1. MUHAMMAD TASNIM, J. - This is an application under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 .(hereinafter called, "Ordinance 2001") filed by defendant seeing leave to defend the suit unconditionally.
2. Brief facts leading to this case, as per plaint, are that on the request of defendant, plaintiff allowed a finance facility upto an aggregate amount of Rs. 156,000,000/-, out of which the defendant availed an amount of Rs. 154,750,000/- in terms of financing for Medium/Long term on mark-up basis dated September 27, 2008. That in consideration of the above financing facility defendant created mortgage of their property and also created charge by way of hypothecation of all the present and, future fixed assets including plant and machinery at Port Qasim Authority. Defendant also (executed finance-agreement dated 27.9.2008, memorandum acknowledging creation of mortgage by deposit of title deeds, letter of Hypothecation and demand promissory note, In addition to aforesaid finance facility, plaintiff alongwith syndicate allowed a syndicated terms finance-facility of Rs. 1,370,000,000/- to the defendant in term of syndicated terms finance agreement dated January 29, 2004. Plaintiffs share in the syndicated finance facility was Rs.
3. 500,000,000/-. The defendant failed to pay instalments amounting to Rs. 111,301,170/- to the plaintiff on respective due dates. The defendant has also defaulted in making payments of instalments amount due to other syndicated members. Defendant is in default of its obligation under the Syndicate Finance Agreement despite various demands and. Reminders by the plaintiff and other Syndicated Members. The aforesaid default of the defendant in respect of Syndicate Finance Facility amounts to an event of default in terms of Finance agreement, In the circumstances the Syndicate Members recalled Syndicate finance facility and filed Suit No. 31772008. That as per the facility advised letter dated September 25, 2008 the amount of facility amounting to Rs.
4. 156,000,000/- for meeting short term financing requirement, for tenure of two months on mark-up basis was extended. That defendant vide their letter dated September 29, 2008 addressed to the plaintiff bank requested for release of demand finance amount to the plaintiff bank requested for release of demand finance amount to Rs. 156,000,000/-. That in terms of request of the defendant, the plaintiff bank credited aforesaid amount in the account of defendant on 30.9.2009. Defendant fully availed the finance facility and wilfully defaulted in paying instalments. That due to default on the part of the defendant^ v as aforesaid legal notice was served by plaintiff upon defendant on March 3, 2009 and thereafter filed the present suit on 29.4.2009.
5. The plaintiff has shown their claim in Para-9 of the ' plaint, which is quoted hereunder:- Date of Disbursement: September 30, 2008 Date of Default: November 30, 2008 a. Amount of Finance availed by Defendant:Rs. 154,750,000/- a. Amount required: NIL i. Amount verdue (as of March 31, 2009) Rs. 168,522,198.57 i. Principal: Rs. 154,750,000/- i. Mark-up Rs. 13,772,198.57 i. Total Amount payable: Rs. 168,522,198.57 After service of the aforesaid suit, present application was filed by defendant on 7.8.2010. To the aforesaid application plaintiff bank filed replication on 2.10.2009 denying the allegations of the defendant in the leave to defend application.
6. Mr. Abdul Sattar Lakhani, learned counsel for defendant has argued that amount, advanced to the defendant by plaintiff bank comes to Pak Rs. 14,70,69,076/-. He further submits that bank charges recoverable from defendant is Rs, 14,79,42,719/-. He further submits that defendant paid an amount of Rs. 33,40,166/- on March 25, 2008. He further submits that an amount of Rs. 40,000,000/- was paid against. Forced PAD leaving balance of Rs. 14,06.02,553/-. He further submits that bank can charge mark-up from March 25, 2008 to September 29, 2009 upto ^Rs. 1,41,44,572/- making total amount payable by defendant to the plaintiff to Rs. 15,47,47,125/-. Learned counsel for defendant further submits that there was no default on the part of defendant allowing the plaintiff to file present suit under Section 9 of Ordinance, 2001. Learned- counsel further argued that suit filed by plaintiff bank is pre-mature. Learned counsel further argued that finance facility was to expire on 28.9.2009 but present suit has been filed prior to expiry of the time hence is pre-mature and liable to be dismissed. Learned counsel has placed his reliance in support of his above submission upon 2001 CLJ 275 (National Bank of Pakistan v. Al-Asif Sugar Mills Limited, etc.). Learned counsel further argued that plaintiff has wrongly treated amount of forced PAD as demand finance facility and such amount was never disbursed to the defendant. He has further submitted that since no amount was disbursed to the defendant hence suit could not be filed under Section 9 of Ordinance 2001. In support of his above contention learned counsel placed his reliance on PLD 2001 Karachi 264 (Habib Bank Ltd. v. A.B.M. Graner (Pvt.) Ltd.).
7. As against the above submissions, Mr. Ejaz-Ahmed, learned counsel for plaintiff has argued that leave to defend application filed by defendant' is not in conformity with provisions of Section 10 of the Ordinance 2001, hence merits no consideration and liable to be dismissed, In support of his contentions learned counsel for plaintiff placed his reliance on 2006 CLD 244 (Habib Bank Limited v.
8. Messrs Sabcos (Pvt.) and 2003 CLD 1406 (Bank of Khyber v. Messrs Spencer Distribution Ltd. And 14 others). Learned counsel for plaintiff has invited my attention to facility advice letter dated September ' 25, 2008 wherein the tenure of facility has been shown as two months. Learned counsel for plaintiff has further invited my attention to defendant's letter dated September 29, 2008 whereby they had requested the plaintiff bank to release demand facility amount of Rs.
9. 156,000,000/- to the defendant. Learned counsel has further invited my attention to the first entry of statement of account dated 30.9.2009, wherein amount of Rs. 156,000,000/- was credited in the defendant's account. Learned counsel was also invited my attention to elapse 7(j) of finance- agreement, which read as under:- "Any default in the payment obligation of the customer occurs in respect of this agreement and/or in respect of any loan, finance, facility and/or accommodation obtained from the bank, and/or any other banks and/or financial institutions and/or if any Associated Concern commits such a default. A default is stipulated herein shall constitute a default of payment obligation towards the bank under this Agreement."
10. Learned counsel has further submitted that suit is not pre-mature as in terms of above-quoted clause of the finance agreement/ the defendant had defaulted in discharging their obligation, hence a legal notice was served but liability was not cleared by the defendant, which forced the plaintiff to file present suit against the defendants. Learned counsel has further submitted that even if suit was pre-maturely filed, it has got matured during the pendency of the suit as the period of finance facility has already expired during the pendency of suit. Learned counsel has placed his reliance in support of his above contention , on PLD 1964 Supreme Court 106 (Abdullah Bhai and others v. Ahmad Din) & 1982 CLC 580 (Younus v. Mrs. Hameeda). Learned counsel in the end has submitted that execution of the documents has been admitted by the defendants and all the terms of documents executed by defendant are binding upon the parties, In support of his above contentions learned counsel has placed reliance on 2007 CLD 1356 (National Bank of Pakistan v.
11. Messrs A.I. Brothers (Private) Limited and others, 2006 CLD 1011 (Muhammad Arshad and another v..
12. Citibank N.A., Al-Fallah Building, Lahore).
13. I have heard learned counsel for parties and have perused the record with-their assistance and have gone through the judgments cited by them.
14. From the examination of the submissions made by counselor the defendant, it is admitted position that finance facility is advanced to the defendant and said amount on their request was credited in their account, which was utilized by defendant, but they did not repay as agreed. Break up of the claim has been given in paragraph-10 of the ch gives the date of disbursement, date of default, amount financed and availed by defendant, amount repaid, amount overdue, principal and mark- up making total of Rs. 168,522,198,57/-. The amount which defendant is ready to pay is not in conformity with the record but amount claimed by plaintiff is supported from the record. With regard to the contention of learned counsel for plaintiff that application for leave to defend under Section 10 of the Ordinance 2001 is not in conformity with the provisions of Section 10 of Ordinance 2001 and same is liable to be rejected, In support of his above contentions he has relied upon the case of Habib Bank Limited v. Messrs Sabcos (Pvt.) Ltd. (2006 CLD 244), wherein learned Single Judge of the Court while dealing with the issue has held as under:- "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, lt 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 sub-section (4). The learned Advocate for the defendants has frankly conceded that the application does not fulfill the mandatory requirements of sub- section (4). However, he has stated that the summary of substantial questions of law as required under sub-section (3) has been mentioned but further conceded that the summary of the facts as required under sub-section (3) has not been mentioned in the application. Even if we take the 9 preliminary legal objections as substantial questions of law then again the second requirement of sub-section (3) has not been complied with the present case. On further perusal it reveals that facts and figures as required under sub-section (4) have also not been mentioned nor any explanation has been furnished for non-compliance. The learned Advocate for the defendants has- also frankly conceded that provisions of sub-section (4) have not been complied with nor the defendants have furnished any explanation in the application for noncompliance of the said provisions. As such, the defendants have disobeyed the directions of law and mandatory provisions as provided under sub-sections (3) and (4), therefore, their application for leave to defend is liable to be dismissed. Consequently invoking the provisions of sub-section (6) I dismiss the said application."
15. Learned counsel for plaintiff further relied upon the case of Bank of Khyber (2003 CLD 1406) the learned Single Judge of Lahore High Court while dealing with the point in issue has held asunder:- "Upon the examination of the instant leave application, I find that the said defendants failed to give amount of finance availed by the defendants; the amount paid by them; the dates of payments; amount of finance and other amounts relating to the finance payable by the defendants to the financial institutions; the amount of finance and other amounts, which the defendants dispute as payable to the financial institutions, thus, the said defendants have comprehensively failed to adhere to the provisions of Section 10(4) of Ordinance of 2001. In the above back drop, 1 now the pivotal question, which has arisen for determination by this Court is as to whether the instant leave application, filed by the said set of defendants,. Is liable to be rejected summarily. Provisions of Section 10(3), (4) and (5) of Ordinance XLVIof 2001, inter alia, provide that the application for leave to defend shall be in the form of a written statement, containing summary of substantial questions of law and facts, and also giving certain ^ particulars to be furnished by the defendants regarding the finance, i.e. Finance availed, amount paid by the defendants etc. And that such an application must be accompanied by all the documents in support of substantial question of law and facts raised by the defendants. If the afore-noted provisions of law are placed in juxtaposition with the contents of the application, filed by the aforementioned set of defendants, the only irresistible conclusions, which can be drawn is that the said defendants did not comply with the aforesaid provisions of law. In the above perspective, I am constrained to hold that the said defendants have comprehensively failed to file leave application, as required under the Jaw, and they have not complied with the requirements of Section 19(4) and (5) of Ordinance XLVI of 2001, thus, the defendants failed to file leave application in accordance with the provisions of the said Ordinance."
7. Section 10(6) of Ordinance XLVI of 2001 provides that an application for the grant of leave, which does not comply with the requirements of subsections (3), (4) and (5) of Section 10. Of Ordinance XLVI of 2001, the same shall be rejected, unless the defendants able to show sufficient cause for their inability to comply with any such requirements, in this case, as noted above, the, application filed by these defendants does hot fulfill the requirements of Sections 10(4) and (5) of Ordinance of 2001. Additionally, they have not been able to show in their application, any cause, what to talk of sufficient cause for their inability to comply with said requirements.
8. Now the question, which arises is as to whether the provisions of Section 10(6) of Ordinance XLVI of 2001 is mandatory or directory. Basic principle for the interpretation of statute is that when a provision of law has been couched with the penal consequences, the said provisions of law would be considered as a mandatory provision of law and where no penal consequences entail to the noncompliance of a provision of law, in that case, the said provision of law would be taken as directory. Having gone through the provisions of Section 10(6) of Ordinance XLVI of 2001 as noted above, I am of the considered view that this provision of law is mandatory in nature, as the non- compliance of said ' provision of law entails the penal consequences of rejection of leave application, as provided in the afore noted provision of law. In the present case, as the defendants did not comply with the afore-noted provisions of law, therefore, the presumption would be that no application for grant of leave to defend a suit is deemed to be pending and the present application for leave to defend is liable to be rejected per force of Section 10(6) of Ordinance XLVI of 2001."
16. An examination of leave to defend application filed by defendant clearly demonstrates that provisions of sub- sections (3), (4) & (5) of Section 10 of the Ordinance, 2001 provides that if an application for leave to defend which does not comply with the requirement of sub-sections (3),
(4) where applicable and (5) is liable to be dismissed. Defendant has failed to show any sufficient cause for his inability to comply with such requirements. The aforesaid judgments fully apply to the present case and the application filed by the defendant does not fulfill the requirement of Section 10 of the Ordinance 2001 hence liable to be dismissed on this ground alone.
17. On merits the contention of learned counsel for defendant that there Was no default on the part of defendant allowing the plaintiff to file the present suit, the submission is opposed to record. The clause quoted from the finance agreement clearly suggests that if any default in the payment obligation of the customer occurs in respect of this agreement and/or in respect of any loan, finance, facility and/or accommodation obtained from the bank and/or any other banks and/or financial institution and/or if any Associated concern commits such a default. A default stipulated herein shall constitute a default of payment obligation towards the bank under this agreement. As per clause-6 of the finance agreement it has been specifically agreed between the parties that where the purchase price is payable in instalments, failure on the part of the customer to pay any installment on its due date, or occurrence of any Event of Default, will entitle bank to demand immediately the payment of the entire balance of Purchase Price remaining and due and all other costs, charges^payments to be made by the Customer to the Bank, notwithstanding anything to the contrary Contained in this agreement and for recovery to take all actions as the Bank may) in- its absolute discretion deem appropriate. Both the judgments cited by the learned counsel for defendant i.e. 2001 CLJ 275 and PLD 2001 Karachi 264, are distinguishable on facts and do not advance the case of defendant, In the case of National Bank of Pakistan (2007 CLD 71356) the learned Single Judge of this Court finally concluded as under:- "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."
18. In the case of Muhammad Arshed and another (2006 CLD 1011) the Honourable Supreme Court of Pakistan while dealing with issue of terms of agreement entered into between the customer and the Bank has held as under:- "We have no hesitation in our mind to hold that agreement dated 26.6.1999 was authentic, genuine and executed between the parties and acted upon. A careful perusal of the agreement dated 26.6.1999 would reveal that mark-up was charged in accordance with the terms and conditions and stipulated therein, It is to be noted that in the agreement dated 26.6.1999 it has been stipulated in a categoric manner that the petitioners had also entered into mark-up agreement which was executed on 21.6.1995 and thus, it stood admitted by the petitioners, It would not be out of place to mention here that an amount of Rs. 21,05,280/- was mentioned as mark-up in the last agreement, lt would be too late in the day to challenge its. Authenticity on the pretext of certain blank columns. The question which arises here at this juncture would be that as to whey certain columns were left blank and if it was so done whey the incomplete agreement was signed by the petitioner? No answer could be given by the learned Advocate Supreme Court on behalf of the petitioners, In our considered view the plea of "blank columns" would hardly renders "any assistance to the case of petitioners, In view of the provisions as contained in Section 20 read with Section 118 of the Negotiable Instruments Act: .1881 no benefit could be given to the petitioner on the ground that the agreement was not completely filled in when executed as it would have no substantial hearing on the validity of the agreement"
19. Since the defendant has not discharged their obligation as per agreement suit has been rightly filed by the plaintiff. Learned counsel for defendant has failed to make out any substantial question of law as well as facts in respect of which any evidence is required to be led by the parties.
20. In the above circumstances, the leave to defend application filed by defendant is dismissed on both the grounds above. Consequently the suit of plaintiff is decreed in the sum of Rs.
21. 168,522,198.57/- with costs of funds at the prevailing rate fixed by State Bank of Pakistan from the date of default till realization. Such decree is to be executed, inter alia, by the sale of the mortgaged properties and hypothecated goods.