SHAMS MEHMOOD MIRZA, J.---The plaintiff filed a suit against the defendant bank under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) for the recovery of Rs.1,062,646,731 as damages on account of non-redemption of mortgaged property, loss of business due to breach of contract by the defendant, penalties paid by the plaintiff, illegal mark up charged by defendant, devaluation of property, loss of expected profits and opportunity costs.
2. Briefly stated the plaintiff's case is that it was lured into doing banking business with the defendant bank when it managed to obtain the signatures of the plaintiff's directors on blank documents in regard to financial facilities allowed to the plaintiff. In 2006 the defendant illegally stopped the limits allowed to the plaintiff and in 2007 started adjusting the funds received from plaintiff's exports against the drawn limits. As a result, the plaintiffs operations came to a halt in September 2007 and the plaintiff suffered huge losses amounting to Rs.1,062,646,731. The prayers made in the plaint included the redemption of mortgaged properties, cancellation of documents, declaration that the plaintiff owes nothing to the defendant, rendition of accounts, recovery of losses amounting to Rs.1,062,646,731 with profit and permanent injunction for restraining defendant bank from claiming any amount against the plaintiff.
3. The defendant bank filed its written statement denying all the allegations in the plaint. It was stated that the plaintiff applied for finance facilities that were allowed and enhanced on various dates in the years 2003, 2004, 2005, 2006 and 2007 when the plaintiff duly executed finance agreements, demand promissory notes, mortgage creating documents including deposit of title deeds, letters of hypothecation, letters of continuity and other charge documents which were filed/registered with the Securities and Exchange Commission of Pakistan. The finance facilities were acknowledged and accepted by the plaintiff through facility acceptance letters that were duly signed by the plaintiff in acceptance of the terms and conditions contained therein. The directors of the plaintiff furnished their personal guarantees to secure repayment of the facilities allowed to the plaintiff. No document was obtained in blank from the plaintiff and its directors. The plaintiff failed to abide by the terms on which the various finance facilities were allowed. The State Bank of Pakistan imposed penalties on plaintiff for non-shipment and other violations of the export finance facility being availed by the plaintiff. The defendant bank was obliged to make payment to Sui Northern Gas Pipelines Limited and to Director Excise and Taxation on basis of guarantees furnished to them on behalf of the plaintiff in regard to gas supplies and tax as the plaintiff defaulted on both these counts. Plaintiff also defaulted to honour the terms of the letters of credit opened on its behalf. In 2010, one of the plaintiff's directors entered into an agreement with the defendant for settlement of plaintiffs dues but he also defaulted. As a result of all these defaults the defendant bank was constrained to file suit bearing C.O.S. 170 of 2011 for the recovery of Rs.243,442,686.16 plus US $ 7,543,611.10 from the plaintiff and its directors which is pending adjudication before this Court. The plaintiff's suit is mala fide, baseless and is a counterblast to the suit filed by the defendant bank. The defendant bank has charged mark-up as per the finance agreements. The plaintiff has not suffered any alleged losses on account of any act or default of the defendant bank.
4. Leave to defend was granted on 7-5-2014 and based on the pleadings of the parties, the following issues were framed by this Court on 14-7-2014.
(1) Whether the titled suit is a counter-blast to avoid recovery of amounts payable by the plaintiff to the defendant in terms of defendant's suit No.170 of 2011 titled "UBL v. Ejaz Dyeing and Finishing Mills Limited and others"? OPD
(2) Whether the titled suit is maintainable under the law? OPP
(3) Whether the plaintiff has no cause of action against the defendant? OPD
(4) Whether the plaintiff has suffered any losses on account of any wrongful act of the defendant as mentioned in the plaint? OPP
(5) Whether the defendant did not comply with the terms and conditions .Of the finance facilities?
If so its effect. OPP
(6) Whether the plaintiff is defaulter of Rs.243,442,268 and U.S $ 7,543,611 and the statement of account is in accordance with law? OPD
(7) Whether the suit of the plaintiff is time barred? OPD
(8) Whether the plaintiff is entitled to the relief prayed for? OPP
(9) Relief.
5. The plaintiff examined two witnesses namely Wasim Ahmed, Company Secretary, as. P.W.1 and Faisal Ejaz, Director of the plaintiff as P.W.2 in support of its claims. P.W.1 produced his affidavit as Exh.P-1 in evidence. Similarly, P.W.2 also produced his affidavit (Exh.P-2) and the board resolution (Exh.P-3) and some other documents in evidence which were marked as Mark-A to Mark-L being photocopies and were brought on the record under objection by the learned counsel for the defendant bank. The defendant bank examined two witnesses i.e. Naveed Sharif, Regional Chief as D.W.1 and Haider Zulfiqar, Manager as D.W.2. These witnesses produced documents Exhibits D. W.1 to D.W.123 and Mark-A to Mark-D. The defendant bank's exhibited documents included the term finance agreements, demand promissory notes, facilities acceptance letters, letters of continuity, letters of hypothecation, agreement for discount/purchase of bills, mortgage deeds, sale deeds, various documents evidencing deposit of title deeds, acknowledgments of filing with the Securities and Exchange Commission and personal guarantees of the plaintiff's directors apart from other documents executed by the plaintiff in favour of the defendant bank.
6. The issue wise findings are as under: ISSUE NOS.4 AND 5:
7. These are the most important issues and being inter-connected are decided together. Onus to prove these issues was on the plaintiff. The witnesses of the plaintiff did not produce any documentary evidence to substantiate the claim that the plaintiff suffered losses on account of the actions of the defendant bank. The detailed of the losses suffered by the plaintiff were mentioned in paragraph 24 of the plaint. The major heads under which losses were claimed were mentioned as follows Non-redeeming of mortgaged properties Rs. 270.600(M)
Breach of contract Rs. 145.760(M)
Penalties paid by the defendants(sic.) Rs. 5,801,941 Property devaluation Rs. 400.000(M)
Loss of expected profit Rs. 60.000(M)
Opportunity cost Rs. 60.000(M)
8. P.W.1 frankly conceded in his cross-examination that he did not have in his possession any proof of the losses incurred by the plaintiff as mentioned in the plaint. A specific question was put to him regarding the basis on which the losses were claimed to which he answered "On the basis of the financial reports and other documents." Later in the cross-examination, he was again asked a similar question. The answer given by P.W.1 is reproduced hereunder: The basis for the business loss from non-redemption of the mortgaged property, the loss of business due to breach of contract, loss due to penalties and fines, excessive amounts and illegal mark-up, properties devaluation, loss of expected profit and opportunity costs were worked out on the basis of the plaintiff Company's financial reports and ()the; documents.
In short, he failed to prove any heads of losses as detailed above by producing the documents on the basis of which alleged those losses were determined. P.W.1, however, admitted that a settlement agreement dated 3-5-2010 was executed between the defendant bank and Gohar Ejaz whereafter Gohar Ejaz made a payment of Rs.135 Million to the defendant bank but defaulted on subsequent installments.
9. P.W.2, who is the chief executive of the plaintiff, also did not produce any valid evidence substantiating the alleged losses that the plaintiff sustained. In fact, his cross-examination makes a strange reading. During cross-examination, he stated that "I have claimed the sales and losses in my affidavit on the basis of mathematics and actual calculations." He admitted that he did not rely upon any statement of account of the finance facilities in the suit. He also stated that he did not have any proof of payments to the defendant bank. He admitted that he did not have any proof of exports made by the plaintiff. Similarly, he admitted that he did not have the documents relating to the contracts with garment factories and by way of explanation stated that "I could not bring the record being voluminous". He also stated that he was not-in possession of the audited accounts of plaintiff. He also admitted that "It is correct that presently. I have no documents to support the facts and figures mentioned in the five (5) tables included in my affidavit. Volunteered that I can produce them." While answering question about his claim regarding excessive charging of amounts by the defendant bank, he stated that Mark-"G" is the document, which supports my claim for excessive amounts being charged by the defendant Bank. Volunteered that it is in fact Mark-"I" instead of Mark-"G" which substantiates my claim for loss on account excessive amounts charged by the defendant Bank. It is correct that Mark-"I" does not fully explain my claim for losses an account of excessive amounts. Volunteered it partially explains.' Further in the cross- examination, he also stated that "I also base my claim of fine on Mark "I" and State Bank of Pakistan's documents. I do not have the relevant State Bank of Pakistan's documents with me right now. Volunteered' that I can produce them later." In regard to the claim for charging illegal mark up, he stated that "It is correct that presently I do not have any documents, which substantiate my claim for illegal mark-up." Regarding 'Mark-G', he admitted that "It is correct that Mark-"a" does not fully explain my claim for loss of expected profits. Volunteered that it partially does."
10. It is evident from the reading of the evidence of the plaintiff's witnesses that they failed to substantiate the claim for sustaining alleged losses. The documents tendered in evidence by P.W.2 were all photocopies and were objected to by the learned counsel for the defendant bank on the ground of being inadmissible in evidence. In the opinion of this Court, the learned counsel for the defendant bank rightly objected to the admissibility of Mark A to Mark L. These documents being in the nature of secondary evidence could only be brought on the record once the plaintiff satisfied the Court that the originals had been lost or could not be found and were not in its possession.
None of the above steps were taken by the plaintiff and its witnesses simply produced the photocopies on the record, which were rightly objected to and which cannot be read in evidence.
Mark A to Mark L are, therefore, declared to be inadmissible in evidence. Even otherwise, the said documents (Mark A to Mark L) did not substantiate the claim of the plaintiff as the documents which formed the basis of claiming losses suffered by the plaintiff were not brought on the record.
11. Similarly, the witnesses of the plaintiff also failed to discharge the onus of proof of issue No.5 and did not substantiate the allegations of the plaint in regard to the failure of the defendant bank to comply with the terms and conditions of the finance facilities. The plaintiff neither brought the relevant documents on the record nor put any questions to the witnesses of the plaintiff in this regard. In the examination-in-chief of the two witnesses of the plaintiff, nothing much has been stated or revealed with regard to the terms and conditions of the finance facilities that were not complied with by the defendant bank. In this case, it is not necessary to refer to the evidence of the defendant bank as the plaintiff's witnesses abjectly failed to discharge the burden of proof that was cast on them. Be that as it may, it is settled law that the plaintiff's case has to stand on its own legs and that the plaintiff cannot take benefit of the deficiencies in the evidence of the defendant.
Issues Nos.4 and 5 are accordingly decided against the plaintiff.
ISSUES NO.6
12. In view of the pendency of the recovery suit filed by the defendant bank, which is currently pending adjudication, there is no need to decide this issue and this issue was in any event not pressed by the learned counsel for the defendant bank.
ISSUE NO.7.
13. The plaintiff's claim relates to years 2003, 2004, 2005, 2006 and 2007. The limitation period for a suit for damages and breach of contract is three (3) years. The suit filed by the plaintiff in the year 2012 is prima facie barred by time. This issue is, therefore, decided in favour of the defendant bank.
ISSUE NO.1.
14. The present suit has been filed after the suit filed by the defendant bank. On the basis of my findings on issues Nos.4 and 5, it is evident that the plaintiff's suit is a counter-blast to the suit filed by the defendant bank. The issue is accordingly decided in favour of the defendant.
ISSUE NO.2.
15. The burden of this issue was on the plaintiff. The learned counsel for the plaintiff did not address any argument as to how the reliefs for declaration, permanent injunction, cancellation of documents and recovery of alleged losses can be maintained within the purview of section 9 or any other provision of the Financial Institutions (Recovery of Finances) Ordinance, 2001. In any event, the plaintiff has failed to prove that the terms and conditions of finance were violated by the defendant bank and as such the reliefs prayed for cannot be granted in this suit. This issue decided against the plaintiff..
ISSUE NO.3
16. In view of the findings on issues Nos.4 and 5, it is held that the plaintiff has no cause of action against the defendant. This issue is decided against the plaintiff. ISSUE NO.8
17. On the basis of findings on issues Nos.4 and 5, it is clear that the plaintiff is not entitled to any of the reliefs prayed for. The mortgaged properties cannot be redeemed and the reliefs of declaration or permanent injunction also cannot be granted. As already held the plaintiff failed to prove the issues regarding sustaining of losses and breach of terms and conditions of the finance facilities by the defendant bank. The plaintiff is not entitled to any of the reliefs prayed for and according this issue is decided against the plaintiff. ISSUE NO.9
18. In view of the findings on issues Nos.1 to 8 the suit filed by the plaintiff is dismissed with costs.