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Suit No. 681 of 1983, decided on 30th May, 1984

‑‑‑S. 9‑‑Civil Procedure Code (V of 1908), O. I, R. 10‑‑Suit against bank‑‑Necessary and proper parties, addition of‑‑Proposed defendants whether acting in discharge of their duties or mala fide and in collusion with defendants determinable at final hearing of suit‑‑For purpose of adding parties to suit, Court, held, had to see whether the proposed defendants were necessary or proper parties and their presence was necessary for effectually determining the controversy between parties.

‑‑‑O, I, R. 10‑‑Adding a party to suit‑‑Discretion of Court, exercise of‑‑Discretion of Court, held, has to be exercised in a judicious and reasonable manner so as not to cause inconvenience or embarrassment to parties‑‑Parties required to be joined should be directly and legally interested in the question involved in the suit‑‑A party could also be added whose presence was necessary to enable Court to effectually and completely adjudicate upon the dispute in suit.

‑‑O. I, R. 10 & O. VI, R. 17‑‑Adding a defendant to suit‑‑Amendment of plaint whether necessary‑‑Where a defendant is added, plaint would, unless Court otherwise directs, be amended in such manner as would be necessary‑‑Consequential amendments which were necessary due to joining of new defendants could be made by plaintiff within such period as specified by Court‑‑Plaintiff could not be allowed to change the cause of action by such amendment.

Wajihuddin Ahmad for Plaintiff.

Ibrahim Peshorifor Defendants.

Mansoor Ahmad Khan for proposed Defendants.

This is an application filed by the plaintiff for joining the following persons as defendants in the suit.

(1) Pakistan Banking Council.

(2) Altaf Ahmad, Member of Pakistan Banking Council.

The plaintiff has filed this suit against Habib Bank Ltd. and its officers for redemption of mortgage, declaration that the defendants were bound to make full payment of Rs.15 lacs to the plaintiff, permanent injunction restraining the defendants from realising any sum in excess of Rs.11, 80, 000 as principal amount and damages of Rs.1, 00, 00, 000 accruing damages @ Rs.100,000 per month and cost of the suit.

Briefly the facts as stated in the plaint are that in or about 1979 the plaintiff approached the defendant No. 1 with a project prepared by his architect and sought financial assistance for the said project. At that time the estimated cost was approximately Rs.52 lacs. The defendant No.l and its officer after close scrutiny initially advanced a loan of Rs.15 lacs against mortgage of Plot No. AM‑146, Shambhu Natty Road, Saddar, Karachi. The defendants agreed to pay the loan in instalments of Rs. 5 lacs on as when required basis. The plaintiff mortgaged the said plot and first instalment of Rs.5 lacs was released on 8‑7‑1979. However, contrary to the arrangement the next instalment of Rs. 5 lacs was not released but fractional sums were made available. Till November, 1979 Rs.13,25,000 were granted out of which Rs.45,000 were spent for effecting mortgage and Rs.100,000 had to be passed to ensure the goodwill and co‑operation of some of the defendants. According to the allegations in the plaint the defendants for mala fide reasons refused to release any further amount thereafter with the result that the plaintiffs project came to a standstill causing loss of business, prestige, reputation, mental agony and monetary loss. The defendants also increased their claim and in spite of several approaches they refused to release the loan amount. The plaintiff then started exploring other avenues for completing his project. It is alleged that the defendant No.3 approached the plaintiff and asked him to see the defendant No. 2 who agreed to finance the project provided it was worth Rs.60,00,000 as estimated by the plaintiff. The certificate of value submitted by the plaintiff was not accepted and the defendants appointed their own architect who assessed it at Rs. 59, 00, 000. The defendant No. 3 informed the plaintiff that overdraft shall be enhanced. Pursuant to this assurance the plaintiff entered into an agreement with the contractor and remobilised work at site. However, no funds were released. The plaintiff then concerted the project into Three Stars Hotel. The plaintiff has claimed that the defendants have by granting overdraft and then refusing to release the entire amount regularly created persistent hitches and pressures and for these reasons he suffered loss as stated in para 11 of the plaint. In this regard the plaintiff served a notice, dated 2‑11‑1982 and filed suit for the above reliefs. The plaintiff has also filed an application under Order XXXIX, rules 1 and 2, C.P.C. which came up for hearing on 28‑11‑1982 when the following order was passed:

"Notice for 30‑11‑1983, in the meantime, the defendants are restrained from making any prejudicial action against the plaintiff other than seeking legal remedy."

The plaintiff also filed an application under sections 3 and 4 of the Contempt of Court Act against Altaf Ahmad, Member Pakistan Banking Council, for issuing letter, dated 21‑11‑1983 to the Presidents of all Nationalised Banks in Pakistan relevant part of which is reproduced as follows: ‑‑

"No facilities should be extended to them or to their associates without getting a clearance from Habib Bank. If any facilities have been extended to them or to their associates particulars of their liabilities should be advised to us together with the securities held thereagainst. They should be asked to come to terms with Habib Bank failing which the facilities extended to them should be withdrawn."

The allegation of the plaintiff is that the said Altaf Ahmed in collusion with defendant No. 1 and its officers antedated this letter with a view to frustrate the order passed an 28‑11‑1983. At the present moment I am not concerned with this aspect of the case, as it is subject‑matter of the contempt application, which is still pending. For the purpose of this application I will treat this letter to have been issued on 21‑11‑1983. The plaintiff then filed the present application under Order 1, rule 10, C.P. C. praying that Pakistan Banking Council and Altaf Ahmed, its member, may be joined as defendants in the suit. In the affidavit filed by the plaintiff it has been alleged that by a letter, dated 25‑10‑1983 the defendant No. 1 had asked the plaintiff to attend a meeting of Karachi Circle Executives Credit Committee to be held on 28‑11‑1983 which was convened at the instance of Pakistan Banking Council. The plaintiff has also alleged that he came to know that Altaf Ahmad by letter, dated 21‑11‑1983 has directed the Presidents of all the Nationalised Banks not to grant facility to the plaintiff without getting clearance from defendant No. 1 and that the defendant No. 1 should be asked to come to terms with defendant No. 1. It was further alleged that this letter was issued with mala fide intention and the defendants are in league with Pakistan Banking Council and Altaf Ahmed causing loss to the plaintiff. An additional affidavit was filed by the plaintiff in which it has been stated in paras 3 and 4 as follows:‑‑--

"3. That because of the acts of commission and omission of the proposed defendant I have suffered further damages in that the mental pain and agony which I was already undergoing has further multiplied and the financial losses which I was already sustaining have become perpetuated. My project which has been rendered standstill has been made to remain so, because of the conduct of the proposed defendants, for a period of indefinite duration. On the other hand, my claim for Redemption in regard to which a separate application for interim relief was moved also stands the varied (thwarted) otherwise, at least a part decree, whether with or without cancellation could be passed. Likewise my prayer for permanent injunction has also been effected. It is therefore, necessary that the proposed defendants may graciously be ordered to be impleaded. I will respectfully rely on such or similar pleas advanced by me earlier on.

4. That I also say that the proposed /defendants have even otherwise evinced interest in the subject‑matter of the dispute and having been acting in concern with the defendants and actively engaged in thwasting (thwarting) the claim have become necessary parties to this suit".

In the counter‑affidavit filed by the proposed defendants the allegation made against them has been denied. It has been pointed out that after the letter was issued for holding the proposed meeting, dated 28‑11‑1983 the plaintiff wrote a letter, dated 5‑11‑1983 seeking postponement of the meeting. It was also stated by the plaintiff that the proposed meeting was uncalled for, and it would be advisable if the proposed meeting is postponed till the decision is announced by Muhtasib‑e‑Ala. It seems that after his letter the proposed defendants issued a letter, dated 21‑11‑1983.

Mr. Waphuddin, the learned counsel for the plaintiff has contended that in view of the facts disclosed in the affidavits and the plaint the proposed defendants are either necessary or proper parties and their presence is necessary for decision on the suit.

Mr. Mansoor Ahmed Khan, the learned counsel for the proposed defendants has referred to the averments made in the plaint as well as the prayer made in the suit and also to the counter‑affidavit filed by Altaf Ahmed in which the provisions of Banks (Nationalisation) Act, 1974 (hereinafter called as the Act) relating to the functions of the Banking Council has been referred. The learned counsel has contended that considering the scope of the claim and prayer the proposed defendants feature nowhere. They are neither proper, nor necessary parties. According to the learned counsel the letter, dated 21‑11‑1983 was issued as provided by section 9(4)(i)(ii)(iii) and (v) of the Act in discharge of function of the Pakistan Banking Council.

According to the learned counsel, the letter was not intended to cause loss but was issued as policy guideline and determining the area of co‑ordination of the banks. He further contended that by this letter the proposed defendants were discharging their duties and their action is neither mala fide, nor caused any loss to the plaintiff. The learned counsel for the proposed defendants also stressed that in the plaint there is no reference to any grievance made by the proposed defendants and therefore, the application should be dismissed. The plaintiff could not have made any allegation against the proposed defendants because according to the plaintiffs Advocate the plaintiff came to know about letter, dated 21‑11‑1983 afterwards. According to the learned counsel for the plaintiff when the plaintiff approached other banks he came to know that the proposed defendants have issued letter prohibiting other banks from advancing any loan to the plaintiff. The plaintiff's grievance is that the proposed defendants have taken action which is causing loss and prejudice to him. According to the plaintiff the action taken by the proposed defendants is mala fide, in collusion with the defendants and unauthorised. The proposed defendants seem to be involved in the dispute between the plaintiff and the defendants as is evident from the fact that a meeting was called at the instance of the Pakistan Banking Council to which the plaintiff did not respond favourably. The proposed defendants then issued letter on 21‑11‑1983 closing other avenues of financial assistance which the plaintiff had been or would have explored to salvage his project. The plaintiff has claimed damage suffered and also the accruing damage at Rs.100, 000 per month. If the fact that the proposed defendants are taking penal action against the plaintiff by letter, dated 21‑11‑1983 would have been known to him earlier they would have been joined in the suit. By their action the proposed defendants have become a party in pressing the demand of defendant No. 1 and making attempts to recover it by coercive method. The plaintiff has alleged that due to the collusion and unauthorised action taken by the proposed defendants he has suffered loss. The proposed defendants do not deny the action taken by them, but justify it on the ground that it is permissible under section 9 of the Act. From the sequence of events it seems clear that the proposed defendants are directly connected with the dispute by taking action in support of the defendant No. 1 which according to the plaintiff has caused loss to him. At this stage it is not possible to determine whether the proposed defendants were acting in discharge of their duties under the Act or mala fide and in collusion with the defendants. These questions can be decided only at the final hearing. For purpose of this application the Court has to see whether the proposed defendants are necessary or proper parties and their presence is necessary for effectually determining the controversy between the parties.

Except for the statement made by Altaf Ahmed there is nothing on record to show at this stage that the circular letter issued by the proposed defendants was in the nature of a policy matter and such steps have been adopted generally in respect of all the bad debtors. The allegations made by the plaintiff against the proposed defendants an very well give him a cause of action against them and therefore, to avoid multiplicity of action in respect of same subject‑matter it will be in the interest of justice to join them as defendants.

Order 1, rule 10 confers discretion on the Court to add party to the suit at any stage of the proceeding. This discretion has to be exercised in a judicious and reasonable manner so as not to cause inconvenience or embarrassment to the parties. The party required to be joined should be directly and legally interested in the questions involved in the suit. This Rule further provides that any party may be added whose presence is necessary to enable the Court to effectually and completely adjudicate upon the dispute in the suit. In this view of the matter even a proper party can also be joined as a defendant. The: proposed defendants do not deny that they have not intervened in the matter. They own the action taken against the plaintiff. Altaf Ahmed in his counter‑affidavit stated that "banking facility is a matter of grant" and justified his action. The letters exchanged between the B parties and the action taken by the proposed defendants not only directly involve them with the controversy but makes their presence necessary for determining the suit itself. If the proposed defendants issued instructions to the defendant No. 1 or other banks which may have caused or is likely to cause any injury or loss to the plaintiff or create obstruction in the normal business dealing then unless such action is authorised and valid will not the proposed defendants be liable for action In view of the stand taken by the proposed defendants such questions are likely to arise and their presence is necessary.

Mr. Mansoor Ahmed Khan, the learned counsel then contended that Altaf Ahmed is a member of Pakistan Banking Council and he can be transferred from the post at any time, therefore, no proper decree can be passed against him; and Court will never pass any decree which cannot be executed. The allegations made against Altaf Ahmed are of causing loss in collusion with the defendants and by taking mala fide and unauthorised act against the plaintiff. In view of these allegations if he is made a party and the same are established he can be held liable irrespective of the fact whether he remains in the present post or not.

The learned counsel for the proposed defendants contended that the plaintiff has not sought any amendment in the plaint which may be necessary for the purpose of joining the proposed defendants. It is not necessary that alongwith the application under Order 1, rule 10, C . P. C . the party may also file amended pleading. Order 1, rule 10, sub rule 4 clearly provides that where a defendant is added, the plaint shall, unless the Court otherwise directs, be amended in such manner as may be necessary, and amended copies of the summons and of the plaint shall be served on the new defendant. Therefore; consequential amendments which are necessary due to joining the new defendants can be made by the plaintiff within the period of specified by the Court. It is true that by such amendments the plaintiff cannot be allowed to change the cause of action. In the result the Plaintiff's application is granted. The plaintiff should file amended plaint within two weeks and supply a copy to the defendants. The summons and copy of the amended plaint shall be issued to the proposed defendants.

A . A . / A‑9/ K Application allowed.

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