1. KHILJI ARIF HUSSAIN, J.---Messrs United Bank Limited filed Suit No.1445 of 1999 against the defendants for the recovery of Rs.58,138,577 being outstanding dues, liquidated damages, in the sum of Rs.11,627,715 against defendants with mark up at the prevailing rate from the date of Suit till realization of the whole amount. On 19-1-2001 suit was decreed in the sum of Rs.58,138,577 with future mark up at the rate of 16 percent. On the application of the defendants ex parte judgment and decree passed against the defendants was recalled on 11-4-2002. While the matter was pending for. adjudication the claim against defendants was transferred to CIRC and thereafter to. National Bank of Pakistan being successor-in-interest of CIRC.
2. C.M.A. 7805 of 2002 has been filed by the defendant No.1, C.M.A. 7806 of 2002 was filed by defendant No.6, C.M.A. 4494 of 2003 was filed by defendant No.5, under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 to grant leave to defend the suit. On behalf of defendant No.1 an application being C.M.A. No.147 of 2004 under Rules 13, 15, 16 CIRC Rules 2001, an application under section 151, C.P.C.C.M.A. No.148 of 2004 was also filed. By C.M.A. No.147 of 2004 defendant No. 1 prayed for that CIRC may be directed to produce documents mentioned in the said application and by C.M.A. No.148 of 2004 defendant No.1 prayed that this suit may be consolidated with Suit bearing B-04 filed by the defandants against the plaintiff. By C.M.A. 7956 of 2006, the defendant Nos.1 and 6 prayed that transfer agreement between CIRC and NBP may be produced by the plaintiff. The plaintiff filed Suit No.B-02 of 2004 seeking declaration that CIRC cases falls within the ambit/scope of S.B.P.'s BPD.'s Circular 29 of 2002 and to direct the State Bank of Pakistan
(SBP) to entertain the plaintiffs complaint. The plaintiff also seeks decree directing the defendant's Bank to implement circular 29 of 2002 and that the defendants are entitled for the benefit under the circular and are liable to pay 75% of outstanding amount of Rs.35 Millions in twelve quarterly instalments as per terms of circular No.29 and/or in alternate entitled to pay the forced sale value of-Rs.32 Millions. The defendants Bank filed C.M.A. No,942 of 2004 application for leave to defend/written Statement. The plaintiff filed an application under sections 4(2) and 2(I)(g) of CIRC (Dissolution) Order, 2006 to direct the defendant to produce transfer agreement. Heard Mr. Saalim Salam Ansari, learned counsel for the defendants in Suit No.1445 of 1999, and for plaintiff in Suit No.B-02 of 2004, Mr.. Naveedul Haq, learned counsel for the plaintiff in Suit No.1445 of 1999 and for defendants in Suit No.B-02 of .2004. Since all the application filed in suit No.1455/1999 and B- 02/2004 as requested. I have heard them together and will be disposed of by this order. Mr. Saalim Salam Ansari, learned counsel for the defendants in Suit No.1445 of 1999 and for plaintiff in Suit No.B-02 of 2004 vehemently argued that on, 24-9-1995 State Bank of Pakistan issued BPD Circular 29 dated 15th October, 2002 by which State Bank gave direction for settlement of liabilities of parties. Learned Advocate heavily relied upon Clauses 4 and 9 of BPD Circular No.29, and argued that Forced Sale Value should be determined by an independent professional values who should be listed on the, panel of valuers 'maintained by the- Pakistan Bank's Associadon (PBA), which read as under:-- "4. -Non-performing Loans 'that are classified as loss for 3 years or above have been divided into three categories A.B. & C Category A.---Loans having outstanding amount upto Rs.0.5 millions (Guidelines at, para.'9(i)' below shall apply.
3. Category B.- -Loans having,,outStandittg of more than Rs.0:5 'millions and up to Rs.2.5 million (All the guidelines except at para '7' will be applicable)
4. Category C..---Loans having outstanding amount of more than Rs.2.5 million. (All the guidelines will be applicable).
9. While allowing write-off arising as a result of settlement/ compromise of cases mentioned at para '4' above the following guidelines may be followed:- Criteria Amount to be recovered Forced Sale Value, of the security is more than the outstanding amount.75% or , more of the outstanding should he recovered in case.
5. Forced Sale Value of the security is less than the outstanding amount.A sum equal to Forced Sale Value be recovered in cash.
6. Where no tangible security is available. Efforts should be made to recover maximum possible amount Defendant through his lawyer approached the plaintiff on 28-3-2003 that defendants are ready, and willing to' settle the matter as per guidelines contained in Circular No.29.
7. Mr. Saalirn Salam Ansari, learned Advocate, argued that Incentive Scheme was announced by State Bank of Pakistan vide Circular No.29 on 15th October, 2002 and CIRC also framed an Incentive Scheme on the same line as to Circular No.29 and by a Public Notice plaintiff informed of the stakeholders about the settlement criteria, and further informed that the settlement scheme will be expired on 30-6-2003 and any application for settlement received after the deadline will not be entertained. The defendant through his advocate on 18-6-2003 informed the plaintiff that the defendants are ready, willing and keen to pay 75% of the settled amount. Mr. Saalim Salam Ansari argued that despite defendant approached bank for settlement of his liability under Incentive Scheme, but the defendant Bank failed to settle the same on one pretext or the other, denying the benefits to plaintiff in Suit No.2 of 2004 and defendant in Suit No.1445 of 1999. It was further contended by the learned counsel that after transfer of liabilities/accounts from United Bank Ltd.
8. From whom financial facility was availed by the parties to CIRC and thereafter to National Bank of Pakistan, under sections 4(2) and 2(1)(g) of. CIRC (Dissolution) Ordinance, 2006, defendants are liable to pay only the amount which was either initially transferred to CIRC or by CIRC to National Bank of Pakistan. The learned counsel in support of his contentions relied upon the cases of Tanya Knitwear (Pvt.) Ltd. v. United Bank Limited and others 2005 CLD 114; National Bank of Pakistan v.
9. Messrs Pakasaco Limited 2005 CLD 422; P.Q. Chemicals v. A.W. Brothers and others 2005 CLD 169; Captain P.Q. Chemical Industries (Pvt.) Ltd. v. Messrs A. W. Brothers and others 2004 SCM R 1956; Muhammad Ayub Khan and others v. Muhammad Farooq Textile Mills Ltd. And others 2004 PLC 250; United Bank Limited v. Messrs Azmat Textile Mills Limited 2002 CLD 542; Hashwani Hotels Limited v.
10. Federation of Pakistan and others PLD 1997 SC 315; Perma Construct (Pvt.) Limited v. Habib Jute Mills Ltd. 2002 CLD 166 and Messrs Dadabhoy Cement Industries Ltd. And 6 others v. National Development Finance Corporation Karachi PLD 2002 SC 500.
11. On the other hand, Mr. Naveed-ul-Haq, learned counsel for the plaintiff in Suit No.1445 of 1999 and defendant in Suit No.2 of 2004 conceded that the State Bank BPD Circular *No.29 is applicable upon CIRC to whom amount was transferred from United Bank Ltd. And argued that a sum of Rs.40,00,000 was disbursed to defendant on 8-10-1995 and the defendant was required to pay Rs.88.933 million in 16 quarterly instalments, but failed to pay any amount and even first instalment was not deposited and an ex parte decree was passed against the defendant for a sum of Rs.58.138 million with future mark up, which decree was recalled on 11-4-2002. The learned counsel argued that the forced sale value of Rs.56,223,750 was determined by the approved valuer in respect of the mortgaged property, which value despite intimation the defendant failed to accept and further failed to deposit 20% of the amounts for the purpose of entering into the agreement as required under BPD Circular No.29 of State Bank of Pakistan. It was contended by the learned Advocate that since no agreement was executed, the Suit No.B-02 of 2004 is liable to be dismissed and defendants in Suit No.1445 of 1999 are not entitled for leave to defend the suit. I have taken into consideration respective arguments advanced by the learned counsel for the parties and perused the record. So far as various case law referred by the learned counsel for the plaintiff is concerned, there is no need to discuss the same as the learned counsel for the plaintiff in Suit No.1445 of 1999 has not pressed 'point that BPD Circular No.29 is not applicable after transfer of the liabilities to CIRC.
12. The question, which required consideration, is whether the defendants are entitled for the benefit under BPD Circular No.29 or not in the circumstances of case. The Incentive Scheme under BPD Circular No.29 was for a limited period of time and was subject to an agreement between the parties upon payment of at least 10% down payment in cash for the settlement of account at the time of signing of the agreement and remaining amount may be paid in instalments of at least on quarterly basis within maximum period of three years from the date of signing of the agreement.
13. The plaintiff in response to the letter of the defendants dated 12-12-2002 informed the defendants on 16-12-2002 that liabilities can be settled in the sum of Rs.35,000,000 upon down payment of Rs.20,000,000 and balance amount of Rs.15,000,000 within one year without mark up from the date of singing of the agreement, otherwise in two years with 12% mark up upon reducing balance. The offer, given by the plaintiff vide letter dated 28-3-2003, was not accepted by the defendant as they would like' to settle the liabilities under BPD Circular No. 29 of 2002.
14. The forced sale value of the property in question as per valuation report was Rs.56,223,750 but despite forced sale value determined by the valuer, the defendants failed to make 10% down payment as required under BPD Circular No.29 and to enter into the agreement of settlement. The proposal given by the defendants for settlement of liabilities on an amount other than the forced value determined by the valuer was rightly not accepted by the plaintiff. The plaintiff vide his letter dated 31-10-2003 informed the defendant that since no concrete proposal was submitted by the defendant, the same was rejected. Since the defendant has not paid 10% of the amount, as required under BPD Circular No.29 and further did not accept the forced sale value determined by the valuer, and no agreement in terms of clause 12 of BPD Circular . No.29 was entered into between the parties, the plaintiff has rightly refused to accept the request made by the defendant for settlement of claim under incentive scheme. Vide order dated 13-12-2005, the request of the parties, it was ordered that no oral evidence is required and matter can be argued on the basis of documents, including the preliminary objection about the maintainability of the suit. As regards the question, whether defendants in Suit No.1445 of 1999 are entitled for leave, the defendants have not denied that financial facilities have been granted by the Bank and or received by them, the execution of document has also not been denied by the defendants, the defendants are therefore not entitled for leave to defend the suit. Suit No.B-02 of 2004 is, therefore, dismissed and Suit No.1445 of 1999, is decreed for the sum of Rs.58,138,577 with cost of funds at the prevailing rate fixed by the State Bank of Pakistan from the date of filing of the suit till realization.