MUHAMMAD IFTIKHAR through Special Attorney vs ZARAI TARAQIATI BANK
This appeal challenges the dismissal of a suit for declaration and permanent injunction by the Banking Court. The appellant's suit was dismissed for non-prosecution and non-compliance with a prior order on a date fixed only for filing a reply to the respondent's application for leave to defend, not for the hearing of the suit itself. The core legal question was whether a suit can be dismissed for non-prosecution on a date that is not fixed for a hearing. The Lahore High Court held that the dismissal was legally unsustainable because the date in question was not a 'date of hearing' as contemplated under the law. Consequently, the Court set aside the dismissal order and the subsequent order refusing to restore the suit. The Court established the principle that a suit cannot be dismissed for non-prosecution on a date not fixed for hearing, and further held that where a foundational order is illegal and void, all subsequent orders based upon it must also fall to the ground, as they lack a valid legal foundation.
- Can a court dismiss a suit for non-prosecution on a date that is not fixed for the hearing of the suit?
- Does the invalidity of a foundational order render all subsequent orders based upon it void?
- Is a date fixed for filing a reply to an application for leave to defend considered a 'date of hearing' for the main suit?
- Financial Institutions (Recovery of Finances) Ordinance, 2001
ORDER
Briefly stated the facts of the case are that the appellant filed the suit for declaration with permanent injunction, against the respondent-Bank, before the learned Banking Court. The respondent-Bank filed the application seeking leave to defend the suit, which was adjourned to 17- 5-2004 for filing its reply by the appellant. However, on the said date, as neither anybody represented the appellant nor reply to the leave application was filed, therefore, the learned Banking Court proceeded to dismiss the suit for non-prosecution as well as for non-compliance of order dated 22-3-2004, vide order dated 17-5-2004. Appellant's application for restoration of the suit was also dismissed by the learned Banking Court, vide order dated 11-10-2004, hence the present appeal.
2. Learned counsel for the appellant has contended that the learned Banking Court did not adopt the procedure provided by the Financial Institutions (Recovery of Finances) Ordinance, 2001, therefore, the impugned orders are not sustainable. Conversely, the learned counsel for the respondents has refuted the aforesaid contention and has supported both the orders.
3. We have heard the learned counsel for the parties and examined the available record, which is sufficient to decide the present appeal. Admittedly, application for leave to defend the suit, filed by the respondent-Bank, was fixed for filing its reply on 17-5-2004, and the suit was not fixed for "hearing". Appellant's suit was dismissed on the date, which was not a "date of hearing" as contemplated under the law. It is settled law that a suit cannot be dismissed on the date, which was not a "date of hearing", as held in various pronouncements of the superior Courts. The learned Banking Court proceeded to dismiss the suit in complete oblivion of the established legal position on the subject. We feel that the learned Banking Court committed legal errors, while dismissing appellant's suit on 17-5-2004, thus, we are inclined to set aside the same.
4. As the basic order is illegal and void, therefore, all the ensuing orders will have no legal effect. It has been held in Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104 that:-- "And 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 superstructure of rights and obligations built upon them, must, unless some statute or principle of law recognizing as legal the changed position of the parties is in operation, fall to the ground because such orders have as little legal foundation as the void order on which they are founded."
5. In the above perspective, we feel that both the impugned orders are not sustainable in law and same suffer from legal defects, thus, we proceed to set aside both the orders.
6. Upshot of the above discussion is that the present appeal is allowed and both the impugned orders are set aside with no order as to costs. Resultantly, respondent-Bank's application for leave to defend and appellants suit shall be deemed to be pending before the learned Banking Court, who shall decide the leave application and then the suit, after hearing the parties and of course in accordance with law, within a period of six months from today. The parties are directed to appear before the learned Banking Court on 26-4-2005.