' SADIQ HUSSAIN BHATTI, J.---Appellants are aggrieved by order dated 22-2-2011 and decree dated 12-10-2011 in Suit No,B-127 of 2009 passed by learned single Judge of this Court, whereby the leave to defend application of the appellants was dismissed and the suit of the respondent bank was decreed against the appellants jointly and severally and in favour of the respondent bank.
2. Brief facts of the case as recorded by the learned Banking Judge of this Court are that running finance facility in the sum of Rs,50 Million was extended to the appellant in October 2004, which was enhanced to Rs,70 Million in the year 2007. In order to secure the above amount appellants executed several documents, such as, agreements for financing, promissory note, letters of continuity, letters of arrangement, conformation and undertaking, letter of disbursement, personal guarantee all dated 8-5-2008 and undertaking dated 3-6-2008. In order to secure the above amount the appellant also mortgaged Plots Nos.201, Sector 25, Korangi Industrial Area, Karachi and 55/1, Khayaban-e-Hafiz, Phase-V, DHA, Karachi and also deposited original documents of title with the respondent bank. Upon failure/default of the appellants in repayment of the above amount, notices under section 15(2) of the Financial Institutions (Recovery of Finances) Ordinances, 2001 were issued and later on Banking Suit No,B-127 of 2009 was filed against the appellants for recovery of amount with following prayers:--
(a) Decree for Rs,100,798,440 against the Defendant jointly and severally along with cost and cost of funds as provided under section 9 of the Financial Institutions (Recovery of Finances) Ordinance 2001 till realization of decretal amount.
(b) Decretal amount may kindly be ordered to be recovered through sale of the mortgaged properties.
(c) The Decretal amount may also be ordered to be recovered through attachment and sale of personal assets (moveable and immovable) of the Defendants and if required against the person of the Defendants through its arrest/detention in civil prison.
(d)In case proceeds of sale are found insufficient for amount under decree then money decree for remaining amount.
(e) To grant/award 20% liquidated damages.
(f) Award cost of the suit.
(g) Any other reliefs which this honourable Court deems fit, just and proper in favour of the Plaintiff.
3. The learned banking Judge in the impugned order and the judgment has observed that there was nothing in the plaint nor anything has been shown by learned counsel for appellants (Defendants in Suit No,B-127 of 2009), which may disentitle the respondent Bank from obtaining a judgment and decree in respect of its claim, and accordingly the suit of the respondent bank was decreed against the appellant jointly and severally in the sum of Rs,100,738,440 along with cost of funds from the date of institution of suit till realization of decretal amount with further directions that the respondent bank shall also be entitled for the sale of mortgaged properties as identified in the plaint and shall also be entitled to costs in the suit.
4. The above order, judgment and decree has been challenged by the appellants through present Special High Court Appeal.
5. Learned counsel for the appellants argued that the impugned order and decree are erroneous in law and facts, and void ab initio, as while passing the impugned judgment and decree and deciding application for leave to defend the learned single Judge did not consider the fact that on same controversy a suit of appellants is pending adjudication. He has also contended that certain facts including denial of execution of charged documents by the appellants, non-disbursement of the agreed amount and creating liability by debiting markup on markup by the respondent, and non-filing of statement of account, duly certified as per Bankers Books Act, were not considered by the learned single Judge while passing the impugned judgment and decree. It has been further argued that according to subsection (8) of section 10 of the Financial Institutions (Recovery of Finances) Ordinance 2001 substantial questions of law and facts were raised but the learned single Judge ignored the same and dismissed the leave to defend application. Learned counsel also argued that while passing the impugned judgment and decree the learned single Judge also ignored the fact that agreement for financing executed on 8-5-2008 was matured on 31-1-2009 and buyback price was agreed at Rs,79,574,159 out of which admittedly Rs,32,624,952 was paid, and passed the decree for an exaggerated amount of Rs, 100,798,440. He also argued that reliance was placed by the appellant on a D.B. Judgment, whereby rollover was declared illegal, but the learned single Judge did not consider the same and passed the impugned judgment, which is against settled principles of law, hence the same is liable to be set aside. Learned counsel for the appellants finally argued that if cost of funds is granted then no liquidated damages can, be allowed particularly when no evidence regarding the actual amount of loss or damage sustained by the respondent bank was filed along with plaint nor any evidence in this regard was led by respondent bank. In support of his contention, he has relied upon a judgment of honourable Supreme Court in the case of SAUDI-PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY (PVT.) LIMITED v. Messrs ALLIED BANK OF PAKISTAN reported as 2003 CLD 596.
6. Conversely, the learned counsel for respondent has controverted the submissions made by the learned Counsel for the appellants and submitted that instant appeal has been filed only to gain time and to get undue benefit of the money to be paid by the appellants and further to prolong the execution of the decree passed by the learned single Judge. Per learned counsel, the learned single Judge, after having considered all assertions made by the appellants and the preliminary objections regarding maintainability of the proceedings, determined their liability and dismissed the leave to defend application through an elaborate order dated 22-2-2011. He has further argued that respondent bank did not claim any markup over markup but filed statement of account in accordance with law, showing every credit and debit entry, forming the basis of amount claimed for. It has been further contended that since the appellants failed to bring any substantial material in terms of subsection (8) of section 10 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001, which requires any evidence to be recorded, therefore, the learned single Judge was justified to dismiss the leave to defend application of the appellants. Learned counsel further argued that appellants had not assailed or questioned the statement of account filed by the respondent in terms of order dated 18-8-2010 passed by learned single Judge which, in any case, cannot be challenged at this stage. Per learned counsel, the grievance of the appellants regarding four payments, which according to appellants, were not reflected in the statement of account, is incorrect as the said payments were included in the statement of account and due credit of such payments was also given. It has been finally argued that the respondent bank had already sought execution of mortgaged property for recovery of decretal amount, wherein order for attachment and sale of mortgaged properties has been passed by the learned single Judge, whereas such order has not been challenged by the appellants. As regards liquidated damages granted by the learned single Judge on a flat rate of 20%, the learned counsel for the respondent has frankly submitted that no evidence in this account was produced by the respondent bank, however, per learned counsel, since it was part of the agreement between the parties, therefore, the same has rightly been granted in addition to cost of funds and cost of suit. In support of his contentions, learned counsel for respondent has relied on the following reported cases:--
(1) ALLAH DITTA v. GHULAM HAIDER and others [1988 SCM R 964]
(2) MUHAMMAD SULTAN and others v. FAQIRULLAH and others [1991 CLC 1098]
8. We have heard both the learned counsel and have also perused the impugned order, judgment and decree.
9. From perusal of the record it has transpired that the respondent bank while filing the suit for recovery against the appellant furnished following documents along with plaint:--
(a) Agreement for Financing on markup basis dated 8-5-2008 for the sum of Rs,79,574,159.
(b) Promissory Note dated 8-5-2008 for the sum of Rs,79,574,159.
(c) Letter of Continuity dated 8-5-2008 for the sum of Rs,79,574,159.
(d) Letter of Arrangement dated 8-5-2008 for the sum of Rs,70,000,000.
(e) Confirmation and undertaking dated 8-5-2008.
(f) Letter of Disbursement dated 8-5-2008 for the sum of Rs,79,574,159.
(g) Personal Guarantee dated 8-5-2008 for the sum of Rs,79,574,159.
(h) Undertaking dated 3-6-2008.
' It has also been noted that in order to secure the finance facility granted by the respondent bank, original documents were deposited by the appellant as equitable mortgage, which were filed along with plaint by the respondent bank in the shape of memorandum of deposit of title deed dated 8-5-2008, subrogation agreement dated 3-6-2008 and certificate of registration of mortgage, whereas, statement of account showing the detail of all the disbursement and the payments was also filed. The, appellant did not controvert the availment of finance facility and the execution of charged documents, however, attempted to raise some technical objections while filing leave to defend application before the learned single Judge. Learned single Judge while passing the order on the leave to defend application filed by the appellant, after having examined all the relevant documents and material available on record observed that the appellant did not raise any substantial ground of facts or law which may require evidence, hence, could not justify the grant of leave to defend application. Before us also, the appellant could not raise any, substantial factual or legal ground which may require any 'evidence' or could possibly dislodge the claim of the respondent bank which was duly supported by evidence. We are of the view that the claim of the respondent bank was in consonance with the provisions of section 9 of the Financial Institutions (Recovery of Finances) Ordinance 2001, whereas the appellant could not raise any substantial factual or legal ground in terms of provisions of section 10 of the Financial Institutions (Recovery of Finances) Ordinance 2001.
10. It will not be out of place to refer to a recent decision of a Division Bench of this Court in the case of ATIF MANZOOR v. FAYSAL BANK LIMITED and others I.A. No,19 of 2012 decided on 18-10-2012, wherein it has been held as under:-- "We may observe that once a financial institution files a suit for recovery, after having complied with the requirements of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, by furnishing duly certified statement of account, the documents relating to the grant of finance and the detail of amount of finance availed by the customer, amounts repaid, with dates of payments, and the amount of finance and other amounts relating to the finance payable upto the date of institution of suit, the burden to dislodge the said claim shifts upon the customer who is required to file leave to defend application in terms of section 10 of the Financial Institutions (Recovery of Finances) Ordinance 2001 in the form of written statement containing summary of the substantial question of law as well as of facts in respect of which evidence is required to be recorded. It shall also specify the details as mentioned in subsection (4) of section 10 Financial Institutions (Recovery of Finances) Ordinance, 2001. We are of the opinion that in the instant case the respondent bank has complied with the provisions of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, whereas the appellant could not dislodge the claim of the bank by raising any substantial question of law and fact which may require recording of evidence, whereas no substantial compliance of the provisions of section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, has been made. Reference in this regard can be made to the case of the honourable Supreme Court in the case of Apollo Textile Mills Ltd. And others v. Soneri Bank Ltd., PLD 2012 SC 268."
11. However, before recording our findings as to validity of the impugned judgment and decree in respect of entire claim of the respondent bank we may observe that the decretal amount i.e, 100,798,440 also included liquidated damages, validity of which has been seriously objected by the appellant before us by placing reliance in the case of SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY (PVT.) LIMITED v. Messrs ALLIED BANK OF PAKISTAN and another, reported as 2003 CLD 596.
12. In the above cited judgment the honourable Supreme Court while examining the validity of the liquidated damages has held that liquidated damages as a rule, required the positive evidence to show that the actual loss was suffered by the party claiming damages and even fixed amount stipulated for liquidated damages could not be recovered if the quantum of actual loss was not proved. In the instant case, we have noted that admittedly no evidence whatsoever was adduced by the respondent bank in support of its claim towards liquidated damages. We have also observed that as per summary of the account furnished by the respondent bank before the learned single Judge, showing total recoverable amount against the appellant also included liquidated damages at the fix rate of 20% i.e, Rs,16,799,740 whereas in the prayer clause of the suit, in addition to decretal amount of Rs, 100,798,440, prayer for grant of 20% liquidated damages was also made. From perusal of impugned judgment and decree we have noted that the learned single Judge has decreed the suit against the present appellant jointly and severally in the sum of Rs, 100,798,440 along with, cost of funds and the cost in the suit, however, has not granted the liquidated damages. It appears that the learned single Judge was not cognizant of the fact that the amount shown as recoverable from the appellant in the summary of accounts, filed by the respondent bank, also included the amount of liquidated damages at the fix rate of 20%.
13. In view of herein above facts, and by respectfully following the ratio of the judgment of the honourable Supreme Court, as referred to hereinabove; we are of the considered view that the liquidated damages, in the absence of any evidence, showing actual amount of damages sustained by any party, particularly when cost of funds, in terms of section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 have already been granted along with the cost of suit, cannot be allowed at a flat rate. A Accordingly, while upholding the impugned judgment and decree, we would modify the same by deleting the amount of liquidated damages i.e, Rs,16,799,740 claimed' by the respondent bank at the flat rate of 20%.
14. Before parting with the above judgment we may observe that the case-law relied upon by the learned counsel for the respondent was not applicable to the facts of the instant case, as in the cited cases it was held that a question of fact cannot be raised at a subsequent stage in appeal etc. Whereas, in the instant case a substantial legal question regarding validity of liquidated damages was raised by the appellant, which has been entertained by this Court as the same relates to a substantial question of law which has arisen from the impugned judgment and decree in the instant case.
' Instant High Court appeal stands disposed of in the 113 above terms.