UMAR ATA BANDIAL, J.--- This regular first appeal is filed against the judgment and decree of the learned Banking Court No. Ill, Lahore passed on 3.9.2003 refusing leave to defend to the appellant company and 4 others and passing decree for an amount of Rs. 38.933 million alongwith the costs and cost of funds as certified by the State Bank of Pakistan payable from the date of default until realization of the decretal amount.
2. The salient facts of the case are that on 4.4.2002 the respondent Bank filed a suit for recovery of Rs. 46.497 million against the appellant company and respondents Nos. 2 to 5 in their capacity as guarantors, and in the case of appellant No. 2, also as mortgagor. Pursuant to sanction advice dated 9.8.2000 the respondent Bank extended two types of finance to the appellant company namely, CFS facility of Rs. 16.0 million and DFS facility of Rs. 23.0 million comprising a fresh limit of Rs.
10.0 million and old Rs. 10.000 million DFS facility plus Rs. 3.000 million slashed from CFS facility of Rs.
19.000 million". The sanction advice, grants one year's grace period for repayment of the DFS facility of Rs. 23.0 million which was adjustable in four years through bi-annual instalments starting on 31.7.2001 and ending on 31.7.2005. The sanction advice requires CFS facility to be adjusted annually.
The appellant company accordingly concluded separate agreements of the finance for the facilities. The one in respect of CFS facility fixed the buy back price at Rs. 20.235 million payable on 30.6.2001. The corresponding agreement for the DFS facilities contained a buy back price of Rs.
37.378 million payable in instalments going upto 31.7.2005.
3. Upon a perusal of the statement of account the judgment of the learned Banking Court notes that the appellant company had merely paid mark-up due on both DFS and CFS facilities whilst the principal amounts thereof, in the sum of Rs. 15.993 million and Rs. 23.0 million respectively, were outstanding as on 30.6.2001. Accordingly, the learned Banking Court passed the impugned decree for the aggregate amount of Rs. 38.993 million alongwith the costs and cost of funds against the appellants jointly and severally.
4. Before this Court the learned counsel for the appellants -has forcefully urged the following points:-
(i) That the learned Banking Court failed to consider and decide the appellants objection that the respondent Bank had not disbursed the facilities in accordance with the sanction advice.
Consequently the impugned decree had been passed for an amount larger than the actual outstanding principal amount which resulted also in a correspondingly inflated liability of mark-up.
(ii) That the appellants had filed a suit for recovery of damages, declaration and permanent injunction against the respondent Bank, which was also pending before the same learned Banking Court No. III. The appellants applied on 7.9.2002 for consolidation of the two suits but that application was kept pending and decided on 3.9.2003, the date of the impugned judgment. The failure to consolidate the two suits has caused injustice to the appellants and affects the fairness and validity of the impugned decree.
(iii) That the respondent Bank's suit could not be filed against appellant No. 2 who is also a mortgagor which status does not fall within the definition of customer under Section 2(c) of the Financial Institutions (Recovery of Finances) Ordinance, 2001.
5. The learned counsel for the appellants took us through the contents of the statements of account of the appellant company filed by the respondent Bank, It was noticed that the transactions in the statements of account for the demand finance (DFS) and the cash finance
(CFS) facilities are inter-woven through "transfer" entries. An amount of Rs. 9.975 million is debited in the DFS statement of account by a transfer entry dated 12.8.2000 (page 72 of the paper book).
However, the CFS account, to which this amount should have been transferred, does not reflect any corresponding credit entry on or about 12.8.2000. The learned counsel-for the respondent Bank tried to explain this amount as having been credited to the CFS account in different tranches from 1.2.2000 upto 3.3.2000. An amount of Rs. 9.975 million has indeed been transferred during the said period from the DFS account to the credit of the CFS account but these entries pertain to a prior period during which the transactions have corresponding date-wise debit transfer disbursements in the DFS account. On the contrary, the debit transfer disbursement on 12.8.2000 in the DFS account has no corresponding credit entry in the CFS account. This position was not explained from the record by the learned counsel for the respondent Bank. Precisely on the same basis learned counsel for the appellant showed that the debit transfer on 31.12.2000 from the CFS account amounting to Rs. 1.261 million was not matched by any corresponding credit transfer into the DFS account. Resultantly, the said amount also had been transfer-debited to the appellant's DFS account without having been placed at the disposal of the appellant in its other account. The respondents learned counsel did not answer this objection in his rebuttal. Consequently, it was contended for the appellants that the respondent's suit claims excessive principal amount liability to the extent of Rs. 11.236 million against the appellants. This exaggeration has also inflated the appellants alleged mark-up liability which according to the statement of account and as noted by the impugned judgment has been fully adjusted in the books of respondent Bank. Obviously the adjustment of excessive mark-up amounts to wrongful appropriation of the re-payments that has been made by the appellant company.
6. The foregoing analysis of the Bank's statement of account has made a forceful case against the credibility of these statements. Accordingly leave to defend is granted to the appellants on the question:-- Whether the claimed transfer entry amounts of Rs. 9.975 million of 12.8.2000 and Rs. 1.261 million of 31.12.2000 appearing in the statements of account submitted by the respondent Bank were not disbursed to and utilized by the appellant company and if so, its effect upon the overall liability of the appellants under the two finance facilities availed by the appellant company.
7. The learned counsel has stated that the amount over charged by the respondent Bank in the above context and decreed in the impugned judgment including both principal and mark-up is Rs.
14.606 million. As condition for leave to defend the appellants shall furnish security in the shape of surety bond of the aforesaid amount to the satisfaction of the learned Banking Court.
8.. As the appellants have admitted the disbursement and utilization of the remaining amount of finance facilities extended by the respondent Bank therefore their liability to repay the same is admitted. An interim decree is accordingly passed against the appellants to jointly and severally pay the remaining amount of Rs. 24.387 million representing the differential between the amount decreed and the amount disputed by the appellants. This amount shall be recovered from the appellants under due process of law.
9. From the perusal of the record it is noted regretfully that the transfer entries seen in the statements of accounts neither show the accounts wherefrom these originated nor the accounts to which the transfer were directed. Furthermore, as the statements of account lacked headings and proper column spacing, therefore, these transfer entries became indistinguishable between credits and debits, In a recovery suit the statement of account is a basic document that is filed by a financial institution in discharge of its statutory duty under Section 9(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred as 'Ordinance'). The filing of such a document is not a formality alone but the performance of a mandatory obligation to support the claim made in the plaint as held by a learned Division Bench of this Court in M/s.C.M.
Textile Mills (Pvt.) Limited Vs. I.C.P. (2004 CLD 587). Clearly this document should be laid out in a format that is comprehensible to any reasonable person reading it in the ordinary course, It must be set out in a mode that clearly describes the nature of the account entries and arranges them in a manner that distinguishes the various categories of amounts, for .Example credits, debits or amounts outstanding. The clarity of the format in a statement of account is now also necessitated by the provisions of Section 9(3) of the Ordinance. That provision requires the plaint to specifically state the particulars namely amount of finance availed, amount repaid, dates of payment, and outstanding amounts of finance and other amounts payable by a customer, It appears to be the statutory scheme that the foregoing contents of the table under Section .9(3) of the Ordinance that are derived from the accounts of the Bank must be verifiable with reference to its statement of account furnished under Section 9(2) of the Ordinance. The presentation of a fully integrated picture of the transactional history in a customer's account is meant to enable a Banking Court to transparently determine the correct financial liability of a customer who, as in the present case, has admitted having availed financial facilities but denied their aggregation as presented by the respondent Bank.
10. The seminal judgment on the legal status and effect of a statement of account filed in a Court was given by the Hon'ble Supreme Court in the case of M/s. Muhammad Siddiq Muhammad Umar and. Another Vs. The Australsia Bank Limited (PLD 1966 SC 684). It was observed that:- "Mere production of a certified copy of the account was not by itself sufficient to charge with liability. The copy produced was tantamount, however, to production of entries from the original books of account. Those entries could have been admissible in evidence only for the purposes mentioned under the Evidence Act, 1872 and to the extent therein provided. Section 34 of the Evidence Act requires that corroboration is necessary of the entry to charge a person with liability, but as to what should be the nature or the extent of the corroboration no hard and fast rule can be laid down, for, that must depend on the circumstances surrounding each transaction and the reliability of the manner in which the account has been kept."
11. If the statement of account is presented in a dis-organized and incomprehensible manner then it becomes necessary that its contents should have strong corroboration before the account may receive judicial acceptance. The foregoing view has been followed consistently by the Courts in the country. Coupled with the statutory provisions of Section 9(2) and 9(3) of the Ordinance it is now the clear legislative intent that the statement of account constitutes a fundamental document to sustain a Bank's financial claim. To fulfill this role the contents of a statement must possess clarity, detail and completeness. These attributes would also serve the evidentiary presumption given by the Bankers Books Evidence Act, 1891. Needless to say, the foregoing emphasis is necessary to facilitate expeditious and transparent determination by the Banking Courts on the important question of quantum of liability that invariably arises in cases where liability as claimed in a suit is disputed by the customers.
12. We return now to the second contention raised by the learned counsel for the appellants that the refusal by the learned Banking Court to consolidate the appellants suit for damages and specific relief against the respondent Bank with the letters' suit for recovery against the appellants has caused miscarriage of justice that vitiates the decree.
13. The plea for consolidation of the two suits is based upon the consideration that conflicting findings be avoided on what is alleged to be the same controversy in the two suits. The foregoing is indeed a consideration for the fair conduct of judicial proceedings. This judicial inclination is recognized by Section 10 of the Code of Civil Procedure, 1908. However, in relation to banking suits under the Ordinance Section 9(4) of the Ordinance expressly excludes the application of the doctrine of subjudice enshrined in Section 10 of the CPC. The effect of this exclusion is that a prior suit between the parties filed before a Banking Court or elsewhere' does not impact upon the progress of a subsequent suit between the same parties although common questions of fact and law arise for determination. The clear implication of Section 9(4) of the Ordinance is to exclude the consideration of conflicting finding from the array of criteria used to control and guide the progress and prosecution of suits under the Ordinance.
14. Furthermore, in the facts of the present case the plea that a suit for damages should have been consolidated with the Bank's suit for recovery is also untenable, In a suit for damages against a financial institution the grant of leave to defend follows as a matter of course on the substantial question of fact whether the loss claimed is proved by evidence. On the other hand, a substantial question of law or fact does not readily arise in a banking claim unless the customer shows, inter alia, consideration or consent to be lacking or the entries in a statement of account to require corroboration. Therefore, unless leave is granted in the banking suit as a whole, consolidation of two disparate proceedings would operate not to facilitate the adjudication of the two suits but rather to retard progress of one for the sake of the other. This is against the statutory scheme for early disposal of suits filed by financial institutions under the Ordinance.
15. The learned counsel for the appellants relied strongly on Malik Jehangir Khan Vs. Banking Tribunal No. 1, Karachi Division, Karachi and 4 others (2002 CLD 1466), which is a judgment by the Hon'ble Sindh High Court wherein the only question under determination was whether a case having a subject-matter of less than Rs. 30 million could be transferred for trial to the High Court whose jurisdiction under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 is to hear and determine claims in excess of Rs. 30 million. The said learned Court held that it is in the interest of justice that proceedings pending before the lower Banking Court may be transferred to the High Court notwithstanding the limitations on minimum pecuniary jurisdiction so that consolidation may be effected with other proceedings pending in the High Court. The view taken by the Sindh High Court has been upheld by the Hon'ble Supreme Court in First Women Bank Limited Vs. Registrar High Court of Sindh, Karachi and others (2004 SCM R 108), by repelling the petitioners challenge to the jurisdiction of the High Court to hear a suit with subject- matter of below Rs. 30 million. The criteria for ordering consolidation of cases was not in dispute between the parties in that case. Therefore that judgment does not consider the question whether the Ordinance favours consolidation of suits and if so upon what consideration. On the other hand, this appeal involves the question posed above, It may be borne in mind that the rule of precedent in this regard was reiterated by the Hon'ble Supreme Court in Trustees of the Port of Karachi Vs. Muhammad Saleem (1994 SCM R 2213) as follows:- "Precedent cases fall in two distinct categories, In the first category fall the decisions which decide a question of law or are based upon or enunciate a principle of law within the meaning of Articles 198 and 201 of the Constitution and are, therefore, binding, if the decision be by the Supreme Court, on all Courts in Pakistan, and if the decision be by a High Court, on all Courts subordinate to it. In the second category fall the cases which are not so binding but are merely illustrations of the application of the principles of law enunciated in the first category of precedent cases. So in order that a decision on a question of law is binding within the meaning of Articles 198 and 201 of v the Constitution it is not enough that a legal proposition follows logically from it; that question must have been actually decided." (underlining is ours to supply emphasis)
16. The precedent cases are therefore of no help to the appellants. Lastly in this regard it may be observed that there is no provision in the Ordinance empowering the Banking Court to order consolidation of proceedings. Such an order can only be passed in the exercise of the inherent jurisdiction of a Banking Court upon considerations that are discretionary in nature and that would clearly vary from case to case, In the present case no ground was made out for Banking Court to have directed consolidation of the proceedings pending before it.
17. The objection that a mortgagor does not fall within the definition of a customer under the Ordinance is misconceived in the facts of the present case. Appellant No. 2 is admittedly a guarantor of the facilities provided by the respondent Bank. Section 2(c) defines "customer" to specifically include a surety or indemnifier. In the light of the said factual position the objection based on the status of appellant No. 2 as a mortgagor does not bear any relevance to the controversy.
18. In view of what has been discussed above, this appeal is partly allowed. Parties to bear their own costs.