' MUSHIR ALAM, C.J.---This appeal arises out of judgment and Decree dated 16-8-2011 which was passed consequent upon dismissal of C.M.A. No,11536 of 2010 (application for leave to defend) for non-prosecution. The suit was decreed as prayed.
2. Facts per record are that the respondent, Standard Chartered Bank of Pakistan, filed a suit for the recovery of Rs,277,574,446.03 along with cost of funds, charges till realization of whole amount. The appellants/defendants Nos,1, 2, 3 and 5 though filed leave to defend application but did not pursue it. From the record it appears that application was fixed and the appellant failed to appear to argue the application when fixed for hearing on 6-11-2010, 19-4-2011, 10-5-2011 and on 27-5-2011 when the C.M.A.11536 of 2010 was fixed for the hearing none appeared for the appellants/defendants, learned Single 'Judge observed "For the last several dates learned counsel for the defendants has failed to appear. In the interest of justice last and final chance is given to the learned counsel for the defendant and matter is adjourned to a date in office. If none appears for the defendant on the next date of hearing the application for leave to defend mat/ be dismissed". Record shows that when leave to defend application came up for hearing on 16-8-2011, in view of the order referred to above, the Court dismissed the application for non-prosecution and consequently the suit was decreed as prayed in favour of the plaintiff (respondent herein).
3. Mr. Bilal A. Khawaja, learned counsel for the appellants, contended that various financial facilities were extended to the appellants/defendants, one in the sum of Rs,1.25 billion for the Import/L.C: second in the sum of Rs,250 Million being Overdraft Facilities. Besides above facilities, it was further urged, two other ancillary facilities were also extended, which are not relevant for the purpose of instant proceedings. It is stated that finance facilities were recommended on 15-9-2008 and Finance Agreement was executed on 20-7-2007. According to the learned counsel for the appellant, in terms of Bank Statement appearing at Page 83 of the file the second mentioned facility was extended and a sum of Rs,43,500,000,00 was credited in the account of the appellant in terms of the agreement between the parties, the amount of the facility was utilized and so also settled from time to time from the cash flow, as reflected from the statement of accounts, available at pages 85 to 115. It is urged that the withdrawal and deposit was strictly in accordance with the sanction advice and within the sanction limit of Rs, 250 million.
4. It was urged that though the appellant was allowed 1.5 billion as L.C.Limit for the import of oil, such facility was never extended, on the contrary it was unilaterally withdrawn causing severe financial loss to the appellant. However, on the query of court, it was stated that no suit for enforcement of such purported obligation and or for damages was filed. Lastly, it was appellant No, 1 with Attock Oil Company and requested the respondent Bank permission to create pari passu charge on its assets, which the respondent/ plaintiff declined, had it been approved financial liquidity of the appellant company would have been improved to liquidate its liability.
5. It was contended that leave to defend application was dismissed for non prosecution without considering the merits of the case. It is urged that Banking Courts has no jurisdiction to dismiss the leave to defend application for non-prosecution in terms of Financial Institutions (Recovery of Finances) Ordinance, 2001 (herein after abbreviated as FIO, 2001). In support of his contention reliance was placed on Rose Incorporate v. Bolan Bank Ltd. (2002 CLD 598), Messrs Noor Flour Mills v. Judge Banking Court Balochistan, Quetta and another (2011 CLD 1263) and Abid Aziz Khan v. Bank of Punjab (2007 CLD 997).
6. Mr. Bilal Khawaja, laid much stress on para-8 the last mentioned judgment, (2011 CLD 1263), which reads as follows:-- "The position, therefore, which emerges from reading section 10 (ibid) is clear and unambiguous, the defendant is required to file PLA, in accordance with the conditions enumerated in section 10 of the Ordinance, the Banking Court is required to examine it and if it fulfils the requirements set there to place it on record. But once PLA is part of record, it is the cardinal duty of the Banking Court, to consider the plaint, the PLA and the replication filed, and thereafter proceed to grant leave conditional or unconditional or reject the application under section 10(11) of the Ordinance.
The Banking Court, therefore, is required to consider and decide the application on merits, it has been left with no other choice in this context. The Ordinance does not visualize the dismissal of application for non-prosecution, no such powers have been conferred upon the Banking Court, proceeding otherwise amounts to defeating the legislative intent, thus the dismissal for non- prosecution of the appellants PLA, was without jurisdiction and patently illegal".
7. Learned counsel for the appellant urged that there is no default, the amount is being paid regularly, therefore suit on merits is liable to be dismissed and appeal be allowed. Alternately, it was urged that order dismissing leave to defend application be set at naught and the matter be remanded to the learned single judge to hear the leave to defend application on merits and decide the case after recording evidence on the question of law raised in the leave to defend application.
8. Learned Counsel for the respondent Mr. Aijaz Ahmed, repelled the foremost legal objection of Mr. Bilal A. Khawaja,. Learned counsel for the appellant, that leave to defendant application cannot be dismissed for non-prosecution, is opposed to the scheme of FIO 2001. According to Mr. Ajaz, in terms of subsection (1) of section 10 of the FIO, 2001 it is the bounden duty of the defendant/s to obtain leave to defend and failure to obtain or absenting from the court clearly amounts to failure to obtain leave. In such eventuality, the Banking Court has no option but to decree the suit. It was further urged that in terms of subsection (8) of section 10 of FIO, 2001 it is necessary that defendant must be before the Court in pursuant to leave to defend application to convince the court that substantial question of fact or law are involved, that calls for recording evidence. It was urged that the form of leave to defend application is provided in terms of subsections (3), (4) and (5) of section 10, ibid, and on failure to comply with any of said provision, leave to defend application is liable to be rejected under subsection (6) ibid. Once the defendant is able to satisfy the court that substantial question of law and facts are raised that require recording of evidence, the court grants leave with or without conditions (subsections (8) and (9) ibid). Where the leave to defend application is rejected or where the defendant(s) fails to comply with the conditions for the grant of leave application Banking Court may proceed to pass judgment and decree in favour of the plaintiff in terms of subsection (11) of section 10 of FIO, 2001.
9. It was further urged that the Banking Court, under section 7 of the F10, 2001 is seized of the power of civil courts, which inter alia include power to dismiss any application or even the suit for non- prosecution, therefore no exception to the dismissal of the leave to defend application for non- prosecution could be taken.
10. It was urged on merits that from statement of account it is not shown that compound mark-up has been charged. According to Mr. Ajaz, even for the sake of arguments if leave to defend application is taken into consideration, borrowing is admitted, no specific plea to dispute the liability was taken, no specific entry was pointed out, which is contrary to the record. It is urged that even if it is shown now that any entry in the statement of account is contrary to law, respondent Bank shall correct the same, which offer was also extended before the single judge and is being repeated now.
11. Mr. Ajaz, has drawn our attention to 9 entries of mark-up, in the statement of account, which according to him is only charged on the principal amount. Lastly, he has drawn our attention to consolidated statement of account at page 125, which shows that maximum financial facility extended was Rs,250,000,000. Appellant from time to time availed Rs, 1,746,816,401.93 and so also from time to time repaid a sum of Rs,1,496,949,209. Principal amount outstanding as on 31st May 2010 is Rs,2,49,867,192.41. The markup at the rate of 15.35% is claimed at Rs,27,707,253.6, thus total outstanding i.e principal + markup claimed is Rs,277,574,446.03, according to Mr. Ajaz, markup claimed is not compounded. There is no dispute as to the principal amount; therefore, no justification for consideration of appeal or leave to defend application. In support of his contention he has placed reliance on Apolo Textile Mills Ltd. And others v. Soneri Bank Ltd. (2012 CLD 337).
12. We have heard arguments, perused the record. From the scheme of the FIO, 2001, a special enactment that has been promulgated to provide speedy measures and mechanism both to the financial institutions and or the customer against any default committed by whichever party in fulfillment of any obligations with regard to finance.
13. In order to appreciate the contentions of the both' the learned counsel it would be beneficial to browse through relevant provisions of subsections (1) and (11) of section 10 of the FIO 2001, subsection (1) of section 10 of the Ordinance reads as follows:-- "In any case in which the summons has been served on the defendant as provided for in subsection (5) of section 9, the defendant shall not be entitled to defend the suit unless he obtains leave from the banking court as hereinafter provided to defend the same; and, in default of his doing so, the allegation of fact in the plaint shall be deemed to be admitted and the Banking Court mau pass a decree in favour of the plaintiff on the basis thereof or such other material as the Banking Court may require in the interests of justice.
' Subsection (11) of section 10 reads as follows; ' Where the leave to defend application is rejected or where a defendant fails to fulfil the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant.
14. On examining the scheme of section 10 of F10, 2001 it becomes clear that obtaining leave to defend is sine qua non or condition precedent to defend a banking suit. The defendant is obligated to obtain leave to defend, without obtaining leave, FIO, 2001 does not permit defaulting defendant to contest the claim set up in a banking suit. Banking Court at two stages has the jurisdiction to pass judgment and decree against the defaulting defendant. Firstly, in terms of subsection (1) of section 10 ibid, when the defendant defaults in obtaining leave to defend the suit, either for the reason of non-service of summons, and secondly where the service is effected under subsection
(5) of section 9 ibid; but the defendant either altogether do not appear and fails to file leave to defend application and or where the defendant after service though appears and files the leave to defend application but neglects, fails to pursue the same, thus defaults to obtain lea gye, the Banking Court by virtue of deeming clause, treats default in obtaining leave to defend as admission of facts as pleaded in the Plaint and, proceeds to pass judgment and decree on facts so pleaded in the plaint and or any other material as the Banking Court may require in the interest of justice. Therefore, contention of Mr. Bilal A. Khawaja, cannot be sustained that Banking Court has no jurisdiction to dismiss the leave to defend application for non-prosecution or for that matter Banking Court is obliged to take into consideration the contents of leave to defend application. It may be observed that where the defendant(s) despite ample opportunity, fails and or neglects to appear and satisfy the court that substantial question of law and facts have been raised in the leave to defend application that necessitate recording of evidence, in default of his doing so, the Banking Court terms of subsection (1) of section 10 ibid; read with provisions of C.P.C., may in such a situation dismiss the application for non-prosecution and or ignore the same, result in either of the eventuality is same and by virtue of deeming clause, the allegation of fact in the plaint shall be deemed to be admitted and the Banking Court mat/ pass a decree in favour of the plaintiff on the basis thereof or such other material as the Banking Court may require in the interests of justice (one may also see Sahara Trading International (Pvt.) Ltd. v. Bank Alfalah 2004 CLD 1522).
15. Second stage or circumstances in which the banking court could decree the suit, is provided for is subsection (11) of section 10, F10, 2001. Subsections (3), (4) and or (5), inter alia require that the leave to defend application to be in the form of written statement, containing summary of question of law and facts, which need to be thrashed out at regular trial after evidence is recorded. The defendant is also required to state with clarity detail of finance availed, amount of finance and other amount related to finance repaid with dates, and the amount payable at the time of suit and the disputed amount if any, with supporting material. Leave to defend application, deficient in any of the material particulars, as noted herein, is liable to be rejected (see section 10(6) ibid): unless where defendant is able to demonstrate his inability to comply with such requirement. In cases where the leave to defend application is rejected in terms of subsection (6) for failure to comply with requirement of subsections (3), (4) and (5) of section 10 ibid; and or where the defendant failed to comply with the conditions imposed while granting such leave, the Banking Court exercises power under subsection (11) of section 10 of the FIO, 2001 to forthwith proceed to pass judgment and decree in favour of the plaintiff. Thus it could be seen that the Banking Court has power to pass judgment under subsection (1) and subsection (11) under different situation. With utmost reverence, it may be noted that Judgment emphatically relied upon by Mr. Bilal Khawaja (Messrs Noor Flour Mills v. Judge Banking Court Balochistan, Quetta and another (2011 CLD 1263) deals with the situation to proceed to pronounce judgment under subsection (11) of section 10, FIO, 2001. It appears that the attention of the learned bench was not drawn toward the provisions of subsection (1) ibid, which empowers the Banking Court to pass decree in favour of the plaintiff for default of the defendant to obtain leave. Failure to prosecute the leave to defend application amount to default in obtaining leave, such default is met by the consequences of passing of decree in favour of plaintiff, as discussed above. Therefore no exception could be taken for dismissal of leave to defend application for non-prosecution. In the instant case no doubt the defendants did file a leave to defend application but, from the record it is also evident that defendants neglected, failed and defaulted to pursue the leave application thus failed to obtain leave within the contemplation of subsection (1) of section 10 ibid; despite several and last opportunity given, consequently the application was dismissed and the suit on the basis of facts pleaded and material placed along with the in the Plaint, was considered and suit was decreed.
16. It may be observed that leave to defend application was dismissed for non-prosecution on 18- 8-2011, defendant took no exception, no application for the restoration of leave to defend application was filed nor in the appeal such dismissal of C.M.A. 11536 of 2010 has been challenged.
Defendants/Appellants continued to absent themselves; defaulted in obtaining leave and allowed the judgment and decree to be passed on 18-8-2011. Again the defendant could have availed the remedy under section 12 of the F10, 2001 before the Banking Court within 21 days from the date of decree, which also he failed to avail (see Asim Hussain Qadri v. Deuteche Bank (2006 CLD 1129) and Nasim Nizami v. Habib Bank Ltd. 2006 CLD 1213).
17. The scheme of the special enactment, is clear manifestation of the object and purpose of FIO, 2001; namely a summary procedure and speedy remedy for recovery of outstanding finance and enforcement of obligation and to avoid lengthy litigation under the general provisions of law.
Section 10 of FIO, 2001 clearly casts an obligation on the defendant to obtain leave to defend from Banking Court and the leave is to be obtained by moving leave to defend application and convincing the court that substantial question of law and facts have been raised that are required to be examined at trail by leading evidence. Merely filing leave to defend application is not enough, to obtain the leave as mandated under subsection (1) of section 10 of the FIO, 2001, defendant cast an obligation on defendant to peruse, follow and plead the leave application consequence for not obtaining leave from the Court is provided under the subsection (1) ibid; in these words "in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff on the basis thereof or such other material as the Banking Court may require in the interests of justice". Judgment and decree could only be passed in terms of subsection (11) of section 10 ibid; when either the leave application was rejected in terms of subsection (6) thereof, and or where the though the leave was granted but subject to certain conditions or limitations and, the defendant failed to comply or fulfil the condition/s. In either of the eventuality, the judgment and decree invariably follows, as envisaged by subsection (11) and not by subsection (1) of section 10 as contended by learned counsel for the appellant. In instant case it is recorded in the judgment that the decree is passed in terms of subsection (11) of section 10 of F10, 2011, whereas fact of the present case shows that in instant matter defendant failed to obtain leave in terms of subsection (1) of section 10, FIO, 2001, the consequently it could be decreed under same provision. It is neither the case where the leave application was rejected under subsection (6) of section 10 ibid; nor the case where the conditional leave was granted and the defendant failed to fulfil the condition, therefore under given facts judgment, could be passed under section 10(1), FIO, 2001 and not under section 10(11), FIO, 2001. It is well entrench and recognized principal of jurisprudence that-merely wrong quotation of provision is of no consequence, when the impugned judgment and decree is well within the contemplation of subsection (1) of 'section 10, F10, 2001 and is treated accordingly.
18. Adverting to the merits, principal liability is not denied. Mr. Bilal A. Khuwaja, has drawn our attention to second page of the statement of account on page 85 of the appeal file, which shows that the mark-up is being added to outstanding amount and in subsequent entry all the markup was added, which also carried forward on the next page 87 and in the similar manner mark-up has been added in the last entry and such compounding effect is apparent from all the nine entries of mark up. According to--him, had the mark-up been calculated without compounding the liability would be much lowest than what is claimed.
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23. Mr. Ajaz Ahmed learned counsel for the appellant contends that the appellant has not given any calculation of the mark up to substantiate his plea. That mark-up is either exorbitant or not in accordance with the contract. Mr. Ajaz extends the offer of the respondent bank that, if appellant, even at this stage are able to show any error of calculation or any excess amount has been charged in excess or in violation of sanction advice and or the finance agreement between the parties, the respondent bank will correct such claim and or discrepancy in the statement of account.
20. We have examined the merits of defense raised by the appellants. From the statement of accounts it appears that the lastly sums of Rs,800,000 and Rs,8,900,000.00 were credited towards discharge of Banks' liability on 13-10-2009. From the record it is evident that the outstanding amount was recalled and immediate repayment was demanded through legal notice dated March 24, 2010. In reply outstanding amount was not disputed, only time was requested till the end of June 2010 to finalize some commercial transaction, the liability was not settled, and consequently suit was filed on 26-7-2010.
21. From the record it appears that neither any further installment was paid nor any proposal to liquidate the outstanding liability has been made till to date. No defense raising substantial question of fact and or law was raised either before the learned single judge or before us that may warrant any interference in the judgment recorded by the learned single judge in banking jurisdiction.
22. Finances as claimed are summarily reflected in the statement of account appearing at page 125 which is reproduced as follows:- "Maximum Amount of Finance Facility Extended to the DefendantsRs,250,000,000 Amount of Finance availed by the Defendants from time to timeRs,1,746,816,401.93
(b) Amount repaid from time to time: Rs,1.496.949,209.52
(1) Principal out-standing Rs,249,867,192.41
(ii) Mark-up Rs, 27.707,253.62
(c) Total outstanding amount (as of May 31,2010)Rs,277,574,446.03 ' As observed above, appellant was not able to make out any case for interference, no exception to the judgment and decree passed as regard the Principal amount together with other relief claimed and granted and decreed could be taken, to such an extent, the Appeal is dismissed.
23. However, as regards mark-up in the sum of Rs,27,707,253.62, is concerned, as already noted above Mr. Ijaz has already extended offer on behalf of the respondent Bank to make correction, if any miscalculation is pointed out.' In order to be fair to the appellant, we would appoint Mr. Qaiser Mufti, Cost and Management Accountant, 309 Mehboob Chambers, Shahrahe-Iraq, Sadder, Karachi (Office phone number 35215164; email mufti1002001@yahoo.Com) as commissioner for accounts, to calculate the markup on the outstanding principal amount in accordance with Finance Agreement for the subject facility and submit report preferably within 45 days from the date of receipt of this order. The appellant and the respondent Bank are directed to provide the sanction advice, finance agreement, all withdrawal, and payment, deposit advice/slips/vouchers/invoices etc. To the learned Commissioner for Accounts. The Principal borrower/appellant No,1 Company and the respondent Bank are also directed to nominate some qualified Accountant to appear before the learned Commissioner, along with all record noted above and or any other document/record as may be required and demanded by the Commissioner to enable him to complete the exercise expeditiously within the time set above. The cost of learned Commissioner shall be borne by the appellant No,1 and the respondent in equal ratio. The amount of mark-up so calculated by the learned Commissioner for Accounts shall form part of the decree.
' Appeal in terms above stand disposed off.