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Intra‑Court Appeal No. 35 of 1981, dated the 7th March, 1983.

‑‑ S. 7 (2) and Civil Procedure Code (V of 1908), Os. XXXVII & XXXIV‑Recovery of loan‑‑Summary procedure‑Banking Com panies (Recovery of Loans) Ordinance, 1979, held, a special law pro mulgated to provide for expeditious disposal of suits and speedy recovery of loans‑Ordinance overrides general law‑Special Judge to follow summary procedure provided in O. XXXVII, Civil Procedure Code ‑ Contention that Special Judge should have followed procedure provided under O. XXXIV, Civil Procedure Code, in suit based on mortgage repelled.

------ O. XXXVII, r. 3 (2)‑‑Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S. 7 (2)-Leave to appear and defend suit‑Power to impose or not to impose a condition to such leave, held, discretionary with Court.

‑‑Art. 9‑Constitution of Pakistan (1973), Art. 199(1)‑Civil Proce dure Code of (V of 1908), O. XXXVII, r. 3(2)‑Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S. 7 (2)‑Constitu tional jurisdiction‑No remedy available against order of Banking Court whereby appellants granted conditional leave to defend Writ petition calling in question imposition of condition to leave to defend, held, competent before High Court‑Held further, where it be shown that decision challenged was based on arbitrary, fanci ful and capricious exercise of discretion then cannot be accepted being a wrong or erroneous decision and judicial review in such like situation can be sought by invoking writ jurisdiction.

‑.‑‑‑ O. XXXVII r. 3. (2)‑Discretion‑Woyds 'as the Court thinks fit' in O. XXXVII, r. 3 (2)‑‑Liberty to give judgment of its choice presupposes that Court shall act in judicial and reasonable manner, i.e. to give decision by taking into consideration all facts and circumstances of a particular case.

‑‑ S. 7 (2) read with Civil Procedure Code (V of 1908), O. XXXVII, r. 3‑Loan‑Loan in case fully secured by mortgage Imposition of condition to deposit suit money, held, will render leave to defend as an illusory.

‑‑ O. XXXVII, r. 3‑Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S. 7 (2)‑Provisional Constitution Order (1 of 1981), Art. 9‑Order of Special Judge (Banking) granting con ditional leave to appear and defend rested on arbitrary and fanciful exercise of discretion vested in him‑Order, held, of no legal effect and set aside‑‑Case remanded to Special Judge to rehear and reconsider and pass order afresh which may accord with situation.

Sh. Muhammad Alyas for Appellants.

Iftikharullah Malik for Respondents.

Date of hearing : 7th March, 1983.

KHIZAR HAYAT, J.‑Briefly the facts are that appellant No. 1 is a firm and Nos. 2 to 7 are its partners: They approached Grain Market Branch, Sahiwal of the National Bank of Pakistan, respondent No. 1. for loan/cash credit facility. The respondent Bank sanctioned the loan upto the limit of Rs. 10 lacs on 23rd October, 1978 and later raised the limit to Rs. 13 lacs on 28th November, 1978 against the security of "pledge of goods" and the "mortgage of property" comprising a ginning factory and various houses and vacant plots of land owned by the appellants. The appellants availed the loan facility and a sum of Rs. 7,7F,364.42 fell due from them by 1st January, 1980. They allegedly evaded repayment of loan and consequently the respondent Bank filed suit for its recovery under the Banking Companies (Recovery of Loans) Ordinance, 1979 (hereinafter called the Ordinance), on 2nd June, 1980, in the Court of Special Judge, Banking, Lahore.

2. The appellants applied to the trial Judge for grant of "leave to appear and defend" contending inter alia that the loan was fully secured, a sum of Rs. 4,25,830 already deposited in the respondent's account has not been adjusted. After hearing the parties, learned Special Judge. Bank having held that "some of matters raised by the defendants (appellants) require consideration" granted leave to defend vide order dated 26th January, 1981 on the condition that the appellants shall deposit a sum of Rs. 3,51,364.42 or furnish Bank guarantee in the said sum within a period of two months and furnish security for the balance of Rs. 4,25,830. Feeling dissatisfied, the appellants file; another appli cation in the same Court seeking recall of the "conditions" attached to the "leave" which was declined on 4th April, 1981. The appellants then filed Writ Petition No. 1 930 of 1981 saying that in granting "conditional leave" to the appellants, the learned Special Judge did not properly exercise the discretion vested in him by rule 3 (2) of Order XXXVII, C.P.C. for the amount due from them was fully secured by equitable mortgage, but it was dismissed by the learned Single Judge in Chamber with the following observation :‑

"There is no yardstick by which it can be held that the imposition of the condition was beyond the power of the Court. It is an accepted principle that an exercise of discretion by a Court, vested in it by law is not to be questioned in the exercise of the constitutional jurisdiction."

In this background, the instant Intra‑Court Appeal has arisen.

3. Learned counsel appearing on behalf of the appellants raised the following points :‑‑

(a) As the respondents' claim was based on mortgage, therefore, the case was triable as a long cause matter under Order XXXIV, C.P.C. and not under summary procedure provided under Order XXXVII, C. P. C.

(b) The loan being secured, the learned Special Judge, Banking, should have granted unconditional leave and that by having attached condition to it, he did not exercise his discretion, judicially, as vested in him under rule 3 of Order XXXVII, C. P. C.

As against, this, the learned counsel for the respondent supported the impugned order. He relied on an unreported judgment delivered by the Supreme. Court of Pakistan in Meiraj Sons and others v. United _ Bank Limited (C. P. No. 100(81) to contend that an order passed in exercise of discretion of a Court could not be interfered with, in course of

writ jurisdiction.,

4. We have considered the submission made by the learned counsel for, the parties and also perused the record in the light of cast‑law cited at the bar. For convenience of reference, the relevant provisions of law are reproduced below :‑

Section 7 of the Ordinance reads :‑‑

"7. Procedure of Special Court.‑(I) Suits before the Special Court shall come up for regular hearing as expeditiously as possible and, except in extraordinary circumstances and on grounds to be recorded a Special Court shall not allow adjourn ment.

(2) In the exercise of its civil jurisdiction the Special Judge shall in all suits before it, including suits based on mortgages of all kinds on statement of accounts for recovery of money paid to, or to the order of, the defendant, follow summary procedure provided for in Order XXXVII in the First Schedule to the Code of Civil Procedure, 1908 (Act V of 1908)."

Rule 3 of Order XXXVII, C.F.C. reads as under :=

"3 (:) The Court shall, upon application by the defendant give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the bolder to prove consideration, or such other facts as the Court may deem sufficient to support the application. ,

(2) Leave to defend may be given unconditionally, or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit."

5. As Banking Companies (Recovery of Loans) Ordinance, 1979, is a special law, promulgated to provide for expeditious disposal of suit and speedy recovery of loans, it overrides the provisions of the general law. Section 7 (2) of the Ordinance quoted above clearly envisages, that a Special Judge, "in all suits before, it, including suits based on mort. gages of all kinds" shall follow summary procedure provided for in Order XXXVII, C. P. C. and the suit against the appellants is thus rightly being dealt with in accordance with the aforesaid special law provisions. We are, therefore, unable to agree with the learned counsel for the appellants that the Special Judge should have followed the procedure provided under Order XXXIV, C. P.C. in suits based on mortgages. Consequently, the contention (a) of the learned counsel is repelled.

6. Order XXXVII, rule 3 (2), C. P. C. says that a defendant has no right to defend the suit unless the Court grants him "leave" which can be either "conditional" or "unconditional" as the Court thinks fit. Undoubtedly it lies within the discretion of the Court to impose or not to impose a condition to such "leave" granted by it. The first and foremost question which engages our attention is whether or not a discretionary order passed under rule 3 (2) of Order XXXVII, C. P. C., against which no appeal or revision has been provided, can be challenged by invoking writ jurisdiction of the Court. Admittedly, no remedy is available to the appellant against the order dated 26th January, 1981 passed by the Banking Judge, whereby the appellants were given leave to defend provide they deposit Rs. 3,51,364.42 or furnish Bank guarantee. We are conscious that the provisions of Article 9 of the Provisional Constitution Order, 1981, read with Article 1951 (1) (c) (ii) of Constitution of the Islamic Re ‑public of Pakistan, are not designed t4 empower the High Court to interfere with the decision of a Court or Tribunal of inferior jurisdiction merely because in its opinion the decision is wrong. But at the same time it must be remembered that where it be shown that the decision was base on arbitrary, fanciful and capricious exercise of discretion then it cannot be accepted as wrong or erroneous decision. We are of the view that in like situation judicial review of such orders can be sought by invoking that writ jurisdiction of this Court. Working on this analogy we find that writ petition calling in question the imposition of condition to leave to defend was competent before the learned Single Judge. The authority relied upon by the respondent‑Meiraj Sons and others v. United Bank Limited (C. P. No. 100/81) does not spell out an absolute bar that an order granting conditional leave to defend' cannot be inter fered with inexercise of writ jurisdiction by this Court. In the precedent case their Lordships found that defendant‑petitioners plea that the loan was "sufficiently secured" was neither admitted by the respondent‑Bank nor was so held by the High Court. The relevant portion of the Supreme Court judgment is reproduced hereunder with advantage:‑

"We agree with the reasoning of the learned Judge that in so far as respondent No. 1 does not admit that the amount stands suffi ciently secured under the equitable mortgages and the order for cash deposit which was one of the orders that could be passed in the discretion of the trial Court, the same could not be interfered with in the course of writ jurisdiction."

It may be noted that the learned Judges of the Supreme Court did not disapprove the following observation made by the learned High Court Judge in that case :‑

The only question which requires judicial review by this Court relates to the nature of the condition imposed by the learned Special Court and the petition to consider this question is competent."

7. Having held that the writ petition was competent, we now proceed to examine if the learned Special Judge exercised his discretion judicially while passing order dated 26th January, 1981, or not.

8. The dictionary meaning of the word "discretion" among various meaning are "liberty deciding as one thinks fit," "disposed of according to the judgment of choice". The liberty to give judgment of its choice presupposes that the Court shall act in a judicial and reasonable manner i.e., to give decision by taking into consideration all the facts and circum stances of a particular case. The provisions of rule 3 of Order XXXVII C. P. C. clearly empower a Court to grant leave to, defend uncondition ally' provided it thinks it 8t. The question arises as to what are those cases which can be considered fit for the grant of "unconditional leave to defend "

9. It goes without saying that a‑ case where the loan stands fully secured is definitely on a higher padestal, than the one. where the loan is not at all secured. The learned Banking Judge was thus called upon to consider to impose or not to impose precondition by clearly differentiating between the two sets of cases, while granting leave to appear and defend.' We are clear in our minds that the two situations cannot be equated with each other. Therefore, in a case where the loan is fully secured by more gage, etc. we feel that imposition of condition to deposit the suit money will reader the leave as ate illusory,

10. Having gone through the plaint, the written statement, the repli cation and other 'documents we find that the loan recoverable from the appellants stands fully secured through mortgage. It has been so admit ted by the plaintiff‑respondent in paragraphs 3 and 7 of the plaint and paragraph 7 (g) of the replication.

11. For the foregoing reasons we declare that the order granting conditional leave to appear and defend to the appellants rested on arbitrary and fanciful exercise of discretion vested in Special Judge, Banking, and is thus of no legal effect. Consequently, we allow this Intra‑Court Appeal, set aside the impugned orders and direct that the case be sent back to Special Judge, Banking, to rehear and reconsider the application of the appellants for grant of leave to appear and defend' and pass an order afresh which may accord with the situation. Parties are left to bear their own costs.

M. Y. H Appeal allowed,

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