MUHAMMAD TASNIM,-J. - This is an application under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with Section 151, C.P.O, (hereinafter;called "Ordinance 2001") filed by defendant seeing leave to defend the suit unconditionally.
2. Brief facts leading to this case, as per plaint, are that at the request of defendant, plaintiff allowed a running finance facility of Rs., 50 million, ln consideration of the above finance facility defendant executed and delivered 'to the plaintiff-bank namely finance-agreement dated 19.12.2005, letter of hypothecation dated 19.12.2005, deed of floating charge dated 19.12.2005,, Demand Promissory Note and defendant also, executed personal guarantees for the same date, ln addition to the above documents, defendant also created mortgage of their property being property Nos. E-123, t24, 125, 126, 135, 136, 137 and 138 Hub Industrial Trading Estate Balochistan, admeasuring about 10,000 square meters at HITE HUB Balochistan. The defendant also executed memorandum of deposit of title deed in favour of plaintiff-bank. Accordingly sanction-advice, containing the terms and conditions arid period for finance, was issued by plaintiff-bank and the finance requested by the defendant was allowed, lt is the case of plaintiff that defendant utilized the finance facility in full, but did not repay the amount as agreed. Plaintiff-bank has stated in paragraph-20 of the plaint that defendant availed finance facility of Rs. 49,999,637. Lt is stated in the plaint in the same para that no amount, whatsoever, has been repaid by the defendant.
Plaintiff has claimed mark-up. From the defendant upto 30.9.2006 to Rs. 1,589,040/-. The amount of finance and other amount relating to the finance payable by the defendant to the plaintiff till the institution of the suit comes, to Rs. 51,588,677/-, such amount has been claimed from defendants through present suit. The defendants filed their leave to defend application, wherein the availing of facility was admitted. Defendant also admitted the execution of documents mentioned hereinabove.
3. Lt is claimed by defendants that an amount of Rs. 50 million was sanctioned but said amount was not released to the defendants, which has caused serious financial loss to the defendants, lt is the case of defendant that .Due to non-release of sanctioned amount serious damages were caused to the defendants for which they have already filed suit in this Court, which is pending adjudication. The defendants in their application for leave to defend have prayed that leave to defendant be allowed unconditionally. To the afore-said application for leave to defend, replication was filed by the plaintiff-bank denying all the assertions made in the leave to defend application and' maintained the stand as per plaint. . .
4. Mr. Khaleeq Ahmed, learned counsel for defendant in support of his leave to defend application submitted that plainfield by plaintiff is not in conformity with provisions of Section 9(3) of Ordinance, 2001. He further submitted that plaintiff-bank had obtained blank documents from the defendant in violation of Section 18 of the Ordinance, 2001 hence claim of the plaintiff-bank on such documents is not maintainable. He further submitted that agreement between the parties was for fixed period commencing from 19.12.2005 to 30.9.2006. He further submitted that mark-up at the fixed rate has been wrongly applied which is against the sanction-advice. Learned counsel further submitted that leave has already been granted, in the suit filed by defendant, to the plaintiff hence leave may also be granted to the defendants in this suit. He has placed his reliance upon the following case-law:-
(1) SBLR 2008 Sindh 1957 (Qamatuzaamah Khan v. Industrial Development Bank of Pakistan & others).
(2) 2004 CLD 1376 (Muhammad Ramzan and 4 others v. Agricultural Development Bank of Pakistan through Manager).
(3) 2007 CLD 673 (Messrs S.S. Ginners through - Ch. ~ Muhammad Younus and 6 others v. Muslim Commercial Bank Ltd. Through Manager).
(4) 2007 CLD 634 (M.L. Traders through Proprietor and others v. Judge Banking Court No. IV, Lahore and 2 others).
(5) 2007 CLD 637 {Mrs. Saeeda Mahmood and another v. Anas Munir (Pvt.) Ltd. Through Chief Executive and 6 others).
(6) 2003 CLD 908 (Mst. Naziran Bibi v. Citi Bank N.A. And another).
(7) 2003 CLD 911 (Muhammad Khalid Butt v. United Bank Limited).
5. As against the, above, Mr. Behzad Haider learned counsel for plaintiff-bank has argued that bank has never obtained any blank documents from the defendants. Learned counsel has further submitted that - all the documents were filled in terms of Section 8 of the Ordinance, thereafter documents were executed by the defendants - and delivered to the plaintiff bank. Learned counsel for. Plaintiff-bank has further submitted that all the pleas raised by the learned counsel during the.
Course of arguments today were never raised in the application, under disposal. Learned counsel for plaintiff has further submitted that application filed by defendant under Section 10 of the Ordinance" 2001 is not in conformity with the provisions of Ordinance, 2001 hence same is liable to be dismissed. Learned counsel further argued that defendants have executed all the documents and have also admitted the finance facility by them hence leave to defend application be dismissed on merits as well. He has further submitted that no substantial questions of law or facts pave been raised by the defendants, which require evidence. He further submitted that defendants are delaying the matter and after availing the facility have to repay the same as agreed. He prays that application be dismissed and suit be decreed as prayed, In support of his contentions learned counsel has placed his reliance upon the following case-law:-
(1) PLD 2001 Karachi 264 (Habib Bank Ltd. V. A.B.M. Graner (Pvt.) Ltd.):
(2) PLD 1999 Karachi 196 (Citi Bank Ltd. v. Tariq Mohsin Siddiqul & others).
(3) . 2003 CLD 1406 (Bank of Khyber v. Messrs Spencer Distribution Ltd. And 14 others).
(4) 2006 CLD 244 (Habib Bank Limited v. Messrs Sabcos (Pvt.) and 2003 CLD 1406 (Bank of Khyber v.
Messrs Spencer Distribution Ltd. And 14 others).
(5) 2006 CLD 1011 (Muhammad Arshad and another v. Citibank N.A., Al-Fallah Building, Lahore). ,
(6) 200? CLD 1356 (National Bank of Pakistan v. Messrs A.I. Brothers (Private) Limited and others).
(7) 2009 CLD 1346 (Habib Bank Ltd. v. Paragon Industries (Pvt.) Ltd. & others). 2011 Allied Bank, Ltd. V. shall International (Pvt.) Ltd: (Muhammad Tasnim, J.)
(8) 2004 CLD 1741 (Zeeshan Energy Ltd. v. Faisal Bank Ltd.).
(9) 2007 CLD 1374 (Saudi-Pak Commercial Bank Ltd. v. Marvr Agrochem (Pvt.) Ltd. & others).
(10) 2007 CLD 217 (Industrial Development Bank of Pakistan v. Zarhco (Pvt.) Ltd. & others).
6. I have heard learned counsel for the parties and have perused the record with their assistance and have gone through the judgments cited by them. ,
7. From the examination of the submissions made by counsel for the defendants, it is admitted position that finance sanctioned by plaintiff-bank was availed by the defendants, It is admitted position on record that documents mentioned in the above paras were executed against the above finance facility, lt is also apparent that objections with regard to execution of blank documents were never raised by the defendants at the time of availing finance facility. Plaintiff- bank has given the break-up of its claim in paragraph-20 of the plaint ' which gives the amount disbursed, the amount paid by defendants, the mark-up charged upto 30.9.2006 and the total amount recoverable from the defendants which comes to Rs. 51,588,677/-. Subsection (3) under Section 9 of the Ordinance mandates that the plaint, in the case of a suit for recovery instituted by a financial institution, shall specifically state an amount of finance availed by the defendant from the . Financial institution, lt further requires that the amount paid by the defendant to the financial institution and the dates of payment and 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.
The close examination of above section would indicate that all the requirements contemplated under Section 9(3) of the Ordinance, 2001 have been complied with in the present suit filed by the plaintiff-bank, more particularly in paragraph-20 of the plaint. The submissions of the learned counsel for the defendants that plaint is not in conformity of provision of Section 9(3) of the Ordinance are of no consequence hence rejected.
8. The second submission of the learned counsel for defendants that no financial institution shall obtain signatures of customer on banking-documents which contain blank in respect of important particulars including date, the amount the property or the period of time in question. From the perusal of record it appears that all the documents filed by the plaintiff-bank on record are duly filled in and each page of such documents contain the signatures of the defendants, no page, whatsoever, was left blank by defendants at the time of execution of documents. Most of the documents are executed and delivered at the time of availing finance facility and in addition to the aforesaid a registered mortgage was created as also equitable mortgage by depositing original title documents with the plaintiff-bank against the finance facility.
9. Ln view of above factual position arguments of the learned counsel for defendants are mis- conceived. Learned counsel for defendants has failed to point out charging of mark-up over mark- up by plaintiff-bank. The examination of the claim by the plaintiff-bank dearly shows that mark-up has been charged for the agreed period.
10. The judgment cited by learned counsel for defendants clearly shows that facts of the case of Qamaruzzaman Khan (supra) are entirely distinguishable and are not applicable to the circumstances of the present case, lt has not been held in the judgment that if leave has been granted in the suit filed by the borrower, it is necessary that leave to defend may also be allowed to the defendant in the plaintiffs suit.
11. The second judgment cited by learned counsel for defendants namely Muhammad Ramzan and 4 others (supra) does not support him, on the contrary this judgment fully, applies to the present case and supports the plaintiff- bank.
12. In the case of Messrs S.S. Ginners (supra), learned Division Bench of Lahore High Court accepted the appeal as issue with regard to charging of mark-up was not dealt with by the original Court, though the same was raised before it. The ratio of the judgment i.e. Messrs S.S. Ginners does not apply to the present case.
13. The case of M.L. Traders (supra) is. Distinguishable on the facts and does not apply to the present case. Similarly the case of Mrs. Saeeda Mahmood and another (supra) is a remand order which does not apply to the present case.
14. The case of Mst. Naziran Bibi (supra) arises from execution proceedings, wherein application filed under Order XXI, R. 69, C.P.C: was disposed of. Appeal against such order was filed before the learned Division Bench of Lahore High Court, but the facts of the reported judgment and the present ease are entirely different hence not applicable to the present case. The case of Muhammad Khalid Butt (supra) also does not apply to the case in hand.
15. Now taking up the arguments of learned counsel for plaintiff-bank that the application under Section 10 of the Ordinance does not fulfill the mandatory requirement hence liable to be rejected, ln support of his above contentions he has relied upon the case of Habib Bank Limited v. Messrs Sabcos (Pvt.) Ltd. (2006 CLD 244), wherein learned single Judge of the Court while dealing with the issue has held as under:-- "13. Keeping in view of above principle of law I have examined the application for leave to defend and found that it is in the form of written statement, lt contains 9 preliminary legal objections. On further perusal it reveals that the defendant did not specifically state the information or facts required to have been supplied under sub-section (4). The learned Advocate for the defendants has frankly conceded that the application does not fulfill the mandatory requirements of sub- section (4). However, he has stated that the summary of substantial questions of law as required under sub-section (3) has been mentioned but further conceded that the summary of the facts as required under sub-section (3) has not been mentioned in the application. Even if we take the 9 preliminary legal objections as substantial questions of law then again the second requirement of sub-section (3) has not been complied with the present case. On further perusal it reveals that facts and figures as required under sub-section (4) have also;not been mentioned nor any explanation has been furnished for non-compliance. The learned Advocate for the defendants has also frankly conceded that provisions of sub-section (4) have not been complied with nor the defendants have furnished any explanation in the application for noncompliance of the said provisions. /As - such, the defendants have disobeyed the directions of law and mandatory provisions as provided under sub-sections (3) and,(4), therefore, their application for leave to defend is liable to be dismissed. Consequently invoking the provisions of sub-section (6) I dismiss the said application."
16. Learned counsel for plaintiff further relied upon the case of Bank of Khyber (2003 CLD 1406) the learned Single Judge of Lahore High Court while dealing with the point in issue has held 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 back drop, 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 XLV1 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 afore-noted provisions of law are placed in juxtaposition with the contents of the application, filed by the aforementioned set of defendants, the only irresistible conclusions, which can be drawn is that the said defendants did not comply with the aforesaid provisions of law. Ln 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 XLV1 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 sub- sections (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 fulfill the requirements of Section 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 is mandatory or directory. Basic principle for the interpretation of statute is that when a .
Provision of law has been couched with the penal consequences, the said provisions of law would be considered as a mandatory provision of law and where no penal consequences entail to the noncompliance of a provision of law, in that case, the said provision of law would be taken as directory. Having gone through the provisions of Section 10(6) of Ordinance XLVI of 2001 as noted above, I am of the considered view that this provision of law is mandatory in nature, as the non- compliance of said provision of law entails the penal consequences of rejection of leave application, as provided in the aforenoted provision of law. The present case, as the defendants did not comply with the afore-noted provisions of law, therefore, the presumption would be that no application forget it of leave to defend a suit is deemed to be pending and the present application for leave to defend is liable co be rejected per force of Section 10(6) of Ordinance XL VI of 2001."
17. An examination of leave to defend application filed by defendant clearly demonstrates that provisions of sub-sections (4) and (5) of Section 10 of the Ordinance,- 2001 have not been complied with sub-section (6) of Section 10 of the Ordinance, 2001 provides that if an application for leave to defend which does not comply with the requirement of sub-sections (3), (4) and (5) is liable to be dismissed. Defendant has failed to show any sufficient cause for their inability to comply with such requirements. On the contrary : defendants counsel has conceded before the Court during his arguments that provisions of Section 10 of. The Ordinance, 2001 have not been complied with. The aforesaid judgments fully apply to the present case and the application filed by the defendant does not fulfill the requirement of Section 10 of the Ordinance, 2001 hence liable to be dismissed on this ground alone.
18. Learned counsel for plaintiff-bank also placed reliance on the case of National Bank of Pakistan (2007 CLD 1356), wherein learned Single Judge of this Court finally concluded as under:- As regards the question, whether defendants in Suit No. 1445 of 1999 are entitled for leave, the defendants have not denied that financial facilities have been granted by the Bank and or received by them, the execution of document has also not been denied by the defendants, the defendants are therefore not entitled for leave to defend the suit. Suit No. B-02 of 2004 is, therefore, dismissed and Suit No. 1445 of 1999, is decreed for the sum of Rs. 58,138,577/- with cost of funds at the prevailing rate fixed by the State Bank of Pakistan from the date of filing of the suit tilt realization.''
19. Ln the ease of Muhammad Arshad and another (2006 CLD 10.11) the Honourable Supreme Court of Pakistan while dealing with issue of terms of agreement entered into between the customer and the Bank has held as under:- We have no hesitation in our mind to hold that agreement dated 26.6.1999 was authentic, genuine and executed between the parties and acted upon. A careful perusal of the agreement dated 26.6.1999 would reveal that mark-up was charged in accordance with the terms and conditions and stipulated therein, It is to be noted that in the agreement dated 26.6.1999 it has been stipulated in a categoric manner that the petitioners had also entered into mark-up agreement which was executed on 21.6.1995 and thus, it stood admitted by the petitioners, it would not be out of place to mention here that an amount of Rs. 21,05,280/- was mentioned as mark-up in the last agreement, it would be too late in the day to challenge its, authenticity on the pretext of certain blank columns. The question which arises here at this juncture would be that as to why certain columns were left blank and if it was so done why ; the incomplete agreement was signed by the petitioners? No answer could be given by the learned Advocate Supreme Court on behalf of the petitioners, in our considered view the plea of "blank columns" would hardly renders any assistance to the case of petitioners, in view of the provisions as contained in Section 20 read with Section 118 of the Negotiable Instruments Act, 1881 no benefit could be given to the petitioner on the ground that the agreement was not completely filled in when executed as it would have no substantial bearing on the validity of the agreement."
20. Since the defendants have not discharged their obligation as per agreement suit has been rightly filed by the plaintiff. Learned counsel for defendants has failed to make out any substantial question of law as well as facts in respect of which any evidence is required to be led by the parties.
21. Ln the above circumstances, the leave to defend application filed by defendants is dismissed for the afore-said reasons. Consequently the suit of the plaintiff is decreed against the defendants jointly and severally with cost in the sum of Rs. 51,588,677/- alongwith costs of funds at the prevailing rate fixed by State Bank of Pakistan from the date of-default till realization. Such decree is to be executed, inter-alia, by the sale of the mortgaged properties and hypothecated goods.