' MIAN HAMID FAROOQ, J.---This single judgment shall decide the present appeal (R.F.A. No,268 of 1997) and the connected appeal (R.F.A. .No, 269 of 1997, as common questions of law and facts are involved in both the appeals and they have arisen out of identical judgments.
2. Instant appeals, filed by United Bank Limited, under section 12 of the Banking Companies (Recovery of Loans) Ordinance, 1979, proceed against judgments and decrees dated 10-4-1997, whereby the learned Judge Banking Court dismissed appellant's two suits for the recovery of Rs.74,349 and Rs.74,369.
3. Precisely stated the facts giving rise to the filing of the present appeals are that the appellant/plaintiff, on 3-9-1980, filed two separate suits for the recovery of Rs.74,349 and Rs.74,369 against the respondents, in both the appeals, before the learned Senior Civil Judge, Lahore. It was contended by the appellant that on the application of defendant No,2, letters of credit for US 10,000.$ (each) were opened by the appellant; the defendant No,3 stood guarantor and all the defendants executed various documents, thereby inter alia, undertaking to retire the shipping documents after paying the Bank's dues. It was further the case of the appellant-Bank that despite various reminders, the defendants failed to retire the shipping documents and ultimately when the appellant-Bank tried to clear the imported goods, it came to their knowledge that the exporter of the consignment has shipped other items instead of agriculture spray equipment and hence the consignment could not be got cleared. In the above backdrop, the Bank filed two suits for the recovery of its outstanding dues. Both the suits were contested by the defendants Nos.1 and 2, while defendant No,3 was proceeded ex parte. The learned Civil Judge, seized of the matter, framed the following solitary issue:
(1) Whether the plaintiff is entitled to recover the suit amount from the defendant for the grounds mentioned in the plaint? OPP. .
(2) Relief.
' With the promulgation of the Banking Companies (Recovery of Loans) Ordinance, 1979, the suits were transferred to the learned Judge Banking Court, constituted under the said Ordinance, by operation of law. In both the suits the appellant-Bank produced same witness, namely, Muhammad Saeed Mughal, who appeared as P.W.1, and produced one document in evidence i.e. Statements of accounts, which was exhibited as Ex.P.1. The learned Judge Banking Court, after hearing the appellant-Bank, proceeded to dismiss both the suits, vide judgments and decrees dated 10-4-1997, hence the present appeals.
4. Despite citation in Daily "Nawa-i-Waqt" of its publication dated 20-8-2003, none entered appearance on behalf of the respondents, therefore, this Court, on 16-9-2003, proceeded ex parte against the respondents.
5. The learned counsel for the appellant, while relying upon Messrs Farid Sons Ltd. v. Messrs Ghulam Farid Muhammad Saeed and 13 others PLD 1972 Lahore 311, has submitted that the suits could be decreed only on the basis of the statements of accounts, which is admissible in evidence of its own force.
6. Out of the pleadings of the parties, the learned trial Court framed the solitary issue, as noted above, the onus of which was rightly placed upon the appellant. Upon the examination of the available record, we find that although the appellant, at the time of the filing of the suits, annexed various documents with the plaint, such as application and agreement for irrevocable letter of credit, account opening form, specimen signature card, F.I.R. And various letters, statedly, addressed to the defendants by the appellant-Bank, including the statements of accounts, yet admittedly, at the time of the recording of the evidence, the appellant-Bank did not produce the said documents in evidence, except the statements of accounts, and thus they were not admitted in evidence and were not exhibited. In view whereof, the said documents are not proved documents under the law and do not form part of the record. The appellant-Bank felt contended only by producing the statements of accounts (Exh.P.1) and one witness namely Muhammad Saeed Mughal, (P.W.1). Even the said witness, could not prove the alleged transaction, as highlighted in the plaints. Upon the perusal of the statement of P.W.1, we find that the said witness did not prove and support even the contents of the plaint and has only stated that the defendants opened the L.C. And later on refused to accept the shipping documents on account of which necessity arose for filing the suits. In his statement, he only produced copy of the statements of accounts, which was exhibited as Exh.P.1.
7. In the above perspective, it is evident that although the plaintiff led ex parte evidence, yet it could not prove its case. The appellant-Bank felt satisfied only after submitting copy of the statements of accounts. As noted above, the appellant-Bank was under an obligation to discharge the onus of solitary issue, however, in view of the evidence on record, we are of the view that the bank did not produce sufficient evidence to discharge the onus of the said issue. On the basis of the existing evidence, to our mind, the suits could not have been decreed and were rightly dismissed by, the learned Judge Banking Court.
8. Now coming to the solitary contention raised by the learned counsel of the appellant-Bank.
There is no cavil to the proposition that under section 4 of the Banker's Books Evidence Act, a certified copy of any entry in Banker's Book shall be received as a prima facie evidence and admissible in evidence without any formal proof, as held in the case of Messrs. Farid Sons Ltd. Ibid, relied upon by the learned counsel. That was the reason, why the learned Banking Court at the time of the recoding of the evidence, admitted the statements of accounts in evidence without any formal proof and exhibited the same as Exh.P.1. However, the mere admission of statements of accounts in evidence does not mean that the suits of the appellants are necessarily to be decreed, as to our view the appellant-Bank in addition to the statements of accounts, had to prove all the documents, relied upon by it and the transaction, as highlighted in the plaints. The learned Judge Banking Court has rightly dealt with the said contention of the learned counsel. It appears appropriate to reproduce the portion of the impugned judgment, which in fact clinches the whole matter, which reads as follows:- "7. The learned counsel for the plaintiff has argued that the suit be decreed in favour of the plaintiff- Bank in view of section 4 of the Bankers Books Evidence Act, 1891. This is submitted that a certified copy of any entry in a Bankers Book is prima facie evidence of the matters, transactions and accounts therein recorded in every case. There is no doubt that the presumption of truth is attached to the entries made in a certified copy of the Bankers Book, but such a statement of account is itself no piece of evidence or proof of the transaction of loan or some other transaction under the loan or some other transaction like L.C. Etc. A certified copy of the entries adduced into evidence under a certificate as per section 4 of the said Act is a good proof of the entry in a book of account maintained by the Banker and evidence of the matters, transactions and accounts recorded and maintained in such book and can be used for that purpose only but this record is not useful for proving the loan agreement or some other transaction about the opening of the accounts and acting of the parties under such accounts. In other words, a suit cannot be decreed merely on the basis of a statements of account which is Exh.P.1 in this suit."
9. The appellant-Bank could not succeed in the suits only on the basis of the statements of accounts, without proving the documents filed in support of the plaint and the nature of transaction, as highlighted in the plaint. We are of the view that the learned Banking Court has rightly dealt with the matter, as noted above, to which no exception can be taken.
10. Now coming to the two statements of accounts Exh. P.1, on which much emphasis and reliance has been placed by the learned counsel. The said two statements of accounts bear only two entries, one of withdrawal of Rs.99,349 and Rs.99,369 and the other is credit entries of Rs.25,000 and thus the outstanding amounts in two statements of accounts have been shown as Rs.74,349 and Rs.74,369. To say the least, the said two statements of accounts are incomplete, sketchy and cannot be made basis for saddling the respondents with the liability of the suit amounts. It is not discernible from the said two statements of accounts that how sum of Rs.99,349 and Rs.99,369 have been debited to the accounts of the defendants. We feel that such slipshod and sketchy statements of accounts cannot be relied upon and has rightly been discarded by the learned Banking Court.
11. Additionally, even the certifications of the two statements of accounts are not in accordance with the definition of "certified copy", as given in section 2(8) of Banker's Books vidence Act, 1891. If the certificates of the statements of accounts are placed in juxtaposition with the definition of "certified copy", as per section 2(8) of said Act, one comes to an irresistible conclusion that certificates are not in accordance with the said definition and therefore, the statements of accounts are not the certified copies of the entries of the Books of Accounts.
12. In the above perspective, we have examined the impugned judgments and find that the same are legal and do not call for any interference by this Court in exercise of its appellate jurisdiction, therefore, the same are maintained.
13. Upshot of the above discussion is that the present appeals are devoid of merits, thus the same are dismissed leaving the parties to bear their owe costs.
Appeal dismissed.
2004 C D 1344 [Lahore] Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ Messrs STATE ENGINEERING CORPORATION LIMITED, ISLAMABAD, through Manager (Personnel) S.M. Akram Farhat----Appellant versus NATIONAL DEVELOPMENT FINANCE CORPORATION and another----Respondents Regular First Appeal No,62 of 1998, decided on 25th February, 2004.
(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)- S.22-Contract Act (IX of 1872), Ss.126, 128 & 139---Contract of guarantee, nature of---Surety's liability, discharge of---Suit for recovery was filed by the respondent on the basis of finance facility availed by the borrower from it, in which the appellant was the guarantor---Suit was partially decreed against the appellant through an interim decree--Appeal was filed by the appellant against the said decree---Contention of the appellant was that the respondent was bound to recover the amount from some other Authority in the first instance, but it committed 'a lapse in the performance of its obligation, therefore, appellant in terms of S.139 of Contract Act, 1872 stood discharged-- Validity---Guarantee was an independent contract between the parties--- Documents on the record showed that the appellant, through the contract of guarantee, had in clear, unequivocal and unambiguous terms guaranteed to stand as surety for whatever amount that was due to the respondent from the borrower--As the borrower had defaulted in the payment of dues, therefore, the appellant was bound to discharge its surety obligation---Section 139 of the Contract Act, 1872 was not attracted in the circumstances. [p. 1346] A
(b) Contract Act (IX of 1872)--- ------------- Ss.126 & 128---Financial Institutions (Recovery of Finances)
Ordinance (XLVI of 2001), S.22---Contract of guarantee, conditions of ---Surety's liability, discharge of---Contention of the appellant was that under the finance agreement, the disbursement of the finance made to the borrower, was to be on the basis of progress of supply orders, but the respondent in breach of this condition disbursed the financing in lump sum, therefore, the guarantee of the appellant, which was strictly on the basis of finance agreement could not be enforced-ValidityAppellant, irrespective of the finance agreement, stood surety for repayment of the amount due from the borrower and this obligation was not dependent upon any terms of the finance agreement---Any deviation from the conditions of the finance agreement, in the circumstances, could not be equated to a breach of the contract, and could not absolve the appellant from its liability as a surety. [p. 1347] B
(c) Banking Tribunals Ordinance (LVIII of 1984)- S.2(e)---'Finance'---Interpretation---Scope---Term finance' does not include the liquidated damages under the Banking Tribunals Ordinance, 1984---Claim of the bank with regard to liquidated damages on the basis of finance availed by the borrower under a finance facility was refused. [p. 1347] C Allied Bank of Pakistan Limited Faisalabad v. Messrs Asisha Garments through proprietor and 2 others 2001 M LD 1955 ref. Sh. Javed Sarfraz for Appellant.
Tariq Kamal Qazi for Respondent No, 1.
' The instant R.F.A. No,62 of 1998 as also R.F.A. No,59 of 2000 are connected matters, thus are being disposed of together.
2. Briefly stated the facts of the case are that, the. Respondent N.D.F.C, brought a suit for the recovery of an amount of Rs.61,660,547.07 inter alia against the appellant, suing it as the guarantor, for the finance provided to Pakistan Switchgear Limited. Pakistan Switchgear Limited, did not contest the matter. The appellant applied for leave to appear and defend, which application has been partly dismissed to the extent of the claim of the respondent for the amount of Rs.26,793,585, under the interim decree passed on 15-1-1998, which is impugned in this appeal. But the leave was granted with regard to the claim of liquidated damages of the respondents. Anyhow, during the pendency of this appeal, the respondent's claim of liquidated damages has been denied through the final judgment dated 2-6-1999, which has been impugned in R.F.A. No,59 of 2000 by the N.D.F.C.
3. Learned counsel for the appellant, while arguing the case stated that, admittedly there are three finances granted to the original borrower, which were through the finance agreements dated 25- 6-1998, 27-9-1988 and 2-5-1989, and are based upon Islamic mode of financing i.e. The mark-up basis; Clause 4 of these agreements, clearly stipulates that, the guarantees shall be given by the appellant in pursuance of the agreement; according to clause 4(e), the respondent N.D.F.0 was bound to recover the amount in the first instance from WAPDA, but it committed a lapse in the performance of its obligation, resultantly, the appellant in terms of section 139 of the Contract Act, stands discharged. It is also argued that, according to condition No,13 of the agreement, the disbursement of the finance, made to the borrower, was to be on the basis of specific schedule depending upon the progress of supply orders of WAPDA, but in breach of this condition, the respondent had disbursed the financing in lump sum, therefore, the guarantee of the appellant, which is strictly on the basis of the financing agreement, cannot be enforced. Lastly, it is submitted that, according to the statement of accounts at page 94 of the file, certain amounts, such as central excise duty, liquidated damages and mark-up price, have been unauthorizedly entered and exaggerated; these amounts are liable to be excluded.
4. We have heard the learned counsel for the parties and find that, under the law, the guarantee is an independent contract between the parties. In these guarantee documents, which are admitted by the appellant, the appellant in clear, unequivocal and unambiguous terms had guaranteed to stand as surety for whatever amount is due to the respondent from the main borrower. As the main borrower in this case undoubtedly has defaulted in the payment of the dues, resultantly, the appellant was bound to discharge its surety obligation. From the record and also the arguments, raised before us, we do not find that, the provisions of section 139 of the Contract Act, are attracted to the facts and circumstances of the case. Resultantly, we do not find any merit in the argument, which is hereby repelled.
5. As regards the argument that, according to condition No,13 of the contract, the amount has been disbursed to the respondent in lump sum, suffice it to say that, again the same reason shall prevail that the appellant, irrespective of the main agreement, stood surety for repayment of the amount due from the principal borrower and this obligation is not dependent upon any terms of the finance agreements mentioned above. Thus, even if, there is some deviation, which cannot be equate to a breach of the contract, and the amount in lump sum has been paid to the borrower, that does not absolve the appellant from its liability as a surety.
6. The last submission that, unauthorized and excessive amounts have been added to the statement of accounts, we have considered the mark-up agreement and find that, the amount claimed in the suit, is strictly in line with the mark-up price of the agreements. Nothing excess thereto has been claimed or granted to the respondent, by virtue of the impugned decree, therefore, the argument has no force. Resultantly, we do not find any merit in this appeal (R.F.A.
No,62 of 1998), which is hereby dismissed.
7. As regards the second appeal (R.F.A. No,59 of 2000), the question involved is, whether in the final decree, the Court below has rightly refused to grant the liquidated damages to the appellant in this appeal. The learned counsel for the appellant has tried to argue that, the liquidated damages can be agreed to be paid by the parties in case of the violation; however, condition entitling the liquidated damages is that, the person, claiming the amount needs to prove the loss suffered on account of the violation; in this case, the appellant has duly established on the record that, they had suffered damages/loss due to the non-payment of the amounts of finance, on the due date.
8. We are afraid, this argument has no force for the reason that, according to the view of a Division Bench of this Court in the case reported as Allied Bank of Pakistan Limited Faisalabad vs. Messrs Asisha Garments through proprietor and 2 others 2001 M LD 1955, the term "finance" does not include the liquidated damages under the Banking Tribunals Ordinance, 1984 and, therefore, the claim of the bank in this behalf does not fall within the purview of the jurisdiction of the Banking Tribunals, as is in the present case. Moreover, the learned counsel for the appellant has failed to establish on the record, if before the institution of the suit, the guarantee was ever enforced by the respondent and that was refused. Resultantly, in the light of above particular law cited, we do not find any merit in this appeal, which is hereby dismissed.
9. However, before parting, on the request of the learned counsel for the appellant in R.F.A. No,62 of 1998, we would like to observe that, the present judgment shall not cause prejudice to the rights of the appellant, if it wants to settle the matter with the respondent on the basis of a compromise or any incentive scheme of the State Bank of Pakistan.