' MUNIB AKHTAR, J.---The present application has been filed by the defendants seeking leave to defend the present suit, which has been filed by the plaintiff bank under the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("2001 Ordinance") to recover a total amount of Rs,62,432,532. The aforesaid amount is claimed on the basis of two facilities extended to the defendant No,1, one being a running finance facility on which Rs,55,641,057 is claimed, and the other a demand finance facility on which Rs,6,789,475 is claimed. The defendants Nos.2 to 4 have been sued as guarantors and/or mortgagors in respect of the aforesaid facilities.
2. Learned counsel for the defendants contended that the defendants were entitled to unconditional leave to defend the suit. He submitted that it was apparent from the finance agreements sued upon that two.Facilities, granted for the year 2007, were involved, one for Rs,60 million and the other for Rs,5 million. These facilities were for one year. He submitted that in para 9 of the plaint, markup on the two facilities was computed up to 12-5-2009, which was much beyond the period of the agreements. Thus, on the face of it, the amount being claimed was far in excess of what was legally permissible, i,e,, was computed on the basis of periods that were much beyond the periods of the agreements. He submitted that the defendant No, 1 had in fact repaid a total amount greatly in excess of the finance actually availed from the plaintiff, and that although the defendants had repeatedly sought a proper statement of, account, none had been forthcoming.
This had forced the defendants to file a suit for rendition of accounts and other declaratory and injunctive relief in 2007, being (new) Suit No,124 of 2007. Instituted. In the concerned banking court.
This is the suit that is mentioned in the leave to defend application, which was filed in 2009. At the hearing, learned counsel clarified that that suit had since then been withdrawn, but another suit, seeking substantially the same relief, had been filed in this Court, being Suit B-30 of 2011. This suit was pending adjudication. Learned counsel emphasized that although there had undoubtedly been a banking relationship between the defendant No,1 and the plaintiff for a number of years, the finances being sued upon had been granted in 2007 as fresh facilities and not merely as renewals of existing lines of credit. He submitted that the mortgages and at least some of the guarantees sued upon predated the present facilities and could not therefore have been executed for the purposes, or in contemplation, of the present facilities.
3. Insofar as the statements of account filed by the plaintiff were concerned, learned counsel submitted that many if not most of the entries were seriously disputed. According to him, it was clear that, markup on markup had been charged, and there had been a rollover, which was impermissible in law. The correctness of the entries could only be determined by and at a proper trial, and this was in any case required since (as noted aboye) the defendants' case was that overpayments had been made. He also submitted that the statements were not certified within the meaning of the Bankers' Books Evidence Act, 1891 ("1891 Act") and this was a mandatory requirement of section 9 of the 2001 Ordinance. In particular, the names and authority of the persons certifying the statements of account had not been stated. He submitted that there had been a material breach of the requirements of the 2001 Ordinance, which entitled the defendants to leave to defend. Learned counsel contended that a suit filed without a proper statement of account was not maintainable.
4. Learned counsel for the plaintiff bank strongly contested the leave to defend application and relied on the plaint and the replication in this regard. He submitted that the leave application did not comply with section 10(4) of the 2001 Ordinance, and therefore had to be rejected as required by subsection (6) of that section. He submitted that the liability of the defendants stood established from the record and nothing had been stated in the leave application that would entitle the defendants to the grant of leave to defend. Proper statements of account had been filed, which clearly established the liability of the defendants. He prayed that the application be dismissed. In his right of reply, learned counsel for the defendants submitted that in any case, the value of the mortgaged properties was in excess of the amount even as claimed by the plaintiff and this was yet another reason why leave should be granted. Both learned counsel also relied on certain case-law.
5. I have heard learned counsel as above, and examined the record with their assistance and considered .The case-law referred to. I have recently had occasion to consider in some detail the provisions of the 2001 Ordinance as presently relevant in my order announced on 10-1-2012 made in Suit B-50 of 2009, titled Pakistan Kuwait Investment Co. (Pvt.) Ltd. v. Active Apparels Investment Ltd.
And others ("earlier order"). I reached, among others, the following conclusions:-- "25. In my view therefore, the scheme of the 2001 Ordinance, as presently relevant, is as follows. (It may be recalled that the present context is of a suit where the financial institution is the plaintiff and the customer is the defendant.) The obligations imposed by section 9(2) make clear that while making his application for leave to defend, the defendant is to be confronted with the best possible case that the plaintiff can put forward. The foundation of such a case must be the statement of account, and section 9(2) ensures that the statement, by being certified under the 1891 Act, is placed at its highest possible footing, i,e,, is the equivalent of actually producing the original books of account. However, since the production of a certified statement of account is a necessary but not sufficient condition to charge the defendant with liability, section 9(2) further provides that the relevant documents relating to the grant of finance must also be produced (if only by way of copies). These documents serve to corroborate the claim made in the statement of account...
26. Thus, the policy of the 2001 Ordinance appears to be that if a financial institution sues to recover any amount, then it must, right from inception, put forward the best possible case that it can make out up .To and at that point and this is so especially for purposes of considering the application for leave to defend. This is a mandatory obligation cast on the financial institution. In other words, the defendant is entitled to have the questions raised by him in his leave to defend application tested against the plaintiffs case when placed at its highest footing. This is obviously an important and valuable right that inheres in the defendant.
27. One question that naturally arises from the foregoing analysis is what happens if the plaintiff fails to abide by the statutory obligations imposed in terms of section 9(2)? At least three possible situations (or some combination thereof) can arise: (a) the plaintiff does not file a proper statement -of account; (b) the statement, though otherwise proper, is not duly certified in terms of the 1891 Act; or (c) the relevant documents relating to the grant of finance are not filed....
30. The second objection taken by learned counsel for the defendants is as regards the certification of the statement of account in terms of the 1891 Act. Learned counsel contended that the person who has certified the statement was not an officer as contemplated by section 2(8) of the 1891 Act and that he was not even, at the time of the filing of the suit, in the employ of the plaintiff. Section 2(8) requires that the certificate be "dated and subscribed by the principal accountant or manager of the bank with his name and official title". For purposes of section 9(2) of the 2001 Ordinance, the word "bank" must of course be read as meaning "financial institution".
Equally, the term "principal accountant" can. In light of the principle of interpretation that a statute should be regarded as "always speaking" and its interpretation adapted to meet ever-changing conditions, be regarded as including a modern day equivalent, such as a chief financial officer.
Nonetheless, in the end the certificate must be subscribed by one or the other of the officers identified in section 2(8). Now the original statement of account, as also the statement appended to the replication, have both (judging from the signatures) been certified by the same person.
While the name and official title of the individual have not been stated in either case, the material on record indicates that the signatory is Mr. Tasnim ul Haq Farooqi. His authority is stated to derive from a resolution of the Board of Directors of the plaintiff (appended to the replication) passed at a meeting held on 16-5-1994. The authority conferred by the Board prima facie relates to matters such as the institution of suits, verification of plaints. Engaging counsel, etc. The authdrity relied upon would seem to address another objection taken by learned counsel for the defendants, namely, that the plaint has been signed and verified by an unauthorized person. This objection appears to be without force in light of the authority relied upon. However, it does not appear to address at all the question presently under consideration, i,e,, whether the statement of account has been duly certified pursuant to the 1891 Act. In this context, it may also be noted that in terms of the relevant laws in force in 1994, being the 1979 and 1984 Ordinances, there was no requirement at all to file a statement of account along with the plaint. Thus, the authority conferred upon Mr. Farooqi could not relate to an authorization to certify the statement of account, for the very simple reason that it did not need to. I may note in passing that the language of section 9(1) of the 1997 Act could, on one possible reading, mean that both the plaint and the statement of account could be verified by, inter alia,. Any officer authorized by the Board of Directors. However, section 9 of the 2001 Ordinance is not open to any such possibility. The plaint and its verification are dealt with in subsection (1), and the statement of account (along with its certification under the 1891 Act) is dealt with in subsection (2). It is significant that the plaintiff also appears to have maintained a discreet silence as to the employment status and/or position held by Mr. Farooqi at the time of the filing of the suit or the replication. It would therefore seem prima facie that Mr. Farooqi was not an officer of either designation as contemplated by section 2(8) of the 1891 Act and could not therefore certify the statement of account in terms as required thereunder."
It may be clarified that the expressions "1997 Act" and "1979 and 1984 Ordinances" were references to the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997; the Banking Companies (Recovery of Loans) Ordinance, 1979 and the Banking Tribunals Ordinance, 1984 respectively.
6. As noted above, one objection taken by . The defendants, in Part (B). Para 5 of the leave application, is that the statements of account in the present case have not been duly certified as required in terms of the 1891 Act. The plaintiffs reply in its replication, as presently relevant, was as follows:-- "That the contents of para (B)5 of the application for leave to defend are frivolous. Baseless and are denied. It is submitted that the plaint is duly verified and on oath. The plaintiff bank has authorized and given powers of attorney in favour of two bank officers namely Mr. Nisar Ahmed Channa and Mr. Syed Asif Ali, copies of the said powers of attorney are already filed with the plaint.
It is denied that the statement of accounts attached with the plaint is neither certified nor prepared as required by law."
' The power of attorney in favour of Mr. Syed Asif All was executed on 18-7-2002, while that empowering Mr. Nisar Ahmed Channa 'was executed on 24-3-2007. In other words, both attorneys were appointed after the coming into force of the 2001 Ordinance. I have examined the two instruments. Both are in identical form in all material respects, and each describes the attorney simply as "an officer of the Bank". There does not appear to be any express power to certify statements of account on behalf of the plaintiff. Paragraph 10 of the each instrument is in respect of litigation. In part, this paragraph empowers the attorney to:--t "...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."
' The foregoing power is bolstered by a general power conferred by paragraph 13, which empowers the attorney to do all such acts, matters, deeds, etc. Not specifically mentioned as are "necessary or requisite or expedient to carry on and manage the business of the bank or which be necessary or requisite or expedient for the better and more effectively doing and performing the several acts, deeds and things aforesaid or incidental thereto".
7. In my view, the foregoing powers do not confer any authority on the two attorneys to certify statements of account within the meaning, and for purposes, of the 1891 Act. Paragraph 10 does empower the attorney to verify "tabular statements", but this seems simply (keeping in mind the context in which this term appears, i,e,, the preceding and succeeding words) to be a reference to an execution application: Order XXI, Rule 11, C.P.C. Requires (in sub-rule (2)) that such an application state the particulars therein, required in "tabular form". Paragraph 13 appears to be rather widely worded and, inter alia, empowers the attorney to do all such acts, deeds, etc. As are deemed necessary or expedient "to carry on and manage the business of the bank". However, general clauses of this nature in a power of attorney must be given a contextual meaning, and are invariably intended to be supplementary to, and supportive of, the specific provisions of the instrument, and are not to be regarded as conferring independent powers on their own. Indeed, read literally, paragraph 13 would seem to make the two attorneys acting together all-in-all insofar as the affairs of the bank are concerned. However, such an interpretation would not merely be contrary to the intent behind conferring such powers but would also negative the statutory and regulatory framework in which banks operate and hence patently unlawful.
' Quite apart from the foregoing, the specific statutory requirements of section 2(8) of the 1891 Act cannot in any case be ignored. Even if the two attorneys had been specifically and expressly empowered to certify statements of account, it would still be necessary for them (or at the very least one of them) to be a "principal accountant or manager of the bank". As I have observed in my earlier order, this express requirement of section 2(8) is to be regarded, and interpreted, as being "always speaking". Although the certificates at the end of the statements of account do not specify the name or title of the signatories (there being two of them), it appears from a comparison of signatures that the statements were signed by the two attorneys. A specific objection was taken by the defendants, and it was open to the plaintiff to clarify in its replication that either Mr. Syed Asif All or Mr. Nisar Ahmed Channa (or both) met the statutory requirements laid down in section 2(8).
However, the plaintiff avoided doing so. And it was only asserted in the replication that the plaint was duly verified on oath. As also observed by me in the earlier order, whatever may have been the position under the 1997 Act, the 2001 Ordinance deals with the plaint and the statement of account in two separate subsections. In other words, they are now to be regarded as separate and distinct matters, and the requirements of each have to be separately complied with.
9. Keeping in mind all of the foregoing matters, I must conclude that the statements of account in the present case were not duly certified within the meaning, and for the purposes, of the 1891 Act. In light of the conclusions arrived at by me in the earlier order, in my view, this is sufficient to entitle the defendants to unconditional leave to defend the present suit.
10. Reference must however, be made to the objection taken by learned counsel for the plaintiff to the leave application; namely that it was non-compliant with the requirements of subsection (4) of section 10 and hence was liable to be dismissed by reason of subsection (6) thereof Learned counsel relied on two single Bench decisions of this Court, reported as Habib Bank Ltd. v. Sabcos (Pvt.) Ltd. 2006 CLD 244 and United Bank Ltd, v. Progas Pakistan Ltd. 2010 CLD 828. In the latter decision, the learned single Judge cited the earlier order with approval, and therefore it is sufficient to refer in detail only to the former. In that case, the learned single Judge observed as follows:-- "11. It is well-settled that non-compliance of plain requirement of a statutory enactment, which prescribes how something is to be done, will invalidate the thing being done in some other manner if the enactment is absolute but not if it is merely directory. The test for judging a provision whether it is a directory or mandatory, is that, if the non-compliance of the provision entails a penal consequence then it is mandatory, otherwise it is directory. The honourable Supreme Court of Pakistan in the case of Niaz Muhammad v. Fazl Raqib PLD 1974 SC 134 has observed as under:-- 'As a general rule however, a statute 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.'
12. If the above rule is applied to subsections (3), (4) and (5) then it is clear that the said provisions are Mandatory as penal consequence of non-compliance of the said provisions has been given in subsection (6) which provides rejection of application for leave to defend in case of non- compliance of such provisions.
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 in the present case. On further perusal it reveals that facts and figures as required under subsection (4) have also not been mentioned nor any explanation has been furnished for non--compliance. The learned Advocate for the defendants has also frankly conceded that provisions of subsection (4) have not been complied with nor the defendants have furnished any explanation in the application for non-compliance of the said provisions. As such, the defendants have disobeyed the directions of law and mandatory provisions as provided under subsections (3) and (4), therefore, their application for leave to defend is liable to be dismissed. Consequently invoking the provisions of subsection (6) I dismiss the said application."
' The foregoing also appears to be the approach taken by the Lahore High Court, which has in more than a few reported decisions rejected the leave application under subsection (6) for being non- compliant with the requirements of subsection (4).
11. In the present case, the defendants have specifically taken up the matter of section 10(4) in Part D of the leave application. It has been contended that the said subsection is not applicable since the defendants have filed a suit for rendition of accounts against the plaintiff. A number of paragraphs follow, in which specific objections have been taken (or rather, repeated) in relation to the amounts as claimed in the plaint. Specific figures have been mentioned. As noted above, the defendants' case is that these matters can only be resolved at a proper trial. In my view, at least prima facie, these paragraphs can be regarded as constituting "sufficient cause" within the meaning of subsection (6) as to why the defendants have been unable to comely with the requirements of subsection (4).
12. Quite apart from the foregoing however, it appears to me, with the utmost respect to the view that has found favuor with other learned single Judges of this Court, and also the Lahore High Court, that an alternative view of subsections (4) and (6) is possible and I would respectfully submit, preferable. For ccvvenience, these provisions, along with subsections (3) and (5), are reproduced below:-- "(3) 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, in the opinion of the defendant, evidence needs to be recorded.
(4) In the case of a suit for recovery instituted by a financial institution the application for leave to defend shall also specifically state 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 payments;
(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 amount if any which the defendant disputes as payable to the financial institution and facts in support thereof: ' Explanation.---For the purposes of clause (b) any payment made to a financial institution by a customer in respect of a finance shall be appropriated first against other amounts relating to the finance and the balance, if any, against the principal amount of the finance.
(5) The application for leave to defend shall be accompanied by all the documents which, in the opinion of the defendant, support the substantial questions of law or fact raised by him.
(6) 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
13. As is clear from the paragraphs from the Sabcos case reproduced above, the learned single Judge applied the principle of interpretation that if penal consequences flow from the non- compliance of a statutory provision, it is to be regarded as mandatory and not directory, and a decision of the Supreme Court was relied upon in this regard. However, two points require consideration. Firstly the Supreme Court itself expressly noted that this is a general rule. It is not, in other words, an absolute rule, Which must necessarily be applied in all cases. In the end, it is a matter of interpretation, and much depends on the specific provisions under consideration when read in the light of the statute as a whole. Secondly, when the facts of the case before the Supreme Court are considered, it becomes clear why it was concluded that this was the correct principle to apply in that case. The Supreme Court was concerned with section 23 of the North-West Frontier Province Pre-emption Act, 1950. Subsection (1) of that section provided that in every suit for pre- emption, the court was to require the plaintiff (who of course, was the preemptor) to deposit a certain sum of the nature as therein specified, and subsection (4) provided that if the plaintiff failed to do so, the plaint was to be rejected. The question was whether the requirement of subsection (1) was (in light of subsection (4)) mandatory or directory? The High Court had concluded that the requirement was mandatory, and the Supreme Court was referred to two pre- partition decisions of the Lahore High Court where a similar view had been taken. The Supreme Court observed as follows (pg. 138):-- "It is true that no universal rule can be laid down for the construction of statutes as to whether mandatory enactments shall be considered directory only or obligatory, with an implied nullification for disobedience. It is the duty of the Courts to try to get at the real intention of the Legislature, by carefully attending to the whole scope of the statute to be construed.
' There then followed the passage cited by the learned single. Judge in the Sabcos case (reproduced above). It is therefore clear that, as already noted, the rule of interpretation applied by the Supreme Court is not absolute in nature. The reason why it was applied was because the right of pre-emption is, in the words of the Supreme Court, "predatory or piratical in nature". Hence, "the requirement enjoined by subsections (1) and (4) of section 23 of the Act is mandatory in nature as failure to comply with the same is to be visited by the penal consequence of the rejection of the plaint" (pg. 138).
14. In my respectful view, the position of subsections (3) to (6) of section 10 is entirely different, and indeed, could not be more so. The right of pre-emption operates as a clog or fetter on the right of a person to deal with his property as he may deem appropriate. Hence, if the exercise of such a right was subjected to conditions imposed by statute (such as depositing a sum of money in court), and penal consequences followed if the plaintiff failed to comply with those obligations, it is no surprise that it was concluded that the legislative intent was that compliance was mandatory. However, the position under the 2001 Ordinance is entirely different. In the normal course, a person sued in a court of law is entitled as of right to defend himself and contest the claim put forward by the plaintiff. This right is but a manifestation of the fundamental principles of natural justice, and lies at the heart of the judicial adjudicatory system. The 2001 Ordinance however negates this right. A defendant is not entitled as of right to defend a banking suit. He must first obtain leave to defend.
The requirements of subsections (3) to (5) are purely procedural in nature, i,e,, they go only to the form of the leave application, and not its merits. To conclude, by reason of subsection (6), that the legislative intent was for these provisions to be mandatory would, in my view, expose the defendant to a form of double jeopardy. Not merely is he not entitled to defend himself as of right, he is to be non-suited if his leave application does not conform to the procedural requirements of subsections (3) to (5) (as applicable). This would be the ultimate triumph of form over substance.
One is almost tempted to regard these subsections, if subsection (6) were indeed a mandatary provision, as a sort of throwback to the forms of action that had once plagued the common law.
The form of action had to be carefully selected and faithfully adhered to: one procedural misstep and the plaintiff could easily be non-suited. In my view, the legislative intent could not have been to expose a defendant to such a hazard. To deny the defendant the opportunity to have even his leave application heard simply on account of procedural infirmities in its form (and indeed, to expose him to the peril of the suit being immediately decreed thereafter) seems to place procedure on a pedestal far higher than that warranted under our law. Procedure is after all, the handmaiden of justice, and not its mistress-or, if I may say so, its stepmother, which would be the effect if subsection (6) were to be regarded as mandatory. In my respectful view, the proper interpretation of subsection (6) is to regard it as directory and not mandatory. It would do well to remember the 'words of Kaikaus, J in Imtiaz Ahmad u. Ghulam All and others PLD 1963 SC 382.
Though in the minority, his Lordship put procedure firmly in its place:-- "I must confess that having dealt with technicalities for more than forty years, out of which thirty years are at the Bar, I do not feel much impressed with them. I think the proper place of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights. All technicalities have to be avoided unless it be essential to comply with them on grounds of public policy. The English system of administration of justice on which our own is based may be to certain extent technical but we are not to take from that system its defects. Any system, which by giving effect to the form and not to the substance defeats substantive rights, is defective to that extent. The ideal must always be a system that gives to every person what is his." (pp. 399- 400)
15. It is of course well established that if the legislative intent, as discovered by the court, so indicates, the word "shall" can be read as "may" (and vice versa). In my view, the present case fully warrants such a conclusion. There are of course cases where the statute provides for penal consequences if there is a failure to comply with requirements that are purely procedural in nature, and such requirements have been held to be mandatory. For example, the elections laws provide (or at least provided at the relevant time) that a failure to properly verify the contents of an election petition would result in its dismissal and such a requirement has been held to be mandatory. I would respectfully suggest that these decisions can be explained on the basis that the plaintiff/petitioner was asserting a right that (like the plaintiff/appellant before the Supreme Court in the Niaz Ahmed case (supra)) in essence interfered with, or sought to negate or upset, a right that inhered in or had accrued to or been acquired by or vested in the defendant/respondent.
The plaintiff/petitioner of course did have the right to do so (e.g., as a preemptor or a losing candidate in an election). However, this was the context in which it was held that the procedural formalities attendant on the assertion of such a right were mandatory on account of the penal consequences laid down by statute. Where however the plaintiff/petitioner is simply asserting a right that he claims inheres in him as such (e.g., on the basis of a contract), then the procedural formalities laid down in. Respect of the defendant, even if non-compliance is visited with penal consequences, are not necessarily intended to be mandatory. This is all the more so when; as is the position in the case at hand, the defendant is being denied a right (namely, to defend himself) that is normally regarded as absolutely fundamental. Accordingly, subsections (3) to (5) read with subsection (6) are in my view, on their proper interpretation, directory in nature. Therefore, even if the defendants in the present case have filed a leave application that is non-compliant with the requirements of subsection (4) that does not mean that the application is to be rejected as a matter of course, and I would not so reject in the facts and circumstances of the present case. In my view therefore, the objection taken by learned counsel for the plaintiff cannot be accepted.
16. In view of what has been stated above, the present application is allowed. The defendants are granted unconditional leave to defend the present suit. In the circumstances, let learned counsel for the parties propose issues to be framed for consideration by the Court. The office L is directed to fix this matter for framing of issues.