Messrs ZULFIQAR ASSOCIATES Ltd. And Messrs HUDAYBIA TEXTILE MILLS Ltd.

ORDER

ZAFFAR HUSSAIN MIRZA, J.--This order will dispose of (Messrs Zulfiqar Associates Limited v. Allied Bank of Pakistan Limited and 3 others ,and Civil Petition for Leave to Appeal No.362 of 1984 (Messrs)

Hudaybia Textile Mills Limited v. Special Judge (Banking), Lahore and 3 others, as these petitions seek to call in question a common order of the Lahore High Court, Lahore, dated 24-1-1984 by which the Writ Petitions filed by the to petitioners were dismissed.

2. The brief facts relevant for present purposes are that Messrs Premier Cloth Mills Limited, Faisalabad, imported parts and accessories of textile machinery from the U.K. For --.68,756 on the letter of credit, dated 18-12-1975 opened by them with the Allied Bank of Pakistan Limited, respondent, in these petitions. The machinery was imported but before it could be released to the aforesaid importing company was reconstituted and three independent and separate companies were constituted as under:--

(1) M/s Zulfiqar Associates Limited, Faisalabad.

(2) Hudaybia Textile Mills Limited, Nazimabad, Faisalabad.

(3) A.B.M. Associates Limited, Dijkot Road, Mian Muhammadabad, Faisalabad.

According to the petitioners, as a result of this reconstitution and emergence of three companies with the approval of the competent Court and in terms of the resolutions of the shareholders the liability for repayment of the liabilities of the defunct company devolved on the petitioners in each petition to the extent of 1/3rd and similarly they were entitled to the release of the imported goods to the same extent.

3. On 30-11-1981, Allied Bank of Pakistan Limited brought a suit for the recovery of Rs.44,95,039 in the Court of a Special Judge, Banking at Lahore in which the to petitioners in these petitions alongwith Messrs A.B.M. Associates Limited and nine others were impleaded as defendants. The suit was based on the Letter of Credit, dated 18-12-1975 for the import of parts and accessories mentioned above, which was issued at the instance of Messrs Premier Cloth Mills Limited. The petitioners on being served with summons put in appearance before the Court and made applications under Order XXXVII, rule 3 of the Civil Procedure Code for leave to defend the suit. It is pertinent to observe that in their application the petitioners admitted their liability to the extent of 1/3rd in the following terms:-- "4. That the defendant is liable to repay 1/3rd of the amount incurred in Import of the Machinery by the plaintiff bank in accordance with the resolution of the shareholders, dated 2-3-1976, as approved by the learned High Court vide judgment, dated 26-3-1976."

The learned Special Judge by his order, dated 5-1-1982 allowed the applications of the petitioners, but considering the aforementioned admission of liability, the learned Judge made the permission to defend subject to the condition that each one of them would deposit 1/3rd of the suit amount in the Court.

4. Being dissatisfied with this order the petitioners filed constitutional petitions in the Lahore High Court which were dismissed in limine by the impugned order. The High Court held that the impugned orders before it were "justified in law as well as on facts established on record". It was observed that "the exercise of discretion one way or the other by a Court of competent jurisdiction cannot ordinarily be interfered within exercise of constitutional jurisdiction until the Court has acted in a perverse, fanciful or arbitrary manner." The petitioners have now come up in these petitions with a prayer for permission to appeal.

5. In support of the petitions learned counsel for the petitioners mainly contended that the trial Court was not justified in imposing the condition to the order for grant of leave to defend to the effect that 1/3rd of the amount claimed in suit be deposited in Court as according to the learned counsel in the circumstances of the case, the Court ought to have granted unconditional leave to defend the suit. Learned counsel elaborated his argument by submitting that the amount of loan granted by the plaintiff bank in the sum of --.68,756 in the year 1975 was a secured loan as the machinery imported by the predecessor company of the petitioners was pledged with the bank.

Reference was made to some decisions of the High Court and this Court elucidating the principles applicable to the question whether leave to defend be granted in suit and whether such leave be burdened with terms in the nature of deposit or security.

6. After hearing the learned counsel at length we, however, are unable to disagree with the High Court that the grounds urged are not sufficient for exercise of constitutional jurisdiction to upset an order are not satisfied that any error of jurisdiction was committed in passing the impugned order before the High Court and the contentions advanced before us clearly relate,' to the merits of the controversy which fell squarely within the jurisdiction of the special Court to decide.

7.For these reasons, we find no merit in these petitions which are accordingly dismissed.