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 seeking leave to defend the suit unconditionally.
2. Brief facts leading to this case, as per plaint, are that defendant No,1 is Private Limited Company and defendants Nos.2, 3 and 4 are directors and have executed personal guarantees. In October, 2007 defendant No,1-company passed resolution to avail finance facility from the plaintiff-Bank and authorized defendants Nos.2 to 4 to negotiate with the plaintiff-Bank the terms and conditions of the finance facility. On 22-10-2007 a request for finance was formally made by the defendants and on their request running finance facility of Rs,75 Million (R.F Facility), Export Re- Finance Facility of Rs,65 Million (E.R.F Facility) and Letter of Credit Facility of Rs,10 Million (L.C. Facility) were approved.
3. Defendants executed agreement for R.F Facility, E.R.F Facility and other related documents.
4. Defendants in order to secure its repayment obligation of the plaintiff in terms of offer letter issued by plaintiff-Bank to the defendants, created registered mortgage of the properties, deed of assignment, memorandum confirming deposit of title deeds, letter of hypothecation and supplementary letter of hypothecation executed personal guarantees by defendants Nos.2 to 4 and demand promissory note. Later on defendant. No,1 requested the plaintiff-Bank for L.C. Facility to be converted into R.F. Facility. The plaintiff-Bank vide their letter dated 25-3-2008 converted L.C.
5. Facility into R.F. Facility. Accordingly on 25-3-2008 plaintiff-Bank and defendant No,1 entered into finance agreement R.F. Facility No,2. To secure repayment obligation defendants executed demand promissory note and personal guarantees. On 5-9-2008 defendant No,1 again approached the plaintiff-Bank for grant of temporary extension of Rs,7 Million to the aggregate R.F. Facility as excess over limit. The plaintiff-Bank in order to support defendant No,1 in its business granted the request for 30 days only. To secure the repayment of above finance facility agreement of E.O.L Facility was executed so also demand promissory note and personal guarantees by defendants Nos.2 to 4. The defendants availed the finance facility in full, but failed to perform its obligation as agreed.
6. The plaintiff-Bank served notices/reminders, but liability was not cleared by the defendants forcing the plaintiff-Bank to file present suit. The total amount recoverable by the plaintiff-Bank from the defendants is as under:---
(a) Total amount withdrawn by defendant No,1
(i) Amount paid by defendant towards Principal
(ii) Mark-up paid by defendants
(iii) Total amount on account of principal upto 30-10-2009 is
(iv) The amount of mark-up up-till 30-1-2009
(v) Total amount recoverable comes to
(b) E.R.F. Facility of
(i) Amount availed by the defendant No,1.
(ii) Mark-up paid by defendant No,1 on account of principal.
(iii) Amount of mark-up paid by defendant No,1 (iv)Amount of principal payable by defendant upto 30-1-2009
(v) The amount of mark-up and other charges payable by defendant upto 30-1-2009 Total amount E.R.F. Is Total R.F. Payable Total E.R.F. Payable SBP Penalty Total outstanding Rs,3,49,453,0006 Rs,257,335,529 Rs,5,468,880 Rs,91.998,334 Rs,5,883,221 Rs,97,881,555 Rs,65 Million Rs,65 Million Nil Nil Rs,65 Million Rs,1,624,642 Rs,66,624,642 Rs,97,881,555 Rs,66,624,642 Rs,2,124,540 Rs,166,630,737 After service of summons, defendants filed leave to defend application admitting the availment of finance facility and also execution of all the documents annexed along with plaint.
7. After receipt of the copy of counter-affidavit, plaintiff-Bank filed replication maintaining their stand in the plaint and denied the allegation of the defendants in the counter-affidavit.
8. In support of leave to defend application, Mr. Abid Hussain, learned counsel for defendants has submitted that suit has not been filed by the authorized persons. Learned counsel further submitted that penal mark-up has been charged which is not permissible under the law. He has further argued that plaint is not in conformity with the provisions of section 9 of the Ordinance, 2001 hence the same is liable to be rejected. Learned counsel has further submitted that claim of the plaintiff-Bank is highly exaggerated. He further submitted that plaint does not disclose amount availed by the defendants and it also does not disclose the amount paid by the defendants to the plaintiff-Bank. He further submitted that statement of account annexed with the plaint is in contradiction of the amount claimed by the plaintiff-Bank. Learned counsel further submitted that defendant have good prima-facie case and entitled to leave to defend the suit unconditionally.
9. However during the course of argument, Learned counsel for defendants admitted that amount mentioned in the plaint has been availed by the defendants. He also admitted the execution of the documents available on record. He also admitted that entire liability of the plaintiff-Bank has not been cleared in accordance with the agreed terms. In support of his contention learned counsel has placed reliance on the following case-law:--
(1) United Bank Limited v. Messrs Ilyas Enterprises and others 2004 CLD 1338,
(2) National Bank of Pakistan v. Messrs Mujahid Nawaz Cotton Ginners and others 2007 CLD 678,
(3) Bank of Punjab v. MRs, Mah Tallat Sultan and another 2006 CLD 773,
(4) National Bank of Pakistan and others v. National Battery Industries and others 1994 CLC 2133.
10. Conversely Mr. Jam Asif Mehmood, learned counsel for plaintiff-Bank has submitted that defendants have failed to raise any substantial question of law or fact, which requires any evidence to be recorded. Learned counsel further submitted that since no question of fact and law has been raised, leave to defend application be dismissed and the suit be decreed. Learned counsel further submitted that availment of finance facility as well as execution of documents are admitted by the defendants. He further submitted that it is admitted by the defendants' counsel that entire liability has not been cleared in accordance with the agreed terms. He submitted that on merits as well no case for grant of leave to defend has been made out.
11. Learned counsel for plaintiff further argued that leave to defend application is not in conformity with the provisions of section 10 of the Ordinance, 2001. Learned counsel for plaintiff further submitted that in terms of subsection (4) of section 10 of the Ordinance, 2001, the defendants were required to specifically mention the amount of finance availed by the defendants from the financial institution. He further submitted that defendants were obliged to mention the amount paid by the defendants to the financial institution and the dates of payment. He further argued that defendants were obliged to mention in the leave to defend application amount of finance and other amount relating to the finance payable by the defendants to the financial institution upto the date of institution of the suit. He further submitted that defendants were also obliged under the law to disclose the disputed amount payable by them to the financial institution. He further submitted that above mandatory requirements of subsection (4) have not been complied with in the leave to defend application. Learned counsel further submitted that in terms of subsection (5) of section 10 of the Ordinance, 2001 application for leave to defend shall accompany with all the documents which in the opinion of the defendants support the substantial question of law or fact raised by them, but no such document has been annexed with the application. Learned counsel further submitted that penal provisions as contained in subsection (6) of section 10 of the Ordinance, 2001 be invoked and the application for leave to defend may be dismissed as it fails to comply with the provisions of subsections (3), (4) and (5) of the section 10 of the Ordinance, 2001. Learned counsel for plaintiff-Bank in support of his contentions has relied upon the following case law:---
(1) Industrial Development Bank of Pakistan, Karachi v. Messrs Zamco (Pvt.) Ltd. And others 2007 CLD 217
(2) National Bank of Pakistan v. Messrs A.I. Brothers (Private) Limited and others 2007 CLD 1356
(3) Haji Ali Khan & Company, Abbottabad and others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362
(4) United Bank Limited v. Ghulam Hussain 1998 CLC 816
(5) Messrs Saudi Pak Commercial Bank Limited v. Messrs Marvi Agrochem (Private) Ltd. And others 2007 CLD 1374
(6) Industrial Development Bank of Pakistan v. Muhammad Ayub and others 2009 CLD 346
(7) Shahid Farooq Sheikh v. Allied Bank of Pakistan Limited 2005 CLD 1489
(8) Zeeshan Energy Ltd. And others v. Faisal Bank Ltd. 2004 CLD 1741
(9) Bank of Khyber v. Messrs Spencer Distribution Ltd. And others 2003 CLD 1406.
12. (10)Messrs U.B.L. v. Messrs Sindh Tech. Industries Ltd. And others 1998 CLD 1152 (11)Messrs Malik & Company and others v. Muslim Commercial Bank and others 2002 CLD 1621 (12)Habib Bank Limited v. Messrs Sabcos (Pvt.) Ltd.. 2006 CLD 244.
13. I have heard learned counsel for the parties and have perused the record with their assistance including written arguments filed by counsel for defendants and have gone through the judgments cited by 'learned counsel for the parties.
14. Now taking up the first submission of the learned counsel for defendants that suit has not been filed by competent person hence the same is liable to be dismissed. The examination of the record shows that two persons namely Amjad Hussain Aftab and Mushtaq Ahmed have filed suit under their signatures who have been appointed attorney by the Bank under its common seal. Power of attorney of both the above officers are available on record as Anne/cures 'A' and 'A/1' respectively.
15. The power of attorney brought on record have been executed by the President of the Bank in favour of above named attorneys and the same is notarized in accordance A with law.
16. ' In the case of Banque Indosuez v. Jet Travels Limited and others 1991 CLC 446 a learned Single Judge of this Court (as he then was) while dealing with the point in issue has held as under:- .... On verification it was found that photostat copy of the Power of Attorney was in the name of only one person i.e, Syed Rasheed Akhtar while the plaint is signed by both, Syed Rasheed Akhtar as well as Saleem. Mr. S.A. Sarwana states that due to oversight he could not file Power of Attorney of Saleem. He shows the original to the Court and files a photo copy of the Power of Muhammad Saleem, which is taken on record. The objection is, therefore, repelled. So far as the resolution by the Bank is concerned, it is not necessary to produce the same before the Court at the time of filing of the suit. Mr. Farooque Naek has relied upon the case of National Bank of Pakistan v. Muhammad Ashraf Sanik and another (PLD 1987 Lah. 17), wherein a suit filed by National Bank of Pakistan by a person holding Power of Attorney which authorised him to institute/defend any action or other proceedings relating to affairs of Principal, was held to be a proper authority. This ruling would not help the defendants."
17. In the case of National Bank of Pakistan v. Muhammad Ashraf Sanik PLD 1987 Lah. 17 a learned Single Judge of Lahore High Court (as he then was) while dealing with the aforesaid point in paragraph 21 of the report has held as under:--- "21. The, only other contention raised on behalf of the defendants which is left to be considered is the objection as to the competence of the signatory of the plaint to institute the suit on behalf of the plaintiff. Suffice it to say that the certified copy of the registered Power of Attorney in favour of Mr. Zia-ud-Din one of the signatories of the plaint has been placed on record which clearly authorizes him (refer recital 13) to institute/defend etc., any action or other proceedings relating to the affairs of the Bank and it squarely meets this objection. Otherwise also the objection in the light of the case-law cited by the learned counsel for the plaintiff does not appear to have force."
18. In the case of Khyam Films and another v. Bank of Bahawalpur Ltd. 1982 CLC 1275 a learned Single Judge of West Pakistan High Court in the year 1966 while deciding the point in issue had held that authority of a person who signs the plaint can be questioned by the principal. The learned Judge in the reported judgment has observed as under:--- ".... In my opinion the fact that the person did or did not have authority can effectively be challenged only by the principal. If in spite of the objections taken the principal continues to recognize the authority of the agent to institute the suit I am inclined to think that this would amount to a ratification and the suit would still be a validly instituted suit."
19. The upshot of the above discussion is that since the plaint in the present suit has been presented by the two signatories who are attorneys and were authorised by the bank, it is valid presentation and suit is maintainable under the law. Even otherwise, section 9(1) of Ordinance 2001 provides that financial institution may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath by the Branch Manager or such other officer of the financial institution as may be duly authorized in this behalf by power of attorney or otherwise. A bare reading of above provision would show that plaint can be presents by a financial institution before a Banking Court duly signed and verified on oath either by a Branch Manager or such other officer of the bank who holds a power of attorney or has been authorized otherwise. In the present case power of attorneys have been brought on record which fulfils the requirement of section 9(1) of Ordinance 2001. Accordingly, I hold that suit has been validly filed and the same is maintainable. (Under lining is mine for emphasis).
20. The other arguments raised by the learned counsel for defendants is that statement of account filed by the plaintiff-Bank along with plaint contains unjust and unwarranted entries for which no details have been provided. Learned counsel has failed to point out any specific entry in the statement of account, but his submission is vague. An C examination of statement of account shows that it contains all the transactions of the account of the defendants and the said statement of account has been certified under the Bankers' Book Evidence Act, 1891. Since the arguments of the learned counsel for defendants are vague and he has failed to point out any defect in the statement of account filed by the plaintiff, such arguments are of no consequences.
21. Last argument of the learned counsel for the defendants that plaint is not in conformity with the provisions of section 9(3) of the Ordinance. 2001 hence the suit is liable to be dismissed. An examination of the plaint, it appears that plaintiff-Bank in paragraph-34 has given all the required particulars in terms of section 9(3) of the Ordinance, 2001, break-up whereof has been given above in this order. In the circumstances, the contention of the learned counsel for defendants that plaint is not in conformity with the provisions of section 9(3) of the Ordinance, 2001 is opposed to record.
22. Accordingly contention of learned counsel for defendants is repelled.
23. During the course of arguments learned counsel for defendants has admitted that amount of finance mentioned in the plaint was availed by the defendants. He also admitted that documents mentioned in the plaint were executed by the defendants to secure the repayment of their liability.
24. From the examination of the submissions made by counsel for the defendants, it is admitted position that finance sanctioned by plaintiff-Bank was availed by the defendants. It is also admitted position on record that documents mentioned in the plaint were executed by defendants against the above finance facility. It is established on record that defendants have failed to discharge their liability in accordance with the agreed terms.
25. Now taking up the arguments of learned counsel for plaintiff-Bank that the application under section 10 of the Ordinance does not fulfil the mandatory requirement hence liable to be rejected.
26. 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. It 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 subsection (4). The learned Advocate for the defendants has frankly conceded that the application does not fulfil the mandatory requirements of subsection (4).
27. However, he has stated that the summary of substantial questions of law as required under subsection (3) has been mentioned but further conceded that the summary of the facts as required under subsection (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 subsection (3) has not been complied with the present case. On further perusal it reveals that facts and figures as required under subsection (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 subsection (4) have not been complied with nor the defendants have furnished any explanation in the application for non-compliance of the said provisions. As such, the defendants have disobeyed the directions of law and mandatory provisions as provided under subsections (3) and (4), therefore, their application for leave to defend is liable to be dismissed.
28. Consequently invoking the provisions of subsection (6) I dismiss the said application."
29. Learned counsel for plaintiff further relied upon the case of Bank of Khyber 2003 CLD 1406 (supra), in which the learned Single Judge of Lahore High Court while dealing with the point in issue has held as under:--- "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 backdrop, 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 XLVI of 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 aforenoted 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 law, 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 not fulfil the requirements of sections 10(4) and (5) of Ordinance XLVI 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) 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 non-compliance 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 aforenoted provision of law. In the present case, as the defendants did not comply with the aforenoted 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."
30. An examination of leave to defend application filed by defendant clearly demonstrates that provisions of subsections (4) and (5) of section 10 of the Ordinance, 2001 have not been complied with. Subsection (6) of section 10 of the Ordinance, 2001 provides that if an application for leave to defend which does not comply with the requirement of subsections (3), (4) and (5) is liable to be dismissed. Defendants have failed to show any sufficient cause for their inability to comply with such requirements. On the contrary defendants counsel has conceded before the Court during his arguments that provisions of section 10 of the Ordinance, 2001 have not been complied with. The aforesaid judgments fully apply to the present case and the application filed by the defendant does not fulfil the requirement of section 10 of the Ordinance 2001 hence liable to be dismissed on this ground alone.
31. Now taking up the contention of learned counsel for plaintiff that availment of finance facility is admitted by the defendants and he also argued that execution of all the documents mentioned in plaint has been admitted by the defendants. He further argued that entire liability was not discharged by the defendants hence he submits that suit be decreed.
32. Learned counsel for plaintiff-Bank also placed reliance on the case of National Bank of Pakistan 2007 CLD 1356 (supra), wherein 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."
33. From me perusal of the above quoted judgment, it will be seen that this judgment fully supports the case of plaintiff. In this case availment of financial facilities granted by the Bank to the borrower have not been denied so also execution of documents by defendants was also admitted. In this view of the matter leave to defend application was dismissed and suit was decreed with costs of funds at the prevailing rate fixed by State Bank of Pakistan. In the present case as well, as submitted earlier, neither availment of the facility has been denied nor execution of documents by the defendants has been denied. In the circumstances, application for leave to defend filed by the defendants is liable to be dismissed and suit of the plaintiff is to be decreed.
34. In the case of Bank of Punjab 2006 CLD 773 (supra), learned Division Bench of Lahore High Court has examined the validity of statement of account filed by the Bank. Learned Division Bench came to the conclusion that if statement of account contains unauthorized entries. And not verified under the Bankers' Book Evidence Act, 1891, held that such statement of account was defective and not a prima facie proof of entries in the Book of accounts, thus, cannot be relied upon. But in this case no such defects in entries of the statement of account filed by the plaintiff have been pointed out by the defendants hence this judgment is of no help to the defendants.
35. ' In the case of National Bank of Pakistan 1994 CLC 2133 (supra) the authority of person who filed suit was questioned on the ground that neither any resolution has been brought on record nor any power of attorney has been filed along with plaint by the person who filed the suit. Since power of attorney was not available on record in favour of person who filed suit. In the reported judgment learned Single Judge of Lahore High Court (as he then was ) came to the conclusion that findings of both the Courts below were correct in holding that the appellant failed to prove that the suit had been instituted through duly authorized person. This judgment is distinguishable on facts as in the present case power of attorneys of two persons who have signed the plaint have been brought. On record hence reported judgment does not apply to the circumstances of this case.
36. In the case of National Bank of Pakistan 2007 CLD 678 supra, the validity of statement of account which was not in conformity with the provisions of Bankers' Book Evidence Act, 1891, the learned Division Bench of Lahore High Court came to the conclusion that bare perusal of the provisions of Bankers' Book Evidence Act, 1891 shows that certificate which is to be given at the foot of copy of statement of account, so as to make it certified copy of the statement of account must state the following:--
(i) it is true copy of the such entry;
(ii) such entry is contained in one of the ordinary books of bank;
(iii) it was made in the usual and ordinary course of business;
(iv) such book is still in the custody of the bank;
(v) it must be dated; and
(vi) subscribed by the principal accountant or manager of the bank with his name and official title.
37. Learned Division Bench came to the conclusion that statement of account which is not certified copy as contemplated under section 2(8) of Bankers' Book Evidence Act, 1891, the said copy cannot be received as prima fade evidence of the existence of such entry and cannot be admitted as evidence of the matteRs, This case does not apply to the case in hand as it is distinguishable on facts. The perusal of statement of account filed by plaintiff-Bank in the present proceedings contains certificate issued by the competent officer and the same is dated. The certificate appears to be in accordance with the provisions of Bankers' Book Evidence Act, 1891 hence ratio in the aforesaid reported judgment has no bearing to the present case.
38. In the case of United Bank Limited 2004 CLD 1338 supra, again the certification of statement of account was in issue and the learned Division Bench of the Lahore High Court came to the conclusion that if statement of account is not in conformity with section 2(8) of the Bankers' Book Evidence Act, 1891, such statement of account was not to be treated as certified copies of the entries of the Books of Account. This judgment is also not relevant to the case in hand for the reasons mentioned hereinabove.
39. Since the defendants have not discharged their obligation as per agreement suit has been rightly filed by the plaintiff. Learned counsel for defendants 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.
40. In the above circumstances, the leave to defend application filed by defendants is dismissed for the aforesaid reasons. Consequently the suit of the plaintiff is decreed against the defendants jointly and severally, with cost in the sum of Rs,166,630,737 along 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.