' UMAR ATA BANDIAL, C.J.---This PLA is filed in a suit for recovery of Rs,81.5062 million filed in respect of finance extended to defendant No,1 company for which the defendants Nos.2, 3 and 4 are mortgagors as well as guarantors. The sanction advice dated 14-1-2000 granted four facilities to the defendant company three of which were fully adjusted but one facility allegedly remains outstanding, namely a Murabaha Facility of Rs,50.0 million. The said facility is reflected in a General Finance Agreement dated 14-1-2000 which was renewed/rolled over from time to time as is evident in the plaintiffs sanction advices dated 25-10-2000, 13-2-2001 and 10-6-2002. Fresh security documents were executed for the first two sanction advices but not in respect of the latest one.
2. The Murabaha Facility is reflected in two heads of account in the books of the plaintiff bank, namely, "Murabaha Finance Facility" and "AMI Pool Murabaha Facility." The statement, of account filed with the suit reflects the entries in the said two' heads of finance availed by the defendant company. The picture about utilization of funds by the defendants is completed by the statement of current account present on record which lists all, transactions made by the defendant company dealing with and utilizing the finance availed.
3. The learned counsel for the defendants has argued the PLA, primarily with reference to the contents of the statements of account that are attached to the plaint. With regard to the statement of Morabaha Finance Account bearing No,452 he submits that the said account was closed on 31-12-2001 whereas the suit was filed on 7-3-2005 beyond the period of three years prescribed in Article 85 of the Limitation Act, 1908. He adds that the last entry in that statement of account made on 7-2-2005, recording a credit of Rs,2.075 million, is described in the said statement as "unauthorized balance" and "un-posted". He submits that on the relevant date, namely, 7-2-2005 there was no amount available in the current account for credit in the aforesaid account No,452. Secondly, he explains that an amount of Rs,2.075 million was withdrawn from the defendants' current account on 13-11-2003 and 14-11-2003 but that amount was not credited to any finance account for the adjustment of the defendants' liability. Accordingly, that amount was put to the bank's own use and has on 7-2-2005 been employed to wrongly overcome the bar of limitation. Thirdly, he -submits that although Morabaha Finance is claimed in the suit yet no Morabaha Agreement has been filed with the plaint. Contends that under section 9(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("F.I.O.") the plaintiff-bank is under an obligation to file all relevant documents with the suit. Without the Morabaha Agreements there is no explanation of the terms of the finance. Further, the learned counsel for the defendants has assailed the maintainability of the suit as no general pmver of attorney of the officer signing the plaint nor resolution of the plaintiff s Board of Directors authorizing the suit is attached with the plaint. He relies on Khan Iftikhar Hussain Khan of Mamdot (represented 191.1 6 heirs) v. Messrs Ghulam Nabi Corporation Ltd., Lahor)e (PLD 1971 SC 550) and Faisal Rauf Malik and - 2 others v.
Messrs Citi Bank N.A. (2005 CLD 1076). Finally adds that neither the plaint nor the statement of account disclose the amount of finance disbursed to the defendant company as required by the terms of section 9(3) of the FIO.
4. The learned counsel for the plaintiff has answered the foregoing objections. On the question whether the suit is filed without proper authorization, the learned counsel for the plaintiff has referred to pages 44 and 48 of the plaint at which two powers of attorney in favour of the officers signing the plaint are attached. These registered powers of attorney are executed by one Mr. Shafqaat Ahmed who is Regional General Manager of the plaintiff-bank and authorized by its Board of Directors empowering him to confer authority on officers of the bank. The powers of attorney of the signatory officers are available on record. Relies on Hail Saqhir Ahmed v. United Bank Ltd. (2004 CLD 1334) which excludes a Court from going behind the registered power of attorney. The explanation is satisfactory. The suit is accordingly competently filed.
5. Addressing the next objection that there is no finance agreement available on record to sustain the claim made in respect of Morabaha Facility, the learned counsel for the plaintiff has submitted that the General Finance Agreement dated 14-1-2000, valid until 30-9-2000, reflects the commencement of the finance relationship between the parties. The facility was renewed from time to time thereafter. The last such renewal was made vide General Finance Agreement dated 13-2-2001 pursuant to sanction advice which is also dated 13-2-2001. According to the said sanction advice dated 13-2-2001 the general finance facility extended to the defendant company in the amount of Rs,200.0 million is differentiated into sub-heads. One of these is the presently relevant Morabaha Finance in the amount of Rs,50.0 million. The different sub-heads of finance granted to the defendant company have identical terms of repayment. It is explained that therefore one General Finance Agreement dated 13-2-2001 deals with all sub-heads of finance cumulatively amounting to total finance of Rs,200.0 million. Except for Morabaha Finance of Rs,50.0 million which forms the subject matter of the instant suit, all other finance facilities availed by defendant company under the General Finance Agreement have been duly repaid. Therefore learned counsel submits that it is incorrect to allege that no finance agreement containing the terms of subject matter Morabaha Finance is available on record.
6. Learned counsel for the plaintiff has thereafter explained that the Morabaha Finance of Rs,50.0 million is depicted on record through two statements of account one carrying the description "Morabaha AMI Pool" and the other titled "Morabaha Finance." He submits that the reflection of the facility in two statements of account does not constitute the creation of two different finances. The descriptive nomenclature is merely for internal purposes of the plaintiff bank. The statement of account of the AMI Pool Morabaha was active on 7-2-2005 when a credit was made in the Morabaha Finance Account No,452. Therefore, objection by the learned counsel for the defendant that the suit filed on 7-3-2005 is time barred, is. Misconceived. The defendants have also by letter dated 29-4-2003 admitted its Morabaha Finance Facility with a total outstanding amount equal to Rs,54.196 million. This is precisely the total of the outstanding amounts in the two statements of account as on that date, 29-4-2003. Submits that the said letter by the defendants constitutes an admission that the two statements of account depict the Morabaha finance facility availed by the defendant company.
7. While dealing with the objection of limitation, learned counsel for the plaintiff has explained that at best the point is based on the entries of statement of account of the subhead Morabaha Finance account No,452, therefore, going by the defendants' own plea time bar is confined to the outstanding amount only in the said account. The defendants have raised no objection on the accrual of outstanding amount in the AMI Pool Morabaha account amounting to Rs,31.93 million.
Accordingly, contends that the said liability is admitted. Reverting to the objection of limitation he submits that in their aforementioned letter dated 29-4-2003 the defendants have admitted the outstanding amount and desired the sale of the defendants' mortgaged property mentioned at Sr.No,1 of that letter. By another letter the defendants have directed settlement of the principal amount of their liabilities by the sale proceeds of the mortgaged property. By making the said admission the defendants have opened a fresh period of limitation under section 19 of the Limitation Act, 1908 for recovery of admitted amount of their liability.
8. Learned counsel for the plaintiff further submits that the defendants in their P.L.A. No,18-B-05 have acknowledged the fact and validity of the sale of the mortgaged properties, the sale proceeds of which were deposited in the current account of the defendants on 13-11-2003 and 14- 11-2003. Under section 20 of the Limitation Act 1908 such admitted adjustments of liability give rise to a fresh period of limitation.
9. That the defendants' letter dated 29-4-2003 makes an acknowledgment in writing within the limitation period from the date of the last finance agreement dated 13-2-2001 executed by the defendants. Under the principle of section 19 of the Limitation Act 1908, a fresh limitation period of 3 years is thereby given to the plaintiff bank for filing itsiB claim. Reference is made to Harchandrai v.
The Popular Metal' Works, Gujranwala and 2 others (PLD 1971 Karachi 925) and Allied Bank of Pakistan v. Safdar All Khan (PLD 1988 SC(AJ&K) 199). Furthermore, the same letter gives authorization to the plaintiff bank to sell mortgaged properties; this was done. It is clear from the statement of current account that the sale proceeds of the said properties were deposited in the said account of the defendant on 13-11-2003 and 14-11-2003. These deposits in the current C account corroborate the acknowledgment of liability made in the defendant's letter dated 29-4- 2003 and therefore, being a payment in term of section 20 of the Limitation Act, 1908 the said acknowledgement of liability starts a fresh period of limitation commencing from the date of said letter.
10. Consequently, it is argued, the objection that the suit is time barred is without weight. Finally, with reference to the alleged disappearance of Rs,2.075 million from Morabaha Finance No,452 on 13-11-2003 and 14-11-2003 is concerned, the said funds were moved on the defendants instructions.
Also such movement does not at all improve the defendants' objection of limitation.
11. In so far as defendant's allegation of forgery in two letters dated 29-4-2003 and 25-8-2003 executed in one case by a detained director and in the other case by two directors of the defendants company is concerned, it is noted that the acknowledgment and approval of the sale of the mortgaged properties is consistent with the contents of the said two letters. Secondly, a letter that is signed by both directors cannot be subject to objection of a detained director signing it under duress. To the mind of this Court the plea that the acknowledgement of liability and approval of the sale of the mortgaged properties is a forged addition made by the plaintiff is not credible. It is disproved by the fact that the sale of the mortgaged properties is accepted by the defendants and relied upon by them for adjustment of their dues. Learned counsel for the defendants has informed that the plea regarding validity of the two letters is also sub judice in defendant's suit bearing COS No, 29 of 2004. The present view with respect to the foregoing two letters is subject to correction if at the trial the defendants bring any credible evidence on the point.
However, in so far as the present proceedings are concerned this Court is not inclined to believe the plea of forgery of the said two letters by the plaintiff bank.
12. Learned counsel for the defendants has also taken objection to the contents of the sanction, advice dated 13-2-2001 in terms of which general finance and collateral agreement dated 13-2- 2001 has been framed. Paragraph No,2 of the sanction advice states that Murabaha Finance shall bear profit as follows:-- "priced to yield a profit calculated as a function of 1.0425 time the Purchase price on a quarterly basis."
' He has also pointed out that the facility in question is available upto December 30, 2001 as stated in the end of para 1 of the sanction, advice. He has then referred page 297 of the suit file containing the markup account statements in respect of AMI Pool Murabaha component and Murabaha Finance component of the Murabaha Finance extended by the plaintiff to the defendant company.
It is clear from the contents of the said statement of account that profit is calculated and charged at the rate of 17% per annum. Learned counsel for the plaintiff bank has rebutted the objection by reference to thirteen finance agreements mentioned in the statement of account. These finance agreements refer to the buyback price, the total of which amounts to Rs,55.199 million. Accordingly, he has explained that calculations of markup that are given in the statement of account are for a fixed period representing the cutoff date of each agreement. The accretion of markup is not repeated for any period of time beyond contractual period. Hence, he has submitted that accretion of markup is limited to the period of the finance agreement. Such action is within the terms of SBP circulars and is therefore valid.
13. In addition to the aforesaid total amount of buyback price, namely, Rs,55.199 million the learned counsel for the plaintiff claims further markup until 31-12-2002 which is the expiry date of the general finance agreement. It is noted, however, that the said plea goes beyond the terms of Murabaha Agreement entered by the parties and incorporates therein the terms of sanction advice which is the General Finance Agreement. To the mind of the Court additional markup outside the validity of the Murabaha agreements D cannot be incorporated to impose liability on the defendants. Accordingly', in so far as the objection of interest being charged is concerned, it is allowed to the extent that the claim by the plaintiff bank is sustained on the basis of buyback 'price of Rs,55.199 million settled in the thirteen Murabaha Agreements signed by the defendants. For the period thereafter the plaintiff bank is entitled to cost of funds in accordance with section 3 of F.I.O., 2001 commencing from the date of default under the thirteen Murabaha Agreements till realization of the amount due.
14. Learned counsel for the defendants has raised the objection that photocopies of only eight out of thirteen Murabaha Agreements signed by the defendants are available on record. Accordingly, Murabaha Finance under the five absent agreements cannot be included for the purposes of liability. The objection taken is inconsistent with the stand of the defendants that no financing has been availed by them from the plaintiff bank. Moreover, the PLA does not contain any objection on the foregoing lines simply for the reason that the plea of denial has been adopted whereas the present stand being taken admits the execution of eight Murabaha Agreements.
15. The fact of the matter is that Murabaha Finance has been extended from time to time by the plaintiff to the defendant company under the General Finance Agreement dated 13-2-2001. Each of the Murabaha Finance Agreements pertains to a portion of sanctioned Murabaha Finance under the General Finance Agreement. These Murabaha Finance Agreements are made on the defendants' requests for disbursement of the sanctioned finance. The eight agreements available on record are indicative of an arrangement between the parties. In the absence of denial of any specific Murabaha Agreement and in view of a bald and clearly false denial of all sanctioned finances generally, there is no need in this case for the remaining agreements to be placed on record. Consequently this objection is rejected. Reference may be made to Zeeshan Enema' Ltd.
And 2 others v. Faisal Bank Ltd. (2004 CLD (Lahore) 1741) wherein the Murabaha Finance was affirmed by the Court when its existence was evident from the General Finance Agreement and not under any specific Murabaha Agreement. The present case has better facts because eight out of thirteen agreements are available on record and the remaining five are statedly attached to the replication which the Court has not read in deference to the objection by the learned counsel for the defendants that their admissibility must be subject to opportunity to rebut the said documents.
16. Learned counsel for the defendants has next raised the objection that General Finance Agreements dated 14-1-2000, 25-10-2000 and 13-2-2001 are not witnessed in accordance with the provisions of Article 17 of Qanun-eShahadat Order, 1984 ("QSO"). Accordingly, submits that the said documents cannot be relied by the plaintiff bank for sustaining its claim made in the suit. Reliance has been placed on section 18 of the FIO, 2001 which provides as follows:-- "(1) No financial institution shall obtain the signature of a customer on banking document which contains blanks in respect of important particulars including the date, the amount, the property or the period of time in question.
(2) Finance agreements executed by or on behalf of a financial institution and a customer shall be duly attested in the manner laid down in Article 17 of the Qanun-e-Shahadat Order, 1984 (P.0.10 of 1984).
(3) Nothing contained in subsections (1) and (2) shall affect the validity of any document executed prior to the date of enforcement of this Ordinance.
(4) Notwithstanding anything contained in this section or any other law, the Banking Court shall not refuse to accept in evidence any document, creating or purporting to create or indicating the creation of a mortgage, charge, pledge or hypothecation in relation to any property or assumption of any obligation by a customer, guarantor, mortgagor or otherwise merely because it is not duly stamped or is not registered as required by any law or is not attested or witnessed as required by Article 17 of the Qanun-e-Shahadat Order, 1984 (P.0.10 of 1984) and no such documents shall be impoundable by the Banking Court or any other Court or authority: ' Provided that nothing contained in this subsection shall operate to defeat the legal rights of a bona fide purchaser for value without notice of a document which ought to have been ccistered."
17. It is clear from the reading of section 18(3) ibid that Article 17 of the QSO does not affect validity of the documents executed prior to the date of enforcement of FIO. Each of the documents questioned by the learned counsel for the defendants is executed prior to the FIO. On the foregoing exemption learned counsel for the defendant maintains that the Banking Companies (Recoveries of Loan, Advances, Credits and Finances) Act, 1997 ("Act") also contains the same provision in section 17(2) thereof. Consequently, it is urged that the aforenoted agreements violate the rule laid down in the said Act.
18. Section 18(4) of the FIO answers the said objection wherein a document that fails to comply the requirements of Article 17 of QSO or any other law may, nevertheless, be received in evidence by a Banking Court. The provisions of section 18(4) dilute the effect of section 18(2) of the Act by excluding consequences of inadmissibility in evidence in a case where Article 17 of QSO is not satisfied. In a case where Article 17 ibid is applied strictly, an unattested document pertaining to a financial or future obligation cannot be exhibited in evidence. However, Article 17(2) of QSO expressly declares that a special law may otherwise provide for the consequence of non- attestation. The terms of Article 17 of QSO are therefore subject to the provisions made in other laws regarding the consequence of nonobservance of the condition of attestation by two witnesses of documents involving financial or future obligation. Section 18(4) of the FIO deals precisely with the aspect of consequence of non-attestation of a document in a banking matter. It is expressly provided that notwithstanding such non-attestation of a charge document indicating mortgage, charge, pledge or hypothecation or assumption of any obligation by a customer such document shall nevertheless be admissible in evidence.
19. In addition to the foregoing legal view, it is also established on record that the aforenoted general finance agreements are corroborated by supplementary documentation admittedly executed by the defendants. These documents include promissory notes dated 25-4-2000, 13-2- 2001, 25-10-2000, letters of guarantee executed by the defendants dated 13-2-2001, mortgage deeds including MODTD dated 1-8-1998, 24-3-2000, 14-10-2000 and general power of attorney dated 3-8-1998 in exercise of which admitted sale of Karachi property was effected. It may also be observed that the defendants admit the signing of general finance agreement but allege that the same were signed in blank. In view of the foregoing factual and legal observations there is no substance in the objection raised by the statements of account that are attached to the plaint.
With regard to the statement of Morabaha Finance Account bearing No,452 he submits that the said account was closed on 31-12-2001 whereas the suit was filed on 7-3-2005 beyond the period of three years prescribed in Article 85 of the Limitation Act, 1908. He adds that the last entry in that statement of account made on 7-2-2005, recording a credit of Rs,2.075 million, is described in the said statement as "unauthorized balance" and "un-posted". He submits that on the relevant date, namely, 7-2-2005 there was no amount available in the current account for credit in the aforesaid account No,452. Secondly, he explains that an amount of Rs,2.075 million was withdrawn from the defendants' current account on 13-11-2003 and 14-11-2003 but that amount was not credited to any finance account for the adjustment of the defendants' liability. Accordingly, that amount was put to the bank's own use and has on 7-2-2005 been employed to wrongly overcome the bar of limitation. Thirdly, he submits that although Morabaha Finance is claimed in the suit yet no Morabaha Agreement has been filed with the plaint. Contends that under section 9(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("F.I.O.") the plaintiff-bank is under an obligation to file all relevant documents with the suit. Without the Morabaha Agreements there is no explanation of the terms of the finance. Further, the learned counsel for the defendants has assailed the maintainability of the suit as no general rower of attorney of the officer signing the plaint nor resolution of the plaintiff s Board of Directors authorizing the suit is attached with the plaint. He relies on Khan Iftikhar Hussain Khan of Mamdot (represented bu 6 heirs) v. Messrs Ghulam Nabi Corporation Ltd., Lahore (PLD 1971 SC 550) and Faisal Rauf Malik and - 2 others v.
Messrs Citi Bank N.A. (2005 CLD 1076). Finally adds that neither the plaint nor the statement of account disclose the amount of finance disbursed to the defendant company as required by the terms of section 9(3) of the FIO.
4. The learned counsel for the plaintiff has answered the foregoing objections. On the question whether the suit is filed without proper authorization, the learned counsel for the plaintiff has referred to pages 44 and 48 of the plaint at which two powers of attorney in favour of the officers signing the plaint are attached. These registered powers of attorney are executed by one Mr. Shafqaat Ahmed who is Regional General Manager of the plaintiff-bank and authorized by its Board of Directors empowering him to confer authority on officers of the bank. The powers of attorney of the signatory officers are available on record. Relies on Hall Saahir Ahmed v. United Bank Ltd. (2004 CLD 1334) which excludes a Court from going behind the registered power of attorney. The explanation is satisfactory. The suit is accordingly competently filed.
5. Addressing the next objection that there is no finance agreement available on record to sustain the claim made in respect of Morabaha Facility, the learned counsel for the plaintiff has submitted that the General Finance Agreement dated 14-1-2000, valid until 30-9-2000, reflects the commencement of the finance relationship between the parties. The facility was renewed from time to time thereafter. The last such renewal was made vide General Finance Agreement dated 13-2-2001 pursuant to sanction advice which is also dated 13-2-2001. According to the said sanction advice dated 13-2-2001 the general finance facility extended to the defendant company in the amount of Rs,200.0 million is differentiated into sub-heads. One of these is the presently relevant Morabaha Finance in the amount of Rs,50.0 million. The different sub-heads of finance granted to the defendant company have identical terms of repayment. It is explained that therefore one General Finance Agreement dated 13-2-2001 deals with all sub-heads of finance cumulatively amounting to total finance of Rs,200.0 million. Except for Morabaha Finance of Rs,50.0 million which forms the subject matter of the instant suit, all other finance facilities availed by defendant company under the General Finance Agreement have been duly repaid. Therefore learned counsel submits that it is incorrect to allege that no finance agreement containing the terms of subject matter Morabaha Finance is available on record.
6. Learned counsel for the plaintiff has thereafter explained that the Morabaha Finance of Rs,50.0 million is depicted on record through two statements of account one carrying the description "Morabaha AMI Pool" and the other titled "Morabaha Finance." He submits that the reflection of the facility in two statements of account does not constitute the creation of two different finances. The descriptive nomenclature is merely for internal purposes of the plaintiff bank. The statement of account of the AMI Pool Morabaha was active on 7-2-2005 when a credit was made in the Morabaha Finance Account No,452. Therefore, objection by the learned counsel for the defendant that the suit filed on 7-3-2005 is time barred, is misconceived. The defendants have also by letter dated 29-4-2003 admitted its Morabaha Finance Facility with a total outstanding amount equal to Rs,54.196 million. This is precisely the total of the outstanding amounts in the two statements of account as on that date, 29-4-2003. Submits that the said letter by the defendants constitutes an admission that the two statements of account depict the Morabaha finance facility availed by the defendant company.
7. While dealing with the objection of limitation, learned counsel for the plaintiff has explained that at best the point is based on the entries of statement of account of the subhead Morabaha Finance account No,452, therefore, going by the defendants' own plea time bar is confined to the outstanding amount only in the said account. The defendants have raised no objection on the accrual of outstanding amount in the AMI Pool Morabaha account amounting to Rs,31.93 million.
Accordingly, contends that the said liability is admitted. Reverting to the objection of limitation he submits that in their aforementioned letter dated 29-4-2003 the defendants have admitted the outstanding amount and desired the sale of the defendants' mortgaged property mentioned at Sr.No,1 of that letter. By another letter the defendants have directed settlement of the principal amount of their liabilities by the sale proceeds of the mortgaged property. By making the said admission the defendants have opened a fresh period of limitation under section 19 of the Limitation Act, 1908 for recovery of admitted amount of their liability.
8. Learned counsel for the plaintiff further submits that the defendants in their P.L.A. No,18-B-05 have acknowledged the fact and validity of the sale of the mortgaged properties, the sale proceeds of which were deposited in the current account of the defendants on 13-11-2003 and 14- 11-2003. Under section 20 of the Limitation Act 1908 such admitted adjustments of liability give rise to a fresh period of limitation.
9. That the defendants' letter dated 29-4-2003 makes an acknowledgment in writing within the limitation period from the date of the last finance agreement dated 13-2-2001 executed by the defendants. Under the principle of section 19 of the Limitation Act 1908, a fresh limitation period of 3 years is thereby given to the plaintiff bank for filing its (B claim. Reference is made to Harchandrai v. The Popular Metal Works, Gujranwala and 2 others (PLD 1971 Karachi 925) and Allied Bank of Pakistan v. Safdar Ali Khan (PLD 1988 SC(AJ&K) 199). Furthermore, the same letter gives authorization to the plaintiff bank to sell mortgaged properties; this was done. It is clear from the statement of current account that the sale proceeds of the said properties were deposited in the said account of the defendant on 13-11-2003 and 14-11-2003. These deposits in the current C account corroborate the acknowledgment of liability made in the defendant's letter dated 29-4- 2003 and therefore, being a payment in term of section 20 of the Limitation Act, 1908 the said acknowledgement of liability starts a fresh period of limitation commencing from the date of said letter.
10. Consequently, it is argued, the objection that the suit is time barred is without weight. Finally, with reference to the alleged disappearance of Rs,2.075 million from Morabaha Finance No,452 on 13-11-2003 and 14-11-2003 is concerned, the said funds were moved on the defendants instructions.
Also such movement does not at all improve the defendants' objection of limitation.
11. In so far as defendant's allegation of forgery in two letters dated 29-4-2003 and 25-8-2003 executed in one case by a detained director and in the other case by two directors of the defendants company is concerned, it is noted that the acknowledgment and approval of the sale of the mortgaged properties is consistent with the contents of the said two letters. Secondly, a letter that is signed by both directors cannot be subject to objection of a detained director signing it under duress. To the mind of that 'Court the plea that the acknowledgement of liability and approval of the sale of the mortgaged properties is a forged addition made by the plaintiff is not credible. It is disproved by the fact that the sale of the mortgaged properties is accepted by the defendants and relied upon by them for adjustment of their dues. Learned counsel for the defendants has informed that the plea regarding validity of the two letters is also sub judice in defendant's suit bearing COS No, 29 of 2004. The present view with respect to the foregoing two letters is subject to correction if at the trial the defendants bring any credible evidence on the point.
However, in so far as the present proceedings are concerned this Court is not inclined to believe the plea of forgery of the said two letters by the plaintiff bank.
12. Learned counsel for the defendants has also taken objection to the contents of the sanction advice dated 13-2-2001 in terms of which general finance and collateral agreement dated 13-2- 2001 has been framed. Paragraph No,2 of the sanction advice states that Murabaha Finance shall bear profit as follows:- "priced to yield a profit calculated as a function of 1.0425 time the Purchase price on a quarterly basis."
' He has also pointed out that the facility in question is available upto December 30, 2001 as stated in the end of para 1 of the sanction advice. He has then referred page 297 of the suit file containing the markup account statements in respect of AMI Pool Murabaha component and Murabaha Finance component of the Murabaha Finance extended by the plaintiff to the defendant company.
It is clear from the contents of the said statement of account that profit is calculated and charged at the rate of 17% per annum. Learned counsel for the plaintiff bank has rebutted the objection by reference to thirteen finance agreements mentioned in the statement of account. These finance agreements refer to the buyback price, the total of which amounts to Rs,55.199 million. Accordingly, he has explained that calculations of markup that are given in the statement of account are for a fixed period representing the cutoff date of each agreement. The accretion of markup is not repeated for any period of time beyond contractual period. Hence, he has submitted that accretion of markup is limited to the period of the finance agreement. Such action is within the terms of SBP circulars and is therefore valid.
13. In addition to the aforesaid total amount of buyback price, namely, Rs,55.199 million the learned counsel for the plaintiff claims further markup until 31-12-2002 which is the expiry date of the general finance agreement. It is noted, however, that the said plea goes beyond the terms of Murabaha Agreement entered by the parties and incorporates therein the terms of sanction advice which is the General Finance Agreement. To the mind of the Court additional markup outside the validity of the Murabaha agreements cannot be incorporated to impose liability on the defendants. Accordingly, in so far as the objection of interest being charged is concerned, it is allowed to the extent that the claim by the plaintiff bank is sustained on the basis of buyback price of Rs,55.199 million settled in the thirteen Murabaha Agreements signed by the defendants. For the period thereafter the plaintiff bank is entitled to cost of funds in accordance with section 3 of F.I.O., 2001 commencing from the date of default under the thirteen Murabaha Agreements till realization of the amount due.
14. Learned counsel for the defendants has raised the objection that photocopies of only eight out of thirteen Murabaha Agreements signed by the defendants are available on record. Accordingly, Murabaha Finance under the five absent agreements cannot be included for the purposes of liability. The objection taken is inconsistent with the stand of the defendants that no financing has been availed by them from the plaintiff bank. Moreover, the PLA does not contain any objection on the foregoing lines simply for the reason that the plea of denial has been adopted whereas the present stand being taken admits the execution of eight Murabaha Agreements.
15. The fact of the matter is that Murabaha Finance has been extended from time to time by the plaintiff to the defendant company under the General Finance Agreement dated 13-2-2001. Each of the Murabaha Finance Agreements pertains to a portion of sanctioned Murabaha Finance under the General Finance Agreement. These Murabaha Finance Agreements are made on the defendants' requests for disbursement of the sanctioned finance. The eight agreements available on record are indicative of an arrangement between the parties. In the absence of denial of any specific Murabaha Agreement and in view of a bald and clearly false denial of all sanctioned finances generally, there is no need in this case for the remaining agreements to be placed on record. Consequently this objection is rejected. Reference may be made to Zeeshan Enerau Ltd.
And 2 others v. Faisal Bank Ltd. (2004 CLD (Lahore) 1741) wherein the Murabaha Finance was affirmed by the Court when its existence was evident from the General Finance Agreement and not under any specific Murabaha Agreement. The present case has better facts because eight out of thirteen agreements are available on record and the remaining five are statedly attached to the replication which the Court has not read in deference to the objection by the learned counsel for the defendants that their admissibility must be subject to opportunity to rebut the said documents.
16. Learned counsel for the defendants has next raised the objection that General Finance Agreements dated 14-1-2000, 25-10-2000 and 13-2-2001 .Axe not witnessed in accordance with the provisions of Article 17 of Qanun-eShahadat Order, 1984 ("QSO"). Accordingly, submits that the said documents cannot be relied by the plaintiff bank for sustaining its claim made in the suit. Reliance has been placed on section 18 of the FIO, 2001 which provides as follows:- "(1) No financial institution shall obtain the, signature of a customer on banking document which contains blanks in respect of important particulars including the date, the amount, the property or the period of time in question.
(2) Finance agreements executed by or on behalf of a financial institution and a customer shall be duly attested in the manner laid down in Article 17 of the Qanun-e-Shahadat Order, 1984 (P.0.10 of 1984).
(3) Nothing contained in subsections (1) and (2) shall affect the validity of any document executed prior to the date of enforcement of this Ordinance.
(4) Notwithstanding anything contained in this section or any other law, the Banking Court shall not refuse to accept in evidence any document, creating or purporting to create or indicating the creation of a mortgage, charge, pledge or hypothecation in relation to any property or assumption of any obligation by a customer, guarantor, mortgagor or otherwise merely because it is not duly stamped or is not registered as required by any law or is not attested or witnessed as required by Article 17 of the Qanun-e-Shahadat Order, 1984 (P.0.10 of 1984) and no such documents shall be impoundable by the Banking Court or any other Court or authority: ' Provided that nothing contained in this subsection shall operate to defeat the legal rights of a bona fide purchaser for value without notice of a document which ought to have been cristered."
17. It is clear from the reading of section 18(3) ibid that Article 17 of the QSO does not affect validity of the documents executed prior to the date of enforcement of FIO. Each of the documents questioned by the learned counsel for the defendants is executed prior to the FIO. On the foregoing exemption learned counsel for the defendant maintains that the Banking Companies (Recoveries of Loan, Advances, Credits and Finances) Act, 1997 ("Act") also contains the same provision in section 17(2) thereof. Consequently, it is urged that the aforenoted agreements violate the rule laid down in the said Act.
18. Section 18(4) of the FIO answers the said objection wherein a document that fails to comply the requirements of Article 17 of QSO or any other law may, nevertheless, be received in evidence by a Banking Court. The provisions of F section 18(4) dilute the effect of section 18(2) of the Act by excluding consequences of inadmissibility in evidence in a case where Article 17 of QSO is not satisfied. In a case where Article 17 ibid is applied strictly, an unattested document pertaining to a financial or future obligation cannot be exhibited .In evidence. However, Article 17(2) of QSO expressly declares that a special law may otherwise provide for the consequence of non- attestation. The terms of Article 17 of QSO are therefore subject to the provisions made in other laws regarding the consequence of nonobservance of the condition of attestation by two witnesses of documents involving financial or future obligation. Section 18(4) of the FIO deals precisely with the aspect of consequence of non-attestation of a document in a banking matter. It is expressly provided that notwithstanding such non-attestation of a charge document indicating mortgage, charge, pledge or hypothecation or G assumption of any obligation by a customer such document shall nevertheless be admissible in evidence.
19. In addition to the foregoing legal view, it is also established on record that the aforenoted general finance agreements are corroborated by supplementary documentation admittedly executed by the defendants. These documents include promissory notes dated 25-4-2000, 13-2- 2001, 25-10-2000, letters of guarantee executed by the defendants dated 13-2-2001, mortgage deeds including MODTD dated 1-8-1998, 24-3-2000, 14-10-2000 and general power of attorney dated 3-8-1998 in exercise of which admitted sale of Karachi property was effected. It may also be observed that the defendants admit the signing of general finance agreement but allege that the same were signed in blank. In view of the foregoing factual and legal observations there is no substance in the objection raised by the learned counsel for the defendants with reference Article 17 of the QSO.
20. Finally, an objection is raised that summary of outstanding liability of the defendants which contains table of outstanding amounts allegedly due against different Murabaha Agreements is an unsigned document. Learned counsel for the plaintiff bank has answered the objection to the effect that the said summary actually draws its contents from 13 statements of account of murabaha finance that are filed on record and are duly attested in accordance with law.
21. The learned counsel has shown,from a chart of all the 13 murabahas (summarized on page 297 of the file), both the creation and where applicable the partial adjustment, of such Murabaha that are reflected on different pages in the statement of account. He has explained that the duration of Murabahas is specified in respective Murabaha Agreements and the maturity amount has been calculated for the said period. In addition he explains that profit upto 31-12-2002 and thereafter for the period upto the date of filing of the suit has been charged in the said summary.
22. On Court's query, learned counsel for the plaintiff is not in a position to explain two separate and additional claims of profit firstly upto 31-12-2002 and then upto the date of filing of the instant suit because both dates are extraneous to the duration of the respective Murabaha Agreements. Profit beyond the contractual period of finance cannot be charged under law. Reference may be made to 1 Muhammad Tarig v. Bank of Punjab and another (2004 CLD (Lahore) 162), Messrs United Bank Ltd through Authorized Attorneys v. M. Mubeen Khan (2012 CLD (Sindh) 1995) and Bank of Punjab through Authorized Officer v. Messrs KNK Infrastructure (Pvt.) Ltd. Through Chief Executive Officer and 2 others (2012 CLD (Lahore) 961).
23. The said statements of account have been perused and it is correct that the disbursement made under 13 claimed murabaha agreements are evident as credit entries in these statements on the pages highlighted by the learned counsel for the plaintiff. The principal amount disbursed tallies with the principal amount shown in the aforementioned table at page 297 of the suit file.
However, the said table also includes profit for duration of each Murabaha agreement in respect of which such disbursements were made. Eight of the corresponding Murabaha agreements have been filed with the suit and remaining with the replication. Learned counsel for the defendants objects that such documents should not be considered as part of the record unless the defendants are given an opportunity to rebut the same. In the circumstances, learned counsel for the plaintiff withdrew reliance on the said documents for purposes of present PLA.
24. The profit element is reflected in the buyback price contained in each of the Murabaha Agreements. This amount can easily be verified by applying the agreed markup to the disbursed principal amounts under the said murabahas and the duration of the murabahas. However, the amount of markup accrued beyond the contracted murabaha period cannot be assessed or determined merely by reference to the statement of account. Therefore, the buyback amount of Rs,55.199 million reflected in the statement of account is duly established. However, the claimed overdue profit of Rs,5.981 million due until expiry of facility on 31-12-2002 and profit for subsequent period in the amount of Rs,19.868 million cannot be granted because these are beyond the contract terms of the murabahas.
25. Learned counsel for the defendants has pointed out that disbursement of the principal amounts are also not proven on record because these amounts are given in Murabaha agreements. All the said agreements were not filed with the suit but with the replication and learned counsel for the plaintiff has not been allowed to read the same in support of his case.
Stand taken by the learned counsel for the defendant is without force. Eight out of thirteen Murabaha agreements are on record. Disbursement to defendants is evidenced first of all in the statement of account. Secondly, the two sanction advices dated 13-2-2001 and 10-6-2002 mention the further finances that are extended to the defendants. The charge documents and defendants' correspondence support the plaintiffs claim. The defendants' plea of denial of facilities is totally disproved. Be that as it may, the replication filed by the plaintiff attaches the corresponding murabaha agreement which are not denied but disputed on the technical ground of belated production on record. The replication is also a pleading filed in the proceedings by a party. These answer the defences taken in the PLA. Documents attached thereto merit judicial consideration so long as these are genuine and relevant. No objection on the said score has been taken by the defendants. Therefore the present plea of unvouched disbursement of finance does not lie in the mouth of the defendants unless proof of fraud or forgery by the plaintiff is brought forth. Finally, the learned counsel for the defendants argues that under Article 17 of QSO the charged documents relied by the plaintiff are inadmissible for lacking two witnesses. That plea has already been dealt with. Nevertheless, on merit the plea is worthless, because the defendants have not denied the execution of any one of the documents attached to the suit.
26. Learned counsel for the plaintiff has again sought to justify the additional claim of markup on the basis of terms of general finance agreement dated 13-2-2001 read with sanction advice dated 10-6-2002 which extends Murabaha finance until 13-2-2002. The contention raised by the learned counsel for the plaintiff has already been considered. The charging of markup is a contractual matter based upon transaction in goods. Markup is not interest that can be charged by a bank solely with reference to the passage of .1 time. In the present case, the general finance agreement dated 13-2-2001 does not contain any provision relating to markup. Markup amount is contained in the respective Murabaha agreements through the buyback price settled therein. Consequently neither the general finance agreement dated 13-2-2001 nor sanction advice dated 10-6-2002 can lawfully authorize charging of markup or nominate the amount thereof without reference to a Murabaha agreement. Consequently, accretion of markup for extended periodIK beyond the life of a Murabaha agreement is not justified. The I Murabaha agreements filed by the plaintiff bank along with replication to the PLA have for reasons given not been read presently by the Court. However, with respect to the plaintiff bank's claim of markup accruing for the period following the expiry of the said murabaha agreements, unconditional leave to defend is granted to the defendants for determination of the claim on evidence led by the parties.
27. Accordingly, the PLA filed by the defendants is allowed to the foregoing extent but dismissed on the remaining defences. The suit is decreed for Rs,55.199 million along with cost of funds till realization.