1. ' SYED PIR ALI SHAH, J.---This is an application under section 10 of the Financial Institution (Recovery of Finances) Ordinance, 2001 read with section 151, C.P.C. Bearing C.M.A.No,10394 of 2007 is filed by the defendant for grant of unconditional leave to appear and defend the above suit.
2. ' Through this application the defendants have denied all the allegations against them. In this application the defendant raised preliminary objections that the suit is not maintainable in law as the same is filed without resolution passed by the Board of Directors of the plaintiff as required under the law. Furthermore, that the plaintiffs claim against the defendants is exaggerated and exorbitant, hence not maintainable in law. That the defendants are not liable to pay such exorbitant and unwarranted amount claimed in the above suit which is based on alleged mark- up/profit, liquidated damages and other charges etc. For which the plaintiff is not entitled.
3. Apart from the preliminary objections, the defendant. No,1 replied the plaint wherein it is mentioned that the plaintiff Bank has illegally and wrongfully charged mark-up-profit for more than agreed period and at higher rate as well as debited the penalties with mark-up/profit thereon and other charges without 'any authority in respect thereto. It is stated these charges are unlawful, unauthorized and exaggerated. It is also mentioned that the plaintiff with mala fide intention has concealed the repayments made by the defendant No,1 towards adjustment of the finance facilities availed by the defendant No,1. On the contrary the said repayments have been utillzed by the plaintiff towards adjustment of unlawful and unauthorized mark-up/prqfit and other charges which were neither agreed between the4arties nor under law was the plaintiff entitled and authorized to claim and recover the same from the defendants. It is mentioned that the plaintiffs claim in the above suit is based on various documents which were obtained by suppression of facts and in blank. That the said documents have been filled in by the plaintiff for the dates and amounts of its own choice without any lawful authority. That these documents are also inconsistent and contradictory and do not support, the entries of the statements of account in question. Hence the said documents are not binding upon the defendants nor the plaintiff is entitled to obtain any decree in the above suit against the defendants on the basis thereto. It is further mentioned that all the Mudarbah facilities availed during that period have fully been adjusted/repaid by the defendant No,1 which is evident from the statement of account and, as such, the defendant No,1 has never been the defaulter of a single paisa at any time during the entire limit period and always used to maintain good business relationship with the plaintiff bank. It is also mentioned that the major portion of the total Mudarbah Local Purchase Facility have also been adjusted and such, an exorbitant amount under principal disbursement is not due and payable as alleged by the plaintiff. It is mentioned that the complete and thorough scrutiny of the statement of account will establish that the plaintiff has made misstatement regarding principal outstanding amount against the defendant No,1 and in such circumstances the alleged statement of account is not a true and certified statement of account as required under the Bankers' Book Evidence Act and therefore on the basis of the alleged statement of account the bank is not entitled to claim judgment and decree against the defendant No,1 for the false and baseless principal amount unless a complete evidence is produced and all relevant documents, vouchers, etc, are produced on record in support for the principal outstanding amount of Rs,49,743,500 as mentioned in para 11 of the plaint. It is further mentioned that as per sanction advise all the Mudarbah Facilities were granted for a maximum period of 180 days with profit at the rate of 78 per annum and in such circumstances the plaintiff bank is not entitled to claim and recover the mark- up in the shape of profit upon the said Mudarbah Facilities for more than. 78 per annum. It is also mentioned that it is normal practice of the plaintiff-Bank to violate the agreed terms and used to charge mark-up/profit at higher rate and for more than agreed period and in addition thereto the plaintiff-Bank has also claimed and recovered several other charges for which the plaintiff bank was not legally entitled. It is denied that the principal amount of Rs,49,743,500 is due and payable by the defendant No,1 and in the like manner Rs,2,350,626 has also been calculated at much higher rate than the agreed rate besides the alleged compensation of Rs,13,119,841 and the alleged legal expenses of Rs,500,000 though the plaintiff is not authorized and entitled to claim amount of compensation and other charges from the defendants under the Islamic Mode of Financing which are even otherwise contrary to the Rules and Regulations prescribed by the State Bank of Pakistan, therefore, entire claim of the plaintiff mentioned in para 11 of the plaint amounting to Rs,65,713,964 has been denied. It is mentioned that the statement of account (Annexure G-3) which consists of 18 pages is evident that complete mark-up/profit till 30-1-2006 has been recovered by the plaintiff-Bank and all the allegations for non-payment/default by the defendant No,1 are misconceived, false and baseless having no substance and therefore, the plaintiff is lawfully bound to prove his claimed amounts through documentary evidence before the Court. It is further mentioned that the plaintiffs legal notice dated 22-3-2006 was replied by the defendant No,1 wherein alleged exaggerated and inflated claim/amount of Rs,53,773,860 has been denied which fact was deliberately concealed by the plaintiff, therefore, the plaintiff was directed to prepare fair and honest account, keeping in view the principles of Morabaha ' facilities. It is mentioned that the heavy repayments made by the defendant No, 1 have not been properly utilized against the principal disbursement and the same have been utilized for the adjustment of unlawful, illegal and unauthorized mark-up/profit, compensation and other charges hence presently the defendants are not liable to pay such exorbitant and exaggerated claims of the plaintiff. It is further mentioned that as per the statement of account filed by the plaintiff in support of its alleged claim against the defendant No,
1. It is evident that the alleged amount claimed by the plaintiff in the above suit is completely in negation as well as contrary to its own statement of account which has been filed along with the plaint as true and certified statement of account. It is stated that on the basis of the said statement of accounts the actual/correct position of the account of defendant No,1 should be as follows:-- Principal Amount Outstanding as per statement of account filed by plaintiffRs,3,468,500 Mark-up/profit till 30-1-2006 As per statement of account filed by the plaintiffRecovered Net Payable Rs,3,468,500 ' It is mentioned that the person who has signed the plaint is not a competent person as no Resolution duly passed by the Board of Directors for the purpose as required under law, has been filed by the plaintiff. It is further mentioned that the plaintiff is not entitled for any decree against the defendants for the alleged amount of Rs,65,713,964 with cost of fund as alleged or at all plaintiff is not entitled for sale of the mortgaged properties and hypothecated machinery for recovery of the unlawful and unwarranted claim of the plaintiff unless the plaintiff proves the same through documentary proof before this Court in evidence. Reliance has been placed upon the cases of Messrs Yussra Textile Corporation and others v. RICIC (sic) Commercial Bank Ltd. 2003 CLD 905, Messrs Haq Feed Industries (Pvt.) Ltd. v. National Development Finance Corporation 2007 CLD 975, Messrs ARK Industrial Management Ltd. v. Messrs Habib Bank Ltd. PLD 1991 SC 976, Agrofoster (Pvt.)
4. Ltd. And others v. Judge, Banking Court No,5, Karachi and another; Messrs Habib Bank Limited v.
5. Messrs Schon Textiles Limited 2001 YLR 1244, Messrs Zodiac International (Pvt.) Ltd. Etc. v. Messrs Industrial Development Bank of Pakistan NLR 2001 Civil 536, Messrs C.M. Textile Mills (Pvt.) Ltd. v.
6. Investment Corporation of Pakistan 2004 CLD 587, Citibank N.A. v. Riaz Ahmed 2000 CLC 847, Allied Bank, ' The plaintiff filed replication to the application for leave to defend filed by the defendants in which the contents of plaint of Pakistan v. Masood Ahmad Khan 1994 MLD 1557, Industrial Development Bank of Pakistan v. Al-Mansoor Ltd. And others PLD 1989 Pesh.191, National Bank of Pakistan v. Messrs Mujahid Nawaz Cotton Ginners 2007 CLD 678, Sh. Muhammad Naeem and others v. Habib Bank Limited 2003 CLD 606, Mushtaq Ahmed Vohra v. Crescent Investment Bank Ltd. 2005 CLD 444 and Muhammad Akram and another v. Mst. Farida Bibi and others 2007 SCMR 1719. Have been reiterated and have denied each any every allegation of the defendants which is inconsistent with and contrary to the factual position of the case.
7. ' The plaintiff has also raised preliminary legal objections and s ted that the application for leave to defend is in breach of the andatory provisions of sections 10(3), (4) and (5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and therefore the application is liable to be summarily rejected under section 10(6) of the said Ordinance. The subsection (3) of the Ordinance requires the application for leave to defend to be in the form of a written statement and 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 whereas the so-cbiled application for leave to defend is just a bundle of unrelated papers. The second legal objection raised by the plaintiff- is that the defence of the defendants is deliberately false, frivolous and dishonest and is made an attempt to avoid its lawful obligation to make payment of the amount demanded by the plaintiff. The third legal objection is that the application is signed by one Aakib Abbas Khan Niazi son of Tariq Abbas Khan Niazi, as defendant No,6 and also on behalf of defendants Nos.1 to 5 and 7 as their" Attorney.
8. However, the said signatory has not filed any power of attorney or a Mandate from defendant No,1 (a registered partnership firm) and on behalf of other partners as co-defendants authorizing him to sign and verify the application as required by law, as such there is no valid application for leave to defend by the defendants Nos.1 to 5 and .7 before the Court.
9. ' The, plaintiff in his replication also replied the preliminary objections raised by the defendants and its defence pleas and in that it is denied those pleas being frivolous misconceived and misleading.
10. It is stated that the plaint is signed by the constituted attorney of the plaintiff by virtue of power of attorneys, copies of which have already been annexed to the Plaint as mentioned para 18 of the plaint and there is no legal requirement of filing any resolution. Secondly the amount of plaintiff s claim is as per its books and hence it is neither exorbitant nor unwarranted. It is stated that the defendants have not specified as to which amount of mark-up/profit has been illegally and wrongfully charged. In fact the plaintiff has ehargel mark-up as per agreed terms. It is also stated that the defend is have failed to mention which repayments have been cone end hence such general allegations have no value in the eyes of Law.
11. ' Apart from above, the plaintiff has replied the replication parawise wherein it is mentioned that the contents of paragraph 4 of the application are admission by the defendants of having availed various finance facilities. It is further mentioned that the contents of paragraph 9 of the application are also admission by the defendants that they actually executed persons guarantees. However, the allegation that exaggerated amounts have been filed in the guarantee is denied. It is mentioned that the defendants Nos.2 to 7 have executed and delivered the guarantee dated 3-2- 2005 to the plaintiff undertaking joint and several obligation of entire liability under the ,Morabaha Financing Agreement. It is mentioned that paragraph 23 of the application amounts to admission of securities by way of mortgage of immovable properties and hypothecation of plaint and machinery and equipment to the plaintiff. It is further mentioned that no loss will be suffered by the defendants, if the application is dismissal as the defendants have enjoyed the benefits of Morabaha facility and are liable to make payment of the entire outstanding liability to the plaintiff.
12. In support of such contention. Reliance has been placed upon the cases of Zeeshan Energy Ltd.
13. And others v. Faisal Bank Ltd. 2004 CLD 1741, Habib Bank Ltd. v. Messrs Sabcos (Pvt.) 2006 CLD 244 and National Bank of Pakistan v. Al-Asif Sugar Mills Limited and others 2001 CLF 125.
14. ' I have heard the learned Advocates for the parties at great length and have also gone through the law citations relied upon by both the parties.
15. ' Obviously legal issue with regard to the maintainability of the suit has been raised. At the very outset, it is a matter of record that this suit has been filed without any resolution passed by the Board of Directors of the plaintiff. Secondly, the suit has been filed while claiming mark-up at the higher rate than the agreed rate of 78 per annum for 180 days. It is said that the plaintiff bank has illegally and wrongfully charged mark-up/profit for more than agreed period and that the penalties with mark-up/profit have been debited. It has also been stated that the charges are unlawful and unauthorized and exaggerated. It has been alleged that the plaintiff with mala fide intention has concealed the repayments made by the defendant No,1 towards adjustment of the finance facilities availed by the defendant No,
1. Above said payments have been utilized by the plaintiff-Bank towards adjustment unlawful and unauthorized mark-up/profit and their charges which were neither agreed between the parties nor under the law, the plaintiff was entitled and authorized to claim and recover the same from the defendant. Besides, it has been stated that the plaintiffs claim in the above suit is based on various documents which where obtained by suppression of facts and in blank. It is further mentioned that the documents have been filled in by the plaintiffs for the dates and amounts of its choice without any lawful uthority. It has been argued that these documents are inconsistent and contradictory and do not support the entries of the stat ment of account in question and as such not binding upon the defendant. It is contended that all the Mudarbah facilities availed by the defendant during the relevant period have fully been adjusted/repaid which is evident from the statements of account filed on record. It is necessary to reproduce below the text of section 10 of the Financial institutions (Recovery of Finances)
16. Ordinance, 2001: "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 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."
17. In this suit the plaintiff-Bank claimed amount of Rs,65,713,964 with cost of funds as fixed by State Bank of Pakistan from the date of default till realization of the entire decretal amount. In consequences thereof, the plaintiff bank also prayed for attachment and sale of the mortgaged property etc. As regards plaintiffs contention that the application for leave to defend is in breach of the mandatory provisions of section 10(3), (4) and (5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, which are essentially reproduced below:--
(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 laws as well as facts in respect of which, in the opinion of the d fondant, evidence needs to be recorded.
18. ( ) In the case of a suit for recovery instituted by a financial institution the application for leave to defend s all 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 upto the date of institution of the suit;
(c) the amounts of finance and other amounts relating to the finance payable by the defendant to the financial institution upto 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 finance 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."
19. In view of the facts mentioned in this application, the matter requires proper adjudication by way of evidence on factual as well as legal questions. Accordingly, this application for leave to defend is allowed in the interest of justice.