Messrs AHMAD AUTOS and another vs ALLIED BANK OF PAKISTAN LIMITED

ORDER

' AJMAL MIAN, J.--Leave to appeal is sought against the order dated 9-12-1986 passed by a Division Bench of the Lahore High Court in F.A.O. No,230 of 1986 filed by the petitioners, dismissing the same and maintaining the orders dated 17-3-1985 and 9-6-1986 passed by a learned Single Judge of the said High Court while acting as the Special Banking Court, hereinafter referred to as the `Special Court'.

2. The facts to be noted are that the respondent filed suit, bearing No,C.O.S. 7/85, hereinafter referred to as the 'suit' for the recovery of Rs,11,80,190.84 with future interest under the Banking Companies (Recovery of Loans) Ordinance, 1979, hereinafter referred to as the 'Ordinance' before the Special Court in respect of the financial facilities provided by it by way of opening Letters of Credit on behalf of the petitioners. In terms of Section 7 of the Ordinance the suit was to proceed under the summary procedure provided for in Order XXXVII in the First Schedule to the Code of Civil Procedure, 1908, hereinafter referred to as the C.P.C. Upon the registration of the suit in terms of Rule 8 of the Banking Companies (Recovery of Loans) Rules, 1980, hereinafter referred to as the 'Rules' summons were simultaneously issued to the petitioners through bailiff of the Court, by registered post acknowledgement due and by publication for 4-6-1985. The above publication appeared in daily Urdu newspaper `Jang' Lahore of 17-4-1985. The summons by the other two aforesaid modes could not be served as the shop was found closed by, the bailiff and the postman. On 4-6-1985 the suit had come up for hearing before the Special Court when Mr. Syed Tasawar Hussain Bukhari, Advocate, had put in appearance on behalf of petitioner No,2 and filed his memo of appearance.

However, no application for leave to defend was filed as required under Order XXXVII Rule 3 C.P.C.

The learned Special Court in the absence of any application for leave to defend the suit, which was to be filed within 10 days from the date of service of the summons passed the judgment and decree in favour of the respondent on the same day.

3. After that on 13-6-1985 the petitioners filed two applications C.M.A. No,76-B/1985 and P.LA. No,19- B/85. The above first application was under Order XXXVII Rule 4 read with Order IX Rule 13 C.P.C. For setting aside of the above judgment and decree dated 4-6-1985, whereas by the second application the petitioners sought leave to appeal and defend the suit. The above applications were taken up by the Special Court on 29-1-1986 when it was pointed out to the learned counsel appearing for the petitioners that the above judgment and decree were not ex parte and, therefore, the above first application was not competent which legal position was conceded by him. However, the second application was heard and by an order dated 29-1-1986 the same was dismissed. Against the above order dated 29-1-1986 the petitioners filed aforesaid F.A.O., which was dismissed by a Division Bench of the Lahore High Court. The petitioners have, therefore, filed the present petition for leave to appeal.

4. Sh. Shaukat Ali, learned A.S.C. Appearing for the petitioners, has made the following submissions in support of the above petition:-

(i) That as the suit was to proceed under Order XXXVII and as the summons were issued in Form No,4 given in Appendix B to the C.P.C., the service of the summons through the publication could not have been held good as the mendatory requirement of the above Form No,4, namely, that it should be accompanied with a copy of a plaint was not complied with.

(ii) That Rule 8 of the Rules is violative of Order XXXVII and, therefore, the same could not have been pressed into service for effecting service of the summons.

(iii) That in any case the Special Court could not have passed the decree without examining the merits of the respondent's claim in suit and without recording evidence.

5. In furtherance of the above first submission Sh. Shaukat Ali, learned Sr.A.S.C. Has referred to the provision of Rule 2 of Order XXXVII C.P.C., which provides that the summons shall be in Form No,4 in Appendix B. It may be advantageous to reproduce the above Form No,4, which reads as follows:- 'To (Name, description and place of residence)

' WHEREAS has instituted a suit against you under Order XXXVII of the Code of Civil Procedure, 1908, for Rs, balance of principal and interest due to him as the of a of which a copy is hereto annexed, you are hereby summoned to obtain leave from the Court within ten days from the service hereof to appear and defend the suit, and within such time to cause an appearance to be entered for you.

In default whereof the plaintiff will be entitled at any time after the expiration of such ten days to obtain a decree for any sum of Rs and the sum of Rs for costs together with such interest, if any, from the date of institution of the suit as the Court may order.

' Leave to appeal may be obtained on an application to the Court supported by affidavit or declaration showing that there is a defence to the suit on the merits, or that it is reasonable that you should be allowed to appear in the suit. Given under my hand and the seal of the Court, this....................... Day of 19

6. There is no doubt that in the above Form it has been stated that a copy of the plaint is annexed but in our view the factum that a copy of plaint cannot be enclosed for effecting service by publication, does not in any way affect the validity of service as it is one of the modes of service provided for under Rule 8. In the instant case the above Rule 8 was strictly complied with as has been held by the Special Court in its order dated 29-1-1986, the relevant portion of which reads as follows:- "It is the established position on record that the compliance of the above rule had been strictly made in the case in hand. On both the summons issued in the ordinary course and by registered post the report is that the shop is lying locked for the last some time. It has been admitted before me today that the defendants had not intimated the plaintiff of change of any address and of their having abandoned the shop long time ago. The plaintiff was, therefore, justified in giving the shop's address of the defendants which was the last known address and obviously the summons could be sent to the same address only.

' Again the summons have also been published in Form 4, of Appendix B of the Code of Civil Procedure by issue thereof in the daily (Jang of Lahore, dated 17-4-1985). The defendants being admittedly residents of Lahore, where they were carrying on business the publication in a daily newspaper of Lahore was apparently the only called for requirement."

7. However, Sh. Shaukat Ali has referred to the case of M/s. United Bank Limited v. Ali Habib and Company reported in 1988 CLC 292 in which a learned Single Judge of the Sindh High Court while acting as the Special Court has held that the service of the summons could not be held good unless the defendant is served with a summon in Form 4 with a copy of plaint. The relevant portion of the above judgment reads as follows:- "18. With due respect I am unable to agree with the views of my learned brother expressed in the aforesaid case of Union Bank of Middle East Ltd. That publication of summons in Form No,4 is sufficient service or that non-supply of a copy of the plaint would not be impediment in filing application under Order XXXVII, Rule 3, C.P.C. By the Defendant. I have already pointed, that provisions of Order XXXVII, C.P.C. Being penal in nature have to be strictly construed. Therefore, the summons are not only to be served in Form 4, but copy of the plaint is also to be attached and served upon the Defendant alongwith the summons. If the Defendant is expected to move application without knowing what is the plaint, he will not be able to file an affidavit disclosing such facts as would make it incumbent upon the plaintiff to prove his case or which the Court may deem fit to be in support of the application. In case of failure to disclose such facts, the Court can even summarily reject the application under Rule 3 of Order XXXVII, C.P.C. Therefore, in my opinion, the service against the Defendant cannot be considered good unless summons have been served upon him in Form 4 alongwith a copy of the plaint either in person or his agent or in the manner prescribed under Order V Rule 17, C.P.C. And Rule 141 of the Sindh Chief Court Rules Original Side."

8. However, a contrary view was taken by another learned Single Judge of the Sindh High Court earlier referred to in the above-quoted passage from the above judgment, namely, in the case of M/s. Union Bank of Middle East Limited v. M/s. Zubna Limited and 3 others reported in PLD 1987 Kar.

206 wherein the learned Judge made inter alia the following observation:- " I am, therefore, of the view that the summons and notices shall be issued to the defendants simultaneously through bailiff, by registered post A.D. And by publication. It is the statutory requirement and it must be complied with. Once it is shown that the summons or notices have been issued by the office, the service on the defendant by anyone of the three modes will be considered as service on the defendant. The question that the plaint cannot be annexed in the case of publication should not be held to be an impediment in holding such service to be good inasmuch as, firstly, the copy of the plaint has been annexed to the summons sent to the defendant through bailiff as well as by registered post and secondly, the defendant is on notice to collect the copy of the plaint from the office and, in any case, there can be no impediment in making just an application for leave to defend, even without a copy of the plaint, within the statutory period. The grounds for leave to defend may be submitted later on, after the receipt of the copy of the plaint."

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 hareinabove, 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 summons by one of the modes was sufficient. In the case of M/s. Allied Bank of Pakistan Limited v.

M/s. 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 hereinabove namely in the case of M/s. Union Bank of Middle East Limited v. M/s. Zubna Limited and 3 others PLD 1987 Kar. 206, relevant portion of which has been quoted hereinabove. 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 notices.- -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 post acknowledgement due and by publication, "and service in any of the 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 successsfully avoid service by one of the above three modes of service for considerable period by maneouvring.

11. As regards the second submission of Sh. Shaukat Ali, we may observe that we are unable to subscribe to his submission that Rule 8 is violative of Order XXXVII C.P.C. The above Rule 8 has been competently framed by the competent authority. It does not violate in any way Order XXXVII or any other provision of the C.P.C. It may be pertinent to point out that Section 129 of the C.P.C. Itself contemplates that the orders and the rules provided in the C.P.C. Can be amended by the chartered High Courts by framing rules relating to their original civil jurisdiction. Framing of Rule 8 in pursuance of the statutory powers contained in section 15 of the Ordinance seems to be in consonance with the above section 129. The object of the above Rule 8 as pointed out hereinabove is to avert delay in effecting service of the summons, which object is in consonance with the proviso 2 to Rule 13 of Order IX C.P.C. Incorporated by the Law Reforms Ordinance, 1972, providing (Ordinance XXII of 1972) which provides that:- "Provided further that no decree passed ex parte shall be set aside merely on the ground of any irregularity in the service of summons, if the Court is satisfied, for reasons, to be recorded, that the defendant had knowledge of the date of hearing in sufficient time to appear on that date and answer the claim."

12. Reverting to Mr. Shaukat's third submission, it may be observed that in furtherance of the above submission, he has referred to the case of Mohammad Yousaf v. Allah Yar reported in PLD 1987 Lah. 101, in which a learned Single Judge of the Lahore High Court while construing Order XXXVII Rule 2(2) C.P.C. Has inter alia held that where there is refusal to grant leave by the Court the plaintiff would not be relieved of normal obligation to prove his case and that the plaintiff would continue to remain under a duty to discharge the above burden.

13. With due deference to the learned Judge, we may point out that the above observation of the learned single Judge seems to be not in consonance with the provision of Rule 2 of Order XXXVII C.P.C. Which inter alia provides that in case a defendant does not obtain such leave, the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree. Additionally in the instant case the Special Court before passing the judgment and decree had examined the above question and observed that the suit claim was verified on oath, which was not controverted.

Leave is accordingly refused.