' 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 defendants seeking leave to defend the suit unconditionally.
2. Brief facts leading to the controversy in this case are summarized as under:
3. Defendant No, 1, which is Public Limited Company carrying on business of printing and publishing.
In the year 2005 at the request of defendant No, 1 finance facilities were allowed by plaintiff for a period valid upto 31-5-2006. Thereafter finance facilities were renewed and enhanced. Fresh facilities were allowed from time to time. Lastly the finance facilities were renewed in January, 2009 as under:-- "(a) Running Finance Rs. 70,000 million valid upto 31-12-2009
(b) Term Finance (I) Rs. 18,977 million valid upto 21-11-2010
(c) Term Finance (II) Rs. 14.068 million valid upto 29-8-2012
(d) Letter of Credit (at sight) Rs. 25.000 million valid upto 31-12-2009"
4. For the aforesaid finances terms and conditions were communicated by the plaintiff to the defendants vide their letter dated 31-1-2009, which were agreed by defendants and inter alia contains the following:- "Facility' No, 1 Running Finance Limit Amount Rs. 70,000,000 (Rupees Seventy Million Only)
PurposeTo meet working capital needs Pricing 6 months KIBOR + 3.5% Payment Through cash generation from Business or on demand/on realization.
Expiry 31-12-2009 Commission & Charges As per Bank's schedule of charges from time to time.
Security 1. 1st Hypothecation charge over Current Assets of Rs. 300.00 million.2. EM inc. LM over factory property and first charge of Rs.300.00 million over present and future assets of the company including land, building, plant and machinery.
3. Personal Guarantees of all Directors of the company.
"Facility No. 2 LTF - I Outstanding amount Rs. 18,977,000 (Rupees Eighteen Million Nine Hundred and Seventy Seven Thousand Only)
Purpose For Purchase of machinery.
Pricing 6 months KIBOR + 3.5% Repayment Remaining 9 Quarterly Instalments including 1 overdue instalment. Mark up to be paid quarterly.
Security 1. EM incl. LM over factory property and first charge of Rs. 300.00 million over present and future assets of the company including land, building, plant and machinery.
2. Personal Guarantees of all Directors.
"Facility No. 3 LFT - II Remaining Limit Amount Rs. 14,068,000 (Rupees Fourteen Million Sixty Eight Thousand Only)
Purpose For purchase of Machinery Pricing 6 months KIBOR + 3.5% Repayment 15 Quarterly instalments including 1 instalment. Mark-up to be paid quarterly. overdue Security 1. EM inc. LM over factory property and first charge of Rs. 300.00 million over present and future assets of the company including land, building, plant and machinery.
2. Personal Guarantees of all Directors. "Facility No. 4 LC (Sight)
Limit Amount Re. 25,000,000 (Rupees Twenty Five Million Only)
Purpose For import of goods.
Margin 10.00 % Commission & Charges As per schedule of charges Repayment On arrival of documents Expiry 31-12-2009 Security 1. Shipping Documents"
5. The defendants for repayment and due discharge of their liability hypothecated stock of cardboard, paper, ink and other allied material, used for printing and publishing and also deposited original title deeds of plot mentioned in the plaint. Defendants also executed memorandum confirming deposit of title deeds of Plot bearing No,D-118 admeasuring 2.22-Acres situated at Sindh Industrial Trading Estate (SITE), Karachi and executed deposit of title deeds for the above plots with all building, machinery, equipment, accessories etc. Defendant No,1 also executed mortgage deed for token sum of Rs,1 Million and defendants. Nos.2 to 4 executed guarantees in their personal capacities guaranteeing repayment of finance facility as per arrangement and undertaken to pay amount within two days after demand, if default is committed in fulfilment of any obligation by the defendants. The aforesaid finance was utilized by the defendants in full.
However defendants committed default in fulfilment of their obligation including repayment of term finance and servicing of mark-up at quarterly basis and violated the terms of offer letter dated 31-1-2009. In the circumstances in exercise of its rights under offer letter dated 31-1-2009, the defendant No,1 was served with the legal notice dated 7-8-2009 pointing out that mark-up of running finance as well as on demand finance upto quarter ending till 30-6-2009 amounting to Rs,3.726 Million and Rs, 2.941 Million respectively is due and payable by defendant No, 1.
6. Defendant No, 1 addressed a letter dated 24-11-2009 seeking cooperation from the plaintiff-Bank with regard to providing flexibility for servicing in their overdue mark-up and quarterly instalments by deferring current overdue payment till 31-12-2009, but such request was not acceded to by the plaintiff-Bank and final notice dated 5-12-2009 was served informing the defendants that due to persistent default on the part of defendants, plaintiff-Bank is left with no option but to recall the credit finance facility and plaintiff-Bank asked the defendants to clear their liability within ten days from the receipt of this notice. Since the liability was not discharged, plaintiff filed the present suit claiming the following in paragraph-1 1 of the plaint: "(A) Running Finance
(i) Amount availed Rs.70.000 million
(ii) Amount repaid Rs. 0.006 million
(iii) Outstanding as on 31-12- 2009Rs.69.994 million
(iv) Mark-up due and payable from 1-4-2009 upto 31-12-2009Rs. 8.961 million
(v) Total amount payable principal Finance and mark-upRs. 78.955 million (B)Term Finance (I)
(i) Principal finance allowed and availedRs.18.977 million
(ii) Amount repaid Rs. 2.925 million
(iii) Outstanding as on 31-12- 2009Rs. 16.052 million
(iv) Mark-up due and payable from 1-7-2009 upto 31-12- 2009Rs. 1.295 million
(v) Total amount payable principal Finance and mark-upRs. 17.347 million Term Finance (II)
(i) Principal finance allowed and availedRs.14.068 million
(ii) Amount repaid Rs. 1.876 million
(iii) Principal Outstanding as on 31-12-2009Rs. 12.192 million
(iv) Mark-up due and payable from 1-4-2009Rs. 1,423 million
(v) Total amount payable principal Finance and mark-up Rs.13.615 million"
7. After service of summons, in accordance with provisions of Ordinance, 2001, defendants filed C.M.A. No,3943 of 2010 under disposal seeking leave to defend the suit raising legal pleas to the maintainability of the suit namely the plaint has not been signed and presented by the competent persons hence plaint is liable to be rejected. It was further stated in the leave to defend application that statements of account filed by the plaintiff do not show numerous amount paid by the defendant No,1 towards repayment of its facilities and has submitted that defendant No,1 availed total amount of Rs,126,734,776 from the plaintiff-Bank in respect of various facilities and has also paid total amount of Rs,80,164,839 towards repayment of the same. The remaining amount is not yet due as term finance facilities Nos.1 and 2 are valid till 21-11-2010 and 29-8-2012 respectively. It was also stated that statements of account filed by the plaintiff have not been filed in terms of Bankers' Book Evidence Act, 1891.
8. In response to the claim of the plaintiff-Bank as set out in para 11 of the plaint defendants have responded to in their paragraph-13 of leave to defend application, wherein it is stated that no statements of account have been filed by the plaintiff-Bank in support of the claim of Rs,8.961 Million as mark-up due and payable from April 1, 2009 to December 31, 2009. In respect of running finance facility Rs,1.295 Million has been shown due and payable as mark-up for the period from 1- 7-2009 to 31-12-2009 in respect of term finance No,1 and Rs,12.192 Million as mark-up due and payable on 31-12-2009 in respect of term finance No,2 and defendants denied that there is any mark-up due and payable by them to the plaintiff-Bank.
9. After receipt of copy of leave to defend application the plaintiff filed their replication denying the claim of defendants and maintained their stand in the plaint. Statement of account relating to mark-up upon above finance facilities were also annexed thereto.
10. Ms. Saman Rafat Imtiaz, learned counsel for defendants in support of leave to defend application has submitted that plaint is liable to be rejected as the same has not been presented in Court by the competent persons. She further submitted that power of attorney executed in favour of two persons, who have signed the plaint has been brought on record, but no Board Resolution or Articles of Association of the Company has been brought on record. Learned counsel for defendants further submitted that since Board Resolution and memorandum of articles are not available on record, the power of attorney filed by the plaintiff-Bank is of no consequences and the plaint has been filed by incompetent persons.
11. In support of aforesaid contentions learned counsel has placed reliance on the following case- law:
(1) The Central Bank of India, Ltd. Lahore v. Messrs Taj- ud-Din Abdur Rauf and others (1992 SCMR 846)
(2) PICIC Commercial Bank Limited v. Spectrum Fisheries Limited (2006 CLD 440)
(3) Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others (2003 CLD 931)
(4) United Bank Limited v. Pak. Leather Grafts Limited and 3 others (2010 CLD 701)
(5) Al-Madina Electric Store v. Habib Bank Limited (2006 CLD 734)
(6) Habib Bank Limited v. A.B.M. Graner (Pvt.) Limited and others (PLD 2001 Karachi 264)
(7) Nusrat Textile Mills Ltd. And others v. United Bank Ltd. (2005 CLD 1421)
12. Ms. Saman Rafat Imtiaz, learned counsel for defendants further argued that no agreement of finance containing the terms of finance has been brought on record. She further submitted that there is no expiry date mentioned in the offer letter dated 31-1-2009 hence no terms of finance was agreed upon between the parties. She further argued that since finance facilities are still in force and are operating the suit has been filed prematurely hence liable to be dismissed on this ground as well. Learned counsel for defendants further contended that nothing is due and payable by the defendants to the plaintiff. She further submitted that claim of the plaintiff-Bank is imaginary, inflated and not supported by the record hence suit of the plaintiff is liable to be dismissed.
However during the course of argument, learned counsel for defendants admitted the execution of all the documents filed by the plaintiff along with plaint. She also admitted the availment of finance facilities by the defendants. She further submitted that more than what was due has already been paid and nothing is payable by the defendants to the plaintiff-Bank. In the end she submitted that leave to defend application be allowed and defendants be provided opportunity to place their case as according to learned counsel there are disputed questions of facts involved which cannot be resolved without recording of evidence of parties.
13. Conversely Mr. Azizuddin Khan, learned counsel for plaintiff submitted that defendants had availed finance facility in the sum of Rs,102.985 million. He further submitted that defendants executed number of documents for securing repayment of the finance and due discharge of obligation. He further submitted that defendants utilized the finance facility in full but did not repay the same in accordance with the terms and conditions of letter dated 31-1-2009, wherein schedule of repayment of all the finances was mentioned. He while elaborating his arguments further stated that running finance facility was to expire on 31-12-2009 and terms finance No,1 was to be repaid by the defendants in 9 quarterly instalments including one overdue instalment and it was further agreed that mark-up to be paid quarterly. Similarly term finance facility No,2 was to be cleared by the defendants in 15 quarterly instalments including one overdue instalment. It was further agreed that mark-upto be paid quarterly.
14. Learned counsel for plaintiff invited attention of the Court to other terms and conditions of offer letter dated 31-1-2009 communicated to the defendants by the plaintiff at the time of grant of finance facility, whereby plaintiff-Bank had reserved right to recall facility at any time and require the outstanding amount to be paid in full on demand. It was further agreed that plaintiff-Bank shall allow one month grace period for payment of quarterly mark-up on all finances and on failure to pay mark-up within one month from the date of quarter, the plaintiff-Bank will charge additional mark-up. Learned counsel for plaintiff further argued that since defendants have defaulted in payment of quarterly instalments and also failed to discharge their obligation in respect of running finance the Bank addressed a letter dated 7-8-2009, which was followed by final notice dated 5- 12-2009, whereby finance facility was recalled. Learned counsel for plaintiff further argued that leave to defend application is not in conformity with the provisions of section 10 of the Ordinance hence this application is liable to be rejected on this ground alone. In support of his contention learned counsel has placed reliance on the following case-law:--
(1) Habib Bank Limited v. Messrs Sabcos (Pvt.) Ltd. (2006 CLD 244)
(2) Bank of Khyber v. Messrs Spencer Distribution Ltd. And others (2003 CLD 1406)
(3) NIB Bank Limited v. Taha Spinning Mills Limited and other (2010 CLD 635)
(4) Askari Commercial Bank Limited v. Hilal Corporation (Pvt.) Ltd. And others (2009 CLD 588)
(5) Messrs Mach Knittrs (Pvt.) Limited and others v. Allied Bank of Pakistan Limited (2004 CLD 535)
15. With regard to maintainability of the suit learned counsel for plaintiff has submitted that suit was competently filed by the attorneys of the Bank. He argued that power of attorney was executed in pursuance of the Board Resolution of Board of Directors and power of attorney was executed under the common seal of the Soneri Bank Limited, which was notarized in accordance with the law. Learned counsel further submitted that once a power of attorney executed under the common seal has been brought on record by the persons signing the plaint the Articles of Association and Resolution of Board are not required to be filed. He further submitted that even otherwise no prejudice has been caused to the defendants due to aforesaid reason.
16. Learned counsel for the plaintiff further submitted that objection of the defendants regarding competence of person who signed the plaint was replied by the bank in their replication and bank has ratified the action taken by the attorney of the bank. He further submitted that it is for the principal to take objection regarding competence of the person who filed the plaint but it is not open to the defendants. In support of above contention he has relied upon the following cases:-- ( 1) Banque Indosuez v. Jet Travels Limited and others (1991 CLC 446)
(2) National Bank of Pakistan v. Muhammad Ashraf Sanik and another (PLD 1987 Lah. 17)
(3) Khyam Films and another v. Bank of Bahawalpur Ltd. (1982 CLC 1275)
17. Learned counsel for plaintiff submitted that mandatory requirement of section 10 of Ordinance 2001 has not been complied with hence leave to defend application be dismissed as the following have not been mentioned in the leave to defend application. That neither amount of finance availed by the defendants from the plaintiff-Bank has been mentioned nor the amounts paid by the defendants to the financial institution, nor the dates of payments nor the amount of finance and other amounts relating to finance payable by the defendants to the financial institution upto the date of institution of the suit have been mentioned nor the amount of finance nor other amounts relating to the finance payable by the defendants to the financial institution upto the date of institution of the suit nor they have shown the amount which they dispute as payable by them to the financial institution hence defendants are not entitled to leave to defend and their application is liable to be dismissed. Learned counsel for plaintiff further argued that no substantial question of law or facts has been raised by the defendants which requires any evidence to be recorded. He prayed that leave to defend application be dismissed and suit of the plaintiff be decreed as prayed.
18. I have heard learned counsel for the parties and have perused the record with their assistance and have gone through the judgments cited at the bar by the respective parties.
19. Now taking up the first contention of learned counsel for defendants regarding competence of persons who had signed the plaint in this suit. Such power of attorneys are in favour of MRs, Suriya Jabeen wife of Anwar Shah dated 31st August, 2009 and other is Syed Muhammad Sajid son of Syed Muhammad Ibrahim dated 25th August, 2009. She has further argued that the bank should have produced along with the aforesaid power of attorneys, the memorandum of articles and the resolution of the Board of DirectoRs, A bare perusal of power of attorneys would show that these power of attorneys have been issued by the plaintiff-Bank itself under its common seal and has been executed by President of the Bank/Director and one other Director and the same is notarized in accordance with law. The aforesaid power of attorneys in paragraph 10 contains as under:-- "10. To commence, prosecute, continue and defend all actions, suits or legal proceedings whether civil, criminal or revenue, including proceedings to procure or establish the bankruptcy or insolvency of any person or firm or liquidation or winding up of any company, or otherwise; to appoint Solicitors, Advocates, Pleaders, Vakils and other legal agents; to make sign, verify, execute, plaints, petitions, Written Statement, Memorandum of Appeal, applications, tabular statements, Vakalatnamas, Warrants of Authority or any other papers, writings or documents expedient or necessary in the opinion of the Attorney to be made, signed, executed, verified, presented or filed."
20. A perusal of above quoted paragraph from the power of attorney would indicate that attorney has been authorized to commence, prosecute, continue and defend all actions, suits or legal proceedings whether civil, criminal or revenue, including proceedings to procure or establish, the bankruptcy or insolvency of any person or firm or liquidation or winding-up of any company, or otherwise; to appoint Solicitors, Advocates, etc. It further authorizes the attorney to sign, execute, verify plaints, petitions, written-statement, memorandum of appeal, applications and other allied documents.
21. The judgment cited by learned counsel for the defendants in the case of UNITED BANK LIMITED Supra (2010 CLD 701) is distinguishable on facts as in the reported judgment two officers who had signed the plaint had failed to show that Messrs Ayaz Hashim Shamsi and Aamir M. Karachiwala who had purportedly granted sub-power of attorney to the other two officers under Clause 14 of the officers power of attorney dated 23-4-2008 had the power to do so or not but in the present case power of attorney was executed in favour of signatories of the plaint by the bank under its common seal signed by the President of the bank as also one of the directors and was notarized in accordance with law so the judgment cited by the learned counsel quoted above has no application or relevance to the present case.
22. The other judgment cited by learned counsel for the defendants in the case of The Central Bank of India Ltd. Lahore v. Messrs Taj-ud-Din Abdur Rauf and others (1992 SCMR 846). In the reported judgment attorney Mr. S.K. Shikari filed suit for recovery against defendants on behalf of the bank who was allegedly holder of power of attorney on behalf of the bank but said Mr. S.K. Shikari at one stage of the proceedings submitted that he had filed the suit on receiving instruction from the appellant Bank's Central Office in Bombay, subsequently he made another statement on the same day that he was not in a position to state as to whether the said instructions were supported by under any provision of the Articles of Association of the Bank and had again on 12-3-1951 stated that the directors of the appellant-Bank were authorised under Article 116(7) of the Articles of Association of the Bank but neither he produced the alleged letter from the Central Office at Bombay to the Lahore Branch containing instructions to institute the present suit, nor the Articles of Association were produced by the bank. In view of above, suit was dismissed having been filed by an incompetent person but in the present case, as stated above, the persons who signed the plaint were equipped with power of attorneys in their favour by the bank issued under the common seal of the bank hence judgment in the case of The Central Bank of India is distinguishable on facts and does not improve the case of the defendants.
23. The other judgment In the case of PICIC Commercial Bank Limited v. Spectrum Fisheries Limited (2006 CLD 440) where proceedings under sections 306 and 305 of Companies Ordinance 1984 were initiated by the PICIC Bank and said petition was filed by authorized officers who were duly authorized by the President and the Company Secretary of the petitioner under the authority given to them by the Board resolution dated 17th March, 2001. In the reported case the Board of Directors had authorised the Chief Executive Officer/President and the Company Secretary of the petitioner as attorneys of the bank who in turn had authorized the person who signed the petition but had delegated their powers to the officers of the bank. But in the present case the bank had issued power of attorneys in favour of signatories of the plaint hence in this view of the matter judgment relied upon by the learned counsel for the defendants is also distinguishable on facts and does not apply to the circumstances of the present case. The other judgments in the cases of Al-Madina Electric Store v. Habib Bank Limited (2006 CLD 734), Nusrat Textile Mills Limited and others v. United Bank Limited (2005 CLD 1421) and Habib Bank Limited v. A.B.M. Graner (Pvt.) Limited and others (PLD 2001 Karachi 264) are concerned all the three judgments are distinguishable on facts and are not applicable to the case in hand.
24. 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 photocopy 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."
25. In the case of National Bank of Pakistan v. Muhammad Ashraf Sanik (PLD 1987 Lahore 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-uclDin 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."
26. 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."
27. 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 presented 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 attorney has 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).
28. The other arguments of learned counsel for the defendants that statement of account is not certified under the Bankers' Book Evidence Act or it does not contain the "debit" and "credit" entries and does not show numerous amount paid by defendant No,1 towards repayment of its facilities. A bare perusal of the statement of account which appears at page 113 of the record clearly shows that all details regarding "withdrawal" and "deposits" are appearing therein. No doubt, the word "debit" or "credit" has not been used but instead of "debit" or "credit" words "withdrawal" and "deposit" have been used. Mere non-using the words debit and credit will not make the statement of account invalid. The statement of account filed by the bank is duly certified under Bankers' Book Evidence Act and has been signed by two authorised persons. It clearly reflects all the amount withdrawn by the defendants as also the entries of payments made by defendants to the plaintiff.
Along with replication the bank has also filed a statement of account duly certified under Bankers'
Book Evidence Act in respect of mark-up on each facility, namely, first statement on account is dealing with mark-up on running finance. The other statement of account shows entries regarding markup from September quarter 2009 to December, 2009 of Term Finance No,
1. The other statement of account shows entries of mark-up in respect of Term Finance No, 2 for the period from June quarter 2009 to December, 2009. In view of above factual position the arguments of learned counsel do not have any substance. Since the statement of account appears to be in accordance with law no exception can be taken at this stage.
29. The plaintiff-Bank in paragraph 11 of the plaint has clearly stated the amount availed by the defendants on account of running finance. It clearly shows the amount repaid by the defendants to the plaintiff-Bank. It further shows the mark-up charged from 1st April 2009 to 31-12-2009 and it further shows the total amount recoverable by the bank from the defendants on account of running finance. Similarly in respect of Term Finance No,1 principal amount has been shown. The amount paid by the defendants has been shown. The mark-up charged by the plaintiff-Bank on the aforesaid finance from 1-7-2009 to 31-12-2009 and the outstanding amount recoverable by the bank from the defendants is also shown. Lastly in respect of Term Finance No,2 principal amount availed by the defendants has been shown. The amount paid by the defendants has been shown.
The mark-up charged by the plaintiffs on the aforesaid finance for the period 1st April, B 2009 upto 31-12-2009 has been shown and finally a total amount recoverable from the defendants on account of Term Finance No,2 has been shown. Under the law the defendants were obliged to rebut the claim of plaintiff-Bank in their leave to defend application in terms of section 10(4) of Ordinance 2001 which provides that leave to defend application shall specifically state the amount of finance availed by the defendant from the financial institution and the dates of payments. It further requires that 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. It further requires that 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. It lastly requires the amount if any which the defendant disputes as payable to the financial institution and documents 'In support thereof. An examination of leave to defend application filed by the defendants will clearly show that aforesaid para 11 of the plaint has not been responded to by the defendants in para 13 of their leave to defend application in accordance with section 10(4) of Ordinance 2001. Para 13 of leave to defend application is quoted hereunder:-- "With further reference to the contents of paragraphs 11 and 12, it is submitted that the no statement of account has been filed by the plaintiff in support of the plaintiffs claim of Rs,8.961 million as mark-up due and payable from April 1, 2009 up to December 31, 2009 in respect of the Running Finance Facility; Rs,1.295 million as mark - up due and payable from July 1, 2009 up to December 31, 2009 in respect of Term Finance (I) and Rs,12.192 million as mark-up due and payable on December 31, 2009 in respect of Term Finance (H) and as such it is denied that any mark-up is due and payable by the defendants in respect of either Term Finance (I) or Term Finance (II)."
30. From the perusal of above quoted paragraph of leave to defend application it would be seen that provisions of section 10(4) of Ordinance 2001 have not been complied with by the defendants.
The amount of finance availed by the defendants from the financial institution has not been shown, The amount paid by the defendants to the financial institution and the dates of payments have not been shown. The amount of finance and other amounts relating to the finance payable by the defendants to the financial institution upto date of institution of the suit have not been shown. The amount if any which the defendants dispute as payable to the financial institution and facts in support thereof has also not been shown in clear term. It appears that leave to defend application is not in conformity with the provisions of section 10 of Ordinance 2001. Subsection (6) of section 10 of Ordinance 2001 provides that if an application for leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient,cause for his inability to comply with any such requirement.
Admittedly, defendants have not come forward and disclosed any sufficient cause for their inability to comply with the provisions of section 10 of Ordinance 2001. This point has come up for consideration before the Superior Courts in number of cases. In 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).
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 ease. 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.
Consequently invoking the provisions of subsection (6) I dismiss the said application."
31. Similarly in 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 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 conclusion, 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) of Ordinance XLVI of 2001 are 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 noncompliance 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."
32. An examination of leave to defend application filed by the defendants clearly demonstrate that provisions of subsection (4) have not been complied with. The defendants have filed Annexure "D" to the leave to defend application wherein availment of running finance, term finance No,1 and terms finance No,2 have been admitted. The defendants have shown payments from 2-7-2005 to 30-9-2009 but no payment appears to have been made by the defendants after 30-9-2009. No other document which in the opinion of defendants raises the substantial question of law or facts has been annexed with the leave to defend application. In this way the provisions of subsection (5) of section 10 of Ordinance 2001 have also not been complied with.
33. In view of above and in view of judgments quoted hereinabove the present application filed by the defendants does not fulfil the requirement of section 10 of the Ordinance 2001 hence liable to be dismissed.
34. On merits learned counsel for the plaintiff has submitted that finance facility was availed in the year 2009. The running finance facility was valid upto 31-12-2009. Terms Finance No,1 was valid upto 21-11-2010 and Term Finance No,2 was valid upto 29-8-2012. He submitted that defendants do not comply with the terms and conditions of the offer letter dated 31-1-2009 and defaulted in payment of agreed instalments. He further submitted that in this connection a meeting in October, 2009 was held with the President of the Bank wherein defendants agreed to pay the overdue instalments and the markup upto September, 2009 for term finance as well as mark-up under running finance by November, 2009 but this commitment was not fulfilled by the defendants. He further pointed out that in these circumstances notice dated 5-12-2009 was served calling upon the defendants to clear the liability outstanding against them within ten days. He further argued that by invoking clause 2 of the terms and conditions of offer letter dated 31-1-2009 finance facilities provided to the defendants were recalled and defendants were asked to clear their liability. He further submitted that the letter of plaintiff was responded to vide their letter dated 22nd December, 2009 wherein they prayed for cooperation by showing flexibility in servicing the mark-up by 31st December, 2009 and also requested to defer the payments of term finance instalments for one year. The request of defendants was not acceded to by the plaintiff-Bank on the ground that they had continuously defaulted and failed to abide by the terms and conditions of the finance allowed to them. Learned counsel for the plaintiff submitted that in the above circumstances the present suit was filed in Court on 3rd February, 2010 for recovery of an amount of Rs,109.917 million. Learned counsel for the plaintiff further submitted that through the leave to defend application the defendants have failed to make out any substantial question of law as well as fact in respect of which any evidence is needed to be recorded. Learned counsel for the plaintiff submitted that leave to defend application be dismissed on merits as well. He submitted that leave to defend application even otherwise does not comply with the provisions of section 10 of Ordinance 2001 and the same is liable to be rejected.
35. Learned counsel for the defendants on merits admitted the availment of facility in the shape of running finance, term finance No,1 and term finance No,2. She also admitted to have made some payments by the defendants to the plaintiff-Bank but however she disputed the amount payable by the defendants to the plaintiff-Bank on the ground that suit is prematurely filed as according to learned counsel for the defendants term finance No,1 was valid upto 21-11-2009 and term finance No,2 was valid upto 29-8-2012. As discussed above running finance facility was not adjusted till December 2009 with regard to the term finance No,1 it will be seen that markup by the defendants was not paid in terms of the finance so also quarterly instalment of term finance No,1 and term finance No,2 were not paid though undertaken by the defendants per their letter dated 24-11-2009 and 22-12-2009 which had forced the plaintiff-sank to recall the finance facility per order dated 5th December, 2009 calling upon the defendants to clear their liability within ten days. A perusal of letter dated 5-12-2009 would show that the defendants did not pay the instalments of term finance No,1 from May, 2009 to November, 2009 and they also failed to pay instalments in relation to term finance No,2 from August, 2009 to November, 2009 despite the repeated demands their finance facility was recalled through above letter. In this view of the matter on merits as well defendants have no case whatsoever for which any evidence is to be recorded. Even otherwise no substantial question of law or fact has been raised by the defendants in their leave to defend application.
36. In the circumstances leave to defend application is dismissed for the aforesaid reason.
Consequently, the suit of the plaintiff is decreed as prayed with cost against the defendants jointly and severally along with cost of fund from the date of default till realization.