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Decisions should be made on Merit basis particularly when they were within the Limitation Period, preventing Procedural Barriers from obstructing Justice --- Lahore High Court, Lahore

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Decisions should be made on Merit basis particularly when they were within the Limitation Period, preventing Procedural Barriers from obstructing Justice --- Lahore High Court, Lahore

Islamabad 06-11-2024: In a recent decision, the Lahore High Court’s Bahawalpur Bench overturned an order of the Bahawalpur Banking Court, restoring an application for setting aside an ex-parte decree filed by M/s Wazir Cotton Ginners & Oil Mills. This decision reinforces the Court’s commitment to substantive justice over rigid procedural requirements, ensuring that parties have a fair chance to contest judgments on merit.

The case centered around an ex-parte judgment issued by the Banking Court in 2017 against Wazir Cotton Ginners & Oil Mills. The appellants initially challenged this decree by pursuing two remedies simultaneously a Regular First Appeal (RFA) in the Lahore High Court and an application in the Banking Court under Order IX Rule 13 of the Code of Civil Procedure (CPC) to set aside the decree. However, procedural complications ensued when the appellants unknowingly allowed the Banking Court application to be dismissed for non-prosecution in 2019, while later withdrawing the RFA in 2021 to focus on the Banking Court proceedings. When the appellants subsequently filed a restoration application in the Banking Court, it was dismissed, with the Court imposing a fine and characterizing the appellants’ actions as an “abuse of Court process.”

In its October 2024 judgment, the Lahore High Court found the Banking Court’s dismissal overly technical, observing that the appellants and their counsel were unaware of the application’s earlier dismissal. The Lahore High Court highlighted that procedural issues should not unduly prevent litigants from seeking justice, particularly when they were within the statutory three-year limitation period for restoration under Article 181 of the Limitation Act, 1908.

Furthermore, the Court rejected the respondent’s argument that the dismissal order was interlocutory and therefore not appealable. Citing Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the Lahore High Court affirmed that the dismissal constituted a final order, thereby allowing the appellants’ appeal to proceed. In its judgment, the Court cited recent case law, including Abdul Quddous Vs. Commandant Frontier Constabulary, KPK (2023 SCMR 334) and Khalid Iqbal Vs. Mst. Yaseen (2023 CLC 963), underscoring a trend in Pakistan’s higher judiciary to favor merit-based justice over procedural technicalities.

The Lahore High Court’s decision directs the Banking Court to reconsider the application on its merits, ensuring that the appellants have an opportunity to contest the ex-parte decree substantively. This judgment reinforces the Court’s emphasis on preventing procedural obstacles from unjustly prejudicing litigants, signaling a significant precedent for future banking and financial cases involving similar procedural dismissals.