Allied Bank Ltd. vs Muhammad Azam etc.

Stereo.HCJDA-38

JUDGMENT SHEET

IN THE LAHORE HIGH COURT

BAHAWALPUR BENCH BAHAWALPUR

JUDICIAL DEPARTMENT

F.A.O. No.2 of 2025

Allied Bank Ltd.

v.

Muhammad Azam and another

JUDGMENT

Date of Hearing 19.1.2026

Appellant by Mr. Mahmood Ahmad Bhatti, Advocate.

Respondents by Mirza Muhammad Nadeem Asif, Advocate.

Rasaal Hasan Syed, J. This is an appeal in terms of section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

2.The appellant bank instituted a suit for recovery against the respondents under section 9 of the Ordinance supra in which the respondents entered appearance and filed application for leave to defend under section 10 thereof. While the matter was at the stage of arguments on the said application, the counsel for the appellant bank did not appear and the suit was dismissed for non-prosecution vide order dated 23.4.2019. An application for restoration of the suit was filed on behalf of the bank which also, it appears, was dismissed for non-prosecution vide order dated 10.9.2020. Instead of filing an application for restoration of the application filed for restoration of the suit dismissed for non-prosecution a fresh/second application for restoration of the suit was filed on

05.7.2021 against order dated 23.4.2019. This was dismissed by order dated 22.10.2024 by the learned Judge Banking Court-II, Bahawalpur. By this appeal all three orders dated 23.4.2019, 10.9.2020 and 22.10.2024 have been assailed.

3.Learned counsel for the appellant submits that the suit was illegally dismissed for non-prosecution as the fateful date was not a date of “hearing” and, therefore, the plea for restoration could not be declined on grounds of limitation and that law was wrongly applied. Learned counsel for the respondents contrariwise has supported the orders and requested for dismissal of the appeal.

4.Perusal of appended documents shows that the recovery suit of the appellant was set down for arguments on application for leave to defend. At such conjuncture on 23.4.2019 when the matter was kept for arguments learned counsel for the appellant bank was not available nor was there any representative on behalf of the bank present, the case was repeatedly called, and it was observed that on the preceding two dates also no one had entered appearance to represent the bank, court time was about to end; and with such observations the suit was dismissed for non- prosecution.

5.The order of dismissal of the suit as made in such circumstances shall be regulated by Rule 8 of Order IX, C.P.C. which prescribes that when the defendant appears and the plaintiff does not appear on the suit being called for hearing, the court shall make an order that the suit be dismissed unless defendant admits the claim or part thereof; in which case the court shall pass a decree against the defendant to the extent of such admission and where part of claim has been admitted shall dismiss the suit so far as it relates to the remainder. The term “hearing” has been

elaborated by the superior courts to mean a date for taking down of evidence or hearing arguments or where questions relating to the determination of the suit are under consideration and not a date for merely some interlocutory matter to be decided between the parties. Reference may be placed on the rule in Mst. Ghulam Sakina and 6 others v. Karim Bakhsh and 7 others (PLD 1970 Lah. 412). In United Bank Limited v. Messrs Khawaja Radio House through Proprietor and two others (2004 CLD 1609) it was observed that court had no jurisdiction to dismiss the suit due to non-prosecution on the date of hearing which was fixed for arguments on the application for grant of leave to appear and defend the suit and that the court could have at the most allowed the application for Leave to Appear and Defend in the absence of plaintiffs but could not dismissed the suit, which order, if passed, will be without jurisdiction. Similar view was taken in the case of Muhammad Iftikhar through Special Attorney v. Zarai Taraqiati Bank Limited through Chairman and another (2005 CLD 1454). In Qaim Ali Khan v. Muhamad Siddique (1987 SCMR 733) it was observed that the plaintiff could not be penalized for his absence on such date which could not be characterized as a date of hearing. In National Bank of Pakistan v. Abson Industries and others (2007 CLD 694) it was observed that suit could not be dismissed on the date fixed for hearing in interlocutory application. Same view was taken in the case of Hashim Khan v. National Bank of Pakistan (1992 SCMR 707) where it was observed that no suit could be dismissed or proceeded against ex parte if date was not for investigation of any matter germane to a suit for the purpose of investigation or controversy in the suit and that fixed for disposal of interlocutory matter was deemed not

to be a date fixed for hearing in the suit. It is further enunciated in Muhammad Saleem and 3 others v. Pak Brunei Investment Company Ltd. through Chief Manager/President (2022 CLD 84) and Faysal Bank Ltd. v. National Electric Company Pakistan and others (2023 CLD 879) that where a banking matter has been set down for arguments on application for leave to defend, the suit itself could not be dismissed for non-prosecution and that in such like circumstances the order so made would be in the nature of void order.

6.In the instant case the appellant filed an application for restoration of the suit which was dismissed for non- prosecution by order dated 23.4.2019. An application was filed for restoration thereof which also was dismissed for non-prosecution. Instead of filing a third application for restoration of the miscellaneous application the appellant, it appears, request was made for restoration of the suit itself in the application subsequently filed by recalling of order dated 23.4.2019. This was dismissed by the learned Judge Banking Court-II, Bahawalpur by observing that the application for restoration of suit was filed on 05.7.2021 after lapse of two years, hence, this was time-barred and that the appellant did not remain vigilant, therefore, application for restoration of the suit was being dismissed.

7.The reasons recorded as to limitation are not tenable in view of the declared law supra under which Article 181 of the Limitation Act, 1908 will apply in instances orders that were passed were without jurisdiction and not Article 163 of the said Act which is otherwise applicable to applications moved for recalling of orders properly made under Rule 8 of Order IX, C.P.C. Reference can be made to Habib Bank Limited through Manager v. Muhammad Hussain through LRs and another (2022 CLD 1013)

wherein it was observed that in the suit which was dismissed due to absence of plaintiff/bank on a date not fixed for hearing of the suit, the dismissal will be of no legal effect and there was no limitation to run against, the order was void, and nullity in law and as such order could be set aside by invoking the provisions of section 151 CPC and under Article 181 of the Limitation Act, 1908 which prescribed a period of three years for such type of applications. In Messrs Wazir Cotton Ginners and Oil Mills and others v. Bank of Punjab (2025 CLD 863) it was observed that restoration of the application for setting aside ex parte decree which was dismissed for non- prosecution was governed by Article 181 of the Limitation Act, 1908 providing three years limitation period. Being a void order, as such, the learned Judge Banking Court-II unjustifiably declined to restore the suit.

8.As to the contention of the learned counsel for the respondents that the second application for restoration of the suit could not be filed when the first application was dismissed for non-prosecution and the application for restoration thereof was also dismissed for non-prosecution this contention is without any force as dismissal of the miscellaneous application for restoration did not bar the appellant from filing a fresh application for recalling of order dated 23.4.2019 by which the suit itself was unjustifiably dismissed. Even otherwise this court having observed that the main order for dismissal of suit for non- prosecution on a date not fixed for hearing of the suit was illegal and without jurisdiction, the subsequent orders will have no legal effect. Reference can be made to the case of Yousaf Ali v. Muhammad Aslam Zia and 2 Others (PLD 1958 SC 104) where it was observed to the effect that if on the basis of a void order subsequent orders have been

passed either by the same authority or by other authorities, the whole series of such orders, together with the super structure” of rights and obligations built upon them must fall to the ground because such orders have as little legal foundation as the void order on which they are founded. Being so the impugned orders could not sustain at law.

9.As a result of the above the appeal is accepted, the impugned orders are set aside and the suit of the appellant shall be deemed to be pending in which proceedings shall be resumed from the stage it was dismissed for non- prosecution. Both sides shall appear before the competent court on 04.2.2026 for further proceedings accordingly.

(CH. MUHAMMAD IQBAL) (RASAAL HASAN SYED)

JUDGE JUDGE

Approved for reporting

JUDGE JUDGE

*Shahzad*