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Petitioner: ROYAL RICE MILLERS LIMITED through CEO and 5 others VS Respondent: HABIB METROPOLITAN BANK LTD.
Court Name: Sindh High Court Judge(s): Muhammad Junaid Ghaffar Title:ROYAL RICE MILLERS LIMITED through CEO and 5 others vs HABIB
METROPOLITAN BANK LTD. Case No.:J.M. No, 55 of 2014 in Suit No, B-82 of 2010 and Execution Application No, 32 of 2012 Date of Judgment:2018-03-30 Reported As: 2018 CLD 933 Result: Order accordingly Judgment ORDER MUHAMMAD JUNAID GHAFFAR, J.---This Judicial Miscellaneous (J.M.) has been filed under section 12 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, ("F.I.O., 2001") read with sections 12(2) and 151, C.P.C. by the applicants impugning the ex parte Judgment and Decree dated 28.03.2012 passed in Banking Suit No,B-82 of 2010. 2. The precise case of the Applicants is to the effect that Applicants Nos,2 to 4 and 6 are residing abroad permanently, whereas, the Applicant No,5 is also not a resident of the address mentioned in the Plaint and according to the applicant while filing the plaint, the Respondent Bank deliberately failed to give the correct address, that is the registered and official address of Applicant No,1 Company and so also the address of other applicants. It is the case of the Applicants that due to such conduct of the Respondent Bank, the notices were not properly served, and therefore, the impugned Judgment and Decree which has been passed ex-parte is liable to be set aside. 3. Learned Counsel for the Applicants Nos,2 and 5 has contended that firstly no proper address of any of the Applicants was mentioned in the Plaint, whereas, the notices were not served properly either through Bailiff, courier or registered A/D, whereas, the diary of the Additional Registrar (Original Side) also reflects that no proper service was effected. Learned counsel has contended that the correct address i,e, the registered and Official Address of Applicant No,1 was very much available on record with the Respondent Bank; but despite this an improper address was mentioned in the Plaint, and therefore, misrepresentation and fraud has been committed. Learned Counsel has further contended that though some publication was made but it is the case of the
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Applicants that they were residing abroad, which fact was in the knowledge of the Respondent Bank as they had earlier made correspondence on those addresses, therefore, even the publication made in the local newspaper is no good service and in support of this contention, he has relied upon 2011 SCMR 2011 (Mubarak Ali v. First Prudential Modarba). Per learned Counsel notwithstanding these infirmities in the proper service regarding issuance of summons, subsequently on 30.04.2011, C.M.A. No,557/2011 was filed by the Respondent Bank for amendment of Plaint under Order VI, Rule 17, C.P.C., and without issuance of a fresh notice, the same was allowed, whereas, on the very next date, the Suit was decreed without proper application of mind and no reasons were mentioned in the order for grant of Judgment and Decree. According to the learned Counsel once an amended plaint was filed and accepted, the applicants in law were entitled for a notice and to contest the matter, if so needed. Per learned Counsel when the Applicant No,2 arrived in Pakistan and applied for a copy of "Fard" maintained by the Revenue Department of the properties only then it came to his knowledge that the properties in question are attached and on further enquiry, the Applicants came to know of such ex parte Judgment and Decree on 05.08.2014 and immediately action was taken and within 21 days of such notice, instant J.M was filed and restraining orders were obtained. In support of his contention, learned Counsel has relied upon 2009 CLD 1699, (Haji Muhammad Yaqoob Akhtar v. Habib Bank Ltd), 2007 CLD 1371 (Mst. Zarina Shamim v. Zarai Tarqiati Bank Ltd.), 2005 CLD 1119 (Shabbir Ahmed v. Zarai Tarqiati Bank Ltd.), 2003 CLD 254 (Quetta Silk Center v. Muslim Commercial Bank Ltd.), 2006 CLD 1403 (Zahid Mahmood through Attorney v. Zarai Tarqiati Bank Ltd.), 2011 CLD 790 (Shat Packages v. Bank Al-Falah Ltd.), 2005 CLD 930 (Muhammad Aslam Tahir v. Union Bank Ltd.), 2010 CLD 1057 (Muhammad Tahir v. Emirates Bank International PJSC), 1986 CLC 6 (Karamat Hussain v. Naik Khan Muhammad), 1996 SCMR 1703 (Akbar v. Gul Baran) and 1985 SCMR 1228 (Muhammad Anwar v. Abdul Haq). 4. Insofar as Counsel for Applicants Nos,1, 3, 4 and 6 is concerned, he has adopted the arguments of the Counsel for the other Applicants and additionally contended that the addresses were not properly mentioned in the Plaint and at least in law the Applicant No,1 was required to be arrayed on the registered address, whereas, subsequently, while filing execution application, the Respondent Bank has used and mentioned the correct registered address, which speaks mala fide and misrepresentation while obtaining Judgment and Decree against the Applicants. 5. On the other hand, learned counsel for the Respondent Bank has contended that the Applicants were fully aware of the proceedings inasmuch as they availed the finance facility and then defaulted and have only come before the Court after attachment of the properties, whereas, it is not disclosed nor supported by any document that why only on 05.08.2014, it came to their knowledge while allegedly obtaining "Fard" from the Revenue Department. According to the learned Counsel, copy of such application allegedly made is not on record nor a personal affidavit of the concerned person, who allegedly informed them about the attachment has been placed on record; nor even his name has been disclosed. Per learned counsel there are various applicants and it is only Applicant No,2, who has come before the Court and filed his affidavit through attorney, whereas, in the affidavit sworn before the Identification Branch, the same address is mentioned, which was disclosed in the Plaint. Therefore, no case is made out regarding any alleged fraud. Learned Counsel has further contended that summons were issued through all modes including TCS and Registered A/D, which were duly served, whereas, publication was made in two leading newspapers i,e, daily "JANG" and "DAWN" dated 24.06.2010, hence they were properly served as required in law. Learned Counsel has also referred to some correspondence made by the Applicants and has contended that on such Letters, the same address is mentioned in respect of another Company, which reflects the address on the Plaint was the address of the applicants and they were using the same. Learned counsel has further contended that no case for any fraud or misrepresentation within the contemplation of section 12 of F.I.O., 2001 or under section 12(2), C.P.C.
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is made out as according to the learned Counsel proper service was affected and upon their failure to seek leave to defend, the Court was well within its justification to decree the Suit as prayed and for that no reasons were required to be stated. Per learned Counsel it is settled law that in Banking Suit, service through any one of the modes is good service and there cannot be any exception to it as pleaded. In support he has relied upon 201 7 CLD 1247 (Abdul Sattar v. The Bank of Punjab through Branch Manager), PLD 2015 SC 401 (District Bar Association v. Federation of Pakistan), 201 7 CLD 10 76 (Rafaqat Ali v. Messrs United Bank Limited), 201 7 CLD 1140 (Dr. Javed lqbal and 2 others v. Askari Bank Limited through Attorney), PLD 1990 SC 497 (Messrs Ahmad Autos and another v. Allied- Bank of Pakistan Limited), 2004 CLD 1555 (Khawaja Muhammad Bilal v. Union Bank Limited through Branch Manager), 2015 CLD 818 (Messrs Waris Steel Mills through Proprietor and another v. Silk Bank Limited through Branch Manager), 2015 CLD 439 (Muhammad Afzal Deura v. Orix Leasing Pakistan and others), 2015 CLD 759 (Allied Bank of Pakistan Limited v. Sultan Ali J. Lilani) and 2002 SCMR 476 (Messrs Simnwa Polypropylene (Pvt.) Ltd. and others v. Messrs National Bank of Pakistan). 6. While exercising right of rebuttal, learned counsel for the Applicant has reiterated his arguments and further submitted that the service was required to be held good on the registered address of the Applicant No,1, whereas, the Applicants were out of country at the time of publication and admittedly on the application of amendment of Plaint no notice was ordered, therefore, entire due process is lacking in this matter, hence this is a case, wherein, appropriate relief must be granted by the Court. 7. I have heard all the learned counsel and perused the record. The primary dispute raised through this J.M is to the effect that no proper service was effected on the applicants, and therefore, the ex parte Judgment and Decree must be set aside. The precise facts as pleaded on behalf of the Applicants is to the effect that the addresses mentioned on the Plaint is not correct, whereas, the notices sent through TCS and registered Post A/D were not delivered and so also the notice served through Bailiff is also improper. Though on the face of it these grounds appear to be attractive insofar as the Applicants case is concerned; but one thing is to be kept in mind that these proceedings are not ordinary proceedings under the Code of Civil Procedure but under a Special law i,e, F.I.O., 2001, and therefore, they are to be governed within the contemplation of the relevant provisions of F.I.O., 2001. The procedure as provided in Order V, Rule 20, C.P.C. regarding substituted service and the case law developed on its interpretation is not relevant for the present purposes and it is only the special provision of section 9(5) of F.I.O., 2001, which is to be applied and followed. The honourable Supreme Court very recently in the case reported as Gulistan Textile Mills Ltd. v. Soneri Bank Limited 2018 CLD 203 through judgment dated 2.1.2018, has delved upon this issue and has come to the following conclusion which appears to be relevant for deciding the issue in hand. The relevant findings are at Para No,6 and reads as under; 6. This brings us to a discussion of section 7 of the Ordinance. Subsection (1) part (a) of section 7 ibid provides that in exercise of its civil jurisdiction a Banking Court shall have all the powers vested in a Civil Court under the C.P.C. One may argue that since, in exercise of its powers under the C.P.C., a Civil Court is empowered to pass an order for interim sale of property, furnished as security to a financial institution, before the final determination of the case under Order XXXIX, Rule 6 of the C.P.C. or whilst exercising its inherent jurisdiction under section 151 of the C.P.C., therefore by virtue of section 7(1)(a), which is legislation by reference, the Banking Court too would possess such power. This view is incorrect because according to the principle of harmonious interpretation the special law would take precedence over the general law (generalia specialibus non derogant). The Ordinance is a special law, and therefore its specific provisions will displace the general law which shall be deemed to be inapplicable. Reference in this regard may be made to the judgment reported as Neimat All Goraya and 7 others v. Jaffar Abbas, Inspector/Sargeant Traffic through S.P.,
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Traffic, Lahore and others (1996 SCMR 826). This position is also supported in section 4 of the Ordinance which provides that "the provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force". The reason behind this is logical in that the legislature, having devoted attention to a special subject and provided for all the peculiar circumstances that may arise in respect thereof (the legislature is presumed to know the law when enacting legislation), it cannot intend to derogate from such special enactment by allowing the general law to override the special law, unless it does so through express and specific mention of its intention to that effect. Thus when section 16 of the Ordinance has provided a comprehensive list of the specific types of orders (which do not include sale of property) that a Banking Court is empowered to pass with respect to property that is pledged, hypothecated etc. prior to the final judgment of a suit for recovery by sale, there is no doubt that such provision was intended to be all-inclusive, leaving no room to read in the power to sell by means of applying the general provisions of the C.P.C., i,e, Order XXXIX, Rule 6 or the inherent powers under section 151 of the C.P.C. However, the legislature did intend that nothing in subsections (1) to (3) of section 16 should affect the powers of the Banking Court under Order XXXVIII, Rules 5 and 6 of the C.P.C. to attach before judgment any property other than property mentioned in subsection (1) and therefore specifically provided for the above in section 16(4) of the Ordinance. The saving of certain provisions of the C.P.C. within Section 16, as done through section 16(4), augments the view that the said section was meant to be comprehensive and it does not permit sale before judgment. This opinion is further bolstered by the fact that section 7(1) of the Ordinance itself begins with the words "Subject to the provisions of this Ordinance, a Banking Court shall...". Section 7(2) further clarifies and provides that:- "A Banking Court shall in all matters with respect to which the procedure has not been provided for in this Ordinance, follow the procedure laid down in the Code of Civil Procedure, 1908 (Act V of 1908), and the Code of Criminal Procedure, 1898 (Act V of 1898)."(Emphasis supplied) Therefore a Banking Court is to follow the procedure laid down in the C.P.C. in all matters with respect to which the procedure has not been provided for in the Ordinance, whereas the procedure to prevent property which has been pledged or hypothecated etc. from being transferred, alienated etc. has been duly and exhaustively provided for in Section 16 of the Ordinance (save for section 16(4) thereof). Therefore, to this extent the application of the C.P.C. has been excluded. The Hon'ble Supreme Court in the aforesaid case has laid down a principle that if there are special provisions in the F.I.O., 2001, for a specific purpose (like holding service as good in this matter), then they are to be followed and not the provisions of C.P.C. for such purposes. For this it would be advantageous to refer section 9(5) of the F.1.0., 2001, which reads as under:- 9. Procedure of Banking Courts.- (1)................................................................... (2)................................................................... (3)................................................................... (4)................................................................... (5)On a plaint being presented to the Banking Court, a summons in Form No, 4 in Appendix 'B' to the Code of Civil Procedure, 1908 (Act V of 1908) or in such other form as may, from time to time, be prescribed by rules, shall be served on the defendant through the bailiff or process-server of the Banking Court, by registered post acknowledgement due, by courier and by publication in one English language and one Urdu language daily newspaper, and service duly effected in any one of the aforesaid modes shall be deemed to be valid service for purposes of this Ordinance. In the case of service of the summons through the bailiff or process server, a copy of the plaint shall be attached therewith and in all other cases the defendant shall be entitled to obtain a copy of the
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plaint from the office of the Banking Court without making a written application but against due acknowledgement. The Banking Court shall ensure that the publication of summons takes place in newspapers with a wide circulation within its territorial limits." 8. The aforesaid provisions provides that when a plaint is presented to the Banking Court, summons in the prescribed Form, as prescribed by Rules shall be served on the Defendants through bailiff or process server of the Banking Court, by registered post A/D, by courier and by publication in one English language and one Urdu language daily newspapers and service duly effected in any one of the aforesaid modes shall be deemed to be valid service for the purposes of this Ordinance. It further provides that in case of service of summons through Bailiff or Process Server, a copy of the Plaint shall be attached therewith and in all other cases, Defendants shall be entitled to obtain a copy of the Plaint from the office of the Banking Court without making a written application but against due acknowledgement, whereas, the Banking Court shall ensure that the publication of summons takes place in newspapers with a wide circulation within its territorial limits. It is to be appreciated that the Ordinance itself provides the mechanism for service and its effect. And this provision is somewhat different and is not akin to the provision of Order V, C.P.C., which deals with service of summons and its substituted service. Though the learned Counsel for the Applicants has made an attempt that service through Bailiff, TCS and Registered A/D was not proper, but it is not in dispute that notwithstanding this objection, the publication as required under the Ordinance in one English language and one Urdu language daily newspapers was made. Again it is not being disputed that both these newspapers have a wide circulation. The only objection in respect of service being held good through publication is to the effect that at the relevant time, the applicants were out of country. To that I may observe that firstly nothing has been placed on record, which could reflect that such information was communicated to the Respondent Bank within time or thereafter, that for the purposes of correspondence or publication their address has changed and now they are to be served on the address outside Pakistan. Mere mention of any foreign or different address in any of the correspondence with the Applicants by the Respondent is not relevant. Learned Counsel for the Applicants made efforts to justify the stance by relying upon the copies of the Passport, but in view of the aforesaid mandatory provisions of the Ordinance, they do not appear to be of any help. The law is very clear and firstly it provides that service through any of the mode shall be deemed to be valid service for the purposes of this Ordinance and secondly the only rider is that it should be in one English language and one Urdu language daily newspaper having wide circulation within the territorial limits of Banking Court. In this case all the requirements as per the Ordinance stands fulfilled, therefore. this argument regarding the applicants being out of country has no force. 9. Insofar as reliance on the case of Mubarak Ali (supra) in support of such contention is concerned; firstly it may be observed that the facts of that case were somewhat on a different footing, inasmuch as in that case it had come on record through Bailiff report that the Defendant/Customer was not residing on the given address, but was permanently residing at his native village and one person on the given address had categorically informed that the Defendant no more resides on such address. In that case, the honourable Supreme Court came to the conclusion that since the publication was made in newspapers, which do not reach the village of the Defendants, whereas, it was a matter of record that defendant was residing in his native village, and therefore, it was held that service was not properly affected and Judgment and Decree was set aside. Notwithstanding the aforesaid observation of the honourable Supreme Court it may be observed that in the Ordinance, the requirement is that publication should be made in a newspaper, which has a wide circulation within the territorial limits of the Banking Court and not of the Defendant. 10.Be that as it may, even otherwise, there is a plethora of case law of the Hon'ble Supreme Court
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as well as various High Courts, which have come to a contrary view and it has been consistently held that service through any one of the modes, as prescribed in section 9(5) of the F.1.0., 2001, is proper service duly affected and no plea can be taken otherwise by a Defendant customer. The first case in this context is reported as Ahmed Autos v. Allied Bank of Pakistan Limited (PLD 1990 SC 497), wherein the Hon'ble Supreme Court has been pleased to uphold this view in the following manner; 9. We are inclined to hold that the view taken in the last referred case of Karachi is in consonance with the spirit of the Ordinance and the Rules framed thereunder. It is a matter of common knowledge that defaulter borrowers in suits brought against them particularly by the financial institutions used to delay the disposal of the suits by avoiding the service of the summons. In order to expedite the disposal of the suits to be brought by the Banking Companies the Ordinance was promulgated, which contains special provisions and which inter alia 'provide that a suit brought by a Banking Company for the recovery of loan is to be tried in summary manner under Order XXXVII. Section 15 of the Ordinance empowers the Federal Government by a notification in the official Gazette to make rules for carrying out the purposes of the Ordinance. In pursuance whereof the rules have been framed. The underlined object of Rule 8 is to avoid the delay in the service of the summons and, therefore, it has been provided that the summons are to be issued simultaneously in three different modes referred to here in above, which is the requirement of the above rule. Obviously for the reason that if the summons is not served through a bailiff or by a registered post acknowledgement due, it would be served in any case by publication. In other words, the service is to be held good if a defendant is served by any of the above three modes of service provided for in Rule 8. The unamended Rule 8 was silent on the question, whether in order to hold service of summons good. it should be effected by all the three prescribed modes or whether service of the summos by one of the modes was sufficient. In the case of Messrs Allied Bank of Pakistan Limited v. Messrs Tahir Traders and 8 others reported in PLD 1986 Kar. 369 a learned Single Judge of the Sindh High Court had taken the view that mere publication of summons under Rule 8 would not be a proper service unless it was proved that defendant was avoiding the service of summons issued through bailiff and registered post or his whereabouts were not known. A contrary view was taken in a subsequent case referred to here in above namely in the case of Messrs Union Bank of Middle East Limited v. Messrs Zubna Limited and 3 others PLD 1987 Kar. 206, relevant portion of which has been quoted here in above. The framers of the Rules by, amending Rule 8 by SRO No,71(1)/88 dated 31-1-1988 have resolved the above controversy. It may be advantageous to reproduce the original rule and the addition made by the above S.R.O. dated 31-1-1988 which read as follows:-- (original Rule 8 as framed) "8. Mode of service of summons and notice.---The Reader shall, on receipt of a plaint, order immediate issue of summons and notices to the defendant simultaneously through the Bailiff of the Court, by registered of the post acknowledgement due and by publication, "an service in any aforesaid modes shall be deemed proper and valid service for the purposes of the Ordinance." (Underlining is ours and is the addition made by SRO No,71(1)/88 dated, 31-1-1988) 10. However, we may observe that it appears that neither the Courts below nor the learned A.S.C. appearing for the petitioners and the respondent/caveator have taken notice of the above amendment as it has not been referred to in the judgments nor it was referred before us during the arguments. However, we may point out that there was no need to amend the above Rule 8 as the correct legal position was that the service was to be held to be good service if it was effected by any one or more modes of service provided for in the above-quoted Rule 8. If we were to take a contrary view, it would be in conflict with the object of the Ordinance and the Rules framed thereunder, as it would make the service more difficult. It would instead of suppressing the mischief which prompted the framing of above Rule 8, would encourage the mischief as a defendant may
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successfully avoid service by one of the above three modes of service for considerable period by maneuvering. The above judgment was cited with approval to the extent of holding service as good, if it is done under any one of the modes as prescribed in the special law, in the case reported as Qureshi Salt and Spice Industries v. Muslim Commercial Bank Limited (1999 SCMR 2353). A learned Single Judge of this Court in the case reported as Union Bank of Middle East…
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