Muhammad Muzammal Khan, J.--This judgment proposes to decide two Regular First Appeals. one in hand and the other RFA No. 129 of 2005, as both these are between the same parties, raise similar questions of law/facts and are directed against consolidated judgment/decree dated 16.2.2005 passed by the one and the same trial/Banking Court. Instant Regular First Appeal assailed the judgment/decree dated 16.2.2005 passed by the Banking Court No. 1 Faisalabad, whereby suit of respondent-bank was decreed for an amount of Rs. 83,73,557/- alongwith costs of the suit and of funds, whereas, the other appeal challenged the decree of even date, whereby suit for declaration filed by Appellant No. 1 was dismissed.
2. Succinctly, relevant facts as deciphered from the record are that respondent-bank on 5.9.2002 gave advance running finance facility to the Appellant No. 1 for an amount of Rs. 7.00 million against a registered mortgage deed of the property in the name of Mst. Surraya Khanim Appellant No. 3 and charge documents executed by the appellants including their finance agreement etc. Appellant No. 1 could not repay the finance facility availed by it and committed breach of terms/conditions of the agreement and an amount of Rs. 105,33,385/- became due, which included liquidated damages and mark up for the crucial period, against the Appellant No. 1 which resulted in filing of suit by the respondent-bank before Banking Court at Faisalabad. Appellant No. 2 was the sole proprietor of Appellant No. 1 and the third appellant was their guarantor and thus all the thee were arrayed in the suit, as defendants.
Appellants being defendants, after service of notice by the Banking Court, filed their application seeking leave to appear and defend the suit wherein they denied their liability to pay Rs. 5.00 million which according to - them were not disbursed by the Bank, besides disputing the amount of mark-up charged.
3. Appellant No. 1 had also filed a suit for declaration against the respondent-bank, challenging its demand notice dated 5.8.2003 requiring payment of the suit amount, with the assertions that the Appellant No. 1 on 5.9.2020 availed the running Finance Facility to the tune of Rs. 7.00 million for the period till 31.8.2003 and on 10.9.2002 payment of Cheques Nos. 36577303, 36577317, 36577319 and 36577321 was stopped under intimation to the Bank due to misplacement of the cheques, with a request for supply of a new cheque book. Plaintiff further averred that the letter stopping payment of the cheques was duly acknowledged by the Bank in its reply-dated 11.9.2002 but on 17.9.2002 Appellant No. 1 was informed that one Ijaz Ahmad Malik got encashed two cheques amounting to Rs. 4.00 Million + 1.00 million against the cheques, payment of which was stopped. As per plaint, bank in its letter dated 17.9.2002 conveyed to the Appellant No. 1 that payment was made on the basis of its letter dated 16.9.2002 containing request to release of payment against misplaced cheques. Appellant No. I denied issuance/dispatch of letter dated 16.9.2002 and the same was said to be forged and fictitiously prepared by the Bank Staff in order to deprive it of the huge amount.
Appellant No. 1 prayed that notice dated 5.8.2003 may be declared illegal and void besides declaring that it was not liable to pay the unauthorizedly released amount of Rs. 50,00,000/, Respondent. Bank being defendant in the suit, contested the same by filing petition for leave to appear/defend the suit. It was allowed and the same was converted into written statement. The main defence of the bank was that Rs. 5.00 Million were released on instruction by Appellant No. 1 on the basis of written request dated 16.9.2002.
4. As a matter of fact, stance taken by the Appellant No. 1 in its suit, was recapitulated in the leave petition filed by it to the recovery suit by the Bank and similar was the. position with respect to suit by the Appellant No. 1 wherein the Bank had taken defence as per details in its plaint. The learned Presiding Officer of the Banking Court cognizant of both the suits, after hearing the parties, granted the bank the leave prayed and petition in this behalf was treated as written statement but the suit was held to be of or civil nature, barred by Section 56 of the Specific Relief Act and was accordingly dismissed. Appellants were declined leave to defend the suit of the Bank and the said Court, decreed the suit of the respondent-bank to the turn of Rs. 69,85,219/- with mark up of Rs.
13,88,338/- with costs of suit/funds, from the date of default till the final realization of the decretal amount with mark up for this period but liquidated damages were declined vide consolidated judgment/decrees dated 16.2.2005. Appellants were declined to liquidate the decretal amount within 30 days jointly and severally whereafter, the decree was ordered to be executed. The appellants, thereafter, filed two distinct appeals, one against the decree in favour of the respondent and the other (RFA No. 129-2005) against the decree of dismissal of suit by Appellant No. 1. Respondent in response to notice by this Court has appeared and was represented through its counsel.
5. The appellants under the order 26.4.2006 by this Court on C.M.1 of 2005 had deposited an amount of Rs. 25,00,000/- in addition to their earlier deposit of Rs. 10,00,000/- and they offered to deposit the remaining decretal amount after exclusion of amount of mark up within a period of three months, as according to them they were not liable to pay the un-agreed mark up of Rs.
13,88,338/- but this offer was not acceptable to the learned counsel for the bank where-upon, we heard the learned counsel for the parties and examined the record, requisitioned from the trial Court, with the assistance of the learned counsel for the parties.
6. Learned counsel for the appellants primarily advanced three fold submissions while attacking the impugned judgment/decree and his first submission was that bank without producing finance agreement before the Banking Court, could not succeed in its suit for recovery of the decretal amount and that the claimed finance facility of Rs. 7.00 million was not released for the utilization of the appellants, as a major part of Rs. 5.00 million was misappropriated by the bank functionaries under the garb of payment of two cheques, payment of which had already been stopped by the Appellant No. 1, besides the fact that bank, could not claim markup beyond the agreed period and entry of amount of Rs. 13,88,338/- to this effect in the bank account statement was not warranted.
Though submissions of the learned counsel for the appellants were self contradictory, yet was proceed to examine those in light of the material on record. Appellant No. 1 had himself filed a suit for declaration with the allegations already detailed in the factual part of this judgment, wherein sanctioning of finance facility in favour of Appellant No. 1 was admitted. Likewise this fact was not denied by the appellants in their petition for leave to appear and defend the suit. In view of this admitted factual position, there was no necessity of producing the finance agreement but inspite of it we have examined the same and our examination is that on 6.9.2002 respondent bank sanctioned finance facility to the tune of Rs. 7.00 million. Paragraph 1 of the finance agreement, which was on markup basis, reads as under: "The bank confirms having bought the Goods from the customer, prior to the execution of this agreement for a sum of Rs. 7.000 M. (Rupees Seven Million only). The price to be paid by the bank to the Customer (hereinafter referred to as the "Sale Price") shall be made available for utilization by the customer by withdrawal from its/their/his Account No. with the bank and such withdrawal(s) from time to time shall constitute payment of the sale price for the purpose of the agreement for financing on mark-up basis."
Besides the above reproduced' clause of the finance agreement bank retained right to reduce sale price and if the customer was dissatisfied with the deduction, he was to deposit/pay the differential amount immediately, in addition to which, bank was given right to demand immediate repayment of purchase price. As per para 9 of the agreement, bank was conferred right to cancel facility advanced without assigning any reason and demand immediate payment of the purchise price.
Customer undertook to repay the same within seven days of the demand, besides payment of cost of funds as certified by the State Bank of Pakistan calculated on the outstanding purchase price, until payment thereof. Besides admission of the appellants in Para No. 5 of their PLA, the terms of agreement clearly proved liability of the customer to pay the charged amount of markup till its recovery thus the markup amount of Rs. 13,88,338/- was not opposed to the agreement.
7. Stance of Appellant No. 1 in his suit for declaration and petition for leave to appear/defend the suit of the bank was that finance facility was sanctioned for an amount of Rs. 7.00 million out of which Rs. 5.00 million was wrongly encashed in the name of one Ijaz Ahmed in violation of instructions to the bank, as customer's four cheques had been misplaced, thus no payment thereagainst be made. Respondent bank had acknowledged receipt of instructions about stopping of payment of cheques through their letter dated 11.9.2002, with the wording mainly, "your instructions have been noted in our books and all due care will be taken but the bank cannot hold itself responsible should the stop payment instructions be overlooked through pressure in business or through inadvertence, accidental mistake or otherwise. Attention in this respect is also invited to current account Rule 6". Respondent bank absolved itself from the liability in case any of the cheques under "stop payment" is encashed. The Banking Court has correctly remarked that allegedly misplaced cheques were not torn in seriatim and were removed from the cheque book by leaving certain cheques intact in between, which created serious. doubt about denial of liability by the appellants. We also contribute to the view of the learned Presiding Officer of the Banking Court that cheque book is always in possession of the account holder and as per instructions on the reverse of the cheque book, the same had to be placed in safe custody. Above all, cheques in question were undisputedly encashed from the current account of Appellant No. 2 wherein the sanctioned loan amount was got transferred thus dispute did not relate to the account of the running finance.
8. Record revealed that on complaint of Appellant No. 2 a criminal case vide FIR No. 138 dated 2.7.2003 under Sections 420, 468, 471, 406, 409 PPC was registered against the bank employees with Police Station Rail Bazar Failsalabad for unauthorized release of an amount of Rs. 5.00 million against the two cheques payment of which had been stopped. Criminal case and bank's stance of encashment of the said cheques under the instructions of Appellant No. 2 was enquired by the police as well as NAB authorities and all the investigating agencies exonerated the bank employees including the Manager for the allegation of fraud etc. levelled by Appellant No. 2 whose stance was found to be fake. Ijaz Ahmed Malik in whose favour the said cheques were encashed, in his bail petition under FIR No. 138 dated 2.7.2003 had pleaded that the cheques encashed in his name were given to him by Maqsood Ahmed Appellant No. 2. Bail petition of Ijaz Ahmed Malik is available with the petition for leave to appear/defend filed by the appellants. As a matter of fact, Appellant No. 2 himself allowed encashment of cheques vide his letter dated 16.9.2002 in order to liquidate his outstanding liability against Ijaz Ahmad Malik but subsequently with a mala fide intention, attempted to refute repayment of finance facility availed by him. Respondent bank in the first instance, had not accepted responsibility in case any of the above referred cheques was encashed and in the second place, those were encashed under the instructions of Appellant No. 2 and thirdly, released payment of the cross 'cheques was made from current account of Appellant No. 2 to which advance amount had been transferred. It goes without noticing that Appellant No. 2 had been operating his loan account right from 16.9.2002 to 7.6.2003 and during this period no objection regarding unauthorized release of Rs. 5.00 million was ever raised. All this leads us to conclude that appellants failed to make out any plausible defence requiring trial of the suit, after recording of evidence and consequently their petition for leave to appear/defend the suit deserved dismissal and was rightly declined by the Banking Court. As regards suit by Appellant No. 1, controversy convassed therein was to be settled on appellant's petition for leave to appear/defend the suit filed by the bank, thus cognizance of such suit being prohibited by Section 56 of the Specific Relief Act was rightly refused to be independently adjudicated upon. Besides, it Appellant No 1 had not only admitted sanctioning of finance facility in its favour in the plaint, which was also accepted in its petition for leave to appear/defend the suit but was also admitted in para. 4 of the memorandum of appeal before this Court. Banking Courts entertain, adjudicate and decide disputes by deriving their jurisdiction from Section 7(4) of the Finance Ordinance, 2001, regarding matters arising out of disputes covered by the said Ordinance. Encashment of two cheques of Rs.
5,00 million from current account of Appellant No. 2 inspite of stoppage of payment was not a dispute arising out of finance facility, thus was not covered by Section 7(4) of the Ordinance (ibid).
Section 9 of this Ordinance further strengthened the plea that suit filed by the Appellant No. 1 was not triable by the Banking Court and was aptly dismissed. Be that as it may on the basis of findings in the forgoing paragraphs, plea of Appellant No. 1 of unauthorized encashment of those cheques was in form of set of which could not be raised in recovery suit under the Ordinance, 2001, especially earlier to filing of written statement. Scan of record and impugned judgment revealed that controversy put to rest by the trial Court without committing any error of law.
9. For the reasons noted above, no case for interference in any of the two appeals could be made out and consequently the same being without any F merit, are dismissed with no order as to costs.