' AQEEL AHMED ABBASI, J.---Instant Special High Court Appeal arises from the impugned order dated 4-1-2010 passed by the learned Single Judge of this Court in Suit No,B-58 of 2008, whereby the application for leave to defend filed by the appellants/defendants was dismissed.
2. Briefly the facts for the purposes of disposal of the instant Special High Court Appeal, as noted by the learned Single Judge, are that the respondent/plaintiff filed the instant suit under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as ("Ordinance 2001") seeking recovery of Rs,559,534,188 from appellant No,1, a limited liability company and principal debtor, appellants Nos.2 and 3 its directors and guarantors to the extent of Rs,.850,000 million and appellant No,4 a mortgagor with liability upto Rs,150,000 million.
3. The respondent/plaintiff claims to have advanced following finance facilities to appellant No, 1 detailed in para 24 of the plaint in terms of subsection (3) of section 9 of Ordinance 2001:-- .Running Finance Facilities (Pledge/Hypothecation)
Principal amount Rs. 136,094,537.25 Amount repaid Nil Principalamount outstanding as on 16-7- 2008Rs. 136,094,537.25 Accruedmarkupfrom1-1-2008to 16-7-2008Rs. 5,762,926.00 Totalamount due and payable as on 16- 7-2008Rs. 141,857,763.25 II.FE-25 (PRE-SHIPMENT FACILITY)
Amount disbursed in US $ US$ 11,148,000.00 Amount repaid/adjusted US$ 6,956,115.47 Principal amount outstanding in US$ on 16-7-2008US$ 4,191,884.53 Outstanding US$ 4,191,884.53 equivalentinPakrupeesason16-7-2008Rs. 291,335,973.45 Accrued markup as on 16-7-2008 Rs. 14,148,689.61 Total outstanding as on 16-7-2008 Rs. 305,484,663.00 III.FE-25 (POST-SHIPMENT FACILITY)
Amount disbursed in US$ US$ 1,023,764.00 Amount repaid/adjusted US$ 920,374.00 Principal amount outstanding US$ 103,390.00 Outstanding US$ 103,300 equivalent to Pak rupees as on 16-7-2008Rs. 7,185,605.00 Accrued markup as on 16-7-2008 Rs. 583,517.07 Total outstanding as on 16-7-2008 Rs. 7,769,122.07 IV.Terms Finance Facilities (a)TF-I Amount disbursed Rs. 25,471,022.00 Amount repaid/adjusted Rs. 22,923,916.00 Principal amount outstanding as on 16-7- 2008Rs. 2,547,106.00 Accrued markup from 1-1-2008 to 16-7- 2008Rs. 282,147.00 Total amount outstanding as on 16-7- 2008Rs. 2,829,253.00 (b)TF-II Amount disbursed s. 14,697,884.00 Amount repaid/adjusted Rs. 11,758,304.00 Principal amount outstanding as on 16-7- 2008Rs. 2,939,580.00 Accrued markup from 1-1-2008 to 16-7- 2008Rs. 273,711.00 Total amount outstanding as on 16-7- 2008Rs. 3,213,291.00 (c)TF-III Amount disbursed Rs. 16,732,303.00 Amount repaid/adjusted Rs. 11,712,700.00 Principal amount outstanding as on 16-7- 2008Rs. 5,019,603.00 Accrued markup from 1-1-2008 to 16-7- 2008Rs. 404,887.00 Total amount outstanding as on 16-7- 2008Rs. 5,424,490.00 (d)TF-IV Amount disbursed Rs. 10,000,000.00 Amount repaid/adjusted Rs. 5,000,000.00 Principal amount outstanding as on 16-7- 2008Rs. 5,000,000.00 Accrued markup from 1-1-2008 to 16-7- 2008Rs. 415,675,00 Total amount outstanding as on 16-7- 2008Rs. 5,415,675,00 (e)TF-V Amount disbursed Rs. 50,000,000.00 Amount repaid/adjusted Rs. 16,667,001.00 Principal amount outstanding as on 16-7- 2008Rs. 33,332,999.00 Accrued markup from 1-1-2008 to 16-7- 2008Rs. 2,738,841.00 Total amount outstanding as on 16-7- 2008Rs. 36,071,840.00 Summary of T.F. Facilities: Amount disbursed Rs. 116,901,209.00 Amount repaid/adjusted Rs. 68,061,921.00 Principal amount outstanding as on 16-7- 2008Rs. 48,839,288.00 Accrued markup from 1-1-2008 to 16-7- 2008Rs. 4,115,261.00 Total amount outstanding as on 16-7- 2008Rs. 52,954,549.00 V.FIM FACILITY Amount disbursed Rs. 45,630,088.00 Amount repaid/adjusted Nil Principal amount outstanding as on 16-7- 2008Rs. 45,630,088.00 Accrued markup from 1-1-2008 to 16-7- 2008Rs. 2,88,086.00 Total amount outstanding as on 16-7- 2008Rs. 48,518,174.00 VI.EBP (Foreign Bills Purchased Facility Amount disbursed in US$ 43,610 equivalent of Pak rupeesRs. 2,950,217.00 Amount repaid/adjusted Nil Total amount outstanding Rs. 2,950,217.00 Grand total of outstanding liabilities (I + II + III + IV + V + VI)Rs. 559,534,188.00
4. The appellants/defendants without denying the facilities, responded to the aforesaid claim in the following terms:-- "The contents of paragraph No,24 are denied as the agreements relied upon by the Bank, which have been addressed hereinbefore in detail, are void on the grounds of being contrary to mandatory provisions of law. Furthermore the contents of paragraphs Nos. 3 to 9 are reiterated and it is submitted that it is the Bank which is liable to pay Apollo and the defendant Nos.2 to 4, a sum of Rs, 3,145, 128,891 (paragraphs 3 to 18, plus paragraph 42) as damages for the losses incurred by them (as explained in the paragraphp) including Rs,36,551,430 cash deposit lying with the bank which must be returned to Apollo."
5. The appellants/defendants further in terms of subsection (4) of section 10 of Ordinance 2001, while giving the detail of the finance facilities "availed", "repayable" and "disputed" in Para 47 of their application seeking leave to defend stated as under:--
(a) The amount of finance availed by the defendant from the Banks is as stated in the plaint which particulars the Bank is requited to disclose under section 9(3) of the FIRO.
(b) The amounts and dates and repayments made by the defendants are as contained in the statement of accounts filed by the Bank as per the particulars to be disclosed by the Bank under section 9(3)(b) of the FIRO in the plaint.
(c) No amount is repayable by the defendants to the Bank for the reason set out in the above, which in summary form include the following:
(i) All amounts detailed to the account of the defendants by the Bank in relation to the FE-25 transactions by the Bank because of the violation of the SBP regulations and Prudential Regulations.
(ii) The repeated conduct of the Bank in debiting excess amounts allegedly by way of markup, which in fact was markup on mark up and also all markups debited at rates in excess of KIBOR.
Thus the total claim for markup is illegal.
(iii) Damages suffered by the defendants because of the above illegal acts of the Bank and also the totally unjustified termination of financial facilities which has led to the virtual paralysis of the operations of the defendants and caused massive losses to it.
(iv) Misappropriation by the Bank and/or its employees and/or muqaddam of the goods pledged and handed over to the physical control, custody and possession of the Bank. It may be noted that the Bank has itself filed documents evidencing physical possession of the defendants' goods by the Bank and/or its muqaddam. This is tantamount to a legal admission of liability by the Bank.
(v) It may be clarified that the above incorrect/legal/(sic) unjustified entries by the Bank as evidenced by the documents filed by it, are in excess of the amount claimed in suit. Hence nothing is due and owed by the Bank.
6. Learned counsel for the appellants/defendants while arguing the matter before the learned Single Judge referred to prayers clause contended that since the respondent/ plaintiff is claiming "cost of fund" from the date of default till realization, therefore, are bound to disclose the source from which the funds were so advanced for the purposes of ascertaining the cost of fund. Per learned counsel, it may be a case where funds advanced are available with the respondent/defendant on account of collections from Current Account holder to whom no return is paid. Consequently, the Bank may not be found entitled to the cost of fund, therefore, the cost of fund cannot be ascertained unless evidence is adduced. Learned counsel while referring to the provisions of Rule 3 of Order XXXVII, C.P.C, section 7 of The Banking Companies (Recovery of Loans)
Ordinance, 1979 and section 10 of The Banking Companies (Recovery of Loans, Credits and Finances) Act, 1997 has contended that earlier the conditions for the grant of leave were more stringent, whereas subsection (8) of section 10 of the Financial Institutions (Recovery of Finances)
Ordinance, 200 makes it incumbent upon the Banking Court to grant leave if on consideration of the contents of the plaint, the application for leave to defend and the reply thereto, it is of the view that "substantial question of law and facts" have been raised in respect of which evidence needs to be recorded. It is next contended by the learned counsel that the plaint is not supported with complete Statement of Account as the Statement of Account annexed with the plaint commence from January, 2007 with outstanding balance; therefore, all such amounts are liable to be deducted. It has been further contended that the entire Statement of Account does not reflect any entry of markup which goes to prove that the markup was added while disbursing the amount without being separately reflected and in order to sift such markup evidence is required to be adduced. Learned counsel while referring to the Agreement for Financing for Short/Medium/ Long Term Mark-up Basis dated 14-3-2007 (annexure "F" at page 85 in suit file) contended that since para 3 of the Agreement which provides for the date of repayment and the number of installments is .Blank, therefore, not admissible under section 18 of the Ordinance, 2001. Learned counsel further while referring to the Agreement of Finance dated 14-3-2007 (Annexure "F" at page 85 and Annexure "F/2" at page 89 in suit file) contended that the defendant/plaintiff had agreed to provide Running Finance Facilities of Rs,500 Million under this head, which was not provided in full resulting in losses. While referring to the Letter of Buy Back of Exports/Inland Bills under the head of Foreign Bill Purchased (Annexure "R/6" at page 283-A in suit file) was contended that the defendant/plaintiff is claiming a sum of Rs,2,950,217 and consequently the evidence is required to be led in order to show as to whether any amount has been received by the respondent/plaintiff on such count. It was next contended that the respondent/plaintiff as evident from para-11 of plaint admits pledge of raw cotton bales and/or yarn to the extent of Rs,385 Million, which according to the Nazir's report admittedly were not found and even macadam was not able to pinpoint the place where such pledged goods were kept and such removal of pledged goods can only be determined after adducing evidence. Learned counsel while referring to para 43 contended that since the appellants/ defendants are claiming setoff in the sum of Rs,3, 145, 128, 891 against damages, therefore, are entitled to the leave of this Court to defend the suit. In support of his contention that damages can be treated as set off and incorrect statement of account cannot be made basis of liability. Learned counsel for the appellants/defendants placed reliance on the following judgments:--
(1) Government of Sindh and 2 others v. Amir Muhammad through his Legal Heirs (1988 MLD 18)
(2) Allied Bank of Pakistan v. Masood Ahmad Khan (1994 MLD 1431) and
(3) Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. (PLD 1966 Supreme Court 684)
7. Conversely, learned counsel for the respondent/ plaintiff while arguing the matter before the learned Single Judge, referred to para-47(a) of the Leave to Defend Application has contended that firstly the appellants/ defendants have admitted the suit amount by stating that the amount of finance availed by the appellants/defendants from the Bank is as stated in plaint and secondly appellants/ defendants failed to provide-the details of availed facilities in terms of subsection (4) of section 10 of the Ordinance, 2001, the appellants/defendants further have not pointed out/ disputed any debit or credit entry, therefore, no case for grant of leave to defend is made out and the application is liable to be dismissed summarily. Regarding cost of fund learned counsel while referring to section 3 of the Ordinance, 2001 has contended that cost of fund being a statutory grant, therefore, does not require ascertainment by adducing evidence. In response to the claim of damages setup as setoff on account of alleged removed of pledged goods. Learned counsel while referring to various Stock Reports (annexure "T-3" to "T-8" from pages 293 to 303) contended that the pledged goods were stored in the factory of appellant/ defendant No,1 and were forcibly removed as acknowledged in the Stock reports, therefore, granting leave to the appellants/defendants to defend the suit would amount to paying premium on their wrongs. It was further contended that even otherwise leave to defend the suit cannot be granted merely on the ground that the appellants/defendants have claimed damages, setoff or has counterclaim. In support of his contention learned counsel placed reliance on the following cases:--
(1) Messrs Ansari Cotton Ginning and Pressing Factory (Pvt.) Ltd. Through Directors and 5 others v.
Habib Bank Limited 2006 CLD 1220)
(2) Siddique Woollen Mills and others v. Allied Bank of Pakistan 2003 SCMR 1156 = 2003 CLD 1033
(3) American Express Bank Ltd. v. Adamjee Industries Limited (1995 CLC 880)
(4) Messrs Razzaq and Company v. Messrs Riazeda (Pvt.) Ltd.(sic.) and
(5) International Finance. Corporation v. Sarah Textiles Ltd. And 3 others (2009 CLD 761).
8. The learned Single Judge, after hearing both the parties and examining the material available on record, has declined the leave to defend application filed by the appellants/defendants and disposed off the same in the following terms: - - "The examination of plaint and documents annexed therewith clearly spell out the liability duly guaranteed by the defendants Nos.2 and 3 and secured by creation of mortgage in respect of their properties as detailed in paras 6 and 12 of the plaint with restricted liability of defendant No,4 upto the extent of Rs,150 million. The plaintiff has given up its right to claim mark up and after deleting all entries of mark up the suit is decreed in the sum of Rs,527,920,448 as prayed, however, the liability of defendant. No,4 would be restricted upto Rs,150 million as undertaken by ,her in deposit of title deed with cost of funds as certified by the State Bank of Pakistan from the date of default till realization. Let a final decree accordingly be prepared."
9. Learned counsel for the appellants/defendants while making his submissions before us has reiterated the contention raised before the learned Single Judge and submitted that the learned Single Judge was not justified in law and facts to decline leave to defend application filed by the appellants. It has been further contended by the learned counsel that substantial questions of law and fact have been raised by the appellants in the leave to defend application which could only be determined by recording evidence, therefore, summarily disposal by the learned Single Judge was not justified under the facts and circumstances of this case. To summarise his arguments, learned counsel argued that statement of account filed by the respondent does not start from zero, however, reflected outstanding balance which, per learned counsel, did not reflect the true statement of account hence could not be relied upon. Learned counsel further argued that cost of fund cannot be allowed unless evidence in this regard is recorded by the parties. Per learned counsel, whereas damage and loss was caused at the hands of the muqqadam appointed by the bank whereby the pledged goods were removed from the godowns, therefore, such damage and loss was required to be adjusted and set off against outstanding liability, as to protect the pledged goods is the responsibility of the bailee. Learned counsel further argued that in order to verify as to who is responsible for the loss of goods the matter required evidence, hence leave to defend application was to be allowed under the facts and circumstances of this case. In support of his contention, learned counsel has placed reliance on the following judgments:--
(1) Trading Corporation of Pakistan (Pvt.) Ltd. v. Murshad Enterprises PLD 2004 Karachi 407
(2) Messrs Foremost Trading Company v. Galedonian Insurance Company Ltd., Karachi PLD 1981 Karachi 540
(3) Sri Narasimhaswa mi, Namagiri Amman and Sri Ranganathaswami Temples by its Executive Officer, P. Rangaraju v. Muthukrishnalyengar AIR 1962 (Madras) 244
(4) Messrs Mahendrakumar Chandulal, Ahmadabad v. Central Bank of India Ahmadabad AIR 1984
(NOC) 113
(5) UCO Bank v. Hem Chandra Sarkar AIR 1990 SC 1329
(6) Messrs Taxila Cotton Mills Ltd. v. Allied Bank of Pakistan 2005 CLD 244
10. Conversely, learned counsel for the respondent has vehemently opposed the maintainability of the instant High Court Appeal and supported the impugned order passed by the learned Single Judge of this Court on the ground that since suit for recovery of the amount along with cost of funds under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was filed by the respondent after complying with the provisions of section 9 of the Ordinance, 2001, whereas neither finance facilities availed by the appellants were disputed nor any objection regarding statement of account was filed by the appellants. It has been further argued that principal amount and repayments have also been admitted by the appellants. Per learned counsel, by filing leave to defend application the appellants attempted to create fictitious grounds as to the statement of account showing outstanding balance instead of zero balance, removal of the pledged goods from the godowns and alleged damage and injury caused in this account, which as per learned counsel for the appellants, is to be adjusted and set off towards outstanding liability of the appellants. Learned counsel further submitted that none of the requirements of section 10 of the Ordinance, 2001 were met by the appellants while filing leave to defend application as no substantial question of law and fact was raised by the appellants. It has been further argued by the learned counsel for the respondent that instant High Court Appeal is otherwise not maintainable as the appellants did not file the decree, copy of plaint, leave to defend application and its annexures along with instant appeal. It is further contended that the appellants have already filed Suit No,58 of 2008 before this Court seeking damages against the loss of pledged goods, which is pending disposal before this Court. Learned counsel further submitted that the grounds raised before this Court were not raised before the learned Single Judge, which besides being frivolous cannot be raised at this stage. In support of his contention, learned counsel has placed reliance in the case of Abdul Majeed and 6 others v. Mst. Haleema and 18 others 1987 CLC 2331.
11. Learned counsel for the appellants, while exercising his right of rebuttal, submitted that there is no estoppel against law, therefore, what is really due is to be determined by law. Learned counsel argued that such proposition of law is also attracted in banking cases. In support of his contention, learned counsel has placed reliance on the following case-law:--
(1) Haji All Khan and Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362
(2) Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353
(3) Agricultural Development Bank of Pakistan v. Messrs Modern Leathers and others 2007 CLD 1424.
12. It is further contended by the learned counsel for the appellants that the objection relating to maintainability of the instant High Court appeal is misconceived as the copy of the decree was filed by the appellants at later stage, whereas such requirements are directory and not mandatory.
It is further contended that if decree is filed subsequently it amounts to sufficient compliance. In support of his contention, he has placed reliance on the case of Basheer Ahmed Siddiqui v. Shama Afroz 1988 SCMR 892.
It has been further submitted that even otherwise no prejudice has been caused to the respondent.
Learned counsel further argued that neither office objection was raised nor any formal objections were filed by the respondent, whereas his objection was raised at the time of hearing of instant appeal. Per learned counsel, Courts prefer disposal of the cases on merits instead of technicalities.
In support of his contention, learned counsel has placed reliance on the case of Rasheed Ahmad v.
Province of Punjab through District Collector, Vehari and another 2004 SCMR, 707 and Sherin and 4 others v. Razal Muhammad and 4 others 1995 SCMR 584.
13. We have heard both the learned counsel and perused the record as well as impugned order passed by the learned Single Judge.
14.
14. It is pertinent to note that suit for recovery of the outstanding amount was filed before the learned Single Judge of this Court under the banking jurisdiction in terms of section 9 of the Ordinance, 2001, which provides for self-contained special procedure for Banking Courts. The Financial Institutions (Recovery of Finances) Ordinance, 2001 i.e. a special law, therefore, every provision contained therein has to be strictly construed and meticulously adhered. Section 4 of the Ordinance, 2001, provides overriding effect to the provisions of the Ordinance, 2001 to all other laws for the time being in force. As per scheme of the Ordinance, 2001, if a customer commits a default or fails to fulfil obligations to financial institution such default in discharge of obligation not only incur cost of funds under section 3(2) of the Ordinance, 2001 but is also actionable under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. In section 9 of the Ordinance, 2001 entire procedure has been provided for the purposes of recovery of the outstanding liability against a customer or financial institution, who commits a default in fulfilment of any obligation with regard to any finance. In terms of subsection (2) of section 9, it is incumbent upon the plaintiff to support the contents of plaint by filing statement of account and also other relevant documents relating to the grant of finance, whereas in terms of subsection (3) of section 9 of the Ordinance, 2001, in case of a suit for recovery instituted by a financial institution, it shall specifically state: --
(a) the amount of finance availed by the defendant from the financial institution;
(b) the amounts paid by the defendant to the financial institution and the dates of payment; and
(c) 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.
15. From perusal of the plaint filed by the respondent seeking recovery of Rs,559,534,188 with cost of funds under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, it appears that the respondent has spelt out entire chronology of the events including the amount of finance availed by the appellants, amounts paid by the respondent to the appellants with the dates of payments, and the amount of finance and other amounts relating to finance payable by the appellants upto the date of institution of the suit . It further appears that the claim was also accompanied with the relevant documents as required to be filed along with the plaint in terms of Section 9 of the Ordinance, 2001 including the statement of account in respect of finance facilities advanced by the respondent to the appellants. All the details of running finance facilities i.e. (Pledge/ Hypothecation), FE-25 (Pre-shipment facility), FE-25 (Post-shipment facility), Terms finance facilities, (a) TF-I, (b) TF-II, (c) TF-III, (d) TF-IV, (e) TF-V, Summary of T.F. Facilities, V. FIM Facility, VT. FBP (Foreign Bills Purchased Facility) have been given in para 24 of the plaint, which has also been reproduced by the learned Single Judge in his order. The detail of liability duly guaranteed by the appellants Nos.2 and 3 and secured by creation of mortgage in respect of their properties has been given in paras 6 and 12 of the plaint with restricted liability of appellant No,4 upto the extent of Rs,150 million. All the relevant documents have duly been exhibited along with the plaint including statement of account showing credit and debit entries during the relevant period whereby the finance facilities were advanced by the respondent and availed by the appellants.
16. From perusal of the record and application for leave to defend filed by the appellants, it appears that the appellants have not disputed the claim of the respondent to have advanced finance facilities as detailed in para 24 of the plaint. Similarly, neither execution of the charge documents has been denied nor the debit or credit entries in any of the statement of account filed by the respondent have been disputed. Whereas the only dispute in this regard is that the statement of account filed by the respondent starts with brought forward balance instead of zero balance. This aspect of the matter has been duly responded by the learned Single Judge in his order by observing that "such objection would have carried weight in case the appellants would have disputed the existing outstanding or the respondent would have been claiming markup. The appellants nowhere have disputed the disbursement of facilities or have brought to the notice any payment not reflected in the Statement of Account. On the contrary, in response to para 24, wherein the respondents have detailed all the facilities the appellants instead of denying the availment have simply pleaded that the agreement being contrary to mandatory provision of law without spelling out the consequences or that the violation, if any." The learned counsel for the appellants has not been able to advance any convincing arguments to dislodge the finding ofthe learned Single Judge as noted hereinabove.
17. The appellants have claimed set off on account of damages as allegedly suffered by the appellants on account of actions/non-actions on the part of the respondent Bank. By placing reliance on the case-law referred to in para 6 hereinabove, the learned counsel for the appellants has argued that in appropriate cases the Claim of damages can be treated as set off. Learned Single Judge while responding to such objection has held that "the question is not as to whether a claim of damages can be treated as set off but as to whether a claim of set off can be set up by a Borrower in a suit instituted by a Financial Institution under section 9 of Ordinance, 2001 and the short answer to my mind appears to be "No". The reason being that if a Borrower is permitted to set up counter claims it would amount to frustrate the very intend of Ordinance 2001 as in every case where damages by way of counter claim or set off are asserted the provisions of subsection
(8) of section 10 of Ordinance, 2001 would become redundant and the Borrower would automatically become entitle to Leave to Defend for the simple reason that a claim of damages cannot be rejected outrightly unless the claimant is permitted to lead evidence." The learned Single Judge has placed reliance on the judgment of a Division Bench of Lahore High Court in the case of Messrs Ansari Cotton, Ginning and Pressing Factory (Pvt.) Ltd. Through Directors and 5 others v. Habib Bank Limited (2006 D 1220). The learned Single Judge has also placed reliance on the case of Siddique Woollen Mills and others v. Allied Bank of Pakistan (2003 SCMR 1156 = 2003 CLD 1033), wherein the Hon'ble Supreme Court refused to interfere in a case where the plea of the Borrowers regarding unauthorized detention of Borrowers' goods were rejected on the ground that it did not give rise to bona fide dispute between the parties.
' We are persuaded to agree with the finding of the_learned Single Judge, which is otherwise based on the judgment of E Hon'ble Supreme Court and a D.B. Judgment of Lahore High Court. Further reliance can also be made to the cases, American Express Bank Ltd. v. Adamjee Industries Limited (1995 CLC 880),. Messrs Razzaq and Company v. Messrs Riazeda (Pvt.) Ltd; and International Finance Corporation v. Sarah. Textiles Ltd. And 3 others (2009 CLD 761). The case-law referred in this regard by the learned- counsel for the appellant is based on distinguishable facts and proceedings hence not attracted in the instant case.
18. Learned counsel for the appellants has mainly argued on the ground of alleged illegal removal of pledged articles from the godowns by the respondents and stated that it is the bailee's duty to take care of the goods entrusted upon him, and in case of any loss, it is responsibility of the bank and their employees to make goods loss. Learned counsel further stated that the essence of bailment is the possession of the articles, which per learned counsel for the appellants was given to the respondent bank. Learned counsel further argued that the amount pledged is more than the amount decreed, hence the same could be adjusted by the respondent under the circumstances.
' Learned Single Judge while responding to such objection has held as under:-- "Regarding pledge goods and their removal the plaintiff in Para-11 of the plaint have pleaded as under:- "11 That in consideration of and as security for the financial facilities allowed/ agreed to be allowed to the defendant No,1 by the plaintiff the defendant No,1 initially created a pledge over its stocks of Raw Cotton Bales and/or Yarn by executing a letter of Pledge dated 14-3-2007 for the amount of Rs,385.00 Million."
(sic.) and have placed on record Letter of Pledge (Annexure 'H'-Page- 97). A minute perusal of Letter of Pledge reflects that the physical possession of the goods against the concept of ordinary pledge as envisaged under section 172 of the Contract Act perhaps was never transferred by the defendants and the Bank has only posted a Muqqadam to supervise unauthorized removal. This appears to be for more than one reasons: firstly, clauses 2 and 3 of the Letter of Pledge provides:-
2. You will be at liberty to have the pledged goods surveyed/ valued from time to time by an appraiser to be appointed by you and the fees and expenses of every such survey/ appraisement/ valuation shall be paid by us on demand and in the event of our failure to do so we undertake to pay to you additionally twenty percent thereof as and by way of liquidated damages and you will have at all times a right to debit the same to any of our accounts maintained with you.
3. We shall keep or cause to be kept a register of goods for the time being and from time to time pledged with you wherein I/We shall duly and punctually enter or cause to be entered particulars of all pledged goods for the time being remaining under your pledge hereunder and 1/ We shall, weekly or as often, as you may require, furnish to you a certified statement or copy of all entries which shall have been made in the said register since the last statement or since the copy was furnished and shall, as often as you may require, produce to you or your nominees or agents, the said register, all accounts and other books, invoices, bills, vouchers, instruments and papers in any way relating to the pledged goods or any part thereof and shall permit you, your nominees and agents to inspect and take copies of or extracts from the same and shall furnish to you, your nominees and agents all such particulars of or information concerning the pledged goods as you may require. and secondly, the Letter of Pledge does not provide the weight or quantity of goods pledged in its schedule except "Pledge of Imported/ Local Raw Cotton Bales and Yarn" and further the defendants almost every month' provided Stocks Report to the Plaintiffs. Notwithstanding since the defendants have already filed a suit seeking recovery of damages against the plaintiff therefore, on this count they are not found entitle to leave of this Court to defend the suit. "
' We are of the view that above finding of the learned Single Judge, under the facts and circumstances of this case, appears to be reasonable and does not require any interference by this Court. We, therefore, hold that the suit for recovery of the amount was competently filed by the respondent after complying with the provisions of section 9 of the Ordinance, 2001.
19. Now adverting to examine propriety of the leave to defend application filed by the appellants, we are of the view that the appellants could not raise any substantial question of law and fact which could be made basis for grant of leave to defend by the learned Single Judge to the appellants. From perusal of the leave to defend application filed by the appellants, it appears that it is not in conformity with the provisions of subsections (3), (4) and subsection (5) of section 10 of the Ordinance, 2001. Subsection (3) of section 10, requires that 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 law as well as fact in respect of which, any evidence needs to be recorded. Similarly, subssection (4) requires that the application for leave to defend shall specify 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 payment;
(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.
20. From perusal of the contents of leave to defend application filed by the appellants, it reveals that in the absence of any denial regarding availing of the finance facilities, execution of the charge documents and acknowledgement of the outstanding liability as per statement of account submitted by the respondent, no substantial question of law or fact was raised by the appellants, which required evidence to be recorded, nor any material document or evidence in terms of subsection (5) of section 10 of the Ordinance, 2001 has been accompanied with application for leave to defend, which could possibly support any question of law or fact raised by the appellant.
21. Section 10(6) of the Ordinance, 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 are 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(3), (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.
22. We are of the view that since the provisions of section 10(6) of the Ordinance, 2001 are the penal consequence for the non-compliance of the requirements of subsections (3), (4) and (5) of section 10 of the Ordinance, 2001, therefore, the said provisions are mandatory in nature. The test to examine as to whether any provision of law would be construed as mandatory or directory, is that when a provision of law has been couched with the penal consequence, the said provision of law would be considered as a mandatory provision, and where no penal consequences entailed to the non-compliance, in that case the said provision of law could be taken as directory. Reference in this regard can be made to the judgment of Hon'ble Supreme Court in the case of Niaz Muhammad v. Fazal Raqib PLD 1974 SC 134, wherein it has been held as under.:-- ' As a general rule however, a statue is understood to be directory when it contains matter merely of direction, but not when those directions are followed up by an express provision that, in default of following them, the facts shall be null and void. To put it differently, if the Act is directory, its disobedience does not entail any invalidity; if the Act is mandatory disobedience entails serious legal consequences amounting to the invalidity of the act done in disobedience to the provision.
' This aspect has been examined by the learned Judge of this Court in the case of NIB Bank Ltd. v.
Muhammad Yasir and another 2011 CLD 243, wherein while considering the provision of section 10(6) of the Ordinance 2001, the leave to defend application was dismissed for the reason that leave to defend application was not in conformity with the provision of subsections (3), (4) and (5) of section 10 of Ordinance 2001. Further reliance in this regard can also be placed to another reported case of Habib Bank Limited v. Messrs Sabcos (Pvt.) 2006 CLD 244.
23. The case-laws referred to by the learned counsel for the appellants under the circumstances, is of no assistance to the appellants as the same are based on distinguishable facts. In the case reported as Government of Sindh and 2 others v. Muir Muhammad through his Legal Heirs 1988 MLD 18, learned Single Judge of this Court while deciding an appeal against an order passed in a suit for recovery of damages held that Court while calculating of amount of damages, to take into consideration factum whether any amount was due and payable by plaintiff to defendants in order to eliminate further litigation between the parties. The facts in the cited case are entirely distinguishable as there was no issue involved relating to a suit for recovery of outstanding borrowed amount and the cost of funds thereon, nor there was any issue relating to granting or rejecting leave to defend in terms of section 10 of the Ordinance, 2001. In the case of Allied Bank of Pakistan v. Masood Ahmed Khan 1994 MLD 1431, the learned Bench of Peshawar High Court, while dismissing appeal under section 12 of the Banking Companies (Recovery of Loans) Ordinance, 1979 has held that Appeal failed as statement of account was absolutely wrong and incorrect while contention of defendant that he had already made full payment was quite correct. In the instant case there is nothing on record to show that the statement of account was factually incorrect nor there is any finding of the learned Judge, in this regard.
24. The appellant could not refer to any such entry in the statement of account which was incorrect. Moreover, the scope of Ordinance, 2001 is distinguishable from the provisions of previous law. In the case of Messrs Muhammad Siddiq Muhammad Umar v. The Australasia Bank Ltd., PLD 1966 SC 684, the Hon'ble Supreme Court has held as under:-- "Even assuming that some goods were pledged with the bank as security for the advance this does not, in our opinion, absolve the defendant from his liability to clear his dues. The banker only acquires a lien over such pledged goods for the recovery of his dues and has a right, after notice to the debtor, to sell those goods to reimburse himself. But it is only where such a sale is actually held that the debtor can claim an adjustment of the sale proceeds of the goods against the amount claimed by the bank.. There is no evidence in the present case that any goods were, in fact, sold by the bank or that the bank still retains any goods as such security."
' The Hon'ble Supreme Court while dismissing the appeal of the borrower further held as under:-- "We cannot, therefore, help observing that after the defendant had admitted that he had an account with the bank and had also borrowed money from the bank on the basis of the arrangement for which be had admittedly executed the promissory notes and the cash agreements there could be no manner of doubt that he had an overdraft account. This has also been corroborated by Inayat Ali, the then Manager of the Delhi Branch. Again, it is clear that the withdrawals had taken place by cheques, the numbers of which have been mentioned in the statement of account (Exh.P.5). It would have been quite easy for the defendant to challenge the correctness of these entries by a reference to the cheque counterfoils which normally would have been in his possession. The fact that this was not done clearly shows that the defence was not in a position to challenge the correctness of those entries. The evasive answers given by the defendant as to the details of his transactions with the bank also confirm us in the view that the defendant had no real answer to the claim "
' Therefore, this case is of no help to the appellants under the circumstances. On the contrary, it negates the contentions of the appellants.
25. As regards the case-law relied upon by the learned counsel for the appellants relating to determination of relationship of bailer and bailee inter se and liability of the bailee in case of damage and loss of pledged goods including the cases reported as Messrs Armair Corporation v.
Allied Bank of Pakistan 1987 MLD 339, Messrs Qadaria Dyes and Chemical Company Ltd. v. United Bank Limited, Clock Tower, Faisalabad 1987 MLD 406, Messrs United Bank Ltd. v. Messrs Muhammad Saeed Muhammad Hussain 1983 CLD 428, Nasir Ahmad Shaikh v. The State Life Insurance Corporation of Pakistan and another 1990 MLD 1261, Pakistan Burmah Shell Ltd. v. S.S. Phoenix and 4 others PLD 1979 Karachi 789 and British India Steam Navigation Co. Ltd. v. National Security Insurance Company Ltd. 1985 CLD 1720. It may be observed that the same are not relevant for the purposes of controversy in hand and the same can be perhaps utilized in the suit proceedings filed by the appellants seeking recovery of damages from the respondents in this regard.
26. We would now like to advert to the objection raised by the learned counsel for the respondent regarding maintainability of instant High Court Appeal, which as per learned counsel for the respondent was filed without certified copy of the decree. It has been contended by the learned counsel for the respondent that instant High Court Appeal besides being devoid of any merits is liable to be dismissed for non-compliance of the mandatory provision of Order XLI, rule 1, C.P.C.
Read with section 22 of the Ordinance, 2001, whereby memo of appeal is to be accompanied by certified copy of the decree, whereas in the instant case the certified copy of the decree was admittedly obtained and filed by the appellants beyond the period of limitation along with affidavit-in-rejoinder by the appellants to the counter affidavit to the main appeal filed by the respondent, which was filed on 6-12-2010. The appellants while responding to such objection have stated in their affidavit-in-rejoinder as under:-- "The appeal is complete in all respects and cannot be dismissed. Even otherwise the appellants now have obtained the decree from the Court which earlier could not be obtained due to misunderstanding between the staff of the appellants' counsel pursuing the suit and the staff of the appellants' counsel pursuing this appeal, therefore, defect, if any, stands apply cured. Copy of the decree is enclosed herewith as annexure R."
' In support of his contention, learned counsel for the respondent has placed reliance on the case of Abdul Majeed and 6 others v. Mst. Haleema and 18 others 1987 CLC 2331.
27. Learned counsel for the appellants has argued that non-filing of the decree along with memo of appeal is not the mandatory requirement. He further argued that if the decree is filed subsequently, it amounts to sufficient compliance whereas no prejudice is shown by the respondent in this regard. Learned counsel further contended that the cases are required to be decided on merits and cannot be dismissed on technicalities. In support of his contention, learned counsel has placed reliance on the case of Bashir Ahmed Siddiqui v. Shama Afroz 1988 SCMR 892, Rasheed Ahmad v. Province of Punjab through District Collector 2004 SCMR 707 and Sherin and 4 others v. Afzal Muhammad and 4 others 1995 SCMR 584.
28. In the case of Bashir Ahmed Siddiqui (supra), it appears that the facts were distinguishable in the cited case, as the decree was neither prepared nor supplied along with judgment to the appellant and the same was admittedly prepared and signed on the same date on which the memo of appeal was presented soon-after the. Record was called for by the Appellate Court. It was held by the High Court that the respondent was not at fault for not obtaining a copy of the decree from the trial Court. Leave to appeal against such order of the High Court was declined by the Hon'ble Supreme Court by observing that the High Court had condoned the delay in submitting decree-sheet.
29 In the case of Rasheed Ahmad v. Province of Punjab through District Collector 2004 SCMR 707, the Hon'ble Supreme Court was pleased to dismiss the petition and refuse leave to appeal filed against an order passed by the learned Single Judge of Lahore High Court Multan Bench Multan, whereby the civil revision was allowed and the first Appellate Court was directed to decide the appeal on merits. In this case the facts were that certified copy of the impugned judgment of the High Court was filed after obtaining the same and it was not appended with the petition, whereas there is no finding as to whether the certified copy was filed beyond the period of limitation or otherwise.
30. The case of Sherin and 4 others v. Afzal Muhammad and 4 others 1995 SCMR 584 is based on entirely different and distinguishable facts as in the cited case delay in filing of appeal and condonation of delay based on sufficient cause and on reasonable ground has been examined. An application under section 5 of Limitation Act, was filed along with the appeal as the appeal was filed before wrong forum on account of mistaken advise of the counsel. It was held that since the appellant and the counsel have shown due diligence, whereas delay was on account of having approached the wrong forum which was properly explained and sufficient cause was shown hence the same was condoned under the circumstances.
31. From perusal of record it appears that the final order was announced on 4th January, 2010 whereafter the respondent applied for the certified copy of judgment and decree on 23rd January, 2010. Cost was paid on 2nd October, 2010 and the copy was made ready on the same date whereafter it was supplied on 30th October, 2010 to the appellants, who submitted the memo of appeal on the same date along with certified copy of the order without certified copy of decree.
The respondent filed counter affidavit to the injunction application under section 22 of the Ordinance, 2001, wherein the objection was raised as to the maintainability of the High Court Appeal for having being filed without certified copy of the decree. Appellants pursuant to such counter affidavit and objection, filed affidavit-inrejoinder to the injunction application as well as to the main appeal on 6-12-2010 wherein non-filing of certified copy of the decree was acknowledged however, it was stated that it was on account of misunderstanding between the staff of the appellants' counsel pursuing the suit and the staff of the appellants' counsel pursuing this appeal.
Certified copy of the decree could not be filed, however, photocopy of the decree was enclosed along with affidavit-in-rejoinder as annexure "R". Whereas no application under section 5 of the Limitation Act, 1908 has been filed for seeking condonation of delay.
32. It will be advantageous to reproduce the provision of Order XLI, Rule 1, C.P.C. Which reads as follows:-- "Form of appeal. What to accompany memorandum.
(1) Every appeal shall be preferred in the form of a memorandum signed by the appellant or his pleader and presented to the Court or to such officer as it appoints in this behalf. The memorandum shall be accompanied by a copy of the decree appealed from and (unless the appellate Court dispenses therewith) of the judgment on which it is founded."
' From perusal of the above provisions, it emerges that every memorandum of appeal duly signed by the appellant or his pleader shall be accompanied by a copy of the decree appealed from whereas filing of the copy of judgment on which such decree is founded can be dispensed with by the appellate Court.
33. In the case of Cooperative Model Town Society through Secretary v. Mst. Asghari Safdar and others 2005 SCMR 931, the Hon'ble Supreme Court while examining the scope of Order XLI, rule 1, C.P.C. And section 5 of Limitation Act has held as under:-- "6 The argument in our view has no merits. It has been held in the case of Col. (Retd) Syed Mukhtar Hussain Shah v. Wasim Sajjad and 30 others PLD 1986 SC 178 that the use of the affirmative word followed by limiting provision shall be deemed to be mandatory. It has been clearly provided in Order XLI, rule 1, C.P.C. As reproduced above that certified copy of the decree had to be appended with the memo of appeal which is followed by the limiting words regarding certified copy of the judgment on which the same was based therefore, the provision regarding production of certified copy of the decree-sheet shall be deemed to be mandatory. It has further been held in the case of Akbar Khan v. Muhammad Razzaq alias Abdur Razzaq PLD 1979 SC 830 that the appeal was not properly constituted if the same had been filed without certified copy of the decree-sheet."
34.
34. It may be observed that in a situation where the decree has not been drawn-up and it is noticed at the time of presenting the appeal that the memorandum is not accompanied by a copy of the decree, time can be allowed for filing the decree-sheet under such circumstances. However, in the instant case, the decree was drawn on the same date when the judgment was announced whereafter the appellants applied for certified copy of the judgment and decree both, which were supplied to the appellants, however, appellants did not file the copy of the decree along with memo of appeal. It further appears that objection in this regard was made by the respondent. The appellants while submitting the reply to such objection, filed the copy of the decree without an application under section 5 of Limitation Act, seeking condonation of the delay, nor could raise any reasonable grounds or excuse for non-compliance of the statutory provision. The casual conduct on the part of the appellants towards non-compliance of the statutory provisions, in the absence of any valid ground or even an application under Limitation Act, seeking condonation of delay in this regard, could not persuade us to exercise any discretion in favour of the appellant to condone the delay and the non-compliance of statutory provision.
35. We are of the view that since the appellants could not make out a case on merits, therefore, the exercise of discretion by this Court to condone the non-compliance of the statutory provisions and the delay thereto, would not advance the cause of justice rather would frustrate the same.
36. Accordingly, we do not find any merits in the instant Special High Court Appeal, which is hereby dismissed along with listed applications with no order as to costs.