1. ' The plaintiff-Bank filed suit for recovery of Rs, 106,304,184.71 against the defendants.
2. ' Brief facts of the case are that at the request of the defendant No,1, the plaintiff-Bank granted foreign currency loan for completing the project owned by the defendant No,
1. The defendants Nos,2 to 11 are the directors of the defendant No,1 and are sued in the capacity of guarantoRs, ' The loan of US $ 3.127 million . Equivalent to Rs,55.032 million was repayable by the defendant No,1 in 14 equal half yearly instalments commencing from 1-4-1991 with interest @ 14% payable in semi- annual instalments.
3. ' The defendants Nos,1 and 3 to 11 filed joint written statement and alleged that suit is premature as plaintiff has claimed the amount of the instalments which have not been fallen due at the time of filing of the suit. The defendants further alleged that interest charged in the account and claimed in the suit is not in accordance with the arrangement between the parties, and instead of simple interest plaintiff had charged compound interest on quarterly basis. The defendants further disputed the calculation, correctness and legality of the plaintiff's claim for interest and other debit charges including excise duty, fee for LLA and the amount of alleged loan as shown in the said statement of accounts.
4. ' On the basis of the pleadings of the parties the following issues were framed:--
(1) Whether the above suit is false, incompetent and premature?
(2) Whether the claim in the suit is tenable and not exaggerated and unconscionable?
(3) Whether the charged documents are without consideration and the amounts and dates stipulated therein are fictitious?
(4) Whether there is legal equitable mortgage?
(5) Whether the agreements undertaking and letter of guarantees (Annexures C-1, C-2, D-1, D-2 and D-3) are invalid, void and inoperative being not attested as required by law?
(6) Whether the plaintiff's claim/ s for interest and excise duty are legal and in accordance with the terms of. Sanction advice and alleged loan agreement?
(7) Whether the statement of account annexed with the plaint, contains correct and authorized debit entries?
(8) Whether the plaintiff has given credit to the amount/ s deposited by the defendant No,1 with the plaintiff in the account?
(9) Whether Mr. Saleem Ahmed Khan who has signed and verified the plaint, is duly authorized person and there is, proper Resolution passed by the Board of Directors of the plaintiff to file the suit?
(10) What should be the decree?
5. ' The plaintiff's witness, namely, Saleem Ahmed Khan gave evidence and was cross-examined by the defendants' Advocate. The witness produced Loan Agreement as Exh.5/1, D.P. Note as Exh. 5/2, Memorandum of Deposit of title deeds as Exh.5/3, receipt, dated 31-10-1988 as Exh.5/4, NOC as Exh.5/5, acknowledgement of possession of plot, approval by Lasbela Industrial Estate Development Authority (UEDA') for creating mortgage and permission letter for creating mortgage as Exhs.5/6, 5/7 and 5/8, undertaking as Exh.5/9, guarantee by defendants as Exh.5/ 10, guarantee for foreign currency loan as Exh. 5/11, Hypothecation Deed as Exh. 5/12, floating charge as Exh.5/ 13, lease agreement as Exh.5/ 14, hypothecation of machinery as Exh.5/15, statement of account as Exhs.5/16 and 5/17 and during the course of cross-examination produced statements of accounts as Exhs.5/18, 5/19, 5/20 and 5/21.
6. ' None of the defendants appeared in witness-box nor any evidence is led on their behalf.
7. ' Heard Mr. Anjum Ghani Khan, learned counsel for the plaintiff and Mr. Syed Mamnoon Hassan, learned counsel for the defendants.
8. ' My findings on the issues are as under:--Issue No, 1 ' The defendants in their written statement alleged that the plaintiff has claimed the amount of instalments, which were even not due at the time of filing of the suit as such suit is premature as on said date entire amount claimed does not become due end payable. The loan was disbursed on 17-7-1989., repayable in 14 bi-annual instalments commencing from 1-4-1991. Admittedly defendants had failed to pay instalments on its due date, and as per terms of Exh. 5/1 plaintiff-Bank had an option to file the suit for recovery of due instalments only and or to cancel the facilities and demand immediate payment of the entire loan. Since defendants had failed to pay instalments on its due dates, plaintiff-Bank rightly filed the suit. The issue is answered in negative.
9. ' Issues Nos,2, 4 and 5 ' These issues are taken together. The plaintiff's witness produced Exh.5/1, the loan agreement, Exh.5/2 demand promissory note, Exh.5/3, Memorandum of deposit. Of title deeds, Exh.5/9, sponsors/directors undertaking, Exh.5/ 10, guarantee by the defendants Nos,2 to 11, Exh.5/11, guarantee executed by defendants Nos,2 to 11 and Exh.5/ 12, deed of floating charge executed by defendant No, 1.
10. ' All the above documents were produced by the plaintiff's witness and were exhibited without any objection from the defendants' side. The plaintiff was suggested during the cross-examination that amount mentioned in Exhs.5/2, 5/3, 5/9, 5/10, 5/11 and 5/12 are incorrect. The defendants have not denied the execution of these documents and only questioned the amount mentioned therein. The defendants had not challenged Exh.5/1, the agreement of loan and amount mentioned in it. In agreement of loan Exh.5/ 1, sanction of foreign currency loan has been shown as US $ 3.127 million equivalent to Pak Rs,55.032 million and same amount has been mentioned in Exh.5/2, demand promissory note, Exh.5/3 Memorandum of deposit of title deeds, Exhs.5/ 10 and 5/11, letters of guarantee executed by defendants Nos,2 to 11, Exh.5/ 12, hypothecation of plant, etc. In reply to a question the plaintiff's witness stated that due to change in the rate of exchange Rs,58.027 million has been debited in the statement of account Exh.5/ 17. The loan was sanctioned on 5-9-1998 in foreign currency of US $ 3.127 million, whereas document has been executed on 28-12-1988 and loan was disbursed on 10-10-1989. The defendants had not produced any evidence that on the date of disbursement of loan in US -$ 3.127 million same was not- equivalent to Rs,58.027 million.
11. The amount in all exhibits is mentioned in US Dollars as well as in some of it equivalent to Pak Rupees.
12. ' The documents Annexures C/1 to E/ 1 and F/8 were executed against valuable consideration.
13. ' Mr. Mamnoon Hassan, learned counsel for the defendants argued that Annexures D/1 to E/2, i,e, Exhs.5/9 to 5/13 are void documents and have no legal effect as the same are not attested by two witnesses, as required under Article 17 of the Qanun-e-Shahadat Order, 1984. The learned counsel argued that the requirement of attestation of documents by two witnesses is mandatory and due to non-attestation of these documents, same cannot be looked into.
14. ' Annexures D/1 to D/3, i,e, Exhs. 5/9 to 5/11 are guarantees executed by defendants Nos,2 to 1 1 , Exh.5/12 is letter of hypothecation and Exh.5/ 13 is deed of floating charge.
15. ' Financial Institutions (Recovery of Finances) Ordinance, 2001 provided only finance agreements by or on behalf of a financial institution and customer to be attested in the manner laid down in Article 17 of the Qanun-e-Shahadat Order, 1984. The finance agreement (Exh.5/ 1) executed by parties is duly attested by the two witnesses, whereas Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 provided that all banking documents executed by or on behalf of a bank and a borrower or customer shall be duly attested in the manner laid down in Article 17 of Qanun-e-Shahadat Order, 1984.
16. ' Both Act, 1997 and Ordinance, 2001 specifically save the documents required to be attested under Qanune-Shahadat Order, 1984, if same were executed prior to enforcement of said Act/Ordinance.
17. The documents Exhs.5/9 and 5/11 to 5/13 were executed on 28-12-1988, much prior to the date of enforcement of Act,' 1997/Ordinance, 2001, and as such cannot be held void, inoperative and of no legal effect and the contention of the learned counsel for the defendants is without any legal force.
18. ' The contentions of Mr. Syed' Mamnoon Hassan, learned counsel for the defendants have no force as subsection (4) of section 17 of Act, 1997 provided that any document creating, or purporting to create or indicating the creation of a mortgage, charge, pledge or hypothecation has to. Be admitted in evidence and Court cannot refuse to accept such documents in evidence merely because it is improperly stamped or is not registered.
19. ' The Legislators by subsection (4) of section 18 of Ordinance, 2001 made significant changes in the proviso of the repealed law by providing that Banking Court shall not refuse to accept in evidence any document creating or purporting to create or indicating the creation of a mortgage, charge, pledge or hypothecation in relation to any property or assumption of any obligation by a customer, guarantor, mortgagor or otherwise merely because it is not duly stamped or is not registered as required by any law or is not attested or witnessed as required by Article 17 of the Qanun-e- Shahadat Order. (Underlined are mine).
20. ' By proviso to subsection (4) of section 17 of Act, 1997, the banking documents which were not attested by two witnesses were not made inadmissible in evidence, whereas subsection (4) of section 18 of Ordinance, 2001, provides that even the Banking documents, which were not attested by witnesses as required by Article 17 of the Qanun-e-Sliathadlt Order and the Court cannot refuse to accept such documents in evidence.
21. ' The contentions of learned counsel for the defendants have also no force from another angle that there is no requirement in Ordinance, 2001 for the attestation of guarantees, hypothecation by two witnesses as under the Ordinance, 2001, law makers specifically deviated from the earlier requirement that "all banking documents" to be attested as required under Article 17 of Order, 1984.
22. In the light of above discussions I hold Issue No,2 in negative and Issue No,4 in affirmative.
23. ' Issue No,3 ' By Annexure F/8 (Exh.5/3) the defendants confirm having already deposited with the plaintiff-Bank original documents, viz. Agreement to lease, dated 30-10-1988, .Receipt of payment, dated 31-10- 1988 by LIEDA, no objection certificate from Government of Balochistan for allotment of land, acknowledgement of possession, permission to mortgage of LIEDA, dated 12-11-1988 and letter of approval of agreement to create mortgage.
24. ' It appears that LIEDA with the approval of Government of Balochistan allotted industrial plot admeasuring 12,457 square meters to defendant No,1 for the purpose of establishing industries. The LIEDA entered into an agreement to lease of Plot No,C-85-91 with defendant (Exh.5/ 14) and undertook to execute 99 years in favour of the defendant upon going into production of the industrial undertaking to be constructed on the plot in question. The LIEDA also gave its no objection for the mortgage of the said plot with the plaintiff and have not taken any objection on the mortgage of the plot. The issue is answered accordingly. Issues No,6, 7 and 8 ' These issues are taken together.
25. ' By order, dated 2-3-1998, it was observed that "the revised statement of account filed on 8-12-1997 again shows some discrepancies as were pointed out by the learned counsel for the defendant on 22-12-1997. The learned counsel for the plaintiff has conceded to such error crept into the statement of account and time was, therefore, granted for filing second revised statement of account.
26. ' On 11-2-1998, second revised statement of account was filed which was certified by the very officer, namely. Mr. Saleem Ahmed Malik of the plaintiff-Bank. It is pointed out by Mr. S. Mamnoon Hassan, the learned counsel for the defendants that the principal amount, which was shown in the plaint as Rs,55.032 million, has now been shown as Rs,58,027,875.71. The amount of interest initially calculated with the quarterly rests for the period from November, 1990 till December, 1992 has now been calculated at the rate of 14% per annum without rest. The fee paid to the Corporate Law Authority has also been included twice. On account of these discrepancies leave was granted to the defendants".
27. ' On 29-1-1999, the learned counsel for the defendants stated that the principal dispute between the parties is the statement of account submitted by the bank and counsel were directed to meet themselves or through their authorized representative/accountants to resolve the dispute of accounts filed by the parties.
28. ' On 16-3-1999, a statement was made that "the' accountants of both sides met to resolve the discrepancies stated in the 'statement of account and both parties have filed their own versions of the accounts in Court.
29. ' Mr. S. Mamnoon Hassan, learned counsel for the defendants, stated that the plaintiff has not shown credit of Rs,4,464,344 paid by the defendant No,1 in the revised statement of account filed today and that no evidence could be required if this issue is resolved by further checking of accounts and that the defendant No,1 would pay the outstanding amount shown in the revised statement if proved correct.
30. ' From the statement of accounts filed by the parties it appears that there is no dispute so far as the principal amount of Rs,58,027,876 is concerned and likewise interest at the agreed rate of 14% per annum amounting to Rs,45,671,913. According to the plaintiff the defendants had paid only a sum of Rs,10,100,791, whereas the defendants are claiming repayment of Rs,14,565,135. The plaintiff's witness produced revised statement of account as Exh.5/21, showing the admitted principal amount likewise interest and amount paid by the defendants. In reply to a question in cross- examination the plaintiff's witness stated that "it is correct that the plaintiff had received a sum of Rs, 30,05,038.38 on 15-5-1990, Rs,40,95,753 on 18-'11-1990, Rs,10,00,000 on 14-3-1993, Rs,10,00,000 on 1-4-1993 and Rs,10,00,000 again on 11-5-1993 and all .These payments were duly credited in the Account No,10346 of the defendant No,1". The defendant's witness denied the suggestion that sum of Rs,4,464,343.93 was debited from the account No,10S60-2 for credit into the loan account.
31. ' The witness of the plaintiff was not contradicted by any document that in fact a sum of Rs,4,464,343.93 was debited from the Account No,10560-2 for credit into the loan accounts. The defendants also failed to appear in the witness-box to make a statement on oath and or to produce any document in support of their contention that the said amount has been debited from their account to credit in the loan accounts.
32. ' The plaintiff has already deleted all the entries pertaining to excess interest debited in the account of the defendants, liquidated damages and other entries and confined his claim only to the extent of principal amount plus interest at the rate of 14% per annum on it.
33. ' For the foregoing reasons I decree the suit of the plaintiff against the defendants Nos,1 and 3 to 11 jointly and severally in the sum of Rs,93,598,996 with interest at the rate of 14% per annum from the date of filing of the suit till realization with costs. Final mortgage decree is also passed in respect of plot, bearing No,E-85-9, admeasuring 12457 square meters in Hub Industrial Trading Estate, Balochistan with all construction and structures, machinery, equipment, etc. On it, but subject to the first charge of Hub Industrial Trading Estate, Balochistan on it.