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Suit No. 573 of 1985, decided on 20th October, 1986.

‑‑‑Ss. 5 & 6‑‑Civil Procedure Code (V of 1908), O.XXXVII, Rr.2 & 3‑‑Suit filed on basis of fraud‑‑Questions of jurisdiction of Court and grant of leave to defend suit‑‑Plaintiff‑Bank nowhere alleging in plaint that defendants had borrowed any loans from Bank and that amount claimed in suit was in respect of that transaction‑‑Entire suit was based on alleged fraudulent and collusive action of defendants Such suit, held, would be considered having been filed under original civil jurisdiction of High Court and not its jurisdiction under Ordinance XIX of 1979‑‑Defendants would not be entitled for grant of leave to appear and defend suit in circumstances, but instead would be entitled to file written statement.

1984 C L C 2106 ref.

Mansoorul Arfin for Plaintiff.

Ch. Attaullah for Defendant No. 1.

Date of hearing: 18th September, 1986.

The plaintiff filed suit for recovery of Rs.13,56,629 against the defendants. The defendant No. 1 had a Current Account No. 2612 with the plaintiff's branch at Daudpota Road, Saddar, Karachi of which the defendant No.2 was the Branch Manager upto 15‑10‑1981. On account of irregularities committed by the defendant No.2 he was suspended on 23‑2‑1982. On 11‑1‑1983 the plaintiff received a letter from Afghan National Bank (Pak) Limited alleging that a sum of Rs.20,00,000 was lying in fixed deposit with the plaintiff bank at its Daudpota Road Branch Saddar, Karachi and upto 31‑12‑1982 quarterly interest was received by Afghan National Bank (Pak) Limited regularly whereafter it did not receive any interest. The plaintiff made inquires and found that the defendant No.2 either himself or in collusion with the defendant No.l had given a credit of Rs.10 lacs in the account of defendant No.l and another amount of Rs.10,00,000 was credited against one Abdul Nasir against whom Suit No. 574 of 1985 has been filed. According to the plaintiff wrong credit of Rs.10,00,000 was provided to defendant No.l who had not deposited it with the plaintiff at its Daudpota Road, Saddar, Karachi. This entry was reversed on 16‑4‑1983 and consequently a debit of Rs.9,94,955.44 became outstanding against the defendant No.l. As he has failed to pay this amount, the plaintiff filed the present suit against the defendant No.l and defendant No.2 who has been accused of making false entries.

The defendant No.l has filed an application under Order XXXVII, Rule 3, C . P. C . seeking leave to appeal and defend the suit alleging that the defendant No.l had deposited Rs.10,00,000 in his aforesaid account and he was given credit accordingly. It was also pointed out that the plaintiff has not filed supporting documents including book entries of the plaintiff's own bank to show that the defendant No.l had not deposited cash in his aforesaid account on 22‑9‑1981. It was further alleged that the suit as framed is not maintainable under the Banking Companies (Recovery of Loans) Ordinance. In support of his contention the defendant No.l has relied upon the statement of account showing credit of Rs.10,00,000 deposited in cash.

From the facts stated in the plaint it is clear that the suit is based on allegations that the defendant No.2 has fraudulently and illegally made credit entries in the account of the defendant No.l. When this fraud was detected the credit entry of Rs.10 lac was reversed. The entire suit is based on alleged fraudulent and collusive action of the defendants. In these circumstances, the question arises whether this Court acting under the Banking Companies (Recovery of Loans) Ordinance, 1979 has jurisdiction to try it. At the outset it may be mentioned that the plaint has been filed under the original civil jurisdiction and not under the Banking Companies (Recovery of Loans) Ordinance, 1979. There is nothing in the plaint to show that the plaintiff had intended to file the suit under the said Ordinance. However, it seems that as the suit was filed by a Bank, the office issued summons under Order XXXVII, Rule 2, C.P.C. and, therefore., the defendant No.l applied for leave to appear and defend the suit. Under section 6 of the Ordinance, the Special Court established under section 5 in exercise of its civil jurisdiction can try suit in respect of claim arising out of a loan. This aspect of the case was considered by my learned brother, K. A. Ghani, J. in National Grindlays Bank Ltd. 1984 C L C 2106 in which after considering various authorities and the meaning of the words 'loan' and 'borrower' it was observed as follows:‑----

"Considering in the light of the above discussion, and finding that the claim in suit filed by the plaintiff Bank, out of which the present execution application has arisen, was not in respect of or arose out of loan transaction the Special Court, a Court of limited jurisdiction would not be competent to entertain this application for execution of the decree for compensation passed by this Court."

In this suit, the decree was passed against the defendants on the finding that under a conspiracy, they had defrauded the bank and dishonestly withdrew money in cash by means of pay order and were thus liable to compensate the plaintiff bank. In the present case also plaintiff's claim is that the defendant No.2 has fraudulently made wrong entries in the account of the defendant No.l. It is not the allegation of the plaintiff that the defendant No.l had borrowed any loan from the Bank and the amount claimed is in respect of that transaction. Considering all the aforestated facts the question of granting leave does not arise. It is a suit filed under the original civil jurisdiction of the Court. The summons under Order XXXVII, Rule 2 was issued wrongly. The defendant No.l is entitled to file written statement. In the circumstances, the defendants are allowed to file written statement within a period of two months.

H . B . T . Order accordingly

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