MUHAMMAD MUZAMMAL KHAN, J.---Instant regular first appeal is directed against the judgment/decree dated 10-6-2004 passed by the Banking Court No.1, Faisalabad whereby the suit of the appellant for recovery of Rs.32,58,289.32 was decreed for an amount of Rs.9,54,560 along with costs of funds at the prevailing rate from 1-7-1998, till the full/final realization of the decretal amount, jointly and severally with costs of the suit, against the respondents.
2. Succinctly, relevant facts are that respondent No.1 through its Directors was granted finance facility by the appellant on 3-7-1996 to the tune of Rs.10.00 million by way of export refinance part-I for a fixed period against the security of open pledge of stocks besides collateral securities in form of equitable mortgaged of properties, lien on export LC/Contracts, personal guarantees of the Directors of the Company besides execution of Finance agreement and other alike documents including the demand promissory notes, payable on demand of the appellant. The finance facility was reduced to the tune of Rs.4.00 Million on request of the loanee on 4-7-1997 for 362 days.
Transactions between the parties remained normal till 30-6-1997 whereafter respondents failed to abide by the terms/conditions of the finance agreement and the rules/regulations promulgated by the State Bank of Pakistan. On demand of the Bank, an amount of Rs.4.00 Million was repatriated to the State Bank of Pakistan and the liability with regard to over due amount was taken over by the appellant Bank. Thereafter the respondents were allowed finance with subsidized rate of mark-up but due to failure to reimburse the finance, they were held liable to pay mark-up at the rate of 19 percent. Liability of the respondents was reduced, as they had been depositing certain amounts towards the adjustment of their account. Respondents, in spite of all this, committed default resulting in legal notices by the appellant which were replied by the respondents, acknowledging their liabilities and praying time space for re-adjustment of the same. Repeated failure in re- adjustment of the finance facility and sale of pledged stocks in trade by the respondents, led to filing of suit for recovery by the Bank. Respondents in response to service of notice filed an application for leave to defend the suit.
3. The Banking Court cognizant of the suit after hearing the parties, partly decreed the suit of the appellant, calculating the liability of the respondents on the basis of mark-up for 362 days at the agreed rate of Rs.52.00 paisas per thousand per day for the agreed finance period' only to the tune of Rs.7,52,950. On account of non-shipment of the consignment by the respondents a penalty of Rs.2,01,000 was imposed and weir total liability was worked out as Rs.49,54,560 and by adjustment of repaid amount by the respondents of Rs.4,00,000 remaining amount was said to be Rs.9,54,560 and for this amount the appellant's suit was decreed, as noted above. Banking Court neither decided the application of the respondents/defendants filed by them under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 praying leave to defend the suit nor any reason was furnished for declining the decree to the appellant, as claimed in the plaint. The appellant aggrieved of partial decretal of its suit, filed the instant first appeal before this Court which was admitted to regular hearing and after notice to the respondents, has now been placed for final determination. Respondents having been served, are represented through their counsel.
4. The learned counsel for the appellant submitted that the trial Court overlooked the fact that except respondent No.2 there was no proper application for leave to defend the suit by other defendants hence as against the defaulting defendants/ respondents, suit of the appellant as it stood, should have been decreed. It was further submitted that decision of the trial Court without deciding the fate of application under section 10 of Financial Institutions (Recovery of Finances)
Ordinance. 2001 by respondent No.2 was unwarranted. According to him, respondent No.2 also failed to\ file a proper statement in terms of section 10(4) of the Ordinance, hence, this application was also liable to rejection under subsection (6), whereafter the suit as brought, deserved to be decreed, but a contrary view without any reason, is not sustainable at law. It was further argued that even after expiry of finance agreement, the finance facility of the respondents was re- scheduled, out of which they had been getting benefits. The precise submission was that the appellant was entitled to the entire suit amount which could not have been reduced without any just cause/reason but the impugned judgment is absolutely silent in this behalf. It was also assertively argued that the appellant was entitled to recover mark-up beyond the initial period of 362 days as the facility was rescheduled and availed by the respondents.
5. The learned counsel appearing on behalf of the respondents refuted the arguments of the appellant, supported the judgment/decree of the trial Court and urged that the original loan amount having been repaid, the respondents were not liable to pay the suit amount. According to him, the markup was correctly worked out and the decretal amount including already penalty of Rs.2,01,000 with which the respondents could not have been burdened.
6. We have minutely considered the respective arguments of the learned counsel for the parties and have examined the record of the trial Court with their assistance. Besides the fact that the Banking Court has not give any reason for declining the decree to the appellant for the bulk of the suit amount as they have been granted only one third of the claimed sum, the judgment is absolutely silent about the fate of the application under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 filed by the respondents. Under law in case of acceptance of application of the defendant, the controversy between the parties was to be put to issues and in case of its rejection the suit of the appellant was to be decreed to the extent the appellant was entitled to the amount. Dispute regarding non-filing of any petition by respondents, other than respondent No.2, and its result, also remained thirsty of decision. The appellant had claimed in the plaint that after expiry of fixed period, for which the finance was advanced, the same was rescheduled and the respondents had been taking benefits of the rescheduling. The appellant also detailed the repayment by the respondents during the period from 30-8-1997 to 30-12-2000 in Para No.9 of the plaint and this period being beyond the time frame of original finance, was enough proof of the rescheduling of the finance facility availed by the respondents. Be that as it may, documents along with the plaint which included the reply of the respondents through their counsel dated 29-9-1999 to the legal notice issued by the appellant, acknowledging their outstanding liability which was prayed by them to be adjusted within the time prayed to be extended from the Bank. All these matters remained undecided by the trial Court including the non-determination of liability of the respondents to liquidate their liability, in spite of repeated notices by the Bank. In these circumstances the judgment/ decree impugned, is not sustainable at law and deserved to be reversed.
7. For the reasons noted above, we are of the considered view that the Banking Court No.1 Faisalabad did not opt a lawful procedure for decision of the case and under a misconceived manner/view of deciding the lis, disposed it of through a non-speaking/sketchy judgment. This appeal is accordingly allowed. The impugned judgment/decree dated 10-6-2004 is accordingly set aside and the case is remitted back to the Banking Court No.1 Faisalabad, for fresh decision of application' of the respondents under section 10 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001 and to decide the suit afresh, in accordance with law. There will be no order as to costs.