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Petitioner: EMIRATE BANK INTERNATIONAL VS Respondent: DOST MUHAMMAD COTTON MILLS
Court Name: Sindh High Court Judge(s): G. H. Malik Title: EMIRATE BANK INTERNATIONAL vs DOST MUHAMMAD COTTON MILLS Case No.:Suit No,621 of 1986 Suit No,67 of 1987 C.M.As. Nos.6260, 6038, 6039 of 1986
and 1487 of 1987, 2437, 2438 and 2439 of 1991 Date of Judgment:1992-03-12 Reported As: 1993 MLD 54 Result: Applications dismissed Judgment ORDER ' The plaintiff has filed this suit for recovery of Rs,59,516,984.73 under the provisions of the Banking Companies (Recovery of Loans) Ordinance, 1979. The defendant No,1 has been sued as principal borrower and the rest of the defendants have been sued as guarantors. ' Upon the admission of the suit, an order was passed on the 18th September, 1986, to issue summons under Order 37, C.P.C. read with Rule 8 of the Banking Companies (Recovery of Loans) Rules. In pursuance of the order, summons in all three modes prescribed by Rule 8, namely, through Bailiff, by registered A/D post and by publication in newspaper, were issued. ' The summons was published in the 'Morning News' on the 16th October, 1986; and, according to the record, was issued on 9th October, 1986 and dispatched on the 13th October, 1986, for service by registered A.D. Post. As regards service by bailiff, the defendants Nos.1, 2 and 7 were admittedly served with the summons on the 20th October, 1986; the defendants Nos.8 and 9 were served on the 12th March, 1987; while the service on the defendants Nos.4 and 6 was effected, according to the bailiffs report, by service on a Clerk of defendant No,4. However, the defendants Nos.4 and 6 deny that any summons was served upon them by the bailiff. ' The defendants Nos.1, 2 and 7 filed an application (C.MA. 6260/86) under Order 37, Rule 3, C.P.C. on the 30th October, 1986; the defendants Nos.6 and 4 filed similar applications (C.MA. 6038/86 and 6039/86 respectively) on the 11th November, 1986; and the defendants Nos.8 and 9 made an application under Order 37, Rule 3, C.P.C. (C.MA. 1483/87) on the 16th March, 1987. These applications were then fixed for hearing from time to time in Court but, before they could be heard
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and disposed of, the defendants Nos.1, 2, 4, 6, 7, 8 and 9 made applications (C.MA. 2437/91, C.MA. 2438/91 and C.MA. 2439/91) under section 5 of the Limitation Act on the 12th May, 1991. ' At the hearing of the above applications under section 5 of the Limitation Act, Mr. Sajid Zahid, the learned counsel for the plaintiff, raised two preliminary objections, namely, (1) that the applications are barred by limitation and (2) that, in any case, in the circumstances of this case, the defendants must be deemed to be served by registered post and that the applications under Order 37, Rule 3, C.P.C. would be barred by limitation on the basis of service by registered post. Mr. Sajid Zahid submitted that Article 181 of the First Schedule to the Limitation Act applies to applications under section 5 of that Act. He contended that Article 181 applies to all applications not otherwise provided for and not merely to applications under the provisions of the Civil Procedure Code. In support of this submission, he relied on the cases of Messrs United Bank Limited v. Mrs. Rehmat and another 1991 MLD 1803, M. Imam-ud-Din Janjua v. The Thal Development Authority through the Chairman, T.DA., Jauharabad PLD 1972 SC 123 and Shaukat Mahmood on the Limitation Act, 3rd Edition at p.990. Mr. Mansoorul Arifm, the learned counsel for the defendants, on the other hand, contended that Article 181 applies only to applications under the Civil Procedure Code and relied on the cases of Hansraj Gupta and others v. Official Liquidators of Dehra Dun, etc. Company ILR 54 All. 1067 (PC), Naeem Finance Ltd. and another v. Bashir Ahmad Rafiqui, Administrator, Muslim Insurance Company Ltd. and another PLD 1971 SC 8 and Jam Khurshid Khan v. The Province of West Pakistan through the Divisional Forest Officer, North Forest Division, Rawalpindi PLD 1973 Lah. 131. ' In the case of Hansraj Gupta v. Official Liquidators, the Official Liquidators had made an application under section 186(1) of the Indian Companies Act, 1913, praying that the appellants who, as executors of one Lala Raghumal, were in the list of contributories, should be ordered to pay certain sums as money due from the deceased to the company. Their Lordships of the Privy Council observed as follows:- "The application of the Liquidators must, therefore, be treated as an "application made" under section 3; and the next inquiry must be whether any period of limitation is "prescribed therefor by the First Schedule" to the Indian Limitation Act. It is common ground that the only Article in that schedule which could apply to such an application is Article 181; but a series of authorities commencing with Bai Manekbai v. Manekji Kaveasji (1880) ILR 7 Born. 213) has taken the view that Article 181 only relates to applications under the Code of Civil Procedure, in which case no period of limitation has been prescribed for the application." ' and having held, on the facts of the case, that even if Article 181 did apply to the application, it was not barred by limitation as it was made within three years from the date of the order of winding up, went on to observe that:-- "The result is that from either point of view the application by the liquidators, if otherwise properly made under and within the provisions of section 186 of the Indian Companies Act is not one which must be dismissed by reason of section 3 of the Indian Limitation Act. It is either an application made within time, or it is an application made for which no period of limitation is prescribed. The case may be a casus omissus. If it be so, then it is for others than their Lordships to remedy the defect." ' In the case of Naeem Finance Ltd. v. Bashir Ahmad Rafiqui, the question was whether an application under section 106 of the Insurance Act, 1938, was governed by Article 181 of the First Schedule to the Limitation Act and, therefore, barred by limitation. Wahiduddin Ahmad, J. speaking for the Court of three Judges, including Hamoodur Rahman, C.J., held that under section 106 of the Insurance Act, no suit is instituted but only an application is moved and that:--- "The only Article which applies to applications is Article 181 of the Limitation Act, but there is consensus of opinion that this Article only applies to applications under the Code of Civil
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Procedure. Thus under Schedule I of the Limitation Act no period of limitation has been provided for an application moved under the above provision of law." ' The question of the application of Article 181 to applications other than those made under the provisions of Civil Procedure Code came up again for consideration before the Supreme Court in the case of M. Inam-ud-Din Janjua v. Thal Development Authority, which was decided by a Bench of two learned Judges including Hamoodur Rahman, C.J. The question there was whether an application under section 20 of the Arbitration Act was governed by Article 181. Hamoodur Rahman, C.J. observed, in relation to the decision of the Privy Council in Hansraj Gupta's case, that the Privy Council did not express any definite opinion as to this question and that in 1933 when the Privy Council delivered its opinion, the Arbitration Act, 1940, had not come into existence nor had the Third Division of the First Schedule to the Limitation Act been amended so as to provide for applications under the Arbitration Act (vide Articles 158 and 178 in the Third Division of the First Schedule to the Limitation Act); and, having examined the cases reported in AIR 1941 Pesh. 3 and PLD 1959 Kar. 465 and PLD 1968 Azad J&K 21, held as follows:-- "Having examined these decisions with care, we, to, have come to the conclusion that, after the incorporation of Articles 158 and 178 in the First Schedule to the Limitation Act, which make specific provision for applications under Arbitration Act, 1940, it is no longer possible to say that the Articles contained in the Third Division of the First Schedule to the Limitation Act apply only to applications under the Code of Civil Procedure, because, all the other Articles contained in this Division apply to such applications. With the incorporation of Articles 158 and 178, that reason no longer holds good, and therefore, the scope of Article 181, which is in the nature of a residuary Article, must necessarily be extended to all kinds of applications for which no specific period of limitation has been provided for either in the First Schedule to the Limitation Act or in any other Statute." ' In the case of Jam Khurshid Khan v. Province of West Pakistan, Aftab Hussain, J. observed, obiter dictum, that the ratio in the case of West Pakistan WAPDA v. Omar Sons Ltd. PLD 1970 Lah. 398 to the effect that Article 181 applies to an application under section 8 of the Arbitration Act was shaken by the latest pronouncement of the Supreme Court in Naeem Finance Ltd. v. Bashir Ahmad Rafiqui. The subsequent Supreme Court judgment reported in PLD 1972 SC 123 was not referred to. ' In the case of Messrs United Bank Ltd. v. Ali Habib & Company 1988 CLC 292, it was conceded by the counsel that no period of limitation applied to an application under section 5 of the Limitation Act but it was objected that the application was not maintainable as it had not been filed alongwith the application for leave to appear and defend the suit. Ahmed Ali U. Qureshi, J. held that an application under section 5 of the Limitation Act cannot be rejected only because it was filed after the application under Order 37, Rule 3, C.P.C. This decision, therefore, is not germane to the question whether or not Article 181 of the Limitation Act applies to applications other than those under the Code of Civil Procedure. In the case of United Bank Ltd. v. Mrs. Rehmat, the objection was that the application under section 5, having been filed seven months after the filing of the application under Order 37, Rule 3, C.P.C. was not maintainable because it was belated. It was observed that the counsel for the plaintiff was not able to show that the application under section 5 of the Limitation Act, though belated, was barred by time and that "no period is prescribed for filing an application under section 5 of Limitation Act, iherefore the residuary Article 181 of Limitation Act, will be applicable which prescribes a period of three years from the date when the right to apply accrues to an applicant". On the facts of the case, it was held that the application was filed within seven months and was, therefore, within time. The observation was not strictly necessary and, thus, obiter dicta; and the two decisions of the Supreme Court, mentioned above, were, apparently, not cited before the learned Judge. ' In view of the pronouncements of the Supreme Court on the question of application of Article 181 to applications other than those under the Code of Civil Procedure, it is not necessary to consider the
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observations made in 1988 CLC 292 and 1991 MLD 1803; but it has become necessary to decide which of the two judgments of the Supreme Court is binding and, therefore, must be followed. The case of Naeem Finance Ltd. was decided earlier, in 1971, by a Bench of three Judges while the case of M. Imam-ud-Din Janjua was decided later, in 1972, by a Bench of two Judges. Similar situation arose in the case of Usman v. Labour Appellate Tribunal and another 1984 CLC 2782. It was there contended, on the basis of a decision of a Bench of three Judges, reported in PLD 1974 SC 139, that the petition under Article 199 of the Constitution was incompetent as the decision of the appellate Court could not be interfered with under Article 199 of the Constitution. A Division Bench of this Court, consisting of Salim Akhtar and Hyderali Pirzada, JJ., held that normally the rule is that where the law is laid down differently in two different decisions of the Supreme Court by Benches of different strength, the decision of the larger Bench shall be followed as the binding decision on the subject. Following this principle, the Division Bench followed, in preference to the decision of a Bench of three Judges in PLD 1974 SC 139, the judgment of a Full Bench of the Supreme Court in Rahim Shah's case PLD 1973 SC 24 where it had been decided that the High Court will interfere if the act done or proceeding undertaken is in violation of any law or any established principle of law, that the term "law" was not confined to "statute", and that in holding the inquiry the Superior Courts are not restricted to an examination of the record of the case and may even record evidence to determine the legality of the act done or proceeding undertaken. ' Ajmal Mian, J. (as he then was) followed the same principle in the case of Amir Ali v. Mrs. Alima Ahmed PLD 1981 Kar. 150 and held that since the case of Muhammad Yusuf v. Abdullah PLD 1980 SC 298 had been decided subsequently by a larger Bench of the Supreme Court, he was bound to follow it in preference to an earlier decision of a smaller Bench in Alif Din v. Khadim Hussain 1980 SCMR 767. In appeal from that case, it was contended, in Alima Ahmed v. Amir Ali PLD 1984 SC 32, on behalf of the appellant/landlord, that whether it be the law laid down in Muhammad Yusuf's case which is applicable or that laid down in Alif Din's case, the tenant admittedly was in default in payment of rent. It was held by the Supreme Court that, on the facts of the case, the tenant was clearly in default even after allowing him the benefit of the law laid down in Muhammad Yusuf's case. Therefore, although appeal from the judgment of the High Court was allowed, the validity of the principle that a decision of a larger Bench of the Supreme Court is binding on the High Court was in no manner questioned.---See PLD 1984 SC 32. ' The question as to which of the two decisions of the Supreme Court, namely, those in Muhammad Yusuf's case and Alif Din's case, was binding also arose in the case of ABCO International Corporation of Pakistan v. Mrs. Salima Hashim Raza 1984 CLC 2483. It was there argued that the High Court should follow the decision in Muhammad Yusuf's case because it was decided by a Bench of four Judges while Alif Din's case was decided by a Bench of two Judges. The argument was not accepted; and, while holding that, on the facts of that case, no occasion arose for relying upon one or the other of those decisions of the Supreme Court, it was observed that it was not possible for the High Court to make such distinction between two judgments of the Supreme Court, that both those judgments have the force of law, that, as shown by later decisions of the Supreme Court in Alima Ahmed v. Amir Ali PLD 1984 SC 32 and Mrs. Zehra Begum v. Messrs Pakistan Burmah Shell Ltd. PLD 1984 SC 38, both Muhammad Yusuf's case and Alif Din's case have been treated as laying down the law and have been noted. ' The observation in 1984 CLC 2483 that it is not possible for the High Court to make a distinction between two judgments of the Supreme Court is contrary to the principle followed in Usman v. Labour Appellate Tribunal and in Amir Ali v. Mrs. Alima Ahmed. It may, with respect, be added that it is not only possible but necessary, in case of conflict between two judgments of the Supreme Court, rendered by Benches of varying strength, to decide which of the two judgments has a
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binding effect and, therefore, must be followed. In 1984 CLC 2483 it was not, in the event, necessary to make the choice. ' The passage, cited in 1984 CLC 2483, from the judgment in PLD 1984 SC 32, is, in fact not an observation by the Court but a submission by a counsel; and the finding in the case was that even after benefit of the law as laid down in Muhammad Yusuf's case was allowed to him, the tenant was a defaulter. It was obviously not necessary, in the circumstances of the case, to decide whether the law with regard to applicability of an agreement of tenancy. after the expiry thereof, was as laid down in Muhammad Yusufs case or in Alif Din's case; and the case was decided on the basis that, in any event the tenant was a defaulter. ' Needless to say, the question of following the one or the other decision of the Supreme Court arises only when there is a conflict in those decisions on a given principle of law. No such situation arose in PLD 1984 SC 38. In that case the question for consideration was whether the provisions of section 15(2)(viii) of the Sindh Rented Premises Ordinance, 1979, would not override the terms of the lease deed which had provided that the tenant would not be evicted if it continued paying the rent reserved and observed the covenants and it was held that the landlord could not repudiate the agreement and seek eviction of the tenant under the Ordinance while the lease deed had not expired. The cases of Muhammad Yusuf and Alif Din, in so far as they had bearing on the question before the Court were referred to because on the particular question there was no conflict but concurrence in the two judgments. The conflict in those two decisions, it may be noted, is in respect of the efficacy or applicability of the terms of a lease after its expiry and not during its currency. ' Mr. Mansoorul Arfin invited my attention to the case of Muhammad Yusuf v. Muhammad Saghiruddin Qureshi 1987 CLC 76 where it has been observed by Ally Madad Shah, J. that the law declared by the Supreme Court in Muhammad Yusufs case was endorsed by the Supreme Court in Alima Ahmed v. Amir All and in Abdul Sattar v. Malik Muhammad Afzal PLD 1985 SC 148. The learned Judge also followed the law declared in Muhammad Yusufs case and observed that the consensus of the view propounded by the Supreme Court was that the terms and conditions of the statutory tenancy following the extinguished contractual tenancy are regulated by the relevant law. ' The rule that in case of conflict in the judgments of the Supreme Court, the. one by larger Bench has to be followed was affirmed by the Supreme Court of India in the case of Mattulal v. Radhe Lal AIR 1974 SC 15%. Bhagwati, J. (as he then was) speaking for a Division Bench of the Supreme Court of India, observed that it was not possible to reconcile the observation in the two cases cited in argument and that "that being so, we must prefer to follow the decision in 1966 MPLJ 26 as against the decision in AIR 1969 NSC 186 as the former is a decision of a larger Bench than the latter". Again in Ganapati Sitaram Bailvalkar v. Waman Shripad Mage AIR 1981 SC 1956 the matter under consideration was held to be concluded by the decision, by a Bench, of four Judges, in AIR 1973 SC 772, to the effect that the transfer of tenancy after it ceases to be contractual was not permissible under the Bombay Rent Act; and the argument that that judgment was dissented from in subsequent decision AIR 1976 SC 2229 by a Bench of three Judges was repelled because the latter case was concerned with the provisions of another statute and it was observed:--- "We may further state that the case first noted is a four Judge decision and is binding on a bench of three Judges. No question of any dissent therefore arises." ' The result of the above discussion is that the decision of the Supreme Court in PLD 1971 SC 8 is binding upon me. It has, therefore, to be held that' ' Article 181 of the First Schedule to the Limitation Act applies only to applications made under the provisions of the Code of Civil Procedure. It, therefore, does not apply to applications under section 5 of the Limitation Act.~~ ' Another preliminary objection raised by Mr. Sajid Zahid was that in any event the applications for leave to appear and defend the suit are barred by limitation because as shown by the order of the
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Additional Registrar, dated the 18th November, 1986, summons by registered A/D post was issued on the 9th October, 1986, and must be deemed to have been served upon the defendants. He relied upon the case of Muhammad Sulaiman Malik and another v. Royal Trust Corporation of Canada and others 1979 CLC 48. Mr. Mansoorul Arfin objected that the ground regarding service by post had not been taken in the counter-affidavit of the plaintiff and, therefore, could not be urged during the arguments. He further contended that the record does not show that the defendants were served by registered A.D. Post because no A.D. Cards are on record. However, the facts that summonses were sent by registered A.D. post and that the envelopes containing the summonses were not returned by the post office were not contested. In so far as the service by registered post is a matter of record, it was not necessary for the plaintiff to raise the question in its counter- affidavit; and, in any case, the Court can suo mote take notice of questions relating to limitation. As for the A.D. Cards, it is common knowledge that in large number of cases, if not in almost all cases, A.D. Cards are seldom returned by post office.---See 1981 CLC 1495. It remains to be considered whether in the circumstances of the case, a presumption arises that the envelopes containing the summonses were delivered to the defendants. Section 27 of the General Clauses Act, 1897, provides:-- "Where any Central Act or Regulation made after the commencement of this Act authorises or requires any document to be served by post then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post." ~~As stated above, summons by registered A.D, post were, in this case, dispatched on the 13th October, 1986, according to the noting on the copy of the summons which is on record. The fact that summons were sent in properly addressed and prepaid 'envelopes may be presumed---See Article 129, illustration (e), Qanun-e-Shahadat, 1984. Therefore, a presumption arises under section 27 of the General Clauses Act that summons were duly served on the defendants by registered post A.D. It is true that the presumption under section 27 of the General Clauses Act is rebuttable but not only is nothing said about service by post in the affidavits of the defendants, no attempt was made by their counsel to rebut the presumption or to ask for any opportunity to do W. The defendants are represented by a senior and experienced counsel and it is inconceivable that the question of service by post was not present to their minds when they made their applications under section 5 of the Limitation Act. A further presumption that the envelopes containing the summons were delivered to the defendants on the day next after posting, viz 14th October, 1986, may also be drawn under the provisions of section 27---See PLD 1959 Kar. 629. ' Mr. Mansoorul Arfin then submitted that the service by publication was not due service because the summons published in the 'Morning News' did not come to the knowledge of the defendants. In support of the proposition that the summons must come to the knowledge of the defendants before the publication thereof can be said to be good service, Mr. Arfin relied on the decisions in G. Shanmukhi v. Utakor Venkatarama Reddi AIR 1957 A.P. 1, S. Sampuran Singh v. Chief Settlement Commissioner AIR 1960 Pb. 153, Zaran Begum v. Saidal Khan PLD 1975 Azad J&K 122 and Mst. Afzal Begum v. Y.M.C.A. PLD 1979 SC 18. ' In AIR 1957 A.P. 1, the defendant was served by publication under Order 5, Rule 20, C.P.C. and, upon his non-appearance, suit was decreed against him ex parte. Upon his application to set aside the decree on the ground that he had no knowledge of the suit, it was held that service by publication may or may not be "due" service according to the circumstances of the case and that it was open to the defendant to establish that he never avoided service and that, in any case, notice of the
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claim had not been brought home to him; and it was, upon analysis of the provisions of Order 5 of the C.P.C., observed:--- "If, of course, the defendant has been deliberately keeping out of the way and substituted service is ordered in such a case, it certainly would be "due" service." ' and further that the effectuality of the service under Order 5, Rule 20, C.P.C. is--- "for the purpose of enabling the Court to go on with the suit. But its effectuality against the defendant depends solely on whether he avoided service or whether as a matter of fact he came to know of the suit otherwise." ' In PLD 1975 Azad J&K 122, the view taken as to the effect of service under Order 5, Rule 20, C.P.C. is similar to the one adopted in AIR 1957 A.P. 1 and it has been observed:--- "This is to emphasise how essential it is to make every possible endevour to get the defendant…
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