1. ' MRS. QAISER IQBAL, J.--- High Court Appeals Nos.7 of 2007, 8 of 2007, 18 of 2007 and 22 of 2007 have arisen out of the judgment and decree dated 4-10-2006, passed in Suit No,B-10 of 2000 whereby the appellants' application for leave to defend was dismissed and the suit was decreed against the appellants in the sum of Rs,33,105,524 jointly and severally together with a decree for sale of the mortgaged property of appellant No,1 in High Court Appeal No,8 of 2007. Since identical facts and grounds are involved in the above appeals arising out of a single order therefore, we propose to dispose off the above appeals jointly.
2. ' Succinctly the facts leading to the case are that Messrs Zamco (Pvt.) Limited was sanctioned finance facilities 5 times by the respondent No,1 Industrial Development Bank of Pakistan (IDBP) for establishment and operation of a China Clay manufacturing project. Appellants Wajih Qamar-uz- Zaman, Nargis Zaman, Fasih Qamar-uz-Zaman, Mumtaz Khanum, Sabeeh Qamar-uz-Zaman, Malih Qamar-uz-Zaman, Mamoona Fayyaz and Anjum Zahid stood guarantors. Equity Participation Fund was arrayed as a party holding pari passu charge whereas Qamer-uz-Zaman Khan was impleaded as he claimed to be the successor of his deceased wife Mumtaz Khanum. The facilities granted to the borrower are as follows:-- "(1) 10-9-1986 Rs,1.5 million (LFM) buy back price Rs,1,713,110.00.
(2) 20-9-1987 Rs,2.85 million (LFM) buy back price Rs,3,291,036.00.
(3) 2-8-1991 Rs,0.6 million (Running Finance) buy back price Rs,14,036,000.00.
(4) 22-11-1997 Rs,13.5 million (LFM) buy back prince Rs,23,661,000.00."
3. ' Messrs Zamco (Pvt.) Limited executed the documents letter of guarantees and proceeded to file Suit No,B-101 of 2000 on the assumption that the initial four finance facilities were rescheduled by the plaintiff vide its letter dated 19-8-1997. On behalf of Messrs Zamco (Pvt.) Limited for all the five finance facilities finance agreements were executed along with the agreements of hypothecation registered with the Registrar Joint Stock of Companies, Letter of Continuity of mortgaging all the existing and future fixed assets comprising of plot No,35/1,2,7 and 8 measuring 4 acres situated at Tando Jan Muhammad, all buildings constructed thereon, and all plant, machinery and equipment installed thereon. Such letter of Continuity was also registered with the Registrar Joint Stock Companies. Further, Letters of Continuity were signed for the 3rd, 4th and 5th finance facilities. For four finance facilities Messrs Zamco (Pvt.) Limited also signed an Agreement of Floating Charge and Memorandum of Deposit of Title Deeds which was also extended to the fifth facility for which a demand promissory note was also signed and personal guarantees were delivered. Messrs Zamco (Pvt.) Limited had also deposited the title deeds of immovable property bearing plot of land No,CL- 119 measuring 3 acres together with building known as 1-Jail Road, Rawalpindi, along with deposit of Title Deeds signed by the borrowers. This property was further mortgaged in respect of 2nd, 4th, and 5th finance facilities. The appellants failed to liquidate the outstanding amount as a consequence thereof suit was filed for recovery along with accrued mark-up.
4. ' That Messrs Zamco (Pvt.) Limited, its Directors and Mortgagers jointly filed an application for leave to defend the suit on 17-8-2000 bearing C.M.A. No, 7469 of 2000. The respondent Equity Participation Fund filed application claiming that they are having pari-passu charge holders of the mortgaged assets/immovable property with the plaintiff/Bank which was allowed on 1-6-2004. On the promulgation of Financial Institutions (Recovery of Finance) Ordinance, 2001, Messrs Zamco (Pvt.) Limited along with its guarantors and mortgagers were allowed to file amended application bearing CMA No,1453 of 2005 seeking leave to defend the suit. Equity Participation Fund also filed application for leave to defend the suit being No,1474 of 2006. Major General Sabeeh Qamar-uz Zaman, Mrs. Mamoona Fayyaz and Anjum Zahid filed amended application for leave to defend the suit bearing CMA No,1846 of 2005 whereas Qamar-uz-Zaman filed an application bearing CMA No,5478 of 2004 for impleading him as one of the parties being successor-husband of Mrs. Mumtaz Khanum, which was allowed on 17-2-2005. As a consequence thereof amended title was filed. The respondent Bank has filed replication to C.M.As. Nos.1883 and 1.896 of 2005. The case came up for hearing before the learned Single Judge whereby the applications for leave to defend were dismissed and the suit was decreed against the borrowers, mortgagers and guarantors jointly severally with decree of sale of mortgaged properties assailed in the High Court Appeals mentioned herein above.
5. ' Mr. Jamshed Malik learned counsel appearing for appellant in HCA No,7 of 2007 has contended that from the year 1947 the appellants were running the Gatmells Motel as a sole proprietor which was converted into a registered partnership inducting his two daughters duly registered with the Registrar of Firms, therefore, Gatmells Motel businesses was a separate and distinct business than that of the mortgaged land which was in the name of Mrs. Mumtaz Khanum wife of the appellant.
6. That she along with her sons established Zamco (Pvt.) Group of Companies for setting up a China Clay manufacturing project, for which the Bank offered the land to be used as interim security for an amount of Rs,1 million. The Zamco Group executed "Memorandum of Deposit of Title Deeds" annexure 'G' to the Memo. Of Appeal (HCA 7 of 2007 page 307) which bears forged signatures of Mrs. Mumtaz Khanum as she had expired on 6-6-1975 prior to the execution of the documents. The Bank in pursuance of the "Memorandum of Deposit of Title Deeds" executed the documents (annexure Z/4 to the Memo. Of Appeal) bearing forged signatures of Mrs. Mumtaz Khanum after 16 years of her death. So much so that forged "letter of continuity in respect of the existing mortgage over Gatmells Motel," (annexure Z/16) was executed without ensuring the genuineness of the signatures and examination of the allocation record, so also, the "interim finance agreement,"
7. (annexure Z/18) was allegedly executed by Mrs. Mumtaz Khanum with the Bank along with forged letter of continuity. It is, urged that appellant Qamar-uz-Zaman has filed suit in the Court of Senior Civil Judge Rawalpindi in respect of land for declaration, permanent and mandatory injunction that he is the beneficial owner of the land, in which respondent and/or any other claimant was restrained from creating any charge, interest, encumbrance and or mortgage till the disposal of the suit, therefore, learned Single Judge has erred in rejecting the extract from the Registrar of death issued by the competent authority at Rawalpindi Cantonment Board which reflects the month of death of Mrs. Mumtaz Khanum as June 1975, whereas Major General Sabeeh Qamar-uz- Zaman, Mrs. Mamoona Fayyaz and Anjum Zahid in their amended application for leave to defend admitted that Mrs. Mumtaz Khanum died in the year 1975. According to the appellant Qamar-uz- Zaman his wife expired on 6-6-1975 therefore, there appears three dates of death of Mrs. Mumtaz Khanum on the record whereas Wajih Qamar-uz-Zaman, Fasih Qamar-uzZaman, Sabeeh Qamar- uz-Zaman, Mrs. Manoona Fayyaz and Anjum Zahid have given the date of death of their mother as November, 1998. It is, urged that a. Presumption of truth is attached to the death certificate filed by appellant Qamar uz Zaman, whereas on account of the variation of the death certificates it cannot be termed that majority of sons and daughters of Mrs. Mumtaz Khanum had given the date of her death as November, 1998. It is, next urged that this question cannot be answered on the basis of presumption because it touches material factum about the execution of the memorandum of title of deed in respect of the property in jeopardy, and it requires deep scrutiny through evidence of the parties in presence of the death certificate produced by the appellant Qamar uz Zaman.
8. ' Adverting to High Court Appeal No,22 of 2007 in similar circumstances Mr. Nadeem Akhtar, Advocate contended that the appellants are children of appellant Mrs. Mumtaz Khanum. That they were neither sponsors, Directors, Beneficiaries nor Guarantors of the land awarded to Messrs Zamco (Pvt.) Limited as the guarantees were executed by Mrs. Nargis Zaman, Fasih Qamar-uz- Zaman, Mrs. Mumtaz Khanum and Major General Sabeeh Qamar-uz-Zaman who were guarantors, sponsors and co-owners of the property. After the promulgation of Ordinance, 2001, the appellant has filed a fresh application for amendment of leave to defend application under Order VI, Rule 17, C.P.C. And additional pleas were added in respect of letter of continuity and letter of mortgage deed, therefore, subsequent application has superseded the earlier application for leave to defend, on the basis of the signatures on the memorandum of title of deed were forged as they were neither sponsors, Directors or beneficiaries. It is, next urged that the date of death of Mrs. Mumtaz Khanum who is their real mother required evidence. Since application for amendment of leave to defend application was filed, therefore, subsequent order by the learned Single Judge tantamount to review of the earlier order therefore, finance agreement, Memorandum of Title of Mortgage Deeds, Letter of Continuity, Memorandum of Deposit of Title Deeds of Gatmells Motel are forged and fabricated documents.
9. ' Adverting to the case of Mr. Zia Kiyani learned counsel appearing for appellant in H.C.A. No,18 of 2007, on behalf of Qamar-uz-Zaman, it is, contended that the suit against a dead person is not maintainable, and it is a nullity in law. There is sufficient evidence on record to establish that Mr. Mumtaz Khanum was not alive when the required documents were executed, thus bearing her forged signatures. It is, next urged that the presumption of truth is attached with the death certificate filed by husband of the deceased Mumtaz Khanum, by virtue of section 49 of the Qanun-e-Shahadat. Entry in the register of birth and death is a public document therefore, the presumption of genuineness is attached thereto. In support thereof reliance is placed on the following case-law:--
(1) 2006 YLR 2477
(2) 2002 YLR 2706
(3) 2002 YLR 2655
(4) 1990 CLC 1443
(5) 1989 SCMR 704 ' It is, next urged that material questions raised by the appellant Malih Qamar-uz-Zaman required investigation at trial because he is residing abroad and he entered the territory of Pakistan under Passport No,A-574272 (issued on 11-12-1984 at New York,) on 16-6-1985 and the exit date is 25-7- 1985. Later he again entered the territory of Pakistan through the same Passport on 4-5-1986 and the date of exit is 15-6-1986. Therefore, the appellant was not In Pakistan on 18-1-1987 when the Memo. Of Deposit of Title Deed was alleged to have been signed by him, and that evidently his signatures have been forged which can be visualized from the naked eye on comparison with his signatures on his NIC and Passport. It is, significantly argued that all other documents annexure G, L, P, Z/4, Z-16 and Z-19 bear forged signatures of the appellant. It is, next urged that the appellant was not available in Pakistan therefore, service could not be effected upon him at the address of Gatmells Motel, and that the summons served upon appellant Qamaruz-Zaman were not in conformity with law as the appellant was not present in Pakistan, and he was not aware of the publication effected under the banking laws in the newspaper circulating at Rawalpindi, and since, under 9(5) of Ordinance, 2001 the service of summons was not properly effected upon him, he was entitled to be condoned under section 10(2) of the Ordinance, 2001, which law provides as under:- "Provided that where service has been validly effected only through publication in the newspaper 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."
10. ' In support of the above contention reliance is placed on:--
(1) 2003 CLC Lahore 1743
(3) 2004 CLD Lahore 771 ' Dictum laid down in the above citations reveals that if the record did not show that the process server used all and reasonable diligence to locate the defendant and there was nothing in the file to show that summons sent through courier and registered acknowledgment-due were received by the defendant, the defending party is entitled to condonation in the delay of filing appeal.
11. ' Adverting to the contention of learned counsel for appellant in HCA No,8 of 2007. Mr. Salahuddin Ahmed has relied upon the preliminary objection to the effect, that throughout, the banking suit against the appellant Messrs Zamco (Pvt.) Limited and others was filed by IDBP, later decree was passed, execution application was filed in the name of the same banking company and for the first time CMA No,910 of 2007 was filed in the instant appeal seeking deletion of the name of IDBP, and it's substitution by National Bank of Pakistan (NBP). The respondent Bank claims that in terms of Ordinance, 2001, the charge of I.D.B.P. Was taken over by C.I.R.C. And after dissolution of C.I.R.C. All rights, liabilities and assets stood transferred to N.B.P, which was contested by filing the counter affidavit. No rejoinder was filed on behalf of the NBP. It is, urged that the only document relied upon by NBP in support of the claim for substitution of IDBP is a statement dated .12-9-2007 accompanied by a letter dated 8-12-2004 from CIRC informing Messrs Zamco (Pvt.) Limited that subsequent to CIRC Ordinance, 2001, for the Non-Performing Assets and rehabilitation of ,Industrial Undertakings, C.I.R.C. Had entered into a transfer agreement with IDBP whereby all rights, title, remedies of I.D.B.P., stood transferred to CIRC by operation of law. It is, urged that the purpose of C.I.R.C. Ordinance was to create a body which was to take over the Non-Performing Assets, lands of the Government-owned Banks and that by virtue of this statute C.I.R.C. Had been given powers to acquire, purchase, hold, manage, restructure, rehabilitate, sell and dispose off nonperforming assets. Much stress has been laid on the implications for C.I.R.C, on actions under the C.I.R.C. - Ordinance and on non-performing assets and rehabilitation of undertakings and legal proceedings, under Ordinance, 2001, which has created a new jurisdiction of the High Court to hear all cases relating to the C.I.R.C. Ordinance. Under section 6 of the N.P.A. Ordinance all pending cases taken over by the C.I.R.C. Were deemed to be transferred to the High Court's new and exclusive jurisdiction. Section 10 and 11 of C.I.R.C, Ordinance provides for the Constitution of a Verification Committee under the auspices of the SBP Governor to correctly determine and verify the calculation, existence and repayment of a financial obligation. It is, urged that, initially, transfer of the case from I.D.B.P. To C.I.R.C. Was defective and void, therefore, subsequent alleged transfer from F.I.R.C. To NBP was equally void and defective, therefore no relief was granted by the learned Single Judge in the instant proceedings against N.B,P. As there was no privity of contract between the appellant and NBP.
12. ' Adverting to the merits of the case it is, contended by Mr. Slahuddin Ahmed learned counsel for appellant that Messrs Zamco (Pvt.) Limited has paid Rs,2,760,000 to IDBP towards the facilities advanced and the repayment schedule, and owing to the financial and operational difficulties faced by the project under the State Bank of Pakistan Circular No,19 of 1997, Messrs Zamco. (Pvt.)
13. Limited had applied for restructuring of their liability to IDBP which was approved vide letter dated 19-8-1997. The respondent Bank has allowed a period of 18 months under S.B.P. Scheme before commencement of payment of their liabilities which were to being on 31-3-1999. It is, next urged that under S.B.P. L.L.M. Scheme of B.M.R., the additional finance assistance were awarded by the Bank for facilitating the operation of the project, which was -approved. As a consequence thereof, an additional finance facility was sanctioned on 22-11-1997 and the Bank had agreed that the appellant would be obliged to begin repayment of their earlier liabilities after six months of the last disbursement of the additional finance facility. The I.D.B.P. Called upon the appellant to start repayment after six months from the date of first disbursement under the additional finance facility and attempted to raise all sorts of different pretexts for its unilateral amendment to the agreement, therefore, Messrs Zamco (Pvt.) Limited filed a complaint before the Federal Ombudsman about the refusal by I.D.B.P. Of the disbursement of full amount of the agreed finance facility. The learned Federal Ombudsman vide order dated 23-12-2000, arrived at the conclusion that IDBP had acted in an unfair manner, unilaterally, and their actions were in breach of natural justice. Hence Messrs Zamco (Pvt.) Limited filed Suit No,B-4 of 2000 for declaration, injunction and damages before this Court in Banking jurisdiction for suffering huge losses in breach of the mutual agreement by the Bank. As a counter blast, the Bank has proceeded to file the present suit. It is, next urged that both suits were ordered to be fixed together for determination of the fact that underlying dispute was the same, unfortunately, Suit No,B-101 of 2000 was decreed against the appellant. For a just decision of the case both the suits could have been tried together and would have been disposed of by a common judgment, therefore, the findings of the learned single Judge, are not justified for arriving at an unjust conclusion that Messrs Zamco (Pvt.) Limited were liable to pay the suit amount. It next urged that out of four finance facilities followed by an additional finance facility, Messrs Zamco (Pvt.) Limited had made repayment of Rs,2,760,000 in respect of the aforesaid facilities which were consolidated and fixed at Rs,19,412,000 and it was stated that mark-up would be charged @ 18% per annum upon the consolidated amount which rate was amended to 14% per annum, therefore, no mark-up could be charged on the expiry period on the original agreement. In case of restructuring in which both principal and mark-up amount are consolidated into one amount, then further mark-up cannot be charged on the said consolidated amount. The penalties and fines for late payment or default are not permissible under the Islamic System of Finance. So also the claim of penalty under a contract in terms of section 74 ,of the Contract Act must be proved to be reasonable by the plaintiff. In support of the above contentions reliance has been placed on the following case-law:--
(1) 2005 CLD 444
(2) PLD 1988 Karachi 316
(3) 2001 CLC 1551
(5) 2001 MLD 1351
(6) 2001YLR1549 ' The accounts filed by the Bank contain penalty and fine whereas the liability in respect of the four finance facilities was Rs,17,016,556 which included mark-up on the original facilities therefore, no further mark-up could be charged. As far as the sanctioned additional finance facility of Rs,13,500,000 is concerned, the repayment sale prince was Rs,23,661,000 and was required to be paid over a period of 10 years including a gross period of two years. However the whole amount was not disbursed and only a sum of Rs,7,385,000 was disbursed. Therefore learned Single Judge has erred in law by allowing mark up on the disbursed amount of Rs,7,385,000 therefore, learned Single Judge could not have allowed I.D.B.P's claim for more than Rs,24,401,556.
14. ' On behalf of the respondent Bank Mr. Khalid Mehmood Siddiqui Advocate contended that the property mortgaged in the name of Mrs. Mumtaz Khanum was Evacuee Trust Property originally allotted in her name as widow having 1/8th share whereas 7/8th share was allotted in the name of her son Lieutenant General Sabeeh Qamar-uz-Zaman, it is, a private land over which the Motel is functioning. It is, next urged that the property was allotted fraudulently as no consideration was paid by the alleged owner, and suit was filed at Rawalpindi, copy of the plaint has been filed. Qur attention is invited to a letter written by Major General Sabeeh Qamar-uzZaman addressed to the Chief Manager of the Bank dated 28-12-1986, on the letterhead of Pakistan Army which reads as under:-- "Maj General Sabeeh Qamar-uz-Zaman DEME General Headquarters Rawalpindi Tele GHQ 34052 No,5770/SQZ/DEME/1 28 Dec, 1986 Chief ManagerIDBP, PO Box 5078State Life Bldg. No,2,Wallace Road, OFF I.I. Chundrigar Road,Karachi-2 ' Dear Sir, ' As directed by Messrs Zamco (Pvt.) Ltd, Karachi, I am enclosing the Title Deed (Transfer Order No,15844) dated 24 Jan 1974) in original, in respect of the property located at Survey No,119, CL, A, B and C (the premises of Gatmells Motel) along with a copy of the site plain for your perusal and safe custody being interim security of the aforementioned firm.
15. ' The property mentioned above is free from all the encumbrances.
16. ' Please return the Title Deed as soon as it is no longer required by you.
17. (Sd.) Maj Gen. (Sabeeh Qamar us Zaman)"
18. ' The above letter suggests that the property was mortgaged with the bank as interim security.
19. Memorandum of Deposit of Title Deed bearing signatures of all was produced as collateral security for and behalf of Messrs Zamco (Pvt.) Limited, so also letter of continuity was also executed. It is, urged that the mortgage deed was executed by women and children cannot be brushed aside if being joint owner, mortgaged the share along with co-owners cannot defeat the claim of the mortgagee as held in AIR 1971 Delhi 316, PLD 1987 Karachi 518, AIR 1934 Madras 67, PLD 1985 SC 1416.
20. The learned counsel appearing for IDBP has further contended that the contentions per se raised by the learned counsel for appellants are not in conformity with law as the proper service was not effected upon the appellant _Malih Qamar uz Zaman, as the summons was delivered to Qamar uz Zaman, as per report of the bailiff. The application for leave to defend being collusive and time barred was rightly dismissed by the learned Single Judge. It is, next urged that the title documents were delivered by one of the co-owners of the property, letter referred (supra), therefore, the pleas raised are not consistent with the record.
21. ' In order to appreciate the contentions of the learned counsel for the parties we have examined the material placed on record and advert to the proposition that Mrs. Mumtaz Khanum wife of Qamar-uz-Zaman, one of the Sponsor/Director/ Beneficiary had expired in the year 1975. She was not alive when the memorandum of title documents and other documents were signed, executed or delivered to the IDBP at A the time of the sanction of the loan and additional finance facility provided to Messrs Zamco (Pvt.) Limited by the bank. On account of three conflicting dates of death of Mst. Mumtaz Ithanum the dispute could not have been resolved without recording the evidence by the learned Single Judge. It is, a well settled law that for adjudication of the bona fide questions raised, requiring probe and investigation, the learned Single Judge ought to have recorded the evidence to come to the specific conclusion about the date on which Mr. Mumtaz Khanum expired.
22. ' On the other hand on the basis of hypothesis the question relating to the death was resolved which goes to the root of the case as to whether forged and fraudulent manner was adopted by the rest of the beneficiaries of the loan for acquiring the same. Adverting to the case of the appellant Malih Qamar-uz-Zaman, it is borne out that at the time of the service of the summons he was not available in Pakistan as vouchsafed from his Passport and the entries of entry and exit produced by him. The service could not be affected upon him in accordance with law. Taking into consideration the other aspects of the case which pertains to the rescheduling of the loan and manifestly includes mark up, it is well settled that subsequent agreements do not change the previous agreements when there is no mention or reference of the previous agreement. Bank can only seek/recover all the mark up price under the first agreement. If however the bank is able to establish that the amount has been actually disbursed under the subsequent agreement it is not for the purpose of adjustment of the previous dates, and, there has been difference in sale and purchase of the commodity. In this context reliance is placed in the case of Habib Bank v. Qayyum Spinning Ltd. MLD 2001 Kar: 1351.
23. ' Since there is a settled mode for the business carried under the banking system, the loan once rescheduled, carries interest. It is well settled that the mark up upon mark-up was Dever the spirit of the law if the recovery is sought under first agreement. In the instant case the recovery was sought on the basis of four finance facilities awarded to the borrowers and subsequently rescheduled, which includes mark up.
24. ' Undisputedly the death of Mrs. Mumtaz Khanum is disputed by all the parties except the bank on account of three different versions disclosed by the parties about the year and date of death of Mrs. Mumtaz Khanum. The issue could not be resolved without recording the evidence which goes to the root of the case. In any view of a matter where genuineness and bona fide disputes are involved in the case, these require that the same be thrashed through evidence as recorded by the learned Single Judge. In view of the circumstances, impugned judgment is hereby set aside, the case is remanded back to the learned Single Judge for the purpose of proceeding with the matter in accordance with law, including the ascertainment of the genuineness of the Memorandum of Title Deeds, death certificate of Mrs. Mumtaz Khanum, forged signatures of Mumtaz Khanum and Malih Qamar-uz-Zaman. It is, further ordered that in view of the cogent and lawful objections raised by Mr. Salahuddin Ahmed in respect of appeal filed against I.D.B.P., in the changed circumstances, the Banking Court is hereby directed to implead National Bank of Pakistan as (plaintiff) for which an application shall be filed by the counsel appearing for the bank in accordance with law, as such application for leave to defend are hereby granted for adjudication of the case on merits. Leave to defend application are treated as written statement where after, evidence shall be led for the purpose of determination of the issues involved in the matter.
25. Consequently, the impugned judgment is set aside. High Court Appeals Nos.7 of 2007, 8 of 2007, 18 of 2007 and 22 of 2007 are hereby allowed in above terms. In the peculiar circumstances the parties are left to bear their own costs.