing of this application, learned Banking Court forthwith proceeded to dispose of the suit without deciding the application for leave to defend the suit.

3.Learned counsel for appellants, inter alia, contends that impugned order has been passed in violation of section 10

of the Ordinance and it was obligatory for learned Banking Court to decide the application for leave to defend before final decision of the suit. Further contends that application for leave to defend, containing serious questions of law and facts, necessitates to grant leave. Further added that learned trial Court has failed to take into account that respondent is a chronic defaulter and an amount of Rs.10,05,977/- (as on 10-08-2021) is payable by the respondent, as per terms of the finance agreement.

4.On the other hand, learned counsel for respondent has vehemently opposed this appeal and contended that leased vehicle has been illegally repossessed by the appellant as well as no deliberate default is committed by the respondent and shortfall of the installments is attributable to pandemic COVID- 19; therefore, instant appeal having no substance is liable to be dismissed.

5.We have heard learned counsel for the parties at length and perused the record.

6.The pivotal question raised in the present appeal for consideration, is as to whether the learned Banking Court is bestowed with the power to grant final relief in the suit without considering the application for leave to defend. The negatively mandated provision of section 10 (1) of the Ordinance suggests that a defendant can only defend the suit once he obtains leave from the Court. Application for leave to defend can be filed under sub-section (2) of section 10 of the Ordinance, which is required to contain all the particulars prescribed in sub-sections 3 to 5 of section 10 of the Ordinance. Upon filing of application for leave to defend by the defendant to such suit and replication by the plaintiff, the procedure given in sub-sections 8 to 11 of section 10 of the Ordinance is required to be followed by the learned Banking Court, which is as follows: -

“(8) Subject to section 11, the Banking Court shall grant the defendant leave to defend the suit if on consideration of the contents of the plaint, the application for leave to defend and the reply thereto it is of the view that substantial questions of law or fact have been raised in respect of which evidence needs to be recorded.

(9)In granting leave under sub-section (8), the Banking Court may impose such conditions as it may deem appropriate in the circumstances of the case, including conditions as to deposit of cash or furnishing of security.

(10)Where the application for leave to defend is accepted, the Banking Court shall treat the application as a written statement, and in its order granting leave shall frame issues to the substantial questions of law or facts, and, subject to fulfillment of any conditions attached to grant of leave fix a date for recording of evidence thereof and disposal of the suit.

(11)Where the application for leave to defend is rejected or where a defendant fails to fulfill the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant.

7.Reading of above, clearly reflects that learned Banking Court is obliged to consider application for leave to defend and to accept or reject the same keeping in view if any question of law and facts requiring evidence is raised therein as well as if the conditions given in sub-sections 3 to 5 of section 10 of the Ordinance are fulfilled. Aforesaid depicts that the Banking Court is required by law to examine application for leave to defend before proceeding to decide the suit. This position of law has already been settled by this Court in the

cases titled “ABID AZIZ KHAN and 2 others Versus BANK OF PUNJAB through Branch Manager” (2007 CLD 997), “SHAHID SALEEM Versus BANK AL-FALAH LIMITED” (2019 CLD 181), “PASSCO Versus OMER BILAL TRADERS (Pvt.) Limited” (2007 CLD 492) as well as various other cases.

In “Abid Aziz Khan’ case (supra), this Court has observed as follows: -

“The position, therefore, which emerges from reading section 10 (ibid) is clear and unambiguous, the defendant is required to file PLA, in accordance with the conditions enumerated in section 10 of the Ordinance, the Banking Court is required to examine it and if it fulfils the requirements set there to place it on record. But once PLA is part of record, it is the cardinal duty of the Banking Court, to consider the plaint, the PLA and the replication filed, and thereafter proceed to grant leave conditional or unconditional or reject the application under section 10 (11) of the Ordinance. The Banking Court, therefore, is required to consider and decide the application on merits, it has been left with no other choice in this context.”

8.Similar conclusion was arrived at by this Court in one of the recent judgments in case titled “BANK OF PUNJAB through Attorney Versus MANZOOR QADIR and another” (2021 CLD 1037). The relevant portion is as under: - “However, once the Banking Court has examined the plaint, is satisfied that the same is in order as per the requirements of Section 9 and has proceeded to issue summons to the defendant under section 9(5) of the Ordinance, pursuant to which a defendant has filed the PLA and a date of hearing of the PLA has been fixed, it ceases to take any further step under the provisions

of the C.P.C. without first deciding the PLA in accordance with the requirements of Section 10 of the Ordinance. The Banking Court is duty bound to first grant or reject the PLA in terms of section 10(9), 10 (11) or 10(12) of the Ordinance before taking any other step towards the progress and continuation of the suit”.

9.Somewhat, in the circumstances similar to the present lis, learned Division Bench of this Court in case titled “THE BANK OF PUNJAB through General Attorney versus Malik UMER FAROOQ” (2014 CLD 198) has held as under: - “To our minds the Banking Court has granted the respondent his final relief without giving the appellant Bank an opportunity to file its preliminary leave to defend application as stipulated under section 10 of F.I.O. 2001 and without hearing the case of the appellant Bank against whom the respondent was seeking its relief. Furthermore we find that the Banking Court has failed to take into consideration that under the F.I.O. 2001, the Banking Court has to determine, in the first instance whether or not the defendant should be granted leave to defend in the case as some substantial question of law and fact have been raised for which evidence needs to be recorded.”

10.Reading of the impugned order reflects that learned Banking Court has opted to dispose of the case without considering any plea raised in application for leave to defend, which is not tenable in law.

11.Resultantly, instant RFA is allowed and impugned order is set aside. This matter is remanded to learned Banking Court, where suit and application for leave to defend shall be

deemed to be pending, with direction to decide the same after following the law hereinabove enumerated, preferably within a period of two months from the receipt of certified copy of this order. As far as, request of learned counsel for respondent as to the temporary possession of the leased vehicle is concerned, the same shall also be seen by learned Banking Court, as per the law.

(MUZAMIL AKHTAR SHABIR) (SULTAN TANVIR AHMAD)

JUDGE JUDGE

Approved for reporting

JUDGE JUDGE

Rao Azmat/*