Malik Arshad Hussain Awan v. Messrs United Bank Limited

Case Details

Present: Syed Mansoor Ali Shah, Jamal Khan Mandokhail and Athar Minallah, JJ.

Malik Arshad Hussain Awan — Petitioner

Versus

Messrs United Bank Limited — Respondent

Civil Petition No. 1393-L of 2020
Decided on: 22nd February, 2024

Against the judgment of the Lahore High Court, Lahore, dated 18.06.2020 passed in F.A.O. No. 512 of 2013.

Civil Procedure Code and Appointment of Guardian

Civil Procedure Code (V of 1908), Order XXXII, Rule 15 — Mental Health Ordinance (VIII of 2001), Sections 29 & 32 — Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Section 7(2) — Suit for recovery of finance — Defendant of unsound mind — Guardian in the suit, appointment of — Banking Court, powers of.

The Banking Court has the power to determine the unsoundness of mind or mental infirmity of a person on an inquiry under Order XXXII of the C.P.C. based on the evidence and appoint a guardian for the suit for the limited purpose of representation before the court of law, without first seeking an appointment of a guardian under the Mental Health Ordinance, 2001.

Rule 15 of Order XXXII, C.P.C.

Rule 15 of Order XXXII of C.P.C. provides that Rules 1 to 14 of Order XXXII shall apply to persons adjudged to be of unsound mind and to persons who, though not so adjudged, are found by the Court on inquiry, by reason of unsoundness of mind or mental infirmity, to be incapable of protecting their interests when suing or being sued.

The said Rule acknowledges two categories of persons of unsound mind: one who is already adjudged by a court of competent authority as a person of unsound mind; and the other, who is not so adjudged but the court itself on inquiry finds that the person is of unsound mind.

In both cases, the court is to appoint a guardian for the suit for such a person. In the first category, in view of the provisions of Rule 4(2) of Order XXXII of C.P.C., the court is to ordinarily appoint the same person as guardian for the suit who has been appointed the guardian under the Mental Health Ordinance, 2001.

In the second category, the court may appoint any suitable person who has no interest against the person of unsound mind. The court cannot decline to appoint the guardian for the suit merely for the reason that the defendant has not been so adjudged under the Mental Health Ordinance by the competent authority.

Powers of the Civil and Banking Courts

Where no guardian has been appointed under the Mental Health Ordinance, it does not preclude the Civil Court or the Banking Court from proceeding to appoint a guardian for the suit under Order XXXII of C.P.C.

This ensures that the interests of a mentally disordered person are protected before the court of law and also ensures the continuation and efficient conclusion of the trial.

The Banking Court, therefore, has the power to determine the unsoundness of mind or mental infirmity of a person on an inquiry under Order XXXII of the C.P.C. based on the evidence and appoint a guardian for the suit for the limited purpose of representation before the court of law, without first seeking an appointment of a guardian under the Mental Health Ordinance.

Guardian for the Suit and Guardian of the Person or Property

The concept of next friend or guardian for the suit is to provide proper representation to a minor or a person with unsound mind during litigation, in order to protect his interests. Therefore, their role is limited to the particular litigation or legal action for which they are appointed.

A guardian for the suit is also called a “Guardian ad Litem.” The Latin term “ad litem” means “for the lawsuit.” Thus, a guardian for the suit is appointed by a court specifically for the duration of legal proceedings, and his role is temporary and limited to the particular lawsuit or legal matter.

This might involve making decisions about litigation, settlement or other legal strategies.

A guardian of the person or property of a minor or a person of unsound mind, on the other hand, is a person legally appointed to manage all the affairs of another person. Such a guardian has the authority to make decisions on behalf of the said person in various aspects of life, including financial, medical and personal matters.

Representation by Counsel

Ms. Saba Saeed Sheikh, Advocate Supreme Court and Syed Fayyaz Ahmad Sherazi, Advocate-on-Record appeared for the Petitioner.

Jam Khurshid Ahmed, Advocate Supreme Court appeared for the Respondent.

Date of Hearing: 22nd February, 2024.

Judgment

Background of the Case

The respondent Bank filed a recovery suit under the Financial Institutions (Recovery of Finances) Ordinance, 2001 (“FIO”) against the brother and father of the petitioner on 03.01.2011.

While the father of the petitioner contested the suit by filing his application for leave to defend, the brother of the petitioner was proceeded against ex-parte vide order dated 10.02.2011.

Subsequently, the petitioner filed an application under Rules 3 and 15 of Order XXXII of the Code of Civil Procedure, 1908 (“C.P.C.”) before the Banking Court seeking his appointment as guardian for the suit of his brother, who he asserted was suffering from mental infirmity and was of unsound mind.

The said application was dismissed by the Banking Court on merits vide order dated 16.09.2013 on the ground that there was no valid document on the record to establish that the brother of the petitioner was of unsound mind or suffering from any mental infirmity.

Aggrieved by the said order, the petitioner filed an appeal before the High Court under Section 22 of the FIO, which was dismissed through judgment dated 18.06.2020.

The High Court maintained that the petitioner’s brother had to be first adjudged as mentally disordered by the Court of Protection under the provisions of the (Punjab) Mental Health Ordinance, 2001 (“MHO”) before the petitioner could be entitled to file an application under Order XXXII, C.P.C. before the Banking Court. Hence, the instant petition for leave to appeal.

Question Before the Court

The question involved in the instant petition was whether a Banking Court can appoint a guardian for the suit, under Rules 3 and 15 of Order XXXII of the C.P.C., for a defendant who by reason of “unsoundness of mind” or “mental infirmity” is incapable of protecting his interests.

The Court also considered whether the defendant had to be first adjudged to be a person of unsound mind and get a guardian appointed under Sections 29 and 32 of the MHO by the Court of Protection before an application for the appointment of his guardian for the suit under Order XXXII of the C.P.C. could be entertained by a Banking Court.

Powers of the Banking Court

The instant petition emanated from a suit for recovery filed under the FIO, which prescribes a special mechanism for dealing with recovery of finance by financial institutions from customers and also establishes special courts, namely the Banking Courts.

Section 4 of the FIO gives its provisions overriding effect over any other law for the time being in force. Section 7 stipulates the powers of Banking Courts and grants them all powers vested in a Civil Court under the C.P.C. in the exercise of its civil jurisdiction.

Furthermore, Section 7(2) of the FIO prescribes that the Banking Court shall follow the procedure laid down in the C.P.C. in all matters with respect to which the procedure has not been provided for in the FIO.

Therefore, for the procedure as to how a person of unsound mind or mental infirmity can file or defend a suit filed under the FIO, recourse has to be made to Rule 15 of Order XXXII of the C.P.C.

Application of Rule 15

Rule 15 of Order XXXII provides that Rules 1 to 14 of Order XXXII shall apply to persons adjudged to be of unsound mind and to persons who, though not so adjudged, are found by the Court on inquiry, by reason of unsoundness of mind or mental infirmity, to be incapable of protecting their interests when suing or being sued.

The Rule therefore recognizes two categories of persons of unsound mind. The first category consists of persons already adjudged by a court of competent authority to be of unsound mind. The second category consists of persons who have not been so adjudged but whom the court itself finds, upon inquiry, to be of unsound mind.

In both cases, the court is to appoint a guardian for the suit.

Purpose of Guardian for the Suit

The mandate and purpose of Order XXXII of the C.P.C. is to ensure the smooth continuation of proceedings and expeditious trial of suits wherein a minor or a person of unsound mind sues or is sued.

The concept of next friend or guardian for the suit is to provide proper representation to a minor or a person with unsound mind during litigation, in order to protect his interests.

A guardian for the suit is appointed specifically for the duration of legal proceedings, and his role is temporary and limited to the particular lawsuit or legal matter. A guardian of the person or property, on the other hand, is legally appointed to manage the affairs of another person and may have authority concerning financial, medical and personal matters.

Scope of the Mental Health Ordinance

The Mental Health Ordinance deals with the care and treatment of mentally disordered persons, management of their property and other related matters.

Under Section 29 of the MHO, where a person is possessed of property and is alleged to be mentally disordered, the Court of Protection may direct an inquiry for the purpose of ascertaining whether such person is mentally disordered and incapable of managing himself, his property and his affairs.

Where a person is found to be mentally disordered and incapable of taking care of himself, the Court of Protection appoints a guardian under Section 32 of the MHO. Such guardian is legally appointed to take care of and manage the personal and property interests of a mentally disordered person.

Difference Between MHO and Order XXXII

The scope of the MHO is different and broader when compared to that of Order XXXII of the C.P.C. It provides for the care and treatment of mentally disordered persons, management of their properties and affairs, and encourages community care of such persons.

It is not limited only to representation before a court in a suit.

Where no guardian has been appointed under the MHO, this does not preclude the Civil Court or Banking Court from proceeding to appoint a guardian for the suit under Order XXXII so that the interest of a mentally disordered person is protected before the court of law and the trial can continue efficiently.

The Banking Court therefore has the power to determine the unsoundness of mind or mental infirmity of a person through an inquiry under Order XXXII of the C.P.C., based on evidence, and appoint a guardian for the suit for the limited purpose of representation before the court of law, without first seeking an appointment of a guardian under the MHO.

Supreme Court’s Finding

The High Court committed a legal error by holding that the petitioner’s brother had to first be adjudged as a person of unsound mind under the MHO before an application could be moved under Order XXXII before the Banking Court.

The Supreme Court therefore held that a prior appointment of a guardian under the Mental Health Ordinance was not necessary for the Banking Court to consider an application for appointment of a guardian for the suit under Order XXXII of the C.P.C.

Final Order

For the above reasons, the petition was converted into an appeal and allowed by setting aside the impugned judgment.

The matter was remanded to the High Court to decide the appeal of the petitioner on merits and in accordance with the provisions of Rule 15 of Order XXXII of the C.P.C., as expounded above.

Appeal allowed.