2015 C L D 249


2015 C L D 249

[Lahore]

Before Amin-ud-Din Khan and M. Sohail Iqbal Bhatti, JJ

INAM ULLAH ZAFAR---Appellant

Versus

ORIX LEASING PAKISTAN LIMITED and another---Respondents

F.A.O. No. 281 of 2009, decided on 22nd September, 2014.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 12 & 9---Civil Procedure Code (V of 1908), S. 12(2)---Suit for recovery of lease finance---Ex parte decree, setting aside of---Maintainability---Appellant had no privy to lease agreement as no guarantee had been executed by him in consideration of said lease agreement---Judgment and decree passed by Banking Court was result of want to jurisdiction---Banking Court though could pass a decree if application for leave to defend was not filed within time or same was rejected but said court was bound to determine the actual liability of the defendants while passing the decree---Application under S.12(2), C.P.C. was maintainable under the proceedings arising under Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court was bound to determine the liability of appellant while passing the decree---Miscarriage of justice would occur to the appellant if ex parte judgment and decree were allowed to remain in field---Application filed under S. 12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 read with S.12(2), C.P.C. was accepted and impugned judgment and decree were set aside subject to payment to 50% of the decretal amount within a specified period---Appeal was accepted in circumstances.

            Nisar Ahmad Afzal v. Muslim Commercial Bank through Assistant Vice-President/Chief Manager and 14 others 2014 CLD 390 rel.

(b) Jurisdiction---

----Scope---"Jurisdiction" would include "assumption and exercise of the jurisdiction" as no court could be said to have exercised its jurisdiction if the court was prevented from knowing the true facts; if the court took for a material fact as to what was not in law that fact; if court proceeded to act in grave and obvious disregard of law or if court had violated the principles of natural justice when law had not permitted the court to do so and if court had given reasons for its conclusions which could not in such circumstances lead to them.

            Abdul Waheed Chaddah for Appellant.

            Ms. Raisa Sarwat for Respondents.

            Date of hearing: 22nd September, 2014.

JUDGMENT

            M. SOHAIL IQBAL BHATTI, J.---This appeal is directed against the order dated 25-6-2009 passed by the learned Judge Banking Court-II, Faisalabad.

2.         Brief facts of the case are that one Shaukat Ullah availed two lease finance facilities from respondent No.1 and in consideration of the two independent lease finance facilities Shaukat Ullah executed two lease agreements bearing vehicle lease agreement No.2000/AL/7018 and 2001/AL/7064. The present appellant being a real son of actual lessee executed his personal guarantee in consideration of lease agreement No.2001/AL/7064 in favour of respondent leasing company whereas in consideration of lease agreement No.2000/AL/7018 one Asghar Ali son of Mirza Mohi-ud-Din executed his personal guarantee in favour of the respondent leasing company. The actual lessee committed default and failed to pay the agreed lease rentals as per terms and conditions laid down in both the lease agreements mentioned above and, therefore, the respondent leasing company filed a suit for recovery of Rs.21,71,924. The suit filed by the respondent leasing company was decreed as prayed for against the defendants jointly and severally.

3.         The appellant aggrieved by the judgment and decree dated 6-3-2003 filed an application under section 12 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with section 12(2), C.P.C. The learned Banking Court, through impugned order dated 25-6-2009, dismissed the application filed by the appellant. Hence, this appeal.

4.         The learned counsel for the appellant argued that the report of the bailiff does not establish that the appellant had been served nor the appellant had been served through registered post acknowledgment due. It is further argued that the appellant had not even been served through publication in the newspaper. The learned counsel submits that the factum of passing of ex parte judgment and decree came into his knowledge on 10-12-2007 and without wasting any time the application under section 12 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with section 12(2), C.P.C. was filed by the appellant. It was thus argued that ex parte decree is nullity in the eye of law as the appellant had executed his guarantee only in consideration of lease agreement No.2001/AL/7064. It is further argued that even if the application under Section 12 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was barred by time, the Banking Court was under an obligation to give its findings as to whether the judgment and decree has been obtained through fraud and was a result of "want of jurisdiction".

5.         On the other hand, learned counsel for the respondent leasing company argued that the application filed by the appellant was barred by time. It is further argued that no illegality has been committed by the learned Judge Banking Court-II, Faisalabad, while passing the impugned order as the application filed by the appellant was come within the mischief of section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

6.         We have considered the arguments advanced by learned counsel for the parties and have also gone through the report with their assistance. It is an undeniable fact that Shaukat Ullah availed two lease finance facilities from the respondent leasing company and in this regard executed two independent lease agreements. The present appellant executed his guarantee in consideration of lease agreement No.2001/AL/7064, however, the respondent leasing company filed a consolidated suit for recovery of Rs.21,71,924 which was decreed ex parte through judgment and decree dated 6-3-2003.

7.         At this stage it would be expedient to refer to section 12(2), C.P.C. which reads as under:--

            "12. Bar to further suit. (1) ..................

(2)        Where a person challenges the validity of a judgment, decree or order on the plea of fraud, misrepresentation or want of jurisdiction, he shall seek his remedy by making an application to the Court which passed the final judgment, decree or order and not by a separate suit."



            In the present case we have observed that the present appellant has been made liable to repay the amount accrued in pursuance to vehicle lease agreement No.2001/AL/7064; but the present appellant has no privy to lease agreement No.2000/AL/7018 as no guarantee had been executed by the present appellant in consideration of this lease agreement. Apparently the judgment and decree passed by the learned Judge Banking Court-II, Faisalabad, is a result of want of jurisdiction.

8.         The expression "jurisdiction" may be expected to include "assumption and exercise of the jurisdiction" because no Court can be said to have exercised its jurisdiction if it was prevented from knowing the true facts, if it took for a material fact as to what was not in law that fact; if it proceeded to act in grave and obvious disregard of law or if it violated the principle of natural justice when the law had not permitted it to do so and, if it gave reasons for its conclusions, which could not, in those circumstances lead to them.

9.         It is true that the Banking Court in case the application for leave to defend is not filed within the stipulated time or is rejected, shall pass a decree but it does not mean that while passing the judgment and decree the Banking Courts are not under an obligation to determine the actual liability of the defendants. It has been held by the Division Bench of this Court in Nisar Ahmad Afzal v. Muslim Commercial Bank through Assistant Vice-President/Chief Manager and 14 others (2014 CLD 390) that application under section 12(2), C.P.C. was maintainable in appropriate cases under the proceedings arising in Financial Institutions (Recovery of Finances) Ordinance, 2001.

10.       We are of the considered opinion that even if an ex parte judgment and decree was passed by the learned Banking Court, a duty was cast upon the Court to determine the liability of the appellant and in the present case if the ex parte judgment and decree is allowed to remain in the filed, it would entail serious miscarriage of justice.

11.       For what has been discussed above, this appeal is allowed. Resultantly, the application filed by the appellant under section 12 of the Finance Institutions (Recovery of Finances) Ordinance, 2001 read with section 12(2), C.P.C. is accepted; judgment and decree dated 6-3-2003 passed by the learned Judge Banking Court-II, Faisalabad, is set aside subject to deposit of 50% of the decretal amount within a period of ten days. In case, the appellant does not deposit 50% of the decretal amount within ten days, the learned Judge Banking Court No.II, Faisalabad, is directed to pass a fresh judgment and decree in light of the observations made above.

AG/I-31/L                                                                                            Appeal allowed.


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