' M. SOHAIL IQBAL BHATTI, J. --- Through this appeal, the appellants have challenged the judgment and decree dated 23.02.2010 passed by learned Judge Banking Court, Sargodha.
2. The facts of the case are that the respondent/plaintiff bank filed a suit for recovery of Rs, 77,13,527/- against the appellants/defendants on 31.05.2008. The appellants/defendants in response to the summons issued by the learned Judge Banking Court, Sargodha under Section 9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 appeared and filed Iwo applications for leave to appear and defend the suit. One application was filed by the appellants No, 1 and 2 and the second application was filed by appellant No, 3, who had been impleaded as defendant No, 3 .In the capacity of mortgagor/Guarantor.
3. The learned Judge Banking Court after dismissing both the applications for leave to appear and defend the suit passed the impugned judgment and decree. Dated 23.02.2010, hence this appeal.
4. The learned counsel for the appellants argued that the learned Banking Court has committed illegality, while passing the impugned judgment and decree, especially when a dispute regarding pledged stock had been raised in the application for leave to appear and defend the suit. It has been further argued that the pledged stock while in possession of the respondent/plaintiff bank had been stolen and criminal case had been lodged, thus no decree could have been passed against the appellants/defendants. The learned counsel placed reliance on A.M. Burq and another v. Central Exchange Bank Ltd. And others (PLD 1966 (W.P.) Lahore 1). The learned counsel further argued that no rate of markup was mentioned in the plaint as well as in the agreement for financing. It has been further argued that suit had not been competently filed by the respondent/plaintiff bank. The learned counsel for the appellants went on to argue that without meeting with the arguments raised in the application for leave to appear and defend the suit, the learned Judge Banking Court, Sargodha passed the impugned judgment and decree,
5. The learned counsel for the respondent bank has strongly supported the impugned judgment and decree. It has been argued by the learned counsel that the flimsy arguments were raised by the appellants. The learned counsel has drawn the attention of this Court towards two sanction letters dated 06.06.2007 through which the running finance facility of Rs, 3.000 (M) and cash finance facility of Rs, 4.000 (M) were allowed to the appellants and the rate of mark-up has been mentioned as 25%. The learned counsel has further referred to the agreement for financing which have been annexed with the plaint. It has been further argued by the learned counsel for the respondent bank that the suit has been competently filed and has referred to the power of attorney attached with the plaint. The learned counsel went on to argue that even if the Banking Court has not adverted to the contentions raised by the learned counsel for the appellants, the same can be attended by this Court as the original and appellate proceedings are steps in one proceedings.
6. We have considered the arguments advanced by the learned counsel for the parties and have perused the record.
7. At this stage, it would be beneficial to examine the law of pledge. The bailment is defined under Section 148 of the Contract Act which reads as under:- "148. "Bailment, "Bailer" and "Bailee" defined.--A bailment is a delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them, the person delivering the goods is called the "Bailer". The person to whom they are delivered is called "Bailee"."
' Section 172 of the Contract Act is reproduced below:- "172. "Pledge "Pawnor" and Pawnee" defined.--The bailment of goods as a security for payment of debt or performance of promise is called "Pledge". The bailer is in this case called the "Pawnor". The Bailee is called the "Pawnee"."
' Thus, the bailment is the delivery of goods by one person to another for a purpose as per the contract that when the purpose is accomplished the goods shall be returned or otherwise disposed of according to the direction of the session delivering them.
8. Meaning thereby, that the Pawnee is bound to return the pledged goods to the Pawnor on repayment of debt or performance of the purpose, but where the Pawnar failed to repay the debt, the Pawnee is within his rights to sell the pledged goods after notice to the Pawnor or retain the goods and file the suit for recovery of debt as provided under the Contract Act. However, this question arose that if the Pawnee is not in a position to return the pledge goods whether the right to sue and recover the debt remains alive or not, if the Bailee/Pawnor adopts the recourse of filing the recovery suit.
9. In a judgment reported in a case titled as Habib Bank Limited v. Orient Rice Mills Ltd. And others (2004 CLD 1289) [Lahore], it was held as under:- "Section 176 of the Contract Act empowers the plaintiff bank to file its suit without selling the pledged rice and to treat the pledge as a collateral security only. Clearly this option has been exercised by the plaintiff bank. The matter relating to any short fall in the pledge stock of rice and the responsibility therefore can be determined in execution proceedings at the time, the collateral security is required to be accounted for and brought to sale. The rights and the obligations of the plaintiff bank as "Pledgee" and those of the defendant company under Sections 151 and 152 of the Contract Act which were referred to by the learned counsel for the defendant company, can also be determined at the time of realization of the collateral security.
Thus on the touch stone of the above mentioned case law, it is only when the Bail4 has been granted a decree and he is enforcing the same in the execution proceedings; the question can be asked as to whether the Bailer is in a position to return the security of pledge goods to the Bailee or not. Thus, it is clear that where the financial institution is treating the pledge a goods as the collateral security, leave to defend the suit cannot be granted on the basis of status, condition and availability or otherwise of the pledged goods."
10. The Honourable Supreme Court of Pakistan in a judgment reported in Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. (PLD 1966 Supreme Court 684) (recently approved by the Honourable Supreme Court of Pakistan in Apollo Textile Mills Ltd. And others v.
Soneri Bank Ltd. (2012 CLD 337) {Supreme Court of Pakistan) has held as under:- ""Even assuming that some goods were pledged with the bank as security for the advance, this does not, in our opinion absolve the defendant from his liability to clear the dues. The Banker only acquires a lien over such pledged goods for the recovery of his dues and has a right, after notice to the debtor, to sell those goods to reimburse himself, but it is only where such sale is actually held that the debtor can claim an adjustment of the sale proceeds of the goods against the amount claimed by the bank."
11. In the case reported in Siddique Woollen Mills and others v. Allied Bank of Pakistan (2003 CLD 1033) (Supreme Court of Pakistan) the Honourable Supreme Court of Pakistan has held as under:- "Liability towards the outstanding amount of the respondent bank was not denied except raising the plea that the bank has retained the goods of the petitioners un-authorisedly. In our opinion, it does not constitute a defence in favour of the petitioners independently nor it give rise to a bona fide dispute between the parties because in such like cases, the Court is required to examine the liability and its acceptance by the borrower. As far as the question of sustaining losses by the borrower on account of conduct of the bank is concerned, it can be sorted out in some other forum instead of claim relief on the basis from the Banking Court"
' At this stage, we would like to reproduce Section 47, C.P.C. Which reads as under:--- "47. Questions to be determined by the Court executing decree.-- (1) All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.
(2) The Court may, subject to any objection as to limitation or jurisdiction, treat a proceeding under the section as a suit or a suit as a proceeding and may, if necessary, order payment of any additional Court-fees.
(3) Where a question arises as to whether any person is or is not the representative of a party, such question shall, for the purposes of this section, be determined by the Court.
' Explanation.-- For the purposes of this section, a plaintiff whose suit has been dismissed and a defendant against whom a suit has been dismissed, are parties to the suit."
' The provisions of Section 47 of the Code of Civil Procedure, 1908 lend support to the proposition that the Executing Court is fully empowered to decide all questions regarding execution, discharge or satisfaction of the decree. We are therefore of the opinion that all the question regarding the security of pledge can be adjudicated at the time of execution of the decree by the Executing Court.
12. As far as the contention of the learned counsel of the appellants that no rate of mark-up has been mentioned, the same is belied from the sanction letters dated 06.06.2007 and the agreement for financing which have been annexed with the plaint and the appellants/defendants No, 1 and 2 in their application for leave to appear and defend the suit have not denied the availing of finance facility or execution of the charge documents.
13. As far as the ground raised by appellant/Defendant No, 3 that no document had been executed by her. We are of the considered opinion that this is not a substantial question of law and fact as the title documents are in possession of the bank as well as the registered mortgage deed is available on record, therefore, the argument regarding non-execution of charge documents is not a plausible defence.
14. As far as the objection regarding the filing of suit incompetently, we are of the opinion that under Section 9 of the Ordinance, 2001 a plaint could be presented by a financial institution before Banking Court duly signed and verified on oath either by the branch manager of such other officer of the bank who was holding power of attorney or was authorized otherwise. In the present case, the plaint has been accompanied with the power of attorney of the official who had signed the plaint, thus the requirement of Section 9(1) of the Ordinance, 2001 has been fully complied with.
Reliance in this regard is placed on Muhammad Nawaz Chaudhry and another v. Citibank N.A.
(2002 CLD 334) [Lahore], Haji Saghir Ahmed v. United Bank Limited (2004 CLD 1334) and Allied Bank Limited v. Muslim Cotton Mills Private Limited and 3 others (2011 CLD 393) [Karachi].
15. We would like to observe that since this is a case of renewal, no physical disbursement is required. The concept of renewal/restructuring/rescheduling has been discussed by this Court in a judgment reported in Habib Bank Limited v. Service Fabrics Ltd. And others (2004 CLD 1117) [Lahore] as under:- "Renewal/rescheduling/restructuring of financial facilities only ensues upon default, nonpayment, delayed payment or inability in payment of outstanding liability by a customer who normally seeks such concession upon admission and determination of liability. By soliciting rescheduling or restructuring, as the case may be, a customer, in a sense, either requests postponement of repayment of finance on renewed terms as agreed between the parties or asks for reorganization/refurbishing of financial basis of a finance and its liquidation.
By approving rescheduling/restructuring/renewal of a finance facility, the bank foregoes its immediate right of recovery and enforcement of securities against the customer. The effect of rescheduling restructuring and renewal of finance facility is mutually agreed by the parties to be absorbed by future interest, mark up charges or commissions till the agreed date of liquidation of liability, Rescheduling, restructuring and renewal is also thus a facility or accommodation granted by the bank to a customer. This facility has been recognized as an "obligation" defined in Section 2(e) of the Financial Institutions (Recovery of Finances Ordinance, 2001."
16. This Court in a judgment reported in Habib Bank Ltd. v. Taj Textile Mills Ltd. Through Chief Executive and 5 others (2009 CLD 1143) [Lahore] while discussing the concept of restructuring/rescheduling of the previous finance has observed as under:- "Bank was not obliged to have brought on record the statements of accounts prior to the agreement through which the restructuring has been made and this was an admitted amount duly acknowledged by the borrower. No disbursement of the amount involved in the matter was required, case being that of restructuring and not in the nature of a fresh finance in which the disbursement may become relevant.--"
17. We have further observed that while passing the impugned judgment and decree neither any mark-up has been allowed beyond the period of expiry nor any liquidated damages have been allowed to the respondent/plaintiff bank.
18. For what has been discussed above, this appeal stands dismissed. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.