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Summary: (a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---S. 10(4), (5), (6) & (12)---Application for leave to defend---Mandatory requirements---Fresh/amended application after promulgation of Ordinance, 2001---Effect of non-compliance---Suit was originally filed under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 for recovery of foreign currency and Pakistani currency amounts along with sale of mortgaged/hypothecated properties---After promulgation of Financial Institutions (Recovery of Finances) Ordinance, 2001, defendants who had earlier filed leave to defend applications under the repealed Act were required to file amended applications in accordance with S.10 of the Ordinance within the prescribed period---Defendants No.1, 2 and 4 failed to file such amended application and also failed to show any sufficient cause for such omission---Held, requirements of S.10 of the Ordinance were mandatory and non-compliance attracted penal consequence under S.10(6), namely rejection of the leave application. Cited Cases: Bankers Equity Limited and another v. M/s Bentonite Pakistan Limited and 7 others 2003 CLD 931. Bank of Khyber v. M/s Spencer Distribution Ltd. and 14 others 2003 CLD 1406. Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Limited v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170. M/s Crystal Enterprises and 6 others v. Platinum Commercial Bank Limited and 2 others 2002 CLD 868. National Bank of Pakistan v. First Tawakkal Modaraba etc. NLR 2002 UC 846. (b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---S. 10(12)---Pending banking suits under repealed law---Leave to defend application filed under Act XV of 1997---Requirement to file amended application under Ordinance, 2001---A defendant who had filed application for leave to defend under the repealed Act was required, after coming into force of the Ordinance, 2001, to file an amended application for leave to defend in conformity with the Ordinance within 21 days from the coming into force of the Ordinance or from the date of first hearing thereafter, whichever was later---Failure to file such amended application rendered the earlier application under Act XV of 1997 ineffective and liable to rejection---Defendants could not continue to defend the suit merely on the basis of the old application. (c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---S. 10(3), (4) & (5)---Leave to defend---Application to be in form of written statement---Particulars of finance to be specified---Application for leave to defend under the Ordinance is required to be in the form of a written statement containing a summary of substantial questions of law and fact---Defendant must also specify particulars regarding finance availed, amounts paid, amounts payable, and amounts disputed, and must append documents in support of substantial questions raised---Such requirements are not directory but mandatory, because failure to comply entails rejection under S.10(6) unless sufficient cause is disclosed. (d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---S. 10(6)---Penal consequence for defective or non-compliant leave application---Where statute expressly provides that an application for leave to defend not complying with S.10(4) and S.10(5) shall be rejected unless sufficient cause is shown, Court cannot treat compliance as optional or merely procedural---Presence of penal consequence demonstrates mandatory character of the provision---Defendants No.1, 2 and 4 having neither filed amended leave application nor shown sufficient cause, stood relegated to the position of defendants who had failed to file leave to defend. (e) Banking suit---Transition from Act XV of 1997 to Ordinance, 2001---Interpretation of procedural requirement---Sindh High Court considered conflicting view in an unreported judgment of same Court, where non-filing of amended application was not treated as fatal---Court preferred the view taken by Lahore High Court in reported judgments, holding that the scheme, language and consequences under S.10 of the Ordinance clearly made filing of amended leave application mandatory---Unreported contrary view was not followed as it had not considered the scheme, spirit and penal consequences of S.10. (f) Banking suit---Defendants failing to file amended leave application---Consequences---Defendants No.1, 2 and 4 had filed leave to defend under the earlier Act but failed to file amended applications under Ordinance, 2001---No plausible explanation was offered---They were treated as having failed to file leave to defend in accordance with law---Plaintiffs were directed to file statement of account showing liability of said defendants. (g) Banking suit---Application by proforma/other defendant---Separate amended application filed---Further proceedings---Defendant No.12 stated that amended application for leave to defend had been filed and sought hearing on merits---Court adjourned matter for arguments on merits on amended application filed on behalf of defendant No.12 and for further proceedings. Disposition: Defendants No.1, 2 and 4, having failed to file amended applications for leave to defend under S.10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and having shown no sufficient cause, were treated as having failed to file such applications in law. Plaintiffs were directed to file statement of account showing liability of said defendants within two weeks. Matter was adjourned for arguments on merits on the amended application filed by defendant No.12 and for further proceedings.

Summary: Summary pending.

Summary: (a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---S. 10(3), (4), (5), (6) & (12)---Application for leave to defend---Mandatory requirements---Effect of failure to file amended application after promulgation of Ordinance, 2001---Suit was originally filed under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 for recovery of US$39,316,706.39 and Rs.1,623,787,057 along with sale of mortgaged/hypothecated properties---Defendants Nos.1, 2 and 4 had filed application for leave to defend under the repealed Act, but after promulgation of Financial Institutions (Recovery of Finances) Ordinance, 2001, they failed to file amended application within time prescribed under S.10(12)---Held, requirements of S.10 of the Ordinance were mandatory and non-compliance attracted penal consequences under S.10(6)---Defendants who failed to file amended application in accordance with S.10 were deemed to have failed to file leave to defend in law. Cited Cases: Bankers Equity Limited and another v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931. Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406. Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Limited v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170. Messrs Crystal Enterprises and 6 others v. Platinum Commercial Bank Limited and 2 others 2002 CLD 868. National Bank of Pakistan v. First Tawakkal Modaraba etc. 2002 CLD 1018. (b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---S. 10(12)---Pending banking suit under repealed Act XV of 1997---Application for leave to defend already filed---Obligation to file amended application---After coming into force of Ordinance, 2001, a defendant who had already filed petition/application for leave to defend under the repealed banking law was required to file amended application for leave to defend in accordance with the Ordinance within twenty-one days from coming into force of the Ordinance or from first hearing thereafter, whichever was later---Application filed earlier under Act XV of 1997 could not be treated as sufficient compliance with S.10 of the Ordinance---Failure to file amended application resulted in rejection of earlier leave application. (c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---S. 10(3), (4) & (5)---Leave to defend---Form and contents---Application to be in form of written statement---Substantial questions of law and fact---Particulars of finance---Unlike the earlier Act, leave to defend under Ordinance, 2001 was required to be in the form of written statement containing summary of substantial questions of law and fact---Defendant was required to specify particulars of finance availed, amount paid, amount payable, amount disputed, and also to append documents in support of questions raised---Such statutory requirements were not merely directory but mandatory, as their breach was expressly made punishable by rejection under S.10(6). (d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---S. 10(6)---Defective or non-compliant leave application---Sufficient cause---Where leave application does not comply with requirements of S.10(3), (4) and (5), it must be rejected unless defendant discloses sufficient cause for inability to comply---Defendants Nos.1, 2 and 4 failed to show any cause, much less sufficient cause, for not filing amended application---They were, therefore, relegated to the position of defendants who had failed to file application for leave to defend. (e) Interpretation of statutes---Mandatory and directory provisions---Penal consequence as indicator---Where statute prescribes a specific manner for doing an act and also provides consequence of rejection for non-compliance, such provision is mandatory---Presence of penal consequence in S.10(6) showed that compliance with requirements of S.10 of Ordinance, 2001 was compulsory---Court could not ignore mandatory statutory conditions or allow defendants to continue on basis of old leave application filed under repealed law. (f) Banking suit---Conflicting views of High Court---Preference for view considering scheme and penal consequence of statute---Sindh High Court considered an unreported judgment of same Court wherein non-filing of amended leave application under Ordinance, 2001 was not treated as fatal---Court declined to follow that view, observing that said judgment had not considered scheme, spirit, language and penal consequences under S.10 of Ordinance, 2001---Court preferred the Lahore High Court view which had examined S.10 in detail and held amended leave application mandatory. (g) Banking suit---Defendants failing to file amended leave application---Further proceedings---Defendants Nos.1, 2 and 4, having failed to comply with S.10 of Ordinance, 2001, could not defend the suit on basis of leave application filed under Act XV of 1997---Plaintiffs were directed to file statement of account showing liability of said defendants---Matter was adjourned for arguments on merits on amended application filed by defendant No.12 and for further proceedings. Disposition: Defendants Nos.1, 2 and 4, having failed to file amended applications for leave to defend under S.10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and having shown no sufficient cause, were treated as having failed to file leave to defend in law. Plaintiffs were directed to file statement of account showing liability of said defendants within two weeks. Matter was adjourned for arguments on merits on amended application filed by defendant No.12 and for further proceedings.