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First Appeal No.7 of 1981, decided on 25th May, 1987.

‑‑‑ S. 12‑‑Civil Procedure Code'(V of 1908), 0. XLI, R.22(l)‑‑Cross objections in appeal‑ ‑Limitation for filing‑‑Effect of non‑filing of cross‑objection Where appeal has been filed against decree of Court, any respondent without filing appeal against any part of decree, may not only support the decree on any of the grounds decided against him in the Court below but could take any cross‑objection to decree which he could have taken by way of appeal, provided he had filed cross‑objections within one month from date of service on him or his counsel, of notice of date fixed for hearing of appeal or within such further time as Appellate Court could see fit to allow‑‑Where cross‑objection had not been filed, provisions of OALI, R.22(l), C.P.C. would not apply.

Ahsan Ali and others v. District Judge and others P L D 1969 S C 167; Allah Ditta v. Fateh Khan and others P L D 1970 Lah. 168; Ahmadur Rehman Chowdhury and others v. Sree Sree Shambhu Nath and others P L D 1968 Dacca 701 and Haji Abdullah Khan and others v. Nisar Muhammad Khan and others P L D 1965 S C 690 ref.

‑‑‑ S. 12‑‑Civil Procedure Code (V of 1908), O.XXXVII, R.4‑‑Limitation Act OX of 1908), S.3‑‑Recovery of bank loan‑‑Leave to appear and defend suit, limitation for‑‑Effect of not raising the question of limitation‑ ‑Provisions of S.3, Limitation Act enjoins Court to decide question of limitation even if same was not raised by any party‑‑Court could allow raising the question of limitation at appellate stage if same could be decided on admitted or proved facts‑‑Where question before Court was whether application for leave to defend suit was properly refused, such Court, held, could examine the question whether same was filed within limitation period‑ ‑Application for leave to defend suit could be filed within limitation period of ten days from receipt of summon.

‑‑‑S. 12‑‑Banking Companies (Recovery of Loans) Rules, 1980, R.8‑ Service of summons‑‑Object of R.8 of Banking Companies (Recovery of Loans) Rules, 1980 is to ensure that service of summons and notices were effected without any delay‑‑Attempt to effect service of summons or of notice is to be made by three simultaneous modes of service‑‑Service would however, be held good, if defendant was served by any one or more of prescribed modes of service‑‑Where defendant was served with summons by publication on specified date, application for leave to defend suit made after ten days of such publication would be time‑barred.

‑‑‑ Ss. 2(g), 32, proviso & 36(3), proviso‑‑Export Credits Guarantee Scheme Rules, 1962, R.16‑‑Pakistan Insurance Corporation‑ ‑Liability to pay loans‑‑Export Credits Guarantee Scheme, held, was to be run by Pakistan Insurance Corporation as its own scheme and not that of the Government‑‑Liability under scheme was of the Corporation except where Government had under written liability in a particular case‑ ‑Constitution of the Advisory Committee would not change such liability.

‑‑ S. 12‑‑Civil Procedure Code (V of 1908), 0. XXXVII, R. 4‑ Recovery of Batik loan‑‑Application for leave to appear and defend suit‑‑Averments as to breach of terms of guarantee vaguely described in such application‑‑Points urged in appeal before High Court not raised before Special Banking Court‑‑Effect‑‑ Appellant, held, was expected to spell out alleged breaches of terms of guarantee in application for leave to defend suit or in supporting affidavit if same were to be made grounds for grant of leave‑‑Vague allegations of breach‑of terms of guarantee in application for leave to defend suit would not justify interference by High Court in order passed by Special Banking Court declining leave to defend suit.

East and West Steamship Co. and another v. Hossain Brothers 19 D L R 75; Bombay Brass Works Co. v. Pakistan and another PLD 1966 (W.P.) Kar. 340; Oriental Fashions Ltd. and 4 others v. National Bank of Pakistan P L D 1985 Kar. 178; Habib Bank Ltd. v. Messrs Pazhong Traders and 12 others 1986 C L C 1086; Abdul Karim Jaffarani v. United Bank Ltd. and 2 others 1984 S C M R 568 and Habib Bank Ltd. v. Mussarat Ali Khan P L D 1987 Kar. 86 ref.

‑‑‑ S. 12‑‑Civil Procedure Code (V of 1908), 0. XXXVII, R. 4‑ Recovery of Bank loan‑‑Leave to defend suit‑‑Requirements‑‑Courts, held, generally grant leave when it was found that defendant in suit under O.XXXVII, C.P.C., had raised a defence which required consideration and which could not be decided without further probing into the matter by recording evidence‑‑Where Special Banking Court could have granted conditional leave but had not granted same, such finding would not call for interference by High Court in appeal for the reason that question of law as to liability needed no evidence while averments in breaches of terms of policies being vague in application for leave to defend suit, could not have been decided by Special Banking Court otherwise, than declining leave on such averments‑‑Plea of breaches of conditions or warranties founded on vague averments could not be allowed to be raised after many years being pleas of fact, which were not specifically raised in application for leave to defend suit or in supporting affidavit.

A. Rauf for Appellant.

S.A. Sarwana for Respondents.

Dates of hearing: 12th and 13th May, 1987.

‑‑This appeal is directed against judgment and decree dated 31‑7‑1980 passed by the learned Special Court (Banking) Karachi in Suit No.49 of 1980 declining the appellants' application under Order XXXVII, Rule 4 CPC for leave to defend and decreeing the suit in the sum of Rs.1,47,666 against the appellant and for Rs.1,97,739 against respondents 2 to 4 with costs and interest at the rate of 12% per annum from the date of suit till recovery of the decretal amount.

2. The brief fact leading to the filing of the above appeal are that respondent No.1 is a Banking Company which has been carrying on business as Bankers in Pakistan. Respondent No. 2 is a firm which had a loan and overdraft account with respondent No.1 Respondents 3 and 4 are the partners of the firm of respondent No.2. The appellant, who is defendant No.4 in the Suit, hereinafter referred to as the Corporation, initiated a scheme for promoting export from Pakistan to foreign countries under the Export Credits Guarantee Scheme, hereinafter referred to as the Scheme. whereby the Corporation undertook to provide credit guarantees' by means of insurance policies or guarantees against losses that may be sustained in connection with the export of goods. The Scheme inter alia covers the loss that may be occasioned to a Bank by default in repayment of a Packing Credit Loan advanced to an exporter to enable him to manufacture and finish the goods for the purpose of their export and is known as Preshipment Export Finance Guarantee. It seems that Respondent No.1 at the request of Respondent No.2 and' its partners granted overdraft facilities including preshipment credit facilities in the year 1965 which facilities continued. During the period commencing from 4‑9‑1976 to 13‑6‑1977. Respondent No.1 granted five preshipment loans Packing Credit Advances to Respondents 2 to 4 on the basis of Letters of Credit and execution of Promissory Notes, the details of which are contained in para 7 of the plaint. The Corporation in consideration of premium received by it issued to the Respondent No.1 Export Finance Guarantee (Preshipment) Policy No. EFK/66‑R/70 dated 3‑9‑1976 and EFK/66/R‑78 dated 25‑9‑1977 by way of cover for the above mentioned five preshipment loans/Packing Credit granted by Respondent No.1 to Respondents 2 to 4. Respondent No.2 failed to export the goods to the buyers within the validity of the respective letters of credit in spite of the extension of period of the Letters of Credit and the loan advanced by Respondent No.1 to Respondents 2 to 4 remained unpaid. Respondent No.1 disposed of the goods hypothecated by Respondent No.2 and adjusted the sale proceeds proportionately against the aforesaid five preshimpment loans. After that the Respondent No.1 filed the aforesaid suit claiming a sum of Rs.1,47,666 against the appellant being 2/3rd, i.e. 67% of the amount due in terms of aforesaid policy and the total amount of Rs.1,97,739 against Respondents 2 to 4. Since the above suit was filed under the Banking Companies (Recovery of Loans) Ordinance, 1979, hereinafter referred to as the Ordinance, before the Special Court the appellant filed application for leave to defend on 15‑5‑1980 whereas Respondents 2 to 4 remained ex parte. The learned Special Court by the Judgment Decree under appeal declined the appellant's above application for leave and decreed the suit in the above terms. The appellant being aggrieved by the above judgment and decree has filed the present appeal.

3. Mr. Abdul Rauf learned counsel for the appellant in support of the above appeal has submitted as follows:

(1) That the Corporation could not have been sued as it was acting merely as an agent of the Federal Government for managing the Scheme and, 'therefore, the suit was incompetent.

(2) That since there were breaches of the terms of the Export Finance Guarantee Policies, the Federal Government or the Corporation could not have been sued.

(3) That since the above two grounds constitute plausible grounds for leave to defend, the learned Special Court should have granted the leave conditionally or unconditionally.

On the other hand Mr. S.A. Sarwana, learned counsel for respondent No.1 has urged as under:

(1) That the appellant's application under Order XXXVII, Rule 4 was barred by Limitation as it was filed after the expiry of more than 10 days from the date of service of the summons.

(2) That under the Scheme the appellants were liable to pay against the policies and not the Federal Government.

(3) That the learned Special Court has exercised discretion properly in declining leave as the above first ground urged by the appellant was not sustainable in law, whereas the second ground as to the breach of the terms of the Guarantee Policies was vague.

4. It may be pertinent to take up the question, whether appellants application under Order XXXVII, Rule 4 CPC was within time. In this regard it may be pointed out that no specific plea was raised by Respondent No.1, though in the counter‑affidavit in reply to para 1 of the application it was stated that the plea that the summon was delivered at the wrong address was raised by appellant to cover the delay and was not bona fide. There is no discussion on the question of limitation in the judgment under appeal which indicates that this point was not argued. However, it was urged by Mr. Sarwana that the question of limitation is a question of law which can be raised even at the appellate stage.

In support of the above submission he has referred to the following judgments.

(1) Ahsan Ali and others v. District Judge and others reported in PLD 1969 Supreme Court 167, in which the Hon'ble Supreme Court while dealing with a settlement case held that a waiver of the question of limitation is not permissible even where a period of limitation is prescribed by a special law or a local law and that mere disposal of appeal on merits is not sufficient to lead to the inference that the delay must have been condoned. It was further held that there must be something in the order or judgment itself to show that the Court concerned was conscious of the fact that the proceeding was out of time and had applied its mind to the question of limitation before dealing with the proceeding on merits.

(2) Allah Ditta v. Fateh Khan and others reported in PLD 1970 Lah. 168. In the above case a learned Single Judge allowed the question of limitation to be raised first time in the second appeal, though it was not pleaded in the pleadings.

(3) Ahmadur Rehman Chowdhury and others v. Sree Sree Shambhu Nath and others reported in PLD 1968 Dacca 701, in which a Division Bench of the Dacca High Court allowed the question of limitation first time to be raised in the Letters Patent Appeal.

(4) Haji Abdullah Khan and others v. Nisar Muhammad Khan and others, reported in PLD 1965 S C 690. In the above case the Hon'ble Supreme Court while dealing with the correctness of the High Court's observations that since the question of law was not raised before the trial Court, it would prejudice the other party and defeat the ends of justice if it was allowed to be raised in the appeal, held that:

"It may be pointed out that it is the duty of the Court itself to apply the law. A party is not bound to engage a counsel. whatever law becomes applicable on the admitted or proved facts law has to be given effect to whether or not it has been relied upon by a party."

On the other hand Mr. Abdul Rauf has submitted that Respondent No.1 cannot be allowed to raise the question of limitation as it was not raised specifically before the learned Special Court nor it has been raised before this Court in accordance with law by filing cross objections in terms of sub‑rule (1) of Rule 22 of Order XLI, C.P.C.. It may be pertinent to refer the above sub‑rule which reads as follows:

"Upon hearing respondent may object to decree as if he had preferred separate appeal. (1) any, respondent, though he may not have appealed from any part of the decree, may not only support the decree on any of the grounds decided against him in the Court below, but take any cross‑objection to the decree which he could have taken by way of appeal, provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow."

A perusal of the above sub‑rule indicates that a respondent without filing an appeal against any part of the decree may not only support the decree on any of the grounds decided against him in the Court below, but can take any cross‑objection to the decree which he could have taken by way of appeal, provided he has filed cross‑objections within one month from the date of service on him or his pleader of the notice of the date fixed for hearing of the appeal or within such further time as the Appellate Court may see fit to allow.

In the instant case the ground of limitation was not decided against the respondent No.1 as it was apparently not argued before the learned Special Court and, therefore, Respondent No.1 cannot support the judgment under appeal on the ground of limitation in terms of above‑quoted sub‑rule (1) of rule 22 of Order XLI, C.P.C., nor respondent No.1 has filed any cross‑objections and, therefore, the above sub‑rule is not attracted to. However, Section 3 of the Limitation Act enjoins the Court to decide the question of limitation even if it is not raised by the party as pointed out by the Hon'ble Supreme Court in the case of Ahsan Ali and others v. District Judge and others (PLD 1969 S.C. 167) referred to hereinabove. It is also evident from the other cases cited by Mr. Sarwana that the Courts have allowed raising of the question of limitation even at the appellate stage if the same can be decided on the admitted or proved facts Since the question whether application for leave to defend was properly refused is an issue before us, in our view we can examine the question whether it was filed within the limitation period. In this regard it may be pertinent to point out that Rule 8 of the Banking Companies (Recovery of Loans) Rules, 1980, hereinafter referred to as the Rules, provides mode of service of summons and services. It lays down that 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. In the file of the suit neither the copy of the summons with the report of the Bailiff nor the acknowledgment receipt with the endorsement of the postman is available and, therefore, it cannot be said on what date summon was served on the appellant by the bailiff or was received by the appellant through .the registered acknowledgement due. The registration receipts are on the suit record which indicate that the summons were posted on 3‑4‑1980 to all four defendants. The suit record further indicates that summons were published in daily Urdu Hurriyat Newspaper on 7‑4‑1980.

We may observe that in a suit under Order XXXVII while making an application under rule 4 of above Order XXXVII, C.P.C. the defendant is to show that his application is within the limitation period of 10 days from the receipt of the summon. In the present case the appellant had made following averments as regards the service of summons‑

"The summons in the present case were sent at wrong address. The Registered Office of Pakistan Insurance Corporation is situated at Pakistan Insurance Corporation Building, M.A. Jinnah Road, Near Mereweather Tower, Karachi. There is only one branch of Pakistan Insurance Corporation which is 8ituated at Shafi Court, Mereweather Road, Karachi. On the second floor in the Shafi Court there is office of National Insurance Corporation and therefore the summons in the above suit were received by the National Insurance Corporation. The National Insurance Corporation could not trace this case and the matter was lying in their office unattended and ultimately they could trace that the case pertains to Export Credit Guarantee Scheme and therefore the summons were given by them to Export Credits Guarantee Scheme on 13‑5‑1980.

The above‑quoted averments were replied to by the Respondent No.1 through paras 2 and 3 of their counter‑affidavit which read as follows:

"(2) That it is not correct that the plaintiffs had given the wrong address of Defendants No.4 prior to the filing of the present case the plaintiffs have been regularly corresponding with the Defendant No.4 in connection with the matter in the suit on the address given in the plaint and the said Defendants have been acknowledging the same. Never once have the said Defendants in their correspondence indicated that the said address was incorrect and their letter heads all bear the same address.

(3) That the summons were served on the Defendant at the correct address and this plea is taken by the Defendant No.4 only to cover the delay and hence is not bona fide."

In this regard it may be pertinent to reproduce hereinbelow the diary sheet dated 5‑5‑1980 which reads as under:‑

5‑5‑1980

P.A. present. Summons to defendants Nos. 1, 2 and 4 sent by Registered Post A/D have been returned undelivered by the postal authorities with the remarks. All the defendants have also been sent through publication in daily Hurriyat dated 7‑4‑1980. Defendants are called absent. Adjourned to 19‑5‑1980 for further orders."

The above‑quoted diary indicates that the summons sent by Registered Post A/D to defendants Nos. 1, 2 and 4 were returned with Urdu remark YEH REGISTER HAMARA HAI The above remark has not been written in the paper book but is given in Urdu in the original diary of the suit file. The envelopes of the undelivered letters are not on record to verify the correctness of the same. Be that as it may, the above diary also indicates that the service was also effected by publication in daily Hurriyat dated 7‑4‑1980. It further indicates that on the above date Mr. Abdul Rauf, Advocate also filed Vakalatnama on behalf of Defendant No.4 at late hours. The object of above rule 8 of the Rules seems to be to ensure that the service of the summons and notices are effected without any delay. It has, therefore, provided three simultaneous modes of service. The question, therefore, arises, whether in order to hold service good, the service of the summon or notice be effected simultaneously by the aforesaid three modes or only one or more to them. We are inclined to hold that though the attempt to effect service of summon or of notice is to be made simultaneously by the aforesaid three modes, but the service can be held good if a defendant is served by any one or more of the, aforesaid prescribed modes of service. In the present case the bailiff's report is not available nor the undelivered covers, the only material available is the daily Urdu newspaper Hurriyat of 7‑4‑1980 in which summon was published. The Corporation was, therefore, in fact served with the summons by publication on 7‑4‑1980, whereas application for leave was filed on 15‑5‑1980, and hence the application under Order XXXVII, Rule 4, C.P.C. was patently time‑barred.

5. Having dealt with the above question of limitation, we may advert to Mr. Abdul Rauf s contentions, noticed hereinabove in pars. 3, the first contention being that the Corporation could not have been sued as it was acting merely as an agent of the Federation for managing the Scheme and, therefore, the suit was incompetent. In this regard, it may be observed that Mr. Abdul Rauf learned counsel for the Corporation has referred to the following provisions of the Pakistan Insurance Corporation Act, 1952 as amended by Ordinance No.XIV of 1962:

(i) Clause (g) of Section 2 of which provides that "Scheme" means any Export Credits Guarantee Scheme prepared by the Central Government the Principal object of which is to give credit guarantees for the purpose of any business connected with the export of goods from Pakistan or any manufacture, treatment or distribution of goods, or rendering of services or other matters conducive to the export trade of Pakistan.

(ii) Proviso to section 32 which provides that "provided further that no dividend shall be declared out of the profits from the business relating to a Scheme and all such profits shall be paid to the Central Government".

(iii) Proviso to subsection (3) of section 36 which provides that "Provided that the annual balance‑sheet and accounts of the business relating to a Scheme shall be separately reported upon to the Central Government".

He has also referred to the Export Credits Guarantee Scheme Rules, 1962, particularly, Rules 2(d), 3, 4, 9, 10, 11, 16, 18, 19, 22nd and 23rd Annual Reports on Export Credits Guarantee Scheme, which were not filed before the learned Special Court but produced before us during the arguments. On the basis of the above provisions of the Act, Rules and the annual reports it was tenaciously urged by Mr.Abdul Rauf that the Scheme was in fact of the Federal Government and that the Corporation was merely managing the same and hence it could not have been sued, the liability if any was of the principal and not of the agent. We are unable to agree with the above submission. It is true that under the relevant provisions the Corporation was required to maintain separate accounts of ,the working of the Scheme and to submit the same to the Federal Government and also to pass on the profits to the Federal Government but it does not make any difference as to the liability. A perusal of the various rules referred to by Mr. Abdul Rauf on the contrary indicates that the Corporation was to run the Scheme as its Scheme and not of the Federai Government. Even in the above Annual Report on the first page the following caption is mentioned "Export Credits Guarantee Scheme (A WING OF THE PAKISTAN INSURANCE CORPORATION)". In this behalf reference may also be made to Rule 16, which reads as follows:

"16. Working capital and the extent of risk covered.‑(1) The Corporation shall restrict its total liability under the Scheme at any time in respect of the insurance policies issued or guarantees given to a total of ten times the aggregate of the amount standing to its credit in the working capital and in the surplus funds of the Scheme.

(2) If at any time the maximum amount of the total liability under the Scheme is likely to exceed beyond the limit fixed in sub‑rule (1), the Corporation shall suspend the issue of new insurance policies or guarantees until it restricts its liabilities to the limit specified in sub‑rule (1).

(3) Nothing in this rule shall apply to any liability under the. Scheme to cover, in the national interest, any additional business, transactions or risks in pursuance of a decision of the Central Government under sub‑rule (1) of rule 14, if the Central Government under‑writes the liability arising out of such transactions of risks."

The above‑quoted rule clearly manifests that the liability under the Scheme was of the Corporation except where the Central Government under‑writes the liability in a particular case. The Constitution of the Advisory Committee under Rule 19 also does not change the above position. The conclusion arrived at by the learned Special Court on the above point seems to be correct. However, Mr. Abdui Rauf has referred to the following cases:

(1) East and West Steamship Co. and another v. Hossain Brothers reported in 19 DLR 75, in which a Division Bench of the Dacca High Court while construing Section 230 of the Contract Act held that where both the defendants are Pakistani Companies and principal is known a decree cannot be passed against the agent as it can only be passed against the principal.

(2) Bombay Brass Works Co. v. Pakistan and another reported in P L D 1966 (W.P.) Karachi 340. In the above case a learned Single Judge of the Erstwhile High Court of West Pakistan while construing Section 230 of the Contract Act held that an agent cannot be sued alongwith principal except in three contingencies mentioned in the Section.

The above cases have no application as we have already held that the Corporation was not acting‑ as an agent but was running the Scheme as its Scheme.

6. As regards Mr. Rauf's submission that since there were breaches of the terms of the Export Finance Guarantee Policies, the Federal Government or the Corporation could not have been sued, it may be observed that before the learned Special Court the following averment as to the breach was made:

"When the claim was filed by the Plaintiff against the Defendant No.4 it was turned down on the short grounds that there was a breach of terms of Guarantee and the compliance of all warranties is condition precedent for maintaining the claim. It was contended that it was primary liability of the principal debtor and under the terms of the Guarantee the Bank was also required to take all measures against the principal debtors."

The above‑quoted para. does not spell out the alleged breaches on the part of respondent No.1. There seems to be no discussion in the judgment under appeal. However, before us Mr.Abdul Rauf learned counsel for the Corporation has pointed out that there were following breaches; on the part of the Respondent No.1.

"(1) That respondent No.1 instead of obtaining letter of hypothecations which they were doing in the past prior to obtaining of the policies accepted five promissory notes as securities and, therefore, there was breach of clause 4 of the policy.

(2) That under para 26 of the Policies the word loan/loans include only the principal amount of debt and not interest, whereas the respondent No.1 included the amount of interest and, therefore, committed the breach of the above terms.

Mr. S.A. Sarwana on the other hand has pointed out that the original principal amount was Rs.2,52,400 against which a sum of Rs.1,03,390 was adjusted from the sale proceeds of the hypothecated goods and the suit was filed for the balance of Rs.1,97,739, whereas the liability of the Corporation was to the extent of 66 per cent as per para 7 of the policies and, therefore, a decree of Rs.1,47,666 has been passed against the Corporation. Mr. Rauf has invited our attention to the various entries of the amount of interest in the statement of account filed by respondent No.1.

In our view, since the averment as to the breach of the terms of guarantee in the Corporation's application was vague and the points which have been urged now were not raised, we are not inclined to go into the merits of the case. In our view, the Corporation was expected to spell out the alleged breaches on the part of respondent No.1 in the application or in the supporting affidavit if the same were to be made a ground for grant of leave. The vague allegation was not sufficient.

7. Reverting to Mr. Rauf's contention that since the above two grounds constitute plausible grounds for leave to defend, the learned Special Court should have granted the leave conditionally or unconditionally, it may be observed that he has referred to the following cases:

(i) Oriental Fashions Ltd. and 4 others v. National Bank of Pakistan, reported in PLD 1985 Karachi 178, in which a Division Bench while dismissing a constitutional petition observed that under Order XXXVII, the Court has to exercise discretion judiciously and not arbitrarily or capriciously in a manner which may defeat ends of justice.

(2) Habib Bank Ltd. v. Messrs Pazhong Traders and 12 others, reported in 1986 CLC 1086. In the above case a learned Single Judge of this Court after referring to the case‑law enunciated the principles on which question of granting leave conditionally or unconditionally or refusal is to be considered.

(3) Abdul Karim Jaffarani v. United Bank Ltd. and 2 others reported in 1984 SCMR 568, in which the Hon'ble Supreme Court while allowing an appeal against the judgment of a Division Bench of the Sind High Court held that condition requiring defendant to furnish security to the extent of the entire claim of the plaintiff render the grant of leave to defend illusory though the question involved was whether defendant agreed to pay time‑barred debt.

"(4) Habib Bank Ltd. v. Mussarat Ali Khan reported in PLD 1987 Karachi 86, in which a learned Single Judge of this Court granted leave to defend in a suit filed under the Banking Companies (Recovery of Loans) Ordinance, 1979, as the question of limitation and the question of recovery were involved.

The Courts generally grant leave when it is found that a defendant in a suit under Order XXXVII has raised a defence which requires consideration and which cannot be decided without further probing into the matter by recording evidence etc. In the instant case the Corporation had raised two pleas, the first being entirely question of law namely, whether the Corporation was the agent or the Principal. under the relevant provisions of the Act, the rules framed thereunder and the Scheme. The other ground was founded on the question of fact. The learned Special Court could have granted conditional leave., but the fact it had not granted leave, in our view does not call for interference by this Court for the reason that the learned Special Court has dealt with the question of law as to the liability which needed no evidence, whereas the second question has not been dealt with in the manner in which it was urged before us as the averment contained in the application for leave as to the breaches of the terms of policies was vague. In this view of the matter, the Special Court could decline the leave.

Furthermore, we have also examined the above legal plea in detail and have concurred with the view found favour with the learned Special Court. Whereas the plea of breaches of the conditions or warranties is founded on vague averment as observed hereinabove, and, therefore, cannot be allowed to be raised after seven years on pleas of fact, which were not specifically raised in the application for leave to defend the suit or in the supporting affidavit.

For the foregoing reasons the appeal is dismissed but there will be no order as to costs.

A.A./P‑24/K Appeal dismissed.

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