' MUHAMMAD KHALID MEHMOOD KHAN, J.---The plaintiff Askari Bank Limited filed a suit for recovery of Rs,191,088,819.68 as on 31-5-2010 along with costs of funds, mark up, liquidated damages and others charges through sale of immovable mortgaged property, pledge of stock and other hypotheticated assets from the date of default till realization against defendants asserting that plaintiff is a financial institution in terms of section 2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as Ordinance 2001).
2. Messrs Arif Jamil and Muhammad Nadeem are its authorized officers vide power of attorney dated 23-9-2008 and 13-9-2008 and are authorized to sign, verify the plaint, institute the proceedings and to do other acts and things necessary and incidental thereto.
3. The defendant No,1 is a partnership concern .With defendants Nos.2 and 3 its partners,' the y petitioner is maintaining a current account with the plaintiff and had availed different financial facilities from plaintiff and as such defendant No,1 is a customer in ' terms of section 2(c) of Financial Institutions (Recovery of Finances) Ordinance, 2001.
4. The defendant No,1 availed following finance facilities;
(i) Running finance,
(ii) Cash finance,
(iii) FIM (Finance against imported merchandise).
5. It is further asserted that before availing the facility from plaintiff, the defendant No,1 had availed' different facilities from Habib Bank Limited and on the request of defendant No,1, vide letter dated 7-3-2008, the plaintiff has swa pped their outstanding liability amounting to Rs,97,993,618 by issuing a pay order in favour of Habib Bank Limited on behalf of defendant No, 1.
6. The plaintiff transferred Rs,43,860,000 out of the H.B.L. Swapped amount of Rs,97,993,618 to the defendant No,1 Cash Finance accounts on 18-6-2008 and remaining amount was credited to Running Finance account.
7. The petitioner has placed reliance on sanction letter dated 23-5-2008. The defendant No,1 entered into finance agreement with the plaintiff qua the above facilities on 16-8-2008. On the request of defendant No,1, on 31-12-2008, temporary enhancement in the Running Finance facility of Rs,3.75-million was also allowed.
8. In consideration of the facilities availed of, the defendants mortgaged immovable property and defendant No,2 also executed agreement of personal guarantee. The defendants, however, failed to repay the finance availed in terms of finance agreements, and as such they are jointly and .Severally liable to pay the suit amount. It was further asserted that cash finance facility was secured by way of pledge of stock which was misappropriated by the defendants and the plaintiff reserve its right to initiate criminal proceedings against defendants.
9. The defendants filed joint PLA and raised following grounds in addition to others; The claim of plaintiff is baseless, frivolous; the statement of account is not certified, which can connect them with the alleged liability; the defendants are not defaulters; the statement of account contains dishonest debit entries, the debit entries of FIM account dated 5-9-2008 and 5-12-2008 are unexplained, and these two entries are not inconsonance with the entries current account. The defendant No,1 never approached the plaintiff for opening of two letter of credits Nos.2480 and 2949. No description of cheques, the source of debits are not mentioned. The claim of plaintiff includes the entries of mark up on mark up. Cash finance facility is secured through pledge of stock and as per their own admission they are not in a position to return the pledge stock and as such the suit to the extent of cash finance facility is not maintainable. The plaint shows that defendant No,1 availed Rs,81,088,094.87, in the cash finance account against the sanctioned limit of Rs,50 million, this very admission is sufficient to negate the plaintiff assertion, qua the statement of account. Transfer entries in statement of account have been challenged on the ground that these did not belong to petitioners' account. The defendants claimed that they availed finance of Rs,110,079,716 in all and paid the amount of Rs,160,253,283.29 and as such nothing is payable. The execution of personal guarantee by respondents Nos.2 and 3 is denied. The authority of signatory of plaint are denied.
10. The plaintiff filed reply to PLA and annexed the photocopies of cheques of different amounts the issuance of which has been denied by the petitioner No,1, the copies of two letter of credits and letter of request for swa pping of outstanding liability of defendants from HBL against payment of Rs,97,993,618.
11. Learned counsel for plaintiff submits that denial of defendants being customer/guarantor of the facts stated in the plaint are devoid of any merit. The defendants have admitted, the maintaining of account with the plaintiff. The denial of availment of finance is dishonest and the suit merits decreed specially when in para-24 of PLA they admitted that availed the finance amounts to Rs,110,079,716 and paid Rs, 160,253,283.29. Learned counsel submits that plaintiff has placed on record photocopies of cheques drawn by defendant No,1, the photocopies of letter of credit and letter of request which show that defendant No,1 availed the suit finance, and as such the application is liable to be dismissed. The statement of account available on record is duly certified under section 4 of the Bankers Books Evidence Act, the presumption of truth is attached to each and every entry of statement of account and as such the denial on the part of petitioners is mala fide and on the face of it is wrong. He submits that documents placed on record with the reply will be treated the part of plaint in terms of section 9 of the Ordinance, 2011, to reply the PLA is the right of plaintiff and as such the defendants could not challenge its admissibility while deciding the PLA.
As far as the objection of petitioners about the authority of two officers is concerned, learned counsel submits that Askari Commercial Bank Ltd. Has been renamed as Askari Bank Limited, and the change of name of the plaintiff creats no right in favour of existing customers and officers/employees of renamed company will not be deemed to be debarred to act on behalf of Askari Bank Limited, further under law in case of change of name of any company under the Companies Ordinance, 1981, the name of original company has to be mentioned on each and every document of the renamed company which is evident from the sanction advice which shows "formerly Askari Commercial Bank Limited".
12. Learned counsel for petitioners submits that Askari Commercial Bank is no more in existence, authority given by Askari Bank Limited to his employees is conditional, the authorized officer can act on behalf of company jointly with other authorized officer/delegatee. Admittedly Mr. Muhammad Nadeem is not the authorized officer of Askari Bank Limited he is holding power of attorney on behalf of Askari Commercial Bank Ltd. And as such on this score alone the plaint is liable to be rejected. He submits that defendants have pointed out each and every entry wrongly debited to their account, and as such till the objected entries are proved, no liability can be foisted upon them. He submits that document filed with the reply could not be looked into while deciding the application for permission to defend the suit, as these documents were not the part of plaint, the defendants are now unable to reply these letters/documents. He submits that this Court has to decide the application for permission to defend the suit on the basis of material available along with the plaint. Learned counsel submits that admittedly the plaintiff is in possession of pledged stock under their lock and key, the cash finance facility is fully secured and in case the plaintiff is not in a position to return the pledged stock, the suit is not maintainable to that extent. Learned counsel submits that alleged theft were in the knowledge of plaintiff and even after the lapse of more than two years they have not taken any action against their own Muqaddam or bank officers who were holding the lock and key of the godown. He submits that defendants have filed suit for redemption of mortgage property, pledge stocks, rendition of accounts and damages, the transaction in both the suit are the same the plaintiff has granted leave to defend in defendants' suit and as such defendants are entitled for the same treatment. Learned counsel relied on Bankers Equitu Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others (2003 CLD 931), Messrs C.M. Textile Mills (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan (2004 CLD 587), Nusrat Textile Mills Ltd. And 8 others v.
United Bank Ltd. Through Attorneu (2005 CLD 1421), Agricultural Development Bank of Pakistan through Manager v. Messrs Malik Food Industries Limited through Director/Chief Executive/Shareholder and 13 others (2005 CLD 1359), Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others (2011 CLD 408), Gul-e-Rana and 4 others v. Citibank N.A., Lahore through Manager and another (2005 CLD 1126), Dr. S.M. Rab v. National,Refinery Ltd. (2005 CLD 1330), Picic Commercial Bank Limited v. Spectrum Fisheries Limited (2006 CLD 440), Messrs Ravi Associate (Private) Limited through Director and 10 others v. Industrial Development Bank of Pakistan through Senior Vice-President (2005 CLD 393), Fausal Bank Limited v. Genertech Pakistan Ltd. And 6 others (2009 CLD 856), Messrs United Dairies Farms (Pvt.) Limited and 4 others v. United Bank Limited (2005 CLD 569), Muhammad Nafees v. Allied Bank of Pakistan Limited through Manager and another (2004 CLD 937), Muhammad Umer Rathore v. Federation of Pakistan (2009 CLD 257), Faisal Bank through dulu appointed attorneus v. Messrs Zimindara Rice Mills and 21 others (2007 CLD 1164), Trading Corporation of Pakistan (Pvt.) Ltd. v. Messrs S.R. International (2008 CLD 412), Habib- ur-Rehman and another v. Judge Banking Court No,4 Lahore and another (2006 CLD 217), Halt Fazal Elahi & Sons through Muhammad Tariq v. Bank of Punjab and another (2004 CLD 162), United Bank Limited v. Messrs Usman Textiles and 6 others (2007 CLD 435) and Muhammad Khalid Butt v. United Bank Limited (2003 CLD 911.
13. Learned counsel submits substantial question of law and facts are involved in the case, hence the defendants are entitled to defend the suit unconditionally.
14. Heard. Record perused.
15. The defendants have filed joint application for permission to defend the suit. Admittedly the defendant No,1 is registered partnership and defendants Nos.2 and 3 are its partners, the plaintiff is claiming the execution of agreement of personal guarantee in its favour by defendants Nos.2 and 3 for securing the suit finance, and the defendants have denied the execution of personal guarantee, if for the sake of arguments it is admitted that defendahts Nos.2 and 3 have not executed agreement of personal guarantee, even then the defendants being the partners of defendant No,1 are jointly and severally liable to pay the liabilities of partnership, hence this argument of defendant is repelled.
16. The defendants have not denied the maintenance of their current account with the plaintiff, but have denied the opening of two letter of credits, the denial of opening of letter of credit mean the FIM facility was not availed by them. The facility of FIM is that banking facility which financial institutions allow to its customer for financing its Import and local business, the customer when open the letter of credit, the L/C opening bank on behalf of its customer gives unconditional guarantee to exporter, that if the documents drawn under the letter of credit were in conformity with the terms of letter of credit, the bank will pay the amount of letter of credit to exporter without referring the demand to importer/L.C. Opener. The Bank after negotiating the documents creates a demand against customer, the documents drawn under the L/C are title to goods, if the importer pay the amount of documents to bank, the bank delivers the documents to importer and the importer on the basis of these documents gets the delivery of imported goods from port, (if the goods are imported and if the L/C is in land then 'as per terms of L/C).
17. After payment of price of documents to bank, the FIM c facility stand adjusted and the transaction is over, but if the importer fails to pay the price of documents, the documents remain with the bank and the FIM facility in the books of bank remain, unadjusted and recoverable from the importer. The bank's claim is that they allowed FIM facility to defendant No,1, they opened two letter of credits Nos.2480 and 2949 and an amount of US$ 17,5000 and 41,600 respectively and outstanding amount in the FIM account against the defendant No,1, is Rs,17,700,527.29 against the total utilization of Rs,32,166,726 excluding mark up. This shows that partly document of L/C were released to defendant and partly are in possession of bank, either the bank has taken the delivery of goods and these goods are in possession of bank, or the bank has sold the goods for adjustment of FIM facility. There is no explanation in the plaint about these facts. Nor the plaintiff has clarified in their reply to PLA specially when the defendants have denied the opening of two letters of credits and utilization of FIM facility.
18. No doubt the plaintiff has placed on record photocopies of letters of credit along with respondent No,1, request to open the letter of credits, but these documents E only establish the opening of letter of credit and the plaint is silent about the subsequent events.
19. The above said facts require deeper probe which could only be resolved after recording evidence, hence unless and F until the bank proves its claim of FIM facility no decree could be passed against defendants for FIM facility.
20. The second facility is of Cash finance (pledge). According to plaint a sum of Rs,76,713,008.87 with markup is due and recoverable from the defendants in this account.
21. The cash finance (pledge) facility in banking parlance is self-adjustable facility, the bank allow Cash finance (pledge) by keeping reasonable margin, in the price of goods as per agreement between the parties, the pledge goods G remain under the bank's lock and key. In case the customer intends to take delivery of pledge goods, the customer has to pay the price of goods sought to be released and in this way the liability of cash finance (pledge) automatically comes to an end.
22. According to plaintiff they allowed to defendant in this head up to Rs,81,088,904.47 the defendants paid Rs,23,542,301.87 including mark up and at present a sum of Rs,76,713,008.87 is outstanding in the said account against pledge of goods, the goods are or were under the bank's lock and key with agreed margin, according to plaintiffs assertion the defendants have stolen the goods and they reserve their right to lodge an F.I.R. Against the defendants, hence, unless it is proved that goods were stolen by defendants, no decree could be passed for the simple reason bank through its Muqaddam is in possession of pledge stocks.
23. Under sections 151 and 152 of the Contract Act, the bank being bailee of the goods is bound to return the goods to debtor/bailor against payment of loan/finance and in case of inability of bank to return the goods they have to give adjustment of stolen or lost goods unless it is proved that bank/pledgee taken care of pledge goods like an ordinary prudent man. The argument of learned counsel for plaintiff is that under section 176 of the. Contract Act, the bank is not bound to sell the pledge goods before filing the suit, the pawnee is thus within its right to exercise his right to sue and keep the goods as collateral security and as such the defendants could not attack the institution of suit, the argument of learned counsel has the force, the pawnee has the right to institute the suit for recovery of its debt without selling the pawned goods but ultimately the decree of debt will be recoverable from the sale proceed of pawned goods in the absence of agreement of personal obligation of the pawnor but in the present case as per plaintiffs' own admission, they are not in a position to return the goods as the defendants have removed the same and claim that they reserve their right to register a criminal complaint against the defendants, learned counsel has referred the stock reports available at pages 62 and 63 of suit that customer removed part of pledge goods on 30-5-2009 as per report of Muqaddam. It is not understandable why the plaintiff remains silent about the alleged theft of pledged goods when the thief was known to them. In plaint they only asserted that they reserve their right to initiate criminal legal action against defendants, the fact of removal of goods by whom is yet to be ascertained, and till the final adjudication of the . Responsibility regarding removal of goods, the presumption will remain that it is the pawnee who failed to take care of the pledge goods like a man of ordinary prudence, who under a similar circumstances takes care of his own goods and for fixing the responsibility of defaulting party the recording evidence is necessary.
25. The third facility is the facility of Running finance, according to plaintiff assertion the defendants were sanctioned the said facility to the tune of Rs,75-million on 23-5-2008 and a temporary enhancement in the said facility amounting to Rs,3.75-million was allowed on 31-12-2008 under these two finance agreements the final liability of defendant No,1 inclusive of mark up, up to 30-4- 2009 and 31-1-2009 is Rs,94, 575,000.
26. According to plaintiffs own admission para-24 of plaint the customer availed the running finance facility up to Rs,194,393,113.09 and paid Rs,118,356,197.29 is addition to mark up of Rs,3,456,535.51. This shows that Running finance facility was a revolving facility but it remained within the agreed limits. It is not the case of plaintiff that defendants withdrew/utilized amounts in excess of the sanctioned limit. The total liability under the Running finance facility as per agreement comes to Rs,94,575,000. The plaintiff is claiming that on the day of institution of suit the defendant No,1 is liable to pay Rs,96,675,283.52 which even exceed the agreed buy back price of Rs,94,575,000. The plaintiff has given the details of adjustment made by the defendant No,1 in para- 24 of the plaint, the amount of markup paid as Rs,3,456,535/51, this amount has to be deducted from buy back price of Rs,94,575,000, hence the liability of Running finance account comes to Rs,91,118,465, if the plaintiff statement of account is admitted correct but the statement of account is not consonance with the assertions of plaint, the statement of account filed by plaintiff shows that plaintiff has debited Rs,42,878,202 as mark up against the agreed mark up of Rs,94,575,000 in the running finance facility.
27. Learned counsel for defendants pointed out a debit entry dated 18-6-2008 of Rs,97,993,618 and submits that the plaintiff claim is that a pay order of said amount was issued to HBL for swapping the defendants liability but this entry shows that it creates only a liability of Rs,54,123,618, meaning thereby that the plaintiff only allowed finance of Rs,54,123,618 instead of Rs,97,993,618.
28. Under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 statement of account is the most important document, and if prima facie the statement of account show entries which are not in corroboration of documents and plaint, the presumption of truth attached with this document, lost its legal value. The related documents mentioned in Section 9 should be in confirmation of statement of account specially the finance agreement, as finance agreement establishes the relation of lender and borrower. As the statement of account prima facie did not reflect the true accounts of parties hence for establishing the claim the plaintiff has to prove the debit entries through evidence.
29. Learned counsel for plaintiff submits that along with their reply to PLA they have placed on record the photocopies of cheques for these entries which were denied by the defendants as well the copies of letter of credit and as such these documents will be considered while deciding the PLA, the argument of learned counsel of defendant is that these documents were not filed along with the plaint, hence it cannot be considered. Learned counsel for defendants have placed heavy reliance on Agricultural Development Bank of Pakistan through Manager v. Messrs Malik Food Industries Limited through Director/Chief Executive/Share-holder and 13 others (CLD 2005 1359) and Nusrat Textile Mills Ltd, and 8 others v. United Bank Ltd. Through Attorneu (CLD 2005 1421). No doubt it is the right of defendant that at the time of replying the plaintiffs claim, all documents creating liability against him should be made known to him enabling to accept or refute the same and in case the plaintiff file the documents with reply of PLA, the defendant has no chance to refute or explain these documents and in that case a prejudice will be caused to defendant, under Financial Institutions (Recovery of Finances) Ordinance, 2001 the proceeding are summary nature and as such for deciding the PLA, only the documents filed with the plaint will be considered for evaluating the claim of parties, the permission to grant unconditional leave to defend the suit does not mean that plaintiffs claim stand rejected, the permission to defend the suit will provide opportunity to both the parties to prove their respective claims. As in the present case the defendants have prima facie established their case for the grant of unconditional leave on different grounds, further discussion on this point of law may cause prejudice to either party during trial.
30. In response to the objection of learned counsel for defendant that power of attorney in favour of one of the signatory of plaint is by Askari Commercial Bank Limited, the other attorney of Askari Bank Limited, alone has, no authority to file the suit simply. Learned counsel for plaintiff submit that Askari Commercial Bank Limited is renamed as Askari Bank Limited, as is evident from sanction letter dated 23-5-2008, which find mention as "Formerly Askari Commercial Bank Limited", further the objection has raised in arguments and the same is not found mention in PLA and as such this objection could not be considered. It is an admitted fact that power of attorney in favour of Mr. Muhammad Nadeem one of the signatory of plaint was granted by Askari Commercial Bank Limited, the plaintiff has not asserted in the plaint that Askari Commercial Bank Limited is renamed as Askari Bank in accordance with law as such in the absence of any assertion of the above fact, the objection of defendant required evidence.
31. Learned counsel for defendants, submits that, defendants have filed a suit for recovery, redemption, rendition of account on the same transaction, the parties are the same, the PLA of plaintiff in either suit has been allowed and as such defendants are entitled for the same treatment. Learned counsel has relied on Muhmmad Khalid Butt v. United Bank Limited (2003 CLD 911), the argument of learned counsel could not be considered for the simple reason that the defendant has not taken the said ground in his PLA, nor the copy of plaint is available on record, hence in the absence of any pleadings, the argument of learned counsel is of no avail.
32. The upshot of the above discussion is that defendants have raised substantial question of law and facts, which could only be resolved after recording evidence, the defendants are thus allowed to defend the suit unconditionally. PLA is accepted.