' RAHMAT HUSSAIN JAFFERI, J.---This order will dispose of application under section 10(12) of Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as "the Ordinance") filed by the defendants to grant leave to defend the suit; and C.M.A. No,1029 of 2005 filed by the defendants under section 151, C.P.C. For implementing outside Court compromise entered into between the parties.
2. Brief facts of the case are that on 6-6-2000 the plaintiff Habib Bank Limited filed the suit for recovery of Rs,13.07,30,560 under the repealed Act XV of 1997 against the defendants. The defendants were served. They filed application under section 10 of the repealed Act XV of 1997 to grant leave to defend on 17-8-2000. In the meantime the Act XV of 1997 was repealed by the Ordinance, therefore, by virtue of section 10(12) of the Ordinance, the defendants filed the application in the form of written statement to grant leave to defend the suit on 17-10-2001.
3. It will be noticed that drastic changes have been made in filing the application for leave to defend from repealed Act XV of 1997 to the Ordinance, therefore, a special provision in the shape of section 10(12) has been made in the Ordinance to file fresh application for leave to defend in accordance with the Ordinance in spite of the fact that such application was filed under Act XV of 1997. Section 10(12) of the Ordinance reads as under:-- "Where an application for leave to defend has been filed before the coming into force of this Ordinance, the defendant shall be allowed a period of twenty-one days from the date of coming into force of this Ordinance, or from the date of first hearing thereafter, whichever is later, for filing an amended application for leave to defend in accordance with the provisions of this Ordinance."
4. As per above provision of law, the defendants were required to file such application within 21 days from the date of coming into force of the Ordinance which came into force on 30-8-2001. The said application should have been filed on 21-9-2001 but the present application was filed on 17-10- 2001 beyond the said period. However, the said provision further provides that the said 21 days can be calculated from the first hearing thereafter whichever is later in both the periods. After promulgation of the Ordinance, the first date of hearing of the suit was fixed on 31-8-2001. The matter was adjourned to 10-9-2001. The application was not filed within 21 days from the date of coming into force of this Ordinance or from 10-9-2001 as the application was filed on 17-10-2001, as such, the defendants have not filed the application with in time as provided under section 10(12) of the Ordinance. Nevertheless, no consequence for not filing the written statement within the above mentioned period has been provided, therefore, the said provision can be treated as directory.
5. I have already pointed out that drastic changes have been made in moving the application for leave to defend, as such, it will be advantageous to reproduce section 10 of the Ordinance, which reads as under:-- "10. Leave to defend:
(1) In any case in which the summons has been served on the defendant as provided for in subsection (5) of section 9, the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court as hereinafter provided to defend the same; and in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff on the basis thereof or, such other material as the Banking Court may require in the interest of justice.
(2) The defendant shall file the application for leave to defend within thirty days of the date of first service by any one of the modes laid down in subsection (5) of section 9: Provided that where service has been validly effected only through publication in the newspapers, the Banking Court may extend the time for filing an application for leave to defend if satisfied that the defendant did not have knowledge thereof.
(3) The application for leave to defend shall be in the form of a written statement, and shall contain a summary of the substantial questions of law as well as fact in respect of which, in the opinion of the defendant, evidence needs to be recorded.
(4) In the case of a suit for recovery instituted by a financial institution the application for leave to defend shall also specifically state the following:---
(a) the amount of finance availed by the defendant from the financial institution; the amounts paid by the defendant to the financial institution and the dates of payments;
(b) the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution up to the date of institution of the suit;
(c) the amounts of finance and other amount crediting to the finance payable by the defendant to the financial institution up to the date of institution of the suit;
(d) the amount if any which the defendant disputes as payable to the financial institution and facts in support thereof; Explanation:---For the purposes of clause (b) any payment made to a - financial institution by a customer in respect of a financial shall be appropriated first against other amounts relating to the finance and the balance, if any, against the principal amount of the finance.
(5) The application for leave to defend shall be accompanied by all the documents, which, in the opinion of the defendant, support the substantial questions of law or fact raised by him.
(6) An application for leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement.
(7) The plaintiff shall be given an opportunity of filing a reply to the application for leave to defend, in the form of a replication.
(8) Subject to section 11, the Banking Court shall grant the defendant leave to defend the suit if on consideration of the contents of the plaint, the application for leave to defend and the reply thereto it is of the view that substantial questions of law or fact have been raised in respect of which evidence needs to be recorded.
(9) In granting leave under subsection (8), the Banking Court may impose such conditions as it may deem appropriate in the circumstances of the case, including conditions as to deposit of cash or furnishing of security.
(10) Where the application for leave to defend is accepted, the Banking Court shall treat the application as a written statement, and in its order granting eave shall frame issues relating to the substantial questions of law or fact, and, subject to fulfilment of any conditions attached to grant of leave fix a date for recording of evidence thereon and disposal of the suit:
(11) Where the application for leave to defend is rejected or where a defendant fails to fulfil the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant.
(12) Where an application for leave to defend has been filed before the coming into force of this Ordinance, the defendant shall be allowed a period of twenty-one days from the date of coming into force of this Ordinance, or from the date of first hearing thereafter, whichever is later, for filing an amended application for leave to defend in accordance with the provisions of this Ordinance."
6. The scheme of the Ordinance is that the suits involving financial matters between the financial institutions and customers should be decided expeditiously in a summary manner and all the vexatious and mala fide pleas of defence should be curtained so that the proceedings may be completed within shortest possible time. In order to achieve the scheme, section 10 has been enacted to put check upon the defence led by the defendants. For the purpose of present proceedings the important provisions for consideration are subsections (3) to (6), (10) and (11) of section 10 of the Ordinance.
7. Subsection (3) provides that the leave to defend application should be in the form of written statement, which was not the requirement of Act XV of 1997. It further provides that the written statement should contain a summary of substantial questions of law as well as fact in respect of which, in the opinion of the defendant, evidence needs to be recorded. If this subsection is read with subsection (10) then it will be manifest that without loss of time the Court is required to frame issues as soon as leave to defend application is granted. The summary of law question and fact would help the Court in immediately framing issues and then the matter is required to be fixed for the evidence. Thus the legislature with specific purpose have directed the defendant to summarise the substantial questions of law and fact in the application. It will be further noticed that non- compliance of subsection (3) entails the rejection of the leave to defend application as provided B under subsection (6).
8. Further in order to summarise the case the defendant is required to comply with the requirements mentioned in subsection (4) if the suit is for recovery of amount instituted by financial institution, then the defendant is required to, firstly, specifically mention the amount of finance availed by him from the financial institution. Secondly the amounts paid by him to the financial institution and the dates of such payments. This provision would help the Court in immediately arriving at the exact figures of dues or otherwise involved in the suit. Thirdly, to specifically mention the amounts of finance and other amounts relating to the finance payable by him to the financial institutions up to the date of the institution of the suit. Fourthly, the amount credited to the finance payable by the defendant to the financial institution up to the date of filing of the suit. Fifthly, to specify amount if any which he disputes is payable to the financial institution and should also file proof in support of such facts. Thus all the requirements are very essential which will go to the root of the cause and would give a clear picture to the Court about the amount due or otherwise in the case. The legislature have found these requirements very important and essential because they have provided a penalty for non-compliance of the said requirement in the shape of rejection of the application for leave to defend as provided under subsection (6).
9. Under subsection (5) the defendant is required to produce all the documents along with the application for leave to defend which can support the substantial question of law and fact raised by him in subsection (3). Non-compliance of the said provision also entails the rejection of leave to defend application as provided under subsection (6) because it provides that if the defendant fails to comply with the requirements of subsections (3), (4) where applicable and (5) his application for leave to defend shall be rejected unless he discloses in the application itself sufficient cause for his inability to comply with such requirement.
10. It is the mandate of the law that if a statute which enables a person to take legal proceedings under certain specified circumstances then statute demands that those circumstances must be accurately obeyed. In the book "Statutory Laws" by Craies 6th Edition at page 226 the said rule has been stated in the following manner:- "That when a statute confers jurisdiction upon a tribunal of limited authority and statutory origin, the conditions and qualifications annexed to the grant must be strictly applied"
11. It is well-settled that non-compliance of plain requirement of a statutory enactment, which prescribes how something is to be done, will invalidate the thing being done in some other manner if the enactment is absolute but not if it is merely directory. The test for judging a provision whether it is a directory or mandatory, is that, if the non-compliance of the provision entails a penal consequence then it is mandatory, otherwise it is directory. The Honourable Supreme Court of Pakistan in the case of Niaz Muhammad v. Fazl Raqib PLD 1974 SC 134 has observed as under:-- "As a general rule however, a statute is understood to be directory when it contains matter merely of direction, but not when those directions are followed up by an express provision that, in default of following them, the facts shall be null and void. To put it differently, if the Act is directory, its disobedience does not entail any invalidity; if the Act is mandatory disobedience entails serious legal consequences amounting to the invalidity of the act done in disobedience to the provision."
12. If the above rule is applied to subsections (3), (4) and (5) then it is clear that the said provisions are mandatory as penal consequence of non-compliance of the said provisions has been given in subsection (6) which provides rejection of application for leave to defend in case of non- compliance of such provisions.
13. Keeping in view of above principle of law I have examined the application for leave to defend and found that it is in the form of written statement. It contains 9 preliminary legal objections. On further perusal it reveals that the defendant did not specifically state the information or facts required to have been supplied under subsection (4). The learned Advocate for the defendants has frankly conceded that the application does not fulfil the mandatory requirements of subsection (4).
However, he has stated that the summary of substantial questions of law as required under subsection (3) has been mentioned but further conceded that the summary of the facts as required under subsection (3) has not been mentioned in the application. Even if we take the 9 preliminary legal objections a s substantial questions of law then again the second requirement of subsection (3) has not been complied with in the present case. On further perusal it reveals that facts and figures as required under subsection (4) have also not been mentioned nor any explanation has been furnished for noncompliance. The learned Advocate for the defendants has also frankly conceded that provisions of subsection (4) have.Not been complied with nor the defendants have furnished any explanation in the application for non-compliance of the said provisions. As such, the defendants have disobeyed the directions of law and mandatory provisions as provided under subsection (3) and (4), therefore, their application for leave to defend is liable to be dismissed. Consequently invoking the provisions of subsection (6) I dismiss the said application.
14. As regards the second application (C.M.A. No,1029 of 2005), the same has been filed with the following prayer:-- "It is, therefore, prayed that this Honourable Court may graciously be pleased to dismiss the present suit with necessary direction to the plaintiffs to pay the amount i,e, benefit of the conversion to the defendants and to direct the plaintiffs to render the amount and after adjustment if anything is found due the defendants will pay accordingly."
15. It is alleged that the defendants and plaintiff entered into an agreement in pursuance of BPD Circular 29 dated 12-12-2003 of State Bank of Pakistan. Under that agreement, some concessions were given to the defendants and amount was settled at Rs,22.00 million. The schedule of payments was also settled. It was further agreed between the parties that "In case of two agreed quarterly payments during a calendar year, this package will stand withdrawn along with all or any concessions in mark-up or otherwise the Bank will be entitled to claim entire outstanding including penal interest etc., in lump sum together with mark-up and all other payments and charges'.
During the course of arguments learned Advocate for the defendants has admitted that after paying down payment that quarterly payments were not paid at all. He gave the reason that because of certain disputes of adjustment of some other payment, the quarterly payments were not made. As I have already observed that there was agreement between the parties that if two agreed quarterly payments were not made as per above provision then the package would stand withdrawn along with all or any consequence mentioned therein. As such, when the terms of final settlement or agreement were not complied with by the defendants then the agreement is not enforceable.
16. It is pertinent to point out that through the present application the defendants want to enforce the said agreement, which I believe, the same cannot be enforced in the present proceedings and in the present manner. Furthermore, the defendants themselves have violated the agreement and as per their agreed term the package stands withdrawn.
17. Apart from the above facts, the defendants have not yet been granted any leave to defend the suit, therefore, before grant of such leave he cannot move the Court to adjudicate any of his rights or defences. The law specifically prohibits ire taking into consideration the defence of the defendants before leave to defend is granted, because a specific procedure has been provided under the law that the defence of any nature involving legal as well as fact pertaining to the case can be considered only after fulfilling the conditions of section 10 of the Ordinance which have not been fulfilled. Thus before grant of leave to defend, the application is not maintainable. The same is dismissed.
18. By virtue of subsection (11) the suit of the plaintiff is to be decreed if the application for leave to defend is rejected. As I have already rejected such application, therefore, the suit is liable to be decreed.
19. The plaintiff has filed the suit for Rs,13,07,30,560. However, during arguments, the learned Advocate for the plaintiff has stated that the said amount also includes the amounts, which under the decisions of superior Courts, the plaintiff is not entitled to claim. Therefore, after deducting such amount, he has stated that the defendants are liable to pay Rs,10,63,48,475.80 therefore, the decree may be passed in respect of such amount.
20. I have gone through the plaint and documents filed along with the plaint. The contents of plaint are verified on oath, which are supported by documents. The plaintiff has excluded the extra amount from the amount claimed in the suit. As such the plaintiff is entitled to the decree of such amount.
21. Consequently, the suit of the plaintiff is decreed In the sum of Rs, 10,63,48,475.80 as prayed with costs.