' MUHAMMAD KHALID MEHMOOD KHAN, J. --- The respondent filed a suit against the appellants for recovery of Rs, 72,47,783/- alongwith costs and costs of funds. The appellant No, 1 was arrayed as proprietorship concern and the appellant No, 2 is its proprietor. Appellant No, 2 was also claimed to be the mortgagor and guarantor of the finance availed or to be availed of by appellant No,
1. The respondent asserted in the plaint that on 04.11.2004 on the request of appellants the respondent allowed a financial facility in the shape of cash finance of Rs, 15 Million vide sanction letter dated 11.11.2004. In acknowledgment of the above-said finance respondent No, 2 executed different charge documents detailed in para 6 of the plaint. The appellants have failed to adjust the finance so availed within the agreed period i.e, 12.2.2005 and on 12.2.2005 the appellants' account was showing a debit balance of Rs, 90,47,084/-. On the request of appellants on 31.12.2005 another cash finance facility of Rs, 9.047 Million was sanctioned to appellants only for adjustment purposes against the pledge of rice/paddy. The appellant No, 1 opened a new account of cash finance (Pledge) No, CF 1804 on 31.12.2005 and outstanding liability of Rs, 87,33,483/-was transferred in the said account. The appellants executed charge documents detailed in para 09 of the plaint and also mortgaged the property detailed in para 12 of the plaint. In addition to mortgage of property the appellants pledged stock of rice of 6350 bags of Super Basmati (50-KG each). The appellant No, 2 failed to adjust the liability and requested the respondent for allowing him to lift the pledged stock of rice of 6350 bags against trust receipt. The respondent acceded to the request of appellants and released 6350 bags of Super Basmati to appellants with the condition that the sale proceeds of the released pledged stocks will be adjusted on or before 30.6.2006. The appellants executed trust receipt in confirmation of the receipt of rice bags. The appellants also executed a delivery order on 15.4.2006 at the time of taking delivery of pledged stocks. On 23.6.2006 appellant No, 2 handed over three post dated cheques of Rs, 2 Million each alongwith a cheque of Rs, 800,000/- drawn on National Bank of Pakistan City Branch, Gujranwala. The respondent when presented these cheques, these were returned unpaid with the remarks that "Not arranged for" and "Refer to drawer". The respondents have lodged an F.I.R. Under Section 489-F, PPC in this regard. It is finally asserted that the appellants even after taking the delivery of pledged stock have failed to adjust the finance and as such a sum of Rs, 72,47,783/- is outstanding in their account. A decree for payment of above-said amount alongwith costs of suit and costs of funds is prayed for.
2. The appellants submitted application for permission to defend the suit. The receipt of finance of Rs, 15 Million on 12.11.2004 was admitted but it was stated that the appellants have deposited number of amounts in their account which has not been shown in the statement of accounts and as such the suit is liable to be dismissed on this score alone. The statement of accounts has not been prepared in accordance with the Bankers Books Evidence Act. The respondent/bank got signed blank documents and subsequently filled in these documents for blackmailing the appellants. Creation of mortgage against the property of appellant No, 2 was denied and it was stated that finance allowed against the mortgaged property was paid and adjusted and as such the mortgage stand automatically redeemed. It was stated that the appellants pledged 7275 bags of rice with the respondent valuing Rs, 20,551,875/-which are still in possession of respondent. The claim of respondent that appellant pledged 6350 bags is wrong. The delivery order and trust receipt was not admitted and it is stated that the pledged stocks of 7275 bags of Super Basmati rice are in possession of bank/respondent. It was admitted that the appellants no doubt requested the release of pledge stocks for adjustment of the liability but his request was declined. It is also stated that bank is recovering godown rent upto the date of institution of suit. The issuance of cheques is denied and stated that the officials of respondents got fraudulently issued cheque book and used four cheques out of the fraudulent issued cheque book. Finally it was stated that the appellants be allowed to defend the suit unconditionally.
3. The learned Trial Court after hearing the parties dismissed the application for permission to defend the suit vide order dated 23.4.2007 and decreed the suit vide judgment and decree dated 23.4.2007 for recovery of Rs, 72,47,773/- with costs and costs of funds. The learned Trial Court dismissed the appellants application on the ground that the application lacks mandatory requirement of Section 10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and as such the application could not be considered according to law. The appellants have not detailed in the application about the amounts availed, amounts paid and amounts due and as such the application is rejected. As far as pledge of stocks is concerned, it was ordered that it can be raised and decided in execution under Section 47 of the CPC. Hence, the present appeal.
4. Learned counsel for appellants submits that the, avaibility of pledged stocks with respondent/bank is a proven fact on record, the appellants have specifically denied any outstanding liability. The appellants have specifically stated that the earlier finance of Rs, 15 Million was adjusted. The execution of trust receipt and delivery order was specifically denied. The respondent filed replication in reply to the application for leave to defend and have not specifically denied the appellants' assertions/reply. In reply to paras 15 and 17 it was only stated that para 15, 16 and 17 are incorrect. The facts stated in the plaint are reiterated. This reply is evasive one and could not be treated the specific denial of the facts stated in the above paras. The respondents, however attached a photocopy of an application of appellant for issuance of cheque book which in the absence of the original could not be treated the appellants' application. Learned counsel for appellants submits that the respondent by submitting a vague reply has admitted all facts stated in application for permission to defend the suit. Learned counsel submits that the learned Trial Court has failed to consider the documents attached with the plaint and application to leave to
5. Learned counsel for respondent/decree-holder supports the judgment and decree and submits that the learned banking Court has rightly declined the appellants' claim qua the pledge stocks as it can be settled in execution petition. Learned counsel submits that appellants have taken delivery of the pledge goods against execution of delivery letter as well as trust receipt. Hence, the allegation that the stocks were pledged with the respondent stands negated from the said facts.
6. We have heard the argument and examined the record.
7. The bone of contention between the parties is the pledged stocks. The appellants are admitting the availment of finance but their contention is that they have adjusted the liability availed of, however they have failed to explain how they adjusted the liability but it is a proven fact on record that the bank was in possession of the pledged stocks on the day of institution of suit. The respondent asserted in their plaint that the pledged stocks of 6350 bags of Super Basmati rice were handed over to appellants on 15.4.2006 against the execution of trust receipt and the appellants received goods against delivery order (page 155 and 157). The delivery order dated 15.4.2006 shows that the appellants have received 6350 bags from National Bank of Pakistan; City Branch, Gujranwala on 15.4.2006 and on the same day the appellants executed a trust receipt. It is also an admitted fact that the appellants issued four cheques of Rs, 2 Million each alongwith a cheque of Rs, 800,000/-. The appellants have taken the stance that the appellants have not issued the cheques and these cheques are forged and fake and respondents themselves have got issued the cheque book of Cash Finance account as this account was opened for adjustment purposes and no finance was available in the said account. The respondents have placed on record an application allegedly signed by the appellants on 23.6.2006 requesting that his earlier cheque book has been damaged and a fresh cheque book may be issued to him. This application is dated 23.6.2006 and the cheque book containing cheques from 2708521 to 2708530, 10 leaves w: shown to be issued to appellants. Four cheques detailed C..3 plaint are from the said cheque book. Prima- facie it an established fact that the appellants issued the cheques from their cheque book but the respondent's stance that the pledged stocks containing 6350 bags of Super Basmati rice were delivered to appellants on execution of trust receipt through delivery order dated 15.4.2006 is doubtful as the respondents have placed on record stock report of pledge stocks dated 19.6.2006 which shows that the bank is in possession of 6350 bags, the report has been singed by the National Cargo (Pvt.) Limited, the respondent/bank's Muqaddam/agent. The bank arranged the insurance of the pledged stocks on 01.5.2006 vide Annex-G from the Pakistan General Insurance Company Limited. Now the question arose, if the pledged stocks were delivered against delivery order allegedly signed by the appellants, how the respondent's agent/Muqaddam had issued a stock report duly signed by him confirming that respondent bank is in possession of 6350 bags of rice Super Basmati (50-KG each). The National Cargo (Pvt.) Limited/Muqaddam has addressed a letter on 10.5.2006 to Manager National Bank of Pakistan, City Branch Gujranwala, confirming that they are in possession of 6350 bags of M/s. Ali Traders lying in Madina Rice Mills, Cantt. (site). The said document shows that there are number of other customers who pledged their stocks and the said stocks arc under the control of National Cargo on behalf of National Bank of Pakistan respondents themselves have arranged the insurance of 6350 bags on 01.5.2006, this mean the pledged stocks were in possession of respondent/bank on 01.5.2006 and if the stocks were in possession of the respondent/bank then the delivery order dated 15.4.2006 becomes doubtful alongwith trust receipt. The learned Trial Court while deciding the application for permission to defend the suit has relied on Messrs Polymer International through Proprietor and another v. Bank Ltd. (2005 CLD 1129). The facts o that case were different. The plaintiff/bank in that case has not asserted the availability of pledged stocks or even creation of pledge charge against the customer's assets. But in the present case the appellants have specifically raised the objection in their application for permission to defend the suit, that pledged stocks were never released to them, the trust receipt and delivery order is fake, hence in the presence of stocks report duly issued by the Muqaddam who is the agent of respondent/bank specially when it is not the case of respondent/bank that their Muqaddam has wrongly issued the report of pledge stocks but the case of respondent/bank is that they have released the pledged stocks to appellants against the execution of trust receipt.
8. The bank being the Pawnee is bound to return the pawned goods to the pawner on payment of debt. Reliance may be placed on A.M. Burq and another v. Central Exchange Bank Ltd. And others (PLD 1966 (W.P) Lahore 1). It is a settled principle of law that the Pawnee is bound to return the goods in case he wanted to recover the finance. In a judgment of Indian Supreme Court LaIlan Prasad v. Rehmat Ali and another (AIR 1967 Supreme Court 1322) it was held that the pledgee cannot maintain a suit for recovery of debt as well as retain the pledged property. The pledgee if is not in a position to return the goods, his suit is not maintainable.
"17. There is no difference between the common law of England and the law with regard to pledge as codified in Ss. 172 to 176 of the Contract Act. Under. 172 a pledge is a bailment of the goods as security for payment of a debt or performance of a promise. Section 173 entitles a pawnee to retain the goods dinary expenses he incurs for the preservation of the goods pledged with him.
Section 176 deals with the rights of a pawnee and provides that in case of default by the pawner the pawnee has (1) the right to sue won the debt and to retain the goods as collateral security, and (2) to sell the goods after reasonable notice of the intended sale to the pawner. Once the pawnea by virtue of his right under S. 176 sells the goods the right of the pawner to redeem them is of course extinguished. But as aforesaid the pawnee is bound to apply the sale proceeds towards satisfaction of the debt and pay the surplus, if any, to the pawner. So long, however, the sale does not take place the pawner is entitled to redeem the goods on payment of the debt. It follows, therefore, that where a pawnee files a suit for recovery of debt, though he is entitled to retain the goods he is bound to return them on payment of the debt. The right to sue on the debt assumes that he is in a position to redeliver the goods on payment of the debt and, therefore, if he has put himself in a position where he is not able to redeliver the goods he cannot obtain a decree. If it were otherwise, the result would be that he would recover the debt and also retain the goods pledged and the pawner in such a case would be placed in a position where he incurs a greater liability than he bargained for under the contract of pledge. The pawnee, therefore, can sue on the debt retaining the pledged goods as collateral security. If the debt is paid he has to return the goods with or without the assistance of the Court and appropriate the sale proceeds towards the debt But if he sues on the debt denying the pledge, and it is found that he was given possession of the goods pledged and had retained the same, the pawner has the right to redeem the goods so pledged by payment of the debt. If the pawnee is not in a position to redeliver the goods he cannot have both the payment of debt and also the goods. Where the value of the pledged property is less than the debt and in a suit for recovery of debt by the pledgee, the pledgee denies the pledge or is otherwise not in a positon to return the pledged goods he has to give credit for the value of the goods and would be entitled then to recover only the balance. That being the position the appellant would not be entitled to a decree against the said promissory note and also retain the said goods found to have been delivered to him and, therefore, in his custody. For, if it were otherwise the first respondent as the pawner would be compelled not only to pay the amount due under the promissory note but lose the pledged goods as well. That certainly is not the effect of S. 176. The contentions urged by Mr. Rana, Therefore, must be rejected".
' We in appeal are not in a position to give definite findings about the genuineness of the delivery order as well as the trust receipt and the stock report issued by the Muqaddam as in this case no evidence was recorded and the learned Trial Court dismissed the PLA on technical ground. Hence, we refrain ourselves to further commenting on the merits of the case as it may cause prejudice to either party, we accept appeal, set aside the impugned judgment and decree, accept the appellants' application for leave to defend and remand the case to the learned Banking Court with the direction that the learned Banking Court will frame issues and decide the suit after recording evidence. As it is an old case the learned Banking Court will decide the suit within six (06) months on receipt of certified copy of this judgment even at the pain of day to day hearing. The appeal is allowed in the above-said terms.