AZIZ-UR-REHMAN, J.---The present suit has been filed under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for Recovery of US $ 5,204,346.77 along with Cost of Funds, Cost of Charges, Costs till the date of realization of the whole amount with the following prayers:-
1. for payment and recovery of sum of US $ 5,204,346.77 together with future mark-up at the applicable rate.
2. for permanent injunction restraining the Defendant jointly and severally, their employees, agents or any other person acting for and on their behalf directly and/or indirectly from selling, alienating, disposing of or creating third party rights in any manner whatsoever in respect of the Pledged Rice and Mortgaged Properties Nos. 1 to 3.
3. for sale of the Mortgaged Property as mentioned in Para 5(i) to (iii) above.
4. for sale of the Pledged Rice as mentioned in Para 5(iv) above.
5. for payment of cost of funds in terms of section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 on the aforesaid suit amount from the date of default till the date of realization.
6. the suit may kindly be decreed with all other costs, charges and expenses incurred by the Plaintiff during the pendency of the suit.
7. to grant any other relief(s) which the Hon'ble Court may deem fit and proper in the circumstances of this case.
2. The brief relevant facts are as under:-
3. The Plaintiff is a Banking Company duly incorporated under the Companies Ordinance, 1984 [XLVII of 1984], having its' registered office at BA Building LI. Chundrigar Road, Karachi and a Branch known aS Paper Market Branch Karachi, wherefrom it is carrying on its 'banking business'. The present suit has been filed through Muhammad Tariq lawaid son of Abdul Majeed and Syed Sajid Ali Shah son of Syed Hamid Ali Shah who are the authorized attorneys of the Plaintiff Bank and as such are well conversant with the facts of the case. Besides, they are duly authorized to sign, verify the plaint, Institute the suit and also do all such other acts, deeds, which are necessary and incidental thereto.
4. The Defendant No.1 besides a guarantor as averred, is carrying on his business in the name and style of Zulfiqar Trading Corporation [In short ZTC] as being sole Proprietorship concern of Defendant No.1 viz. Syed Zulfiqar Ali Rizvi, having its' place ot business at Room Nos.6, 7 and 8 Al- Yousuf Chamber, New Challi Karachi, while Defendant No.2 iS mortgagor, Defendant No.3 is duly constituted attorney of Defendant No.2, Defendant No.4 besides mortgagor is a guarantor and Defendant No.5, is a person in whose custody the pledged rice is lying.
5. Per assertions, on the request, representation and guarantee of the Defendants the Plaintiff from time to time extended various finance facility[ies] to Defendant No. 1 's proprietorship concern, i.e. a finance facility of US $ 5,000,000/- under AGREEMENTS FOR FINANCING FOR SHORT/MEDIUM/LONG TERMS ON MARK-UP BASIS dated April 17, 2006 [Annexure 'B-2' to the Plaint] and December 14, 2007 [Annexure 'B-3' to the Plaint]. In order to secure the aforesaid finance facility, the Defendants Nos.2 and 4 created mortgages over their immovable properties described and detailed as below in favour of the Plaintiff Bank:-
(i) A mortgage by deposit of title deeds of Plot No.108/16, Survey Sheet No.35-P/1, measuring 840 square yards, Block 3, Bahadur Yar Jung Cooperative Housing Society, Karachi [Mortgaged property No.1] situated within registration of District and Sub-District Karachi created by Defendant No.2.
(it) A mortgage by deposit of title deeds of Plot No.109/16, Survey Sheet No.35-P/1, measuring 835 square yards, Block 3, Bahadur Yar Jung Cooperative Housing Society, Karachi [Mortgaged property No.2] situated within registration of district and sub-district Karachi created by Defendant No.2.
(iii) A mortgaged by deposit of title deeds of Double storey bungalow on Plot No.95, measuring 2000 square yards, Khayaban-e Ghazi, Phase VI, DHA Karachi [Mortgaged Property No.3] situated within registration of District and sub-district Karachi, created by Defendant No.4.
6. The Defendant No.1 as being sole proprietor of Zulfiqar Trading Corporation, apart from signing and executing the aforesaid 'finance agreements', 'Demand Promissory Notes' of April 17, 2006 and December 26, 2007 etc. also signed and executed letter of guarantee in his personal capacity dated December 14, 2007 [Annexure 'F' to the Plaint]. Likewise, Defendant No.4, in order to secure the Finance Facility granted to and availed by Defendant No. 1, signed and executed letter of guarantee dated May 29, 2009 [Annexure 'F-1' to the Plaint]. Besides, Defendant No. 1, pledged its' rice through pledged letters [Annexures 'D' and 'D-1' to the Plaint] with the Plaintiff Bank as security for securing the finance facility availed by Defendant No.1 and for the discharge of the agreed contractual obligations.
7. The finance facility in the sum of US $ 5,000,000/- granted to the Defendant No.1, was fully availed and utilized by Defendant No.1. The Defendant No.1, however, in breach of the mutually agreed 'terms' and 'conditions' inter alia as per annexed documents, failed and/or avoided to repay the outstanding amount to the Plaintiff Bank. For and in view of such failure, the Plaintiff Bank while, re calling the aforesaid finance facility also served three demand notices under Section 15[2] of the Financial Institutions [Recovery of Finances] Ordinance, 2001 dated February 12, 2009, March 12, 2009 and April 2, 2009, upon the Defendant No. 2 in his capacity as being mortgagor regarding sale of the 'mortgaged properties Nos.1 and 2' in of section 15 of F.1.0., 2001.
8. Nevertheless, instead of Making payment, the Defendant No.2 as averred with 'mala fide intention' and 'ulterior motives' to delay and/or avoid the repayments of the outstanding dues filed Suit Na. B-54 of 2009 [Muhammad Irfan through his registered Attorney Aurangzeb v. Bank Al-Falah Ltd.] against the Plaintiff Bank and Defendant No.1 herein for rendition, declaration, settlement of accounts and permanent injunction along with a stay application. The Plaintiff herein besides, filing APPLICATION FOR LEAVE TO DEFEND THE SUIT, had also filed 'counter affidavit' in opposition of the stay application in Suit No.B-54 of 2009. The Court, however, was pleased to restrain both the Defendants in Suit No 54 of 2009 i.e. Bank Al-Falah Ltd. and Syed Zulfiqar Ali [who are Plaintiff and Defendant No.1 hereinabove from creating any 3rd party interest in the mortgaged proper No.1 and 2 belonging of Defandant No.2 herein viz. Muhammad Irfan Pursuant to filling of the aforesaid Suit No. B-54 pf 2009 Muhammad Irfan v. Bank Al-falah and another, the defendant No.1 herein nonetheless entered into a Settlement Agreement dated May 25, 2009 [Annexure 'I' to the plaint] with the Plaintiff Bank herein whereby, it was agreed that the entire outstanding liability will be settled on or before July 31, 2009. The defandant No.1 however failed and/or avoided to pay the outstanding dues even in accordance with aforesaid Settlement Agreement. The Plaintiff Bank despite giving several opportunities to the Defendant for the repayment of the outstanding amount , however failed and/or avoided to discharge their contractual obligation. The failure of the Defandant to liquidate the outstanding dues owed to the plaintiff Bank per plaintiff stand it tantamounts to refusal on the part of the defandant.
9. The BREAK-UP-SUMMARY of the outstanding liability of the Defendants, inspect of finance facility grantee to and availed by the Defendant No.1, as required in terms of section 9[3] of the Financial Institutions [Recovery of Finances] Ordinance, 2001, is as follows:- [a]Amount of Finance Availed/disbursed to Defendant No.1US $ 7,648,930.00 [b]Amount repaidUS .$ 3,556,838.58 PrincipalUS $ 2,853,827.00 Mark-up US $ 703,011.58 [c]Amount Overdueu's $ 5,204,346.80 PrincipalUS $ 4,795,103.00 Mark-up US $ 412,243.77 [d]Total amount payableUS $ 5,204,346.77
10. Per Plaintiffs version if, the Defendants had paid the outstanding amount on the dates when they were called-upon to make payment then of course, the Plaintiff Bank would have made profit on the outstanding amounts by advancing the same onwards. On account of non-payment of the outstanding amounts, the Plaintiff Bank was thus exposed to suffer losses of profit/income on the outstanding amounts. The Plaintiff Bank, as per its' version, is entitled to the grant of mark-up on the outstanding amounts.
11. On filing of the suit, process under section 9[5] of F.I.O., 2001, was issued to the Defendants by all the requisite modes including publications in Newspapers i.e. Daily 'Dawn' English Karachi and Daily Jang' Karachi, both dated 17.09.2009. In response, the Defendants Nos.1, 3 and 5 filed their Leave to Defend Applications respectively as follows:-
[i] CMA No. 9567 of 2009
[ii] CMA No. 9568 of 2009
[iii] CMA No. 9569 of 2009
12. In response to the aforesaid 'LEAVE TO DEFEND APPLICATIONS', 'REPLICAS' on behalf of the Plaintiff Bank, were also ' filed. As far as Defendants Nos.2 and 4 are concerned, they in their 'own wisdom' did not file any Leave to Defend Application[s], as such against them the allegations of fact in the plaint shall be deemed as admitted in terms of section 10[1] of F.I.O., 2001. For ready reference section 10[1] of F.I.O., 2001 is reproduced here-in-below:- "10. Leave to defend.---(1) In any case in which the summons has been served on the defendant as provided for in subsection (5) of section 9, the defendant shall not be entitled to defend the suit unless he obtains from the Banking Court as hereinafter provided to defend the same; and, in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff on the basis thereof or such other material as the Banking Court may require in the interests of justice." [Underlining is mine].
13. On 25.05.2015, the LEAVE TO DEFEND APPLICATION bearing CMA No.9569 of 2009 filed by Defendant No.5, was dismissed as 'infructuous' in view of the fact that against Defendant No.5, the 'ABOVE SUIT' was 'NOT PRESSED' by the Plaintiff Bank. Being relevant, order dated 25.05.2015 is reproduced here-in-below:-
1. FOR HEARING OF CMA 8632/2010
2. FOR HEARING OF CMA 8329/2009
3. FOR HEARING OF CMA 9567/2009
4. FOR HEARING OF CMA 9568/2009
5. FOR HEARING OF CMA 9569/2009
6. FOR HEARING OF CMA 273/2010
7. FOR HEARING OF CMA 3553/2014 25.05.2015 Mr. Aijaz Hussain Sheerazi advocate for plaintiff Mr. Zeeshan advocate holding brief for Mr. Asim Mansoor advocate for defendant No.1 Mr. Khalid Lateef advocate for defendant No.2 Mr. Faiz H Shah advocate for defendant No.3 Mr. Rasheed A. Rizvi advocate for defendant No.5 along with Mr. Farhatullah advocate Against defendant No.5, the learned counsel for plaintiff does not press suit. Accordingly, the suit against defendant No.5 is dismissed as withdrawn. In view of withdrawal of suit against defendant No.5 leave to defend application bearing CMA No.9569/2009 has become infructuous.
Accordingly, the same stands disposed off Plaintiff is consequently directed to file 'amended title' within two days. The statement filed today on behalf of the defendant No.5 dated 25.5.2015 which also bears the endorsement of the learned counsel for the plaintiff to the effect that plaintiff is not pressing the suit against defendant No.5 is taken on record.
Both learned counsel for defendant No.3 and the plaintiff today have have been heard on CMA No.9668/2009 being an application under section 10 of F.I.0., 2001. For reply in rebuttal of the learned counsel for defendant No.3, however, the matter is adjourned to 28.5.2015, to be taken up 11.00 a.m."
14. In the LEAVE 'TO DEFEND APPLICATIONS [i.e. CMA No.9567 of 2009 and CMA No.9568 of 2009] besides raising various pleas, a 'common prayer' for grant of un-conditional Leave to Defend the above suit has also been sought. The gist of the pleas raised by Defendants Nos.1 and 3 in their have-to-Defend Applications respectively are as follows:-
1. CMA NO.9367 OF 2009: i-a. In the 'LEAVE TO DEFEND APPLICATION' filed by Defendant No.1, it was denied that the Plaintiff Bank has any 'cause of action' as alleged against the Defendant No.1. The breach of any obligation i.e. contractual or otherwise, was also denied. The factum of creation of mortgage of the mortgaged properties was not denied, however, it was averred that the mortgaged properties needs to be released as now there REMAINS NOTHING to be recovered from Defendant No.1. On account of refusal to sell the 'pledged. Rice', the Defendant No.1 in its' leave to defend application bearing CMA No.9567 of 2009, has also alleged SUFFERING OF LOSSES. The execution of 'Finance Agreements' in April, 2006 and December, 2007 has not been denied by Defendant No.1. The Defendant No.1 also admits the 'SETTLEMENT AGREEMENT' dated 25th May, 2009. i-b. Per Defendant No.l's assertion, despite provision of additional security, the Plaintiff Bank with mala fide intention had backtracked from its' legal obligation of releasing the whole stock of 'pledged rice' and issuing the delivery orders in respect thereof. Besides, it was alleged that the plaintiff Bank had wrongly ADJUSTER, the repayments made by the defendant No.1 towards on markup' and 'markup beyond the scope of initial finance agreement' [Annexure 'B-2' to the Plaint].
According to Defendant No.1 's stand such act of the Plaintiff Bank is contrary to both INJUNCIMNS OF ISLAM and law. i-c. In the leave to defend application, facilities from . the plaintiff Bank amongst other financial institutions, however, has not been denied by the defendant No.1. Per defendant No.l's stand, the 'PLEDGED RICE' due to un-professional and ill-attitude of the Plaintiff Bank, COULD NOT BE SOLD in time as such, the Defendant No.1 suffered huge losses on account of deterioration of value of pledged goods, loss in revenue and profit inter alia due to loss of contracts, loss of future contracts and loss of goodwill regarding which now the counterblast Suit No.B-182 of 2009 [Syed Zulfiqar Ali Rizvi v. Bank Al-Falah Limited] is pending. Further, the demand of the Plaintiff Bank for more properties as security and that too before issuing of 'delivery orders' for the 'whole stock of pledged rice' as per Defendant No.l's stand, was also illegal and unjustified.i-d. Per defendant No.1 's version, the quality of 'pledged rice' was since going from bad to worse as such, the defendant No.1 under severe pressure was constrained to sell the same so that to minimize the losses. The LESS, DAMAGED 'pledged rice' under circumstances, were sold in local market. From the sale proceeds thereof, according to Defendant No.1, an amount of about 8 to 9 crones rupees was paid to the Plaintiff Bank. i.e. The lodging of FIR against defendant No.1 for about 77000 stolen bags of 'pledged rice' was not denied by the Defendant No.1, however, in 'LEAVE TO DEFEND APPLICATION', it was averred that during investigation, the COMPLAINT filed by the Plaintiff Bank has already been declared as false, bogus and cancelled in Clause-'A'. According to the Defendant No.l's stand, the plaintiff Bank is not entitled to any of the reliefs as claimed in the suit. Rather, the Defendants who have raised very SUBSTANTIAL QUESTIONS OF FACTS and law deserve to be granted un-conditional leave to defend the suit. CMA No. 9568/2009: ii-a. Per Defendant No.3's version, since finance facility has been provided by the Plaintiff to the Defendant No.1 against the security of 'PLEDGED RICE' and 'PERSONAL GUARANTEE' of Defendant No.1 etc., therefore, Defendant No.3 is not liable to pay any amount to the Plaintiff Bank. Defendant No.3, in his 'LEAVE TO DEFEND APPLICATION' bearing CMA No.9568 of 2009, besides admitting the execution of two 'DEEDS OF MORTGAGES', [Annexure 'C-2' and 'C-3' to the Plaint], however, to the extent of securing Rs.2,50,000/- has also acknowledged the 'SETTLEMENT AGREEMENT' [Annexure 'I' to the Plaint], having been signed and executed between the Plaintiff and Defendant No.1 on 25th May, 2009. Besides, the 'MDOT Deeds' [Annexures 'C' and 'C-1' to the Plaint] for securing an amount upto Rs.350,000,000/- were also admitted. ii-b. The Defendant No.3 as averred, is not at all liable to pay/repay any money to the Plaintiff Bank.
The execution of 'Deeds of Mortgage' and 'Memoranda of Deposit of Title Deeds', per Defendant No.3' stand, have been subsequently ENGINEERED and MANUFACTURED as such these documents beside meaningless are liable to be released/redeemed. The claim of the Plaintiff Bank that the 'Deeds of Mortgage' was executed for creating 'security' is false, concocted and also seems an attempt to usurp the mortgaged properties. Neither, the Defendant No.2 has given his consent to creation of mortgage of properties as additional securities nor otherwise, in the registered 'DEEDS OF MORTGAGE'/'MEMORANDUM OF DEPOSIT OF TITLE DEEDS', it has been mentioned as 'additional securities' for the previous liability of Defendant No. 1 . The Defendant No.3, in absence of any agreement/contract, is not liable to pay or repay any amount whatsoever to the Plaintiff Bank. ii-c. According to Defendant No.3, the plaintiff [Bank] and Defendant No.1, no doubt, had entered into a Finance Agreement of 17.4.2006 and in pursuance thereof, a finance to the extent of US $ 5,000,000/-, was also advanced to and availed by the Defendant No.1 but apparently against the securities of 'PERSONAL GUARANTEES' and 'PLEDGE GOODS OF RICE'. In term of the Finance Agreement dated 17.4.2006 [Annexure 'B2' to the Plaint], the 'PURCHASE PRICE' was payable by the customer to the Plaintiff Bank on or before 28.02.2007. The factum of another Finance Agreement dated 14,12.2007 [Annexure 'B-3' to the Plaint] duly signed and executed between the Plaintiff Bank and Defendant No.1, has also not been denied. Under the finance agreement of 14.12.2007, the 'PURCHASE PRICE' in the sum of US $ 5,673,000/-, was payable on or before 31.3.2008. According to the Defendant No.3's stand, two registered 'MORTGAGED DEEDS' for Rs.2,50,000/- [Rupees Two Hundred Fifty Thousand only] one each have also been executed. Per the said 'Mortgage Deeds', the agreed liability of the mortgagor is to the extent of Rs.2,50,000/- only [Rupees Two lacs Fifty Thousand only] and not above that amount as being claimed by the Plaintiff Bank in the instant Suit. The 'MDOT Deeds' [Annexures 'C' and 'C-1' to the Plaint] for securing upto a sum of Rs.350,000,000/- , however, have not been denied. ii-d. According to Defendant No.3's version, finance facility advanced by the Plaintiff to the Defendant No.1 under finance agreement dated 17.4.2006, is only against the security of 'pledged Rice' that was lying under the 'custody' and 'control' of the Plaintiff Bank. The Plaintiff Bank, as alleged by the Defendant No.3, in collusion with the Defendant No.!, did remove the 'pledged Rice' of high value i.e. Rs.21,000/- per Metric Ton. The 'pledged value' of 'Rice' as per Defendant No.3's version, is Rs.14,500/- per Metric Ton only. ii-e. The Plaintiff Bank, with a view to grab the precious immovable properties without lawful authority and justification has impleaded the Defendant No.3 in his personal capacity in the present suit. According to Defendant No.3's stand, despite notice for 'non-advancing' any amount to Defendant No.1, the Plaintiff Bank did advance huge amount to the Defendant No.1 obviously in violation of the instructions given to the Plaintiff Bank vide Defendant No.3's letter of February 1, 2009. ii-f. The Defendant No.3, under such circumstances, filed Suit No. B-54/2009 [Muhammad Irfan through his Registered Attorney Aurangzeb v. Bank Al-Falah Ltd.] before this Court wherein-the Plaintiff Bank, was restrained from creating any 3rd party's interest in the mortgaged properties pursuant to Plaintiff Bank's notices under Section 15 of FIO, 2001, regarding properties belonging to the Defendant No.2 herein viz. Muhammad Irfan. The 'SETTLEMENT AGREEMENT' dated 25.5.2009 [Annexure 'I' to the Plaint], per Defendant No.3's stand, does nothing with Defendant No.3 herein.
According to Defendant No.3 [who is attorney of Defendant No.2] herein, the Plaintiff and Defendant No.1/principal customer, in actual fact, are acting in collusion and in connivance with each other.
The Defendant No.3, as alleged, is not liable to pay or repay any amount much-less pursuant to execution of Mortgage Deeds/Memoranda of Deposit of Title Deeds on 14.12.2007, as no any amount as alleged has been provided to the Defendant No. 1. The liability if any, pertains to the earlier finance agreement of 17.4.2006 [Annexure 'B-2' to the Plaint] which, as far as the instant claim of Plaintiffs is concerned seems irrelevant and frivolous. ii-g. Per Defendant No.3's stand, the allegations of 'REMOVAL' of the 'pledged Rice', meant for securing the entire liability under the Finance Agreement dated 17.4.2006, NON-DISBURSEMENT of any finance facility by the Plaintiff under the subsequent Finance Agreement dated 14.12.2007 and for the 'reason that the security provided as per registered 'DEEDS OF MORTGAGE', is only to THE EXTENT OF Rs.2,50,000/-, the Defendant No.3 for the reasons mentioned in the LEAVE-TO DEFEND APPLICATION, per learned counsel for Defendant No.3, is entitled 'FOR THE GRANT OF LEAVE TO DEFEND THE SUIT', as Defendant No.3, his not only raised 'SUBSTANTIAL QUESTIONS' of facts but also substantial questions of law. The Defendant No.3, who is attorney of Defendant No.2, has prayed for granting 'UN-CONDITIONAL LEAVE TO DEFEND THE SUIT' to him otherwise, the Defendant No.3 as agreed shall be seriously prejudiced.
15. In response to aforesaid 'LEAVE TO DEFEND APPLICATIONS', the Plaintiff Bank, has also filed 'REPLICAS' thereto wherein, Defendants Nos.1 and 3's averments and assertions contrary to the Plaintiffs stand, have been specifically denied.
16. On 28.05.2015, when the above case came-up before the Court then the following order was passed:
1. For hearing of CMA 8632/10
2. For hearing of CMA 8329/09
3. For hearing of CAM 9567/09
4. For hearing of CMA 9568/09
5. For hearing of CMA 273/10
6. For hearing of CMA 3553/14 28.05.2015 Mr. Aijaz Hussain Sheerazi, Advocate for Plaintiff Mr. Asim Mansoor, Advocate for Defendant No. 1 Mr. Khalid Lateef Advocate for Defendant No. 2 Mr. Abdul Lateef Shakoor, Advocate Mr. Faiz H. Shah, Advocate for Defendant No. 3 Mr. Arif Khan, Advocate for Intervener 1, 2 & 5]. Dismissed as 'not pressed'.
3 & 4] Learned counsel for Plaintiff and contesting Defendants concluded their arguments on 'leave to defend applications' bearing CMAs Nos. 9567/09 and 9568/09. Mr. Abdul Lateef Shakoor, who is representing Defendant No.2 adopted the arguments of learned counsel for the Defendant No.3. Reserved for orders.
6]. Through this application under Order I, Rule 10, C.P.C. read with section 151, C.P.C., the Applicant/Intervener viz. Mst. Kausar Jabeen is seeking her joining in the suit as Defendant No.6 as the Applicant/Intervener's stand is that she has already entered into a sale agreement with the mortgagors in respect of Bungalow No.95, Khayaban-e-Ghazi, Phase VI, PDOHA, Karachi measuring 2000 sq. yds. The application, so made, cannot be entertained as the Applicant/Intervener is not a customer of the Plaintiff As such, cannot be jointed in the Banking Suit. [Underlining is mine].
In view of this position the application stands disposed off however, the Applicant/Intervener will be at liberty to agitate her alleged claim, if any, in terms of section 19[7] of F.I.0., 2001 in the execution proceedings."
17. Mr. Asim Mansoor Khan while, arguing 'LEAVE-TO-DEFEND APPLICATION' bearing CMA No.9567 of 2009, filed by the Defendant No.1, vehemently contended that the plaintiff bank has 'NO CAUSE OF ACTION' in its' favour against defendant No.1, as there occurs no breach of any obligation on the part of Defendant No.1. If at all, any amount is/was found to be payable to the Plaintiff Bank then too the same be deemed as got 'SETTLED'/'SET OFF' by the AMOUNT OF DAMAGES/LOSSES caused to the Defendant No.1 by the Plaintiff Bank, inter alia, on account of refusal/non-release of the 'PLEDGED RICE'. Per learned counsel, the Plaintiff Bank was under legal obligation to have immediately released the 'pledged rice' in favour of Defendant No.1 and that too without any excuse or demand for additional security. According to Mr. Asim Mansoor Khan, the Finance Agreement etc. have been filled-up with figures which were not agreed upon between the Defendant No.1 and Plaintiff Bank.
18. Mr. Asim Mansoor Khan, learned counsel for the Defendant No.1, further argued that not only 'ADDITIONAL COLLATERAL' was provided but Defendant No.1 also undertaken the sale of 'pledged stock of rice' in local market in order to clear the entire outstanding amounts that being due on account of finance facility granted to and availed by the Defendant No.1 . The Plaintiff, however, to utter surprise of Defendant No.1, failed and/or avoided to release the 'WHOLE PLEDGED STOCK OF RICE' regarding which a contract for 55000 Metric Ton was executed between the Defendant No.1 and one M/s. ASCOT Commodities. Mr. Asim next argued that the amount availed by Defendant No.1, was since credited in the account of proprietorship concern of Defendant No.1, in PAK RUPEES, as such the credited amount and further mark-up thereon cannot be claimed/charged in US DOLLARS.
19. While, arguing the case, Mr. Asim also urged that the Plaintiff Bank, under law, could not charge 'MARK-UP' over 'MARK-UP' or 'MARK-UP' BEYOND EXPIRY DATES of finance agreement[s]. The mark-up, charged by the Plaintiff Bank in the case in hand, is beyond the EXPIRY DATE/BEYOND the expiry period of finance agreement[s], is not only CONTRARY TO INJUNCTION OF ISLAM but also against the SBP'S CIRCULARS AND LAW. Moreover, the repayments made by the defendant No.1 was wrongly ADJUSTED TOWARDS/AGAINST markup, mark-up over mark-up being illegally charged by the Plaintiff Bank beyond the scope of initial finance agreement dated 17.4.20062 [Annexure 'B-2' to the plaint]. Per Mr. Asim, on the 'RESCHEDULED' /'RESTRUCTURED' amount under Finance Agreement dated December 14, 2007 [Annexure 'B-3' to the Plaint], even if, it was done at the request of Defendant No.1, no FURTHER 'mark-up' can be charged by the Plaintiff as no 'FRESH DISBURSEMENT' has ever been made to Defendant No.1. Even otherwise, it would amount to charging of 'mark-up' over 'mark-up'.
20. Mr. Asim Mansoor Khan, learned counsel for the Defendant No.1 next contended that the plaintiff Bank has failed to meet all the necessary requirements regarding the 'STATEMENT OF ACCOUNT[S]', as per Bankers' Book Evidence Act, 1869. Per Mr. Asim, on this 'SCORE ALONE' the defendants are entitled TO THE GRANT OF UNCONDITIONAL LEAVE TO DEFEND THE SUIT. According to Mr. Asim, the plaintiff bank, without any justification had been asking the Defendant No.1, for providing 'additional security' and that too prior to release of the 'PLEDGE STOCK OF RICE'. The 'pledged stock of rice', in view of such illegal demand could not be sold by the Defendant promptly. The delay so caused, resulted in deterioration in the 'quality' and quantity' of the 'pledged stock of rice' which resultantly caused reduction in the value of the 'PLEDGED STOCK OF RICE'. The Defendant No.1 thus faced and SUFFERED HUGE LOSSES on account of delay caused by the Plaintiff Bank in the process of sale of 'pledged rice' by the Defendant No.1. Nevertheless, per Mr. Asirn Mansoor Khan, under such compelling circumstances, the Defendant No.1, found himself with no any other alternative except to sell the 'LESS DAMAGED RICE' in local market by making cash payment to plaintiff Bank after obtaining delivery orders.
21. Mr. Asim Mansoor Khan while, attacking/challenging the alleged act of the Plaintiff Bank regarding charging of 'MARKUP OVER MARKUP and 'CHARGING OF MARKUP' under the 2nd Finance Agreement dated 14.12.2007 [Annexure 'B-3' to the plaint], vehemently contended that such act of the Plaintiff Bank is not only against the injunction of Islam but also in violation of SBP'S CIRCULARS.
The SBP's Circulars have the force of law and as such are binding on Banks/Financial Institutions. In support of his contention reliance was placed on, Messrs Petrosin and 2 others v. Messrs Faysal Bank f2009 CLD 3611, wherein it was held as follows:- "10. Every bank deals with numerous customers in its normal banking business. It is practically not possible for bank to give effect to the circular on the deadline. The circular (BPRD Circular 23) provides that the subject conversion and adjustments are required to be made between the period from issuance of the circular and the deadline mentioned in it. The defendant through letters dated 18-7-1998 (Exh.D.W.1/26) and 18-7-1998 (Exh.D.W.1/27) provided sufficient opportunity to the plaintiffs to pay off the overdue amounts, towards Moharaba Finance. The plaintiffs had taken no steps to save their foreign currency account. They have simply informed the defendant through letter Exh.P.W.1/10, to refrain from encashment of collateral security and to not to accept circular 23. State Bank of Pakistan has the power to control the advances made by the Banking Company, as provided in section 25 of Banking Companies Ordinance, 2001. The circulars issued by the State Bank of Pakistan are in the nature of instructions/directions to the Finance Institutions.
The Commercial Banks, whether private or Government owned, are bound by those instructions.
The directions are as consequence of promulgation of statute or an act of parliament A banking company cannot deviate from these instructions or circulars. The defendant being a banking company, was under the obligation to follow these instructions within the contemplation of sections 3-A, 25 and 41 of Banking Companies Ordinance, 1962. The defendant before encashment, duly informed the plaintiffs of desired action for encashment of collateral security.
Plaintiffs Nos. 2 and 3 failed in paying of their liabilities. The plaintiffs could get their foreign currency encashed to save themselves from loss, occasioned due to encashment of US dollars, at specified rate. P.W.1 in his evidence has himself admitted that the defendant bank was legally bound to follow the instructions and circulars of State Bank of Pakistan. The stance of the plaintiffs that the defendant could ignore the instructions of State Bank as against notice/instructions of the plaintiffs, is not convincing"... [Underlining is mine].
22. Moreover, under Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973, the Defendants are not only entitled to have a 'FAIR TRIAL' but also deserve to be dealt with in accordance with 'DUE PROCESS' of law. Per Mr. Asim Mansoor Khan, after incorporation of Article 10- A in the Constitution of Islamic Republic of Pakistan, 1973 through 18th amendment, a 'fair trial' and 'due process', have become a fundamental right of every citizen in litigation. In support of his contentions regarding GRANT OF LEAVE TO DEFEND on the basis of 'SERIOUS AND BONA FIDE DISPUTE', `MARK-UP OVER `MARK-UP', 'AGREEMENT WITHOUT CONSIDERATION', `MARK-UP BEYOND EXPIRY PERIOD', 'PROMPT PAYMENT BONUS', as claimed by Defendant No.!, two suits being PENDING, VIOLATION OF SBP's CIRCULARS and on 'NO DEFAULT' NO BANKING COURT'S JURISDICTION, Mr. Asim Mansoor Khan, learned counsel for Defendant No.1 placed reliance on the case-laws as follows:- A. ON THE GRANT OF LEAVE TO DEFEND:
1. 2009 CLD 401 [2] 2009 CLD 1177
3. 2009 CLD 655 [4] 2008 CLD 1252
5. 2008 CLD 36 [6] 2005 CLD 1442
7. 2007 CLD 656 [8] 2009 CLD 856
9. 2007 CLD 492 [10] 2007 CLD 170
11. 2008 CLD 1611 [12] 2009 CLD 354
13. PLD 1963 SC 163 [14] PLD 2004 Karachi 309
15. 2009 CLD 1195 [16] 2005 CLD 1225
17. 2005 CLD 1437 B. SERIOUS AND BONA FIDE DISPUTE:
18. 2000 CLC 2017 [19] PLD 1999 Karachi 398 C. MARK-UP OVER MARK-UP ALLEGEDLY CHARGED:
20. 2002 CLD 93 [21] 2001 MLD 1955
22. 2002 CLD 276 [23] 2003 CLD 1352
24. 2004 CLC 275 [25] 2005 CLD 444 D. AGREEMENT WITHOUT CONSIDERATION:
26. 1998 CLD 816 [27] PLD 2001 Karachi 264
28. 2003 CLD 751 E. MARK-UP BEYOND EXPIRY PERIOD:
29. 2003 CLD 905 [30] 2003 CLD 1007
31. PLD 1998 Karachi 302 [32] PLD 1998 Kar. 316
33. 1999 CLC 1374 [34] 2001 MLD 1137
35. 2001 MLD 1332 F. PROMPT PAYMENT BONUS AS CLAIMED BY DEFENDANT NO.1:
36. PLD 1999 Karachi 196 [37] PLD 2000 Karachi 246
38. 2001 CLC 1551 G. TWO SUITS/COUNTER SUITS BEING PENDING:
39. 2007 CLC 634 [40] 2003 CLD 911
41. 2009 CLD 460 [42] 2004 CLD 913
43. 2004 SCMR 108 [44] 2002 CLD 1466 H. JURISDICTION OF HIGH COURT UNDER BANKING JURISDICTION:
45. 2009 CLD 49 [46] 2010 CLD 585
47. 2010 CLD 293 [48] 2010 CLD 883
49. 1998 CLC 1718 L. SBP'S CIRCULAR BINDING ON BANKS:
50. 2009 CLD 361 [51] PLD 1997 SC 315
23. Regarding 'GRANT OF LEAVE TO DEFEND THE SUIT', Mr. Asim Mansoor Khan focused the attention of this Court towards the following portion from the case of Fine Textile Mills Ltd., Karachi v. Haji Umar [PLD 1963 SC 163] wherein, it was observed as follows:- "In a suit of this nature where the defendant discloses upon his affidavits facts which may constitute a plausible defense or even show that there is some substantial question of fact or law which needs to be tried or investigated into, then he is entitled to leave to defend. What is more is that even if the defense set up be vague or unsatisfactory or there be a doubt as to its genuineness, leave should not be refused altogether but the defendant should be put on terms either to furnish security, or to deposit the amount claimed in Court.
The principles upon which the provisions of Order )(XXVII of the Code of Civil Procedure should be applied are not dissimilar to the principles which govern the exercise of the summary power of giving liberty to sign final judgment in a suit filed by a specially endorsed writ of summons under Order XIV of the Rules of the Supreme Court in England. One of such principles laid down by the Court of Appeal in the case of Kodak v. Alpha Film Corporation (1930) 2 KB 340) was that at the stage when leave to defend is sought "the Judge is not to try the action; he is to see that there is a bona fide allegation of a triable issue, which is not illusory; he need not be satisfied that the defense will succeed; it is enough that such a plausible defense is verified by affidavit.
[Underlining is mine]."
24. On the point of 'SERIOUS AND BONA FIDE DISPUTE', Mr. Asian Mansoor Khan, placed reliance on the case of AGROFOSTER (PVT.) LTD. and 2 others v. JUDGE, BANKING COURT NO.5, KARACHI and another [PLD 1999 Karachi 398], wherein it was observed as follows:- "Adverting to the instant case, it is noted that only condition as per section 10 of the Act for granting leave to defend the suit is that the nature of the dispute be serious and bona fide. The word "serious" in the Oxford English Dictionary has been defined to mean; important, grave, consequences giving cause for concern, worthy of consideration etc. and the "bona fide" means: good faith, freedom from intent to deceive, guarantees of good faith, credentials, Combined effect of these two words is if the dispute, ex facie, appears to be genuine, arising out from good faith and free from mala fide, the Banking Court shall grant leave to defend the suit. Once the case is found fit for granting leave no condition of furnishing security can be attached, as it would tantamount to reading more than what actually the Legislature has mentioned in said section.
Any other construction which contradicts the letters of a statute and permits substitution of views other than expounded by Legislature, shall; as a rule, be avoided. Neither the principle of aforesaid maxim is applicable to this case nor the plea of substantial justice to both the parties would apply. The Legislature in its wisdom has not thought it proper to put any condition for seeking leave to defend the suit, except mentioned earlier." [Underlining is mine].
25. With regard to the charge of 'MARKUP OVER MARKUP', Mr. Asim Mansoor Khan vigorously contended that no 'MARKUP OVER MARKUP' under the Islamic mode of financing can be charged.
Per learned counsel ONCE THE 'PURCHASE PRICE' IS FIXED, it cannot be REDUCED on the case of earlier payment or ENHANCED in case of default. Even for the extended time no 'additional mark-up' can be charged from the customer otherwise, it would practically means charging of 'MARKUP OVER MARKUP' which per Mr. Asim Mansoor Khan, would be against the injunctions of Islam and SI3P's Circulars. In support of his contention reliance was placed on the case of Textile Management (Pvt.) Limited v. N.I.T. [2002 CLD 276], wherein it was observed as follows:- "... The mode of financing under clause (b)... Once the price is fixed, it cannot be decreased in case of earlier payment, nor can it be increased in case of default. The buyer may be asked to promise that in case of default, he will donate some specific amount for a charitable purpose. In such cases, seller may receive such amount from the buyer, not to make it as part of income but to use it for charitable purpose on behalf of the buyer. In Murabahah financing, if buyer defaults in payment of the price at due date the price cannot be increased, though, in interest based loan, the amount of loan keeps on increasing according to the period of default. In Murabahah financing once the price is fixed it cannot be increased. Murabahah transaction cannot be rolled over for a further period, it is not permissible, whereas, in the interest-based financing, if a customer of the bank cannot pay at the due date for any reason, he may request to extend the facility for another term. If the bank agrees, the facility is rolled over on the terms and conditions mutually agreed at that point of time, whereby the newly-agreed rate of interest is applied to the new term. The concept of Murabahah cannot be misunderstood as a mode of financing, analogous to the interest-based loan by using the concept of roll over. In Murabahah, if the client requests the bank to extend the maturity date of Murabahah, to roll it over and extend the period of payment on an additional mark-up charged from the client which practically means that another separate Murabahah is booked on the same commodity. Such practice is totally against the well settled principles of Shariah. Even rescheduling of payment in Murabahah is not permissible. If the installments are rescheduled, no additional amount can be, charged for the rescheduling. The amount of Murabahah price will remain the same in the currency (refer chapter Murabahah of an Introduction of Islamic Finance by Muhammad Taqi Usmani). [Underlining is mine].
26. Mr. Asim Mansoor Khan further contended that any Agreement under which 'NO DISBURSEMENT' is made shall be deemed and treated as void. In this regard, 'AS FAR AS THE PRESENT CASE IS CONCERNED', reference was made to finance Agreement dated 14.12.2007 [Annexure 'B-3' to the plaint]. In support of his contention reliance was placed on the case of United Bank Limited v. Ch. Ghulam Hussain [1998 CLC 816], wherein it was held as follows:- 4....It is, thus, clear that the learned Banking Tribunal is not required by law to accept the ipse dixit of a plaintiff qua its suit for any amount it may choose to claim from the defendant. It is, on the other hand, under a legal duty to first ascertain as to whether, according to the record of the case before it, amount claimed in the suit could legally be so claimed, failing which the suit, as a whole, or to the extent of the amount held to be not recoverable as such must be dismissed. For instance in suit for recovery of amount of finance based facility, the plaintiff may ask for award of interest/penal interest; claim for amount sought may be patently time-barred; or suit on the face of record may be hit by res judicata. In these and many other situations there may be a legal bar to maintain a suit. It cannot be said that the Banking Tribunal is so helpless as to be forced to grant a decree to a suitor on the averments of the plaint, ipso facto.
10. From the perusal of the record, it transpires that there is no sanction advice available for creation of these financial facilities. Significantly, the statement of account filed by the appellant does not show any disbursement, whatsoever, under these two agreements which have to be treated a void, being without consideration. The supporting material of these agreements i.e D.P.C. Notes etc. (pages 483, 485, 487 and 489) also suffer from the same fatal defect and cannot be looked into for holding that respondents Nos. 1 and 2 had incurred any financial liability thereunder." [Underlining is mine].
27. Mr. Asim Mansoor Khan in support of his contention that 'NO MARKUP BEYOND EXPIRY DATE' of Finance Agreement is permissible or can be charged by the Financial Institutions from the customer, relied upon the case of National Bank of Pakistan v. Punjab Buildings Products Ltd. [PLD 1998 Kar. 302], wherein inter alia the claim of markup beyond the agreed rate/period was disallowed. The relevant portion therefrom, reads as follows:- "...The claim for mark-up beyond the agreed rate is, therefore, disallowed. The plaintiff is also not entitled to any mark-up for the cushion period due to the reason that it was granted to compensate the Banking Companies mainly for the period consumed in litigation. The present law, however, stipulates grant of mark up from the date of institution of suit with the result that cushion period over-lapse the period for which mark up is granted under section 15 of Act XV of 1997." [Underlining is mine].
28. Mr. Asim Mansoor Khan taking his argument forward forcefully submitted that the Defendant No.1 herein is not liable to pay 'PROMPT PAYMENT BONUS' as the Plaintiff Bank under the Islamic mode of FINANCING is not entitled to charge anything more, over and above the 'MARKUP PRICE' mutually settled between the parties in the Finance Agreement. 'PROMPT PAYMENT BONUS' in fact, per Mr. Asim Mansoor Khan, is a PENALTY FOR LATE PAYMENT as such neither it is permissible under the Islamic mode of financing nor under section 74 of the Contract Act, 1872. In this regard, reliance was placed on the case of Askari Commercial Bank Limited and others v. Pakland Cement and others [PLD 2000 Karachi 246], wherein it was held as follows:- " ...On perusal of Schedule "B" of the Term Finance Agreement dated 20-7-1995, it appears that Pakland is required to pay the marked-up price in installments in the amount shown in Column III and is entitled to a specified amount as Prompt Payment Bonus shown in Column V if it pays the installment on or within 7 days of the due date of payment. Thus, the actual installment payable by Pakland to the plaintiff if paid on time is the amount shown in Column III less Prompt Payment Bonus shown in Column V of Schedule "B". The Prompt Payment Bonus therefore, prima facie, is in the nature of penalty for late payment which is neither permissible under section 74 of the Contract Act, 1872 nor under Islamic principles of finance for Murabahah which do not allow recovery of any penalty in case of delay in payment. The payment of any penalty on delayed payment of installments would also amount to Markup on Mark up which is prohibited by State Bank of Pakistan BCD Circular No.32 dated 26th November, 1984. The alleged prompt payment a bonus under any nomenclature or form, therefore, cannot be permitted to be incorporated in or if incorporated cannot be enforced under an agreement based upon the principles of Islamic finance and under BCD Circular No.32. Consequently, Pakland is liable to pay only the installments as shown in Column III of Schedule "B" less the Prompt Payment Bonus shown in Column V thereof.
The plaintiffs, therefore, cannot recover any additional amount which may have been incorporated in the Term Finance Agreement Which is over and above the marked-up price in the agreement. The amount financed by the first three plaintiffs, namely, Askari Commercial Bank, Standard Chartered Bank and Allied Bank Limited, were the same but the amounts claimed by them in their suits were different. Similarly, the amount claimed by the Soneri Bank Limited did not appear to have been calculated on the same basis as Askari Commercial Bank (Suit No.868 of 1999). Accordingly, I directed Mr. Zahid, learned counsel for the plaintiff- to file a revised statement of account showing the outstanding Marked-tip Price less Prompt Payment Bonus due from Pakland to the four plaintiffs." [Underlining is mine].
29. Mr. Asim Mansoor Khan, in support of his contention, 'TO AVOID POSSIBILITY OF CONFLICT OF JUDGMENTS', the instant suit for recovery of the outstanding amounts be CONSOLIDATED with the suits, filed ty the Defendants Nos.1 and 3 inter alia for damages/losses and declaration and which are still pending before this Court, placed reliance on the case of M.L. Traders through Proprietor and others v. Judge Banking Court No.IV, Lahore and 2 others [2007 CLD 634], wherein it was held/observed as follows:- "4. Respondents in response to notice by this Court have appeared and were represented through their counsel who could not refute the claim of the writ petitioners of decision of both the suits, out of consolidated proceedings and there was no answer with him to the judgment by the apex Court in the case of Messrs First Woman Bank Limited v. Registrar High Court of Sindh, Karachi and 4 others 2004 SCMR 108 wherein it was graciously held that trial of both the suits between the parties, out of consolidated trial was not only expedient in the interest of justice but was also in the interest of the parties and was also necessary to avoid possibility of conflict of judgments and he accordingly concurred to the prayer of consolidation of both the suits, made through instant petition. [Underlining is mine].
5. In view of the above, instant, petition is accepted and impugned order dated 24-1-2006 passed by the Banking Court No. IV Lahore is declared to be void and non-existent in the eye of law, with the result that Banking Court cognizant of the suit by the parties noted above, is directed to hold trial of those, out of consolidation and framing .of consolidated issue, in accordance with law. There will be no order as to costs.
30. Per Mr. Asim Mansoor Khan, since the Defendants in the case in hand are 'NOT IN A DEFAULT' or otherwise, any 'CAUSE OF ACTION' against the Defendants and in favour of the Plaintiff Bank has arisen as such the 'JURISDICTION OF HIGH Court' under banking jurisdiction is not attracted inter alia in terms of section 9[1] of 2001. Reference in this regard was made to the case of M. Nujeebullah Qureshi v. Citi Bank N.A. [2009 CLD 491, wherein it was held as follows:-
9. ... There could not be two opinions that the jurisdiction of the Banking Court is attracted when a customer or financial institution commits a default in fulfillment of any obligation with regard to any finance.
In case of Abdul Rehman Altana v. The Citi Bank 2003 CLD Karachi 1843 for the exercise of the jurisdiction by the Banking Court three pre-conditions have been laid down:-
(i) The plaintiff be either financial institution or the customer.
(ii) Cause of action on default in fulfilment of any obligation.
(iii) With regard to the finance i.e. subject matter.
Appellant has restored to file suit for declaration, injunction and damages as well as for removal of his name from the Data Check 'List on the basis of breach of contract or commission of tort. In case of Nasimuddin Siddiqui and another v. United Bank Limited and others 1998 CLC 1718, the cases filed before the Banking Court established under section 2(b) of the Act, 1997 (which is pan i materia of section 2(b) of the Ordinance, 2001) inter alia laid down:--
(a) All suits filed by the Banking Companies against the borrower or customer for recovery of Loan or Finance, either based on interest for mark-up as defined in the Act, 1997.
(b) All suits or claims filed by a borrower or customer against the banking company claiming any adjustment, set off or setting up a counter claim either through an independent suit or in a suit filed by a Banking Company.
(c) Suits for accounts arising out of a Loan or Finance as defined in the Act, 1997.
(d) Suits for specific performance seeking enforcement of an agreement or contract to pay or repay any Loan or Finance or to perform any obligation arising out of such agreement.
(e) All the suits for declaration as to legality, validity or otherwise of a document which creates Loan or Finance as defined in the Act, 1997.
(f) All the suits for cancellation of any instrument through which any liability to pay or repay a loan or finance may arise.
(g) All the suits for prohibitory injunction which may restrain any of the parties namely, banking companies, borrower or customer from performing their obligations and duties arising out of such business pertaining to loan or finance. In the manner, all suits in the nature of mandatory injunction.
(h) All the suits for damages [excluding tort cases) arising out of the breach of contract executed in respect of Loan or Finance between the Banking Company on the one hand and the borrower or customer on the other." [Underlining is mine].
31. Mr. Asim Mansoor Khan lastly prayed FOR GRANT OF UN CONDITIONAL LEAVE TO DEFEND THE SUIT as according to him, the Defendant No.1 has raised 'SERIOUS AND BONA FIDE DISPUTE'/'SUBSTANTIAL QUESTIONS OF FACTS AND LAW' which in any event, per learned counsel for Defendant No.1 needs framing of issues and recording of evidence.
32. IN REBUTTAL, Mr. Aijaz Hussain Sheerazi, learned counsel for the Plaintiff Bank while, repelling the arguments of Mr. Asim Mansoor Khan, forcefully contended that the Plaintiff Bank has admittedly extended the 'StIBJECT FINANCE FACILITY' to the Defendant No.l's 'SOLE PROPRIETORSHIP CONCERN' in the sum of US $ 5000,000/- i.e. in terms of the Agreement for Financing dated April 17, 2006 [Annexures 'B2' Page 65], however, the Defendant No.1, failed and/or neglected to pay the outstanding amount and discharge its' contractual obligations. The Defendant No.1, -as being IN DEFAULT, however, requested the Plaintiff Bank for extensions of time so that it becomes able to 'pay off the outstanding amounts. The request so made, nonetheless, was accepted by the Plaintiff Bank. Consequently, another Agreement for Financing [Annexure 'B-3' to the plaint], was signed and executed on December 14, 2007 between the Plaintiff Bank and Defendant No.!.
33. The Defendant No.1, however, again failed and/or neglected to pay the outstanding amounts and discharge its' legal obligations. Per Mr. Aijaz Sheerazi, time was again extended, as per request of Defendant No.1, in terms of the 'SETTLEMENT AGREEMENT' DATED MAY 25, 2009 [Annexure 'I' Page 215]. Per the aforesaid Settlement Agreement of May 25, 2009, the Defendant No.1 herein inter alia un-conditionally admitted its outstanding liability as on March 31, 2009 i.e. Principal Amount US $ 4,795,103.00 Mark-up US $ 277,417,87
[b] Defendant No.1, also agreed to pay markup with effect from April 1, 2009 at the rate of LIBOR [London Interbank Offered Rate] plus 3% per annum. [see Clause 3 page 217].
[c] The acknowledged outstanding amount was to be paid in the following manner:- (if US $ 315,103 on or before June 2, 2009;
[ii] US $ 1,000,000 on or before June 30, 2009;
[iii] US $ 1,880,000 on or before July 31, 2009;
[iv] US $ 1,600,000 along with accrued markup on all amounts on or before July 31, 2009; [see Clause 2 page 217]
[d] Moreover, in addition to the existing securities, a mortgage on double story bungalow on Plot No.95, Khayaban-e-Ghazi, Phase V. DHA, Karachi was also agreed to be created on or before May 31,2009 [see Clause 4 page 217]
[e] The securities/charges already created in favour of the Plaintiff Bank agreed to continue for securing all the liabilities of Defendant No.1, [see Clause 7 page 217].
34. Per Mr. Aijaz Hussain Sheerazi, the Defendant No.!, however, badly failed to perform his contractual obligations even for the second time in terms of 'SETTLEMENT AGREEMENT' OF MAY 25, 2009 [Annexure 'I' to the Plaint]. The Plaintiff Bank, under such circumstances, was compelled to file the above suit, inter alia, for the recovery of its outstanding dues/amount. According to Mr. Aijaz , Hussain Sheerazi, the Defendant No.1 in his 'APPLICATION FOR LEAVE TO DEFEND' bearing CMA No.9567 of 2009, has not only admitted the execution of financial and security documents but has also admitted the availment of the subject finance facility. Besides, the Defendant No.1, admitted the creation of charges/mortgages etc., in favour of the Plaintiff Bank and execution of all the documents INCLUDING THE DOCUMENTS OF MORTGAGES. The EVASIVE and unspecific DENIALS in his 'LEAVE TO DEFEND APPLICATION' filed by Defendant No.1, according to Mr. Aijaz Hussain Sheerazi, is not only un-permissible under Order VIII, Rule 4, C.P.C. Rather, such 'evasive denials' tantamount to admissions under Order VIII, Rule 5, C.P.C. Even otherwise, in view of the 'EXECUTION OF FINANCIAL' and 'SECURITY DOCUMENTS', SETTLEMENT AGREEMENT dated May 25, 2009 [Annexure 'I' Page 215] etc. the 'evasive denials' of Defendant No.!, seems afterthought and meaningless. For ready reference Order VIII, Rules 4 and 5, C.P.C., as referred to by Mr. Aijaz Hussain Sheerazi reads as follows:-
4. Evasive denial. Where a Defendant denied an allegation of fact in the plaint, he must not do so evasively, must answer the point of substance. Thus, if it is alleged that he received a certain sum of money, it shall not be sufficient to deny that he received that particular amount, but he must deny that he received that sum or any part thereof or else set out how much he received. And if an allegation is made with diverse circumstance, it shall not be sufficient to deny it along with those circumstances. [Underlining is mine].
5. Specific denial. Every allegation of fact in the plaint if not denied specifically or by necessary implication, or stated to be not admitted except as against a person under disability: Provided that the Court may in its' discretion require any fact so admitted to be proved otherwise than by such admission."
35. Mr. Aijaz Hussain Sheerazi, learned counsel for the Plaintiff, next contended that on account of 'non-compliance' of the mandatory requirements of section 10[4] of F.1.0., 2001, the 'LEAVE TO DEFEND APPLICATION' bearing CMA 9567 of 2009 filed by Defendant No. 1 is liable to be dismissed under section 10[6] of F.I.O., 2001. In this regard reliance has been placed on the following case- laws:- a. Faysal Bank Limited v. Genertech Pakistan Ltd. and 6 others [2009 CLD 856] b. Habib Bank Limited v. Messrs Sabcos (Pvt.) [2006 CLD 244] c. Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 12003 CLD 1406]
36. Per Mr. Aijaz Sheerazi, In the above cases, the Honourable Superior Courts have held that compliance of Section 10[3][4][5] of the Ordinance 2001 [In short F.I.O. 2001], is 'MANDATORY IN NATURE' and in case of non-compliance it would render the 'APPLICATION FOR LEAVE TO DEFEND', as being in-competent in law unless, 'SUFFICIENT CAUSE' is shown. the Defendant No.l's LEAVE-TO- DEFEND APPLICATION', without showing 'sufficient cause' for non-compliance of section 10[3][41[5], as the case in hand is, per Mr. Aijaz Hussain Sheerazi, is liable to be rejected under section 10[6] of FIO, 2001. The relevant portion/observations respectively from the aforesaid cases read as follows:-
34. While section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 casts a duty on a plaintiff financial institution to disclose with clarity the amount of finance disbursed, received back and the current outstanding amount, a similar duty is also cast on the defendantAby virtue of section 10 of the Ordinance. The relevant portion whereof is reproduced hereunder"
"Leave to defend. (I)
(2) --------------
(3) --------------
(4) In the case of a suit for recovery instituted by a financial institution the application for leave to defend shall also specifically state the following:--
(a) the amount of finance availed by the defendant from the financial institution; the amounts paid by the defendant to the financial institution and the dates of payment;
(b) the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit;
(c) the amounts of finance and other amounts relating to, the finance payable by the defendant to the financial institution upto the date of institution of the suit;
(d) the amount if any which the defendant disputes a payable to the financial institution and facts in support thereof; Explanation.--For the purposes of clause (b) any payment made to a financial institution by a customer in respect of a finance shall be appropriated first against other amounts relating to the finance and the balance, if any, against the principal amount of the finance.
(5) The application for leave to defend shall be accompanied by all the documents, which in the opinion of the defendant, support the substantial questions of law or fact raised by him.
(6) An application or leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to company with any such requirement. [Underlining is mine].
(7) ....................
(8) .......................
(9) ......................
(10) ...................
(11) ................
(12) .................
41. In view of the above, it is clear and obvious that neither PLA filed on behalf of defendants Nos. 1, 2, 4 to 7 nor PLA filed on behalf of defendant No.3 fulfills the mandatory requirements ofsection 10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Even otherwise, no triable issue or plausible defence has been made out by or on behalf of any of the defendants.
Consequently, PLA No.33-B of 2006 and PLA No.34-B of 2006 are without any merits and are hereby dismissed.
B. ......................
8. ... the defendant is required to comply with the requirements mentioned in subsection (4) if the suit is for recovery of amount instituted by financial institution, then the defendant is required to, firstly, specifically mention the amount of finance availed by him from the financial institution.
Secondly the amounts paid by him to the financial institution and the dates of such payments. This provision would help the Court in immediately arriving at the exact figures of dues or otherwise involved in the suit. Thirdly, to specifically mention the amounts of finance and other amounts relating to the finance payable by him to the financial institutions up to the date of the institution of the suit. Fourthly, the amount credited to the finance payable by the defendant to the financial institution up to the date of filing of the suit. Fifthly, to specify amount if any which he disputes is payable to the financial institution and should also file proof in support of such facts. Thus all the requirements are very essential which will go to the root of the cause and would give a clear picture to the Court about the amount due or otherwise in the case. The legislature have found these requirements very important and essential because they have provided a penalty for non - compliance of the said requirement in the shape of rejection of the application for leave to defend as provided under subsection (6).
9. Under subsection (5) the defendant is required to produce all the documents along with the application for leave to defend which can support the substantial question of law and fact raised by him in subsection (3). Non-compliance of the said provision also entails the rejection of leave to defend application as provided under subsection (6) because it provides that if the defendant fails to comply with the requirements of subsections (3), (4) where applicable and (5) his application for leave to defend shall be rejected unless he discloses in the application itself sufficient cause for his inability to comply with such requirement.
17. Apart from the above facts, the defendants have not yet been granted any leave to defend the suit, therefore, before grant of such leave he cannot move the Court to adjudicate any of his rights or defences. The law specifically prohibits in taking into consideration the defence of the defendants before leave to defend is granted, because a specific procedure has been provided under the law that the defence of any nature involving legal as well as fact pertaining to the case can be considered only after fulfilling the conditions of section 10 of the Ordinance which have not been fulfilled. Thus before grant of leave to defend, the application is not maintainable. The same is dismissed. [Underlining is mine"
C. (6). Upon the examination of the instant leave application, I find that the said defendants failed to give amount of finance availed by' the defendants; the amount paid by them; the dates of payments; amount of finance and other amounts relating to the finance payable by the defendants to the financial institutions; the amount of finance and other amounts, which the defendants dispute as payable to the financial institutions, thus, the said defendants have comprehensively failed to adhere to the provisions of section 10(4) of Ordinance of 2001 in the above backdrop, now the pivotal question, which has arisen for determination by this court is as to whether the instant leave application, filed by the said set of defendants, is liable to be rejected summarily. Provisions of sections 10(3), (4) and (5) of Ordinance XLVI of 2001, inter alia, provide that the application for leave to defend shall be in the form of a written statement, containing summary of substantial questions of law and facts, and also giving certain particulars to be furnished by the defendants regarding the finance, i.e. finance availed, amount paid by the defendants etc. and that such an application must be accompanied by all the documents in support of substantial question of law and facts raised by the defendants. If the afore-noted provisions of law are placed in juxtaposition with the contents of the application, filed by the aforementioned set of defendants, the only irresistible conclusions, which can be drawn is that the said defendants did not comply with the aforesaid provisions of law. In the above perspective, I am constrained to hold that the said defendants have comprehensively failed to file leave application, as required under the law, and they have not complied with the requirements of sections 9(4) and (5) of Ordinance XLVI of 2001, thus, the defendants failed to file leave application in accordance with the provisions of the said Ordinance.
(7) Section 10(6) of Ordinance (XLVI of 2001) provides that an application for the grant of leave, which does not comply with the requirements of subsections (3), (4) and (5) of section 10 of Ordinance (XLVI of 2001), the same shall be rejected, unless the defendants able to show sufficient cause for their inability to comply with any such requirements, in this case, as noted above, the application filed by these defendants does not fulfill the requirements of section 10(4) and (5) of Ordinance XLVI of 2001. Additionally, they have not been able to show in their application, any cause, what to talk of sufficient cause for their inability to comply, with said requirements.
(8) Now the question, which arises is as to whether the provisions of section 10(6) of Ordinance XLVI of 2001 is mandatory or directory. Basic principle for the interpretation of statute is that when a provision of law has been couched with the penal consequences, the said provisions of law would be considered as a mandatory provision of law and where no penal consequences entail to the non-compliance of a provision of law, in that case, the said provision of law would be taken, as directory. Having gone through the provisions of section 10(6) of Ordinance XLVI of 2001 as noted above, I am of the considered view that this provision of law is mandatory in nature, as the non- compliance of said provision of law entails the penal consequences of rejection of leave application, as provided in the afore-noted provision of law. In the present case, as the defendants did not comply with the afore-noted provisions of law, therefore, the presumption would be that no application for grant of leave to defend a suit is deemed to be pending and the present application for leave to defend is liable to be rejected per force of section 10(6) of Ordinance XLVI of 2001." [Underlining is mind.
37. Per Mr Aijaz Hussain Sheerazi, the objection raised to the effect that the present suit is not filed by the Plaintiffs authorized attorneys, is not only mis-conceived but also mis-leading. The contents of 'Power of Attorneys' [Annexure 'A' and 'A-1' to the Plaint] of the principal officers of the Plaintiff Bank belie the assertions and stand taken by the learned counsel for the Defendants. The Power of Attorneys are of duly notarized attorneys of the Plaintiff Bank and evidently in terms thereof, the above suit has been competently filed. Per Mr. Sheerazi, the Plaintiffs suit is not only competent in law but also deserves to be decreed as prayed. On this aspect of the matter reliance was placed on the case of KASB Bank Ltd. v. Mirza Ghulam Mujtaba and 2 others [2011 CLD 461] wherein on the aspect of filing of Banking Suit it was held as under: "18. The upshot of the above discussion is that since the plaint in the present suit has been presented by the two signatories who are attorneys and were authorised by the bank, it is valid presentation and suit is maintainable under the law. Even otherwise, section 9(1) of Ordinance, 2001 provides that financial institution may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath by the Branch Manager or such other officer of the financial institution as may be duly authorized in this behalf by power of attorney or otherwise. A bear reading of above provision would show that plaint can be present by a financial institution before a Banking Court duly signed and verified on oath either by a Branch Manager or such other officer of the bank who holds a power of attorney or has been authorized otherwise. In the present case valid power of attorneys have been brought on record which fulfils the requirement of section 9(1) of Ordinance 2001. Accordingly, I hold that suit has been validly filed and the same is maintainable."
38. The contention of Defendant No.1 regarding 'LOSSES' on account of Plaintiffs alleged failure to sell the 'pledged rice' or to allow Defendant No..1 to sell the same, per Mr. Aijaz Hussain Sheerazi, is absolutely incorrect and without any foundation as well. Per learned counsel, a notice dated April 4, 2008 in this regard was issued to Defendant No.1, whereby besides, demanding the outstanding amount, sale of the 'pledged rice' was also sought. However, due to Defendant No. 1 's failure of making payment, the Plaintiff Bank thereafter, was consequently constrained to INVITE OFFERS for sale of the 'pledged rice'. The Plaintiff Bank in response thereof, as contended by Mr. Aijaz, received offers for the purchase of 'pledged rice' from one MIS. KARIM KAROBAR vide their letter dated April 15, 2008 for 3200 and 25,234 Metric Tons, Vide another letter of April 18, 2008, an offer for 400 Metric Tons, was also received by the Plaintiff Bank. The offer[s], so received were ACCEPTED DEFENDANT No.1 through a 'handwritten note' on the offers and also vide letter dated April 18, 2011. The 'pledged rice' according to Mr. Aijazl Hussain Sheerazi, learned counsel for the Plaintiff Bank was thereafter also inspected by MIS. KARIM KAROBAR but they refused to purchase the 'pledged rice' without firstly 'segregating' and 're-packing' the same. In this regard, a reference was made to the letter dated April 28, 2008 of M/s. Karim Karobar. For ready reference the letter No.HM/ALFALH/08 dated April, 28, 2008 is reproduced as under:- Karim Karobar Co.
EXPORTERS. RICE DEALERS AND F000 GRAIN MERCHANT Ref No.HM/ALFALH/08 To, Mr. Danish Saleem Relationship Officer Credits, Bank Al-Falah Ltd., Karachi, Date: April 28, 2008 Dear Sir, We visited following Godown with you to inspect IRRI-6 Rice:
1. TPX-KPT Shade No.E-1 M. T. Khan Road, Karachi
2. Plot No.D-1 & D-2 Main Hawksbay Road, Phase-I Musharraf Colony, Karachi After physical inspection, we are very sorry to inform you that partial Rice is now in a condition that need to segregate.
As Mr. Aqeel Qadri is aware, we did not physically inspect the cargo at the time of officer(sic.). Still we believe very strong that you can get your money recovered plus extra as well.
The balance Rice is now not in a condition to be consumed by humans without segregate, so regretfully the offer for the said commodity does not stand.
The only way to sell this Rice is,it has to be segregated and quality wise lot should be made. We will help in segregation by providing you our Rice experts/analyzer. This is the only way we will be able to sell different lots A --B--C--D according to quality to different animal needs consumers at different prices. If you intend to sell as is where basis you will not get the price. If you segregate you will get good rate and no claim or rejection. [Underlining is mine].
Thanking you, Best regards Sd/- KARIM KAROBAR CO.
39. Per Mr. Ejaz, upon refusal, the Plaintiff again issued a notice dated April 22, 2008 demanding thereby, the outstanding amounts and asking sale of 'pledged rice'. In response to the aforesaid 'legal notice', Defendant No.1, however, vide its' LETTER DATED MAY 3, 2008, asked for time and permission to segregate and re-pack the 'pledged rice.' The Plaintiff Bank, vide letter dated May 10, 2008, granted the permission. The task of segregation and re-packing according to Mr. Aijaz, was needed to be completed in specified time. The Defendant No.1, nonetheless, vide LETTER DATED MAY 16, 2008, again sought extension of time for completion of the 'segregation' and 're-packing' process. The Plaintiff again extended the time by three days vide its' letter dated May 20, 2008. The Defendant No.1, however, again failed to meet its' commitments and obligations. The ZTC's letter dated May 3, 2008, Plaintiffs Bank's letter dated May 10, 2008 and ZTC's letter dated May 16, 2008 are reproduced as under:- A. ZATCO Group ZULFIQAR TRADING CORPORATION (EXPORT AND IMPORT HOUSE)
6, 7 & 8, 6th Floor, Al-Yousuf Chambers, Shahrah e Liaquat, New Challi, Karachi-74200 (PAKISTAN)
May 3, 2008 The Manager, Bank Alfalah Limited Paper Market Branch Karachi Dear Sir, Subject: Disposal of Rice under pledge with your bank With reference to your legal notice dated 22/04/08 through M/s. Ahmed and Qazi, Co, Advocate I would like to mention that we tried our best to sell pledge stock on as is where as basis, but till today we could not get the appropriate offer on this basis. You will refer that we got an offer from M/s. Karim Karobar Co. at Rs.27,000/- per metric ton. But after a week and two they backed out from their original offer and offered to purchase on segregation basis (Quality wise).
In the light of above I would like to request you to allow me for segregation from Monday i.e. 05/05/08. I further firmly commit that the process of segregation shall be completed by 20th May 2008.
I further declare that segregation of TPX site shall be completed within a week. At the same time the process of selling will be going on against your Delivery Order and payment Order from the purchaser of rice. The bank shall receive the sales proceeds directly which will start from 15/05/08.
[Underlining is mine].
I would, therefore, request you to allow me to start segregation process so that the pledged stock is sold at a better price.
Regards For and on behalf of M/s Zulfiqat Trading Corp.
Sd/- Proprietor"
B. BANK ALFALAH LIMITED BANK AUFALAN LIMITED WITHOUT PREJUDICE Zulfiqar Trading Corporation, 6,7 & 8, 6th Floor, Al-Yousuf Chambers, Shahrah-e-Liaquat, New Challi, Karachi Dear Sir, May 10, 2008 Notice for sale of pledged goods- Request for segregation of rice pledged Reference your letter dated 03.05.2008 that you have written to us in response to our legal notice dated 22.4.2008 for the sale of pledged goods/rice to settle you outstanding liability towards Bank Alfalah Limited (BAL).
In the said letter you, inter alia, have requested for some time to find a buyer who may purchase the pledged goods at some better rate and have also sought permission of BAL for segregation of rice pledged with the BAL.
We are writing to inform you that the competent authority of BAL has Accepted your said request, subject to the meticulous adherence of following terms and conditions:
(a) Segregation of pledged rice is allowed only for purpose of selling the said pledged stock of rice for best price as per its quality and the sale will start form 15th of May 2008, positively;
(b) Segregation process shall be completed in the presence of mucaddam of BAL;
(c) Segregation of pledged rice stored at TPX Site shall be completed upto 13/05/08;
(d) Segregation of pledged rice stored other than the site mentioned at (c) shall be finalized upto 20/05/08;
(e) Prior to the sale of any quantity of pledged stock you would obtain delivery order from BAL;
(f) Any consideration received from the sale of pledged stocks of rice shall (i) be directly deposited with BAL and (ii) shall only be adjusted towards your outstanding liabilities with BAL; [Underlining is mine].
(g) By issuing this letter, BAL is not withstanding its legal notice dated 22.04.2008 under section 176 of the Contract Act, issued through its Advocates Ahmed and Qazi for sale of pledged goods contents of the same are still intact.
In case you failed to comply with the abovementioned terms and conditions or failed to segregate the pledged stock of rice within stipulated time period then BAL without giving you any prior notice or intimation shall proceed for auction of pledged stock of rice. Regards Syed Aqeel Ahmed Qaudri Branch Manger, Bank Alfalah Ltd., Paper Market Branch, Karachi ZULFIQAR TRADING CORPORATION (EXPORT AND IMPORT HOUSE)
6, 7 & 8, 6th Floor, Al-Yousuf Chambers, Shahrah e Liaquat, New Challi, Karachi-74200 (PAKISTAN)
Dated: 16.05.2008 The Manager, Bank Alfalah Limited Paper Market Branch Karachi Sub: Extension in Deadline for Segregation of Rice Dear Sir, With reference the captioned subject and your letter dated 10th May 2008 regarding the subject mentioned above, we would like to inform you that due to what crop's cutting in the entire Pakistan, labour is falling short.
In view of the above, we wish to inform you that it will be difficult for us to keep the deadlines given in your cited letter, however we are trying our best to expedite the entire process of segregation and repacking at both sites. [Underlining is mine].
Your cooperation in this regard shall be highly appreciable. Thanking You Yours Faithfully, Sd/- For Zulfiqar Trading Corporation
40. The Defendant No.1, later on also furnished an 'UNDERTAKING-CUM-INDEMNITY bond' of July 24, 2008. Perusal of the 'undertaking-cum-indemnity bond' would show that the Plaintiff Bank besides, making efforts to sell the 'pledged rice had also allowed ample opportunities to Defendant No.1, for 'segregating', 're-packing' and 'selling' of the 'pledged rice.' Besides Defendant No.1., is not only admitting release of the 'pledged rice' from time to time but also admits its' outstanding liability of the 'subject finance facility' in sum of US $ 4,795,103.00 Notwithstanding all the above, Defendant No.1, however, failed to fulfill its' commitments and obligations as undertaken. The Plaintiff Bank, was thus constrained, to issue a 'legal notice' of August 13, 2008 inter alia for meeting its' commitnients. The Defendant No.1, vide his letter dated August 18, 2008 while, accepting the sale of the 'pledged rice', also admitted the outstanding amount/dues and payment thereof by September 30,.
2008. The 'undertaking-cum indemnity bond' of July 24, 2008, furnished by Defendant No.1 's 'sole proprietorship concern' viz. ZTC and its' letter dated August 18 of 2008 are respectively reproduced as under:- The Manager, Bank Alfalah Limited Paper Market Branch Karachi Date: July 24th, 2008 A. ZATCO Group ZULFIQAR TRADING CORPORATION (EXPORT AND IMPORT HOUSE)
6, 7 & 8, 6th Floor, Al-Yousuf Chambers, Shahrah e Liaquat, New Challi, Karachi-74200 (PAKISTAN)
Dear Sir, UNDERTAKING-CUM-INDEMNITY BOND I, Syed Zulfiqar Ali Rizvi, sole proprietor of M/s. Zulfiqar Trading Corporation, Export and Import House, Room Nos.6, 7 and 8, at 6th Floor, Al-Yousuf Chambers, Shahrah-e-Liaquat, New Challi, Karachi (hereinafter the 'Customer'/'Pledgor') do hereby confirm, declare and undertake as follows: A. That on my specific request Bank Alfalah Limited (hereinafter 'BAL' or 'Pledgee') sanctioned various finance facilities and for the security of the said finance facilities I, inter alia, created pledge upon my following stock of rice:
(I) 3,200 M.Tons stored under muccadamge of BAL at TPX KPT Godown, Shade # E 1, M. T. Khan Road, Karachi, and
(II) 25,234 M. Tons stored under muccadamage of BAL at Plot No.D-1 and D-2, Main Hawksbay Road, Phase I, Musharraf Colony, Karachi.
B. That due to certain unavoidable circumstances, I was unable to pay the following outstanding amount to BAL as on 24.07.2008.
(I) CF Rs.24,999,999.95/-
(II) FAPC Rs.2,580,820.00/-
(HI) PAPC (under FE-25) US$4,795,103.00/- C. That on 22.04.2008, BAL through its legal advisor Ahmed and Qazi, Advocate and Legal Consultants, served me legal notice under section 176 of Contract Act for sale of said pledged goods/stock of rice.
D. That after receiving and in response of said legal notice on 03.05.2008, I approached BAL through my letter dated 03.05.2008 and requested for some time to find a buyer who may purchase the pledged goods/stock of rice at some better rate and also sought permission of BAL for segregation and re packing of stock of rice pledged with BAL.
E. That on 10.05.2008, the competent authority of BAL was pleased to accept my said request and allowed me to segregate and re-pack the said pledged stock of rice with BAL only for the purpose of selling the same at some better rate and to liquidate my outstanding liabilities towards BAL.
F. That in pursuance of said permission of BAL, I started segregation and repacking of the said stock of rice pledged with BAL but due to huge quantity of said pledged stock of rice and shortage of required labor for segregation and re-packing I was unable to complete the same within agreed/stipulated time period hence on 16.0-5.2008, I approached BAL through my letter and requested for extension of some time for segregation and re packing of the pledged stock of rice with BAL.
G. That on 20.05.2008, the competent authority of BAL once again was pleased to accept my said request of extension for time and further time period up to 23.05.2008 was granted to me for segregation and re-packing of the pledged stock of rice with BAL.
H. That in pursuance of said permission, I started segregation and re-packing of said pledged stock of rice with BAL and now on 20.07.2008 said segregation and re-packing is completed. I. That I hereby acknowledge/confirm and admit that as on 23.07.2008 after segregation and re-packing of said pledged stock for rice now a total of 12,027 M. Tons available as detailed below.
(I) 35,000 Bags of 50 Kg each, approximately 1,750 M. Tons is available at TPX KPT Godown, Shade# El, M.T. Khan Road, Karachi
(II) 205,545 Bags of 50 Kg each, approximately 10,277 M.Tons is available at Plot Nos.D-1 and D-2 Main Hawksbay Road, Phase I, Musharraf Colony, Karachi.
J. That I hereby acknowledge, confirm and admit that before segregation and re-packing approximately a quantity of 15,662 M.Tons was released to me by BAL against Trust Receipt from the total rice under pledge. I further undertake that in lieu of the goods so released to me against Trust Receipt, I will further provide under pledge of BAL stock of rice of approximately 15,662 M.Tons to BAL within 2 months from the date of this undertaking. K. That I hereby undertake to indemnify BAL and promise to keep BAL indemnified against all losses, charges, damages, expenses or other costs, which BAL may have to suffer due to shortage of the pledged stock of rice. L. That I hereby confirm that whatever is stated above is true and correct to the best of my knowledge and belief and nothing has been concealed thereof. M. That I further confirm, declare and admit that the existing stock of rice and additional stock of rice that will be provided hereafter shall be under the effective pledge of BAL who has full and complete rights to effect adjustment from sale of mortgaged property bearing Plot No.108/16, Bahaduryar Jhang Cooperative Housing Society, Karachi. [Underlining is mine].
Yours truly Sd/- Syed Zulfiqar Ali Rizvi Sole Proprietor of M/s Zulfiqar Trading Corporation Karachi B. ZATCO Group ZULFIQAR TRADING CORPORATION (EXPORT AND IMPORT HOUSE)
6, 7 and 8, 6th Floor, Al-Yousuf Chambers, Shahrah-e- Liaquat, New Challi, Karachi-74200 (PAKISTAN)
Ref: 18-X-2K8 18-Aug-2008 Karachi Mr Jam Asif Mehmood, Ahmed and Qazi Advocates and Legal Consultants 400, Clifton Centre Clifton, Karachi Fax 5860428 Sub: Your Notice Dated 13-Aug-2008 Dear sir, With reference to your letter Notice dated 13-Aug-2008 which was received at 1210 hours on 15- Aug-2008, I would like to inform you I am in regular contact with the Management and Branch Manager of Bank Alfalah. A deal/understanding has been made with Bank Alfalah under which I am already selling the rice almost everyday. I have submitted a commitment in writing that I will adjust the outstanding amount including FATR amount before or latest by 30-Sep-2008. I already have been depositing all the sales proceeds direct to Bank Alfalah for releasing the delivery orders of rice. On the other hand, I have sold one of my property just to honour my commitment in time and it's sales proceeds be helpful to fulfill my commitment. I requested for segregation of stock as I know that without which no body will show interest to buy such a stock. In this connection Bank Alfalah also tried to sell out the stock but fruitless and finally I segregated the stock and almost Rs.40 Million has been deposited against sales proceeds of stock after segregation. [Underlining is mine].
In the light of this scenario, I hereby confirm that it will be adjusted as per my commitment.
Thanks and Best Regards For Zulfiqar Trading Corporation.
Sd/- Authorized Signatory C.C. MANAGER, BANK ALFALAH PAPER MARKET BRANCH.
41. According ,to Mr. Aijaz Sheerazi, the Defendant No.!, instead of reciprocating the good gestures of the Plaintiff Bank, also attempted to get release the 'pledged rice' on the basis of a 'FORGED CONTRACT' DATED JANUARY 18, 2008, purportedly executed with ASCOT COMMODITIES and COUNTER-CORP. The Plaintiff Bank, however, upon seeking confirmation of the genuineness of the alleged contract was surprised to know that the aforesaid contract was in fact a forged document.
From all the above, the Plaintiff's Bank co-operation and facilitation regarding sale of the 'pledged rice' is quite clear. Moreover, the efforts of the Plaintiff Bank on so many occasions have also been acknowledged by the Defendant No. 1 . The 'Email/reply' received regarding 'forgery of the contract' dated February 1, 2008 from ASCOT reads as follows:- ---Original Message---- From: Countercorp"marshall@countercorp.com.sg To: Hasnain Mirza" <hasnainmabankalfalah.com> Sent: Wednesday, February 06,2008 9:54 AM</hasnainmabankalfalah.com> Subject: Re: GENUINENESS OF IMPORT CONTRACT Husnain Mirza Relationship Manager Credit Bank Alfalah Limited Dear sir, Ref: Your message dated Feb. 1, 2008 enquiring as to the veracity of a contract purported between Zulfiqar and Ascot for 18,000 tons Rice We have to say that this is a total fraud and we have absolutely no knowledge of any such transaction and furthermore the usage of our name, letterhead and signature are false ones and a flagrant action on the part of Zulfiqar and/or Ascot.
We therefore, deny any such connection and commitment or responsibility and suggest that you take appropriate action against the perpetrators. [Underlining is mine].
As a matter of interest we are not involved in Pakistan rice and had terminated our connection with Zulfiqar Ali over five years ago. Thanking you Sumuel Marshall ---Original Message---- From: Hasnain Mirza To: marshallecountercorp.com.sg Sent:Friday, February 01, 2008 2:48 PM Subject: Fw: GENUINENESS OF IMPORT CONTRACT This is with reference to the import contract No.ZTC/621/756, Dated 18/01/2008 for US$ 6,480,000/- Beneficiary: M/s. Zulfiqar Trading Corporation -- Karachi, Pakistan Kindly confirm the genuineness of said import contract (scanned copy enclosed), along with the representative's name, who have signed.
Please also provide us copy of import contract duly signed on all the pages of contract through return fax. Thanks and regards Hasnain Mirza Relationship Manger Credits Bank Alfalah Limited Paper Market Branch, Karachi
42. Per Mr. Aijaz Sheerazi, the Defendant No.1, has also failed to fulfill his contractual obligations regarding re-payment and sale of the 'pledged rice'. The Defendant No.1, as urged by Mr. Sheerazi, had rather actively attempted to cheat the Plaintiff Bank by way of submitting a 'FORGED CONTRACT'. The Defendant No.1, when failed to achieve the attempted goal thereafter he with the help of Defendant No.5, compelled/forced the Plaintiffs MUQADDAM to leave the 'premises' where the 'PLEDGED RICE' were stored. The 'pledged rice' was thus stolen thereafter and regarding such offence criminal proceeding was also initiated by the Plaintiff Bank. On account of Defendant's failure to perform its' contractual obligation, inter alia, in terms of Clauses 2[i], 2[ii], 2[iii] and 2[iv] of SETTLEMENT AGREEMENT dated May 25, 2009 [Annexure 'I' to the Plaint], the Plaintiff Bank thus besides justified is entitled to retain and hold all the securities lying with the Plaintiff Bank and from the sale thereof, recover its' outstanding amounts, inter alia, as per 'Clause 12' of the SETTLEMENT AGREEMENT dated May 25, 2009 [Annexure 'I' to the Plaint] and other documents available on record. Defendant No.1, per Mr. Sheerazi, be also deemed as estopped from making any contrary assertions in view of Article 114 of the Qanun-e-Shahadat Order, 1984. Per Mr. Aijaz Sheerazi, the allegations leveled by the Defendant No.1 vis-a-vis NON-RELEASE of the PLEDGED GOODS are absolutely false and as such merits no consideration on the basis of false assertions, the Defendant No.1 is not entitled for any LEAVE-TO-DEFEND the suit as Defendant No.1, has failed to raise any substantial questions of law and facts in respect of which any evidence needs to be recorded. On this aspect of the matter reliance was placed on the case of NIB Bank Ltd v.
Muhammad Yasir and another [2011 CLD 243] wherein under somewhat the like circumstances, it was held as follows:- "14. The examination of the section 2(c) of the Ordinance, 2001 shows that customer means a person to whom finance has been extended by financial institution and includes person on whose behalf a guarantee or letter of credit has been issued by financial institution as well as surety or indemnifier. If clause 5(y) of the above agreement is read, it will be seen that at the time of execution of such agreement, defendant No.2 had undertaken to indemnify the bank against all losses, damages, payments, dues, claims, expenses and charges. It is admitted position that pledged goods were delivered to defendant No.2, which were under exclusive control of defendant No.2 under lock and key. In confirmation thereof defendant No.2 along with defendant No.1 had executed stock reports of pledged goods, which appears on pages 115, 117, 119,
121. Iris also an admitted position that all such goods were removed, which has caused loss to the bank. It is also an admitted position that defendant No.2 had not indemnified the plaintiff-bank. Even if leave to defend application is to be considered as competently filed, no substantial question of law and facts have been raised in respect of which any evidence is to be recorded. The removal of pledged goods from the custody of defendant No.2 is admitted by defendant No.2 has he himself had lodged FIR against defendant No.1 in respect of above removed pledged goods but plaintiff-bank has not been indemnified. On this ground alone the leave to defend application merits no consideration and liable to be dismissed.
15. On merits as well, the plaintiff has stated his claim against defendant No.2 in paragraph 17 of the plaint, such statement of facts is verified on oath. The defendant No.2 in this leave to defend application had denied all other assertions made by the plaintiff in the plaint, but neither paragraph 17 of the plaint has been referred to nor the same has been denied. It is settled law that where fact asserted by one party on oath remains unchallenged or unrebutted, the same amounts to admission on the part of other party. In this view of the matter, defendant No.2 does not have any case on merits.
16. Even otherwise leave to defend application is not in conformity with the provisions of section 10(3) of the Ordinance, 2001 which requires that application for leave to defend shall be in the form of a written statement and shall contain summary of substantial question of law as well as facts in respect of which any evidence is needed to be recorded. Neither the present application is in form of written statement, nor any substantial question of law or facts has been raised, which requires any evidence to be recorded. On this ground as well, application for leave to defend is liable to be dismissed. The above findings are supported by following case-law. [Underlining is mine]."
43. Like-wise, as far as the allegations of Defendant No.1 regarding non-sale of the 'pledged goods' by the Plaintiff Bank and its' alleged negligence is concerned, Mr. Aijaz Hussain Sheerazi, in rebuttal thereof, placed reliance on the case of KASB Bank Ltd. v. Mirza Ghulam Murtaza and others [2011 CLD 461], wherein it was observed as follows:-
19. The next contention of learned counsel for the defendants that plaintiff-Bank did not sell the pledged shares in time and did not act as a prudent bank. An examination of the record shows that number of letters were addressed by the defendants to the plaintiff-Bank for dot selling the pledged shares in market otherwise defendants shall initiate legal proceedings against the plaintiff-Bank. Even otherwise, the argument of learned counsel for defendants is in violation of the provisions of section 176 of the Contract Act which is quoted hereinunder:-- "176. Pawnee 's right where pawnor makes default. If the pawnor makes default in payment of the debt, or performance, at the stipulated time of the promise in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged on giving the pawnor reasonable notice of the sale.
If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due the pawnee shall pay over the surplus to the pawnor."
44. Per Mr. Aijaz Hussain Sheerazi, the 'objection raised to the effect' that the Plaintiff Bank has wrongly adjusted the amount repaid by Defendant No.! towards 'markup', 'mark-up' over 'mark-up' wrongly charged by the Plaintiff Bank beyond the expiry date of the Finance Agreement [Annexure 'B-2' & 'B-3' to the Plaint] besides incorrect calls for the wisdom of Defendant No.l. The Defendant No.1 has not only failed to pin-point ay entry in the two certified statements of accounts pertaining to the 'Principal Amount' and 'Mark-up' jointly enclosed and marked as Annexure 'K-1' to the Plaint as being wrong and incorrect but also failed to establish for the record that Mark-up over Mark-up in contravention of any finance agreement has been charged. As far as the adjustment of repayments made by Defendant No.1 against mark-up is concerned, the same is quite permissible under law/F.1.0., 2001. According to Mr. Aijaz Hussain Sheerazi, the objection so raised is not only 'MIS-CONCEIVED ' but also 'MIS-LEADING' as such merits no consideration.
45. Mr. Aijaz Hussain Sheerazi, learned counsel for the Plaintiff Bank, vis-a-vis CMA No.9567 of 2009, next forcefully urged that Defendant No.1 amongst others has failed to raise any SUBSTANTIAL QUESTIONS OF FACTS AND LAW. In view of this position, the 'LEAVE TO DEFENDANT APPLICATION', merits no consideration.
' Rather, the 'LEAVE TO DEFEND APPLICATION' filed by Defendant No.1 is liable to be rejected straight away. CMA NO.9668 OF 2009
46. Mr. Faiz H. Shah, learned counsel for the Defendant No.3, strenuously contended that the Defendant No.3 in his 'personal capacity' except as an attorney of Defendant No.2, is not liable to pay any outstanding amount to the Plaintiff Bank as claimed in the plaint or otherwise. Per learned counsel, Defendant No.3, is neither a 'customer' nor 'mortgagor' and/or 'guarantor' in his 'personal capacity' as such being not a 'customer' of the Plaintiff Bank, the present suit against Defendant No.3 is 'mis-conceived' and mis-leading' thus liable to be dismissed with cost.
47. Without prejudice to above, Mr. Faiz Shah next contended that the claim of the Plaintiff Bank, even against the Defendant No.2, and/or his 'mortgaged properties', is not enforceable under the law, as the 'FINANCE FACILITY' granted to and availed by the Defendant No.1, in fact is secured only against the 'PLEDGED STOCK OF RICE' and 'PERSONAL LETTER OF GUARANTEE' of the sole proprietor of Zulfiqar Trading Corporation [In short ZTC]. Mr. Faiz H. Shah, learned counsel for Defendant No.3, also argued that the 'MORTGAGE DEEDS' and 'MDOT Deeds' signed and executed by the Defendant No.3, are only in his 'CAPACITY AS AN ATTORNEY' of Defendant No.2. The same documents thus executed by Defendant No.3 are not enforceable against Defendant No.3 and/or his properties, if any, in his personal capacity, as the Defendant No.3, is only attorney of Defendant No.2. The said documents, per Mr. Faiz H. Shah, are no more enforceable in law rather now they are liable to be cancelled and returned to Defendant No.2/mortgagor, if course, without making any false excuse by the Plaintiff Bank.
48. Mr. Faiz H. Shah, learned counsel for the Defendant No.3, further contended that 'DISBURSEMENT OF THE FACILITY AMOUNT' to Defendant No.1, much-less after February 1, 2008, is seemingly against the instructions as given in letter dated February 1, 2008. The Defendant No.2 herein, was thus constrained to file Suit No. B-54 of 2009 [Muhammad Irfan son of Muhammad Yaqoob SOria through His Registered General Attorney Aurangzeb son of Late Muhammad Sharif v. Bank Al-Falah Ltd.], against Plaintiff herein, for declaration, permanent injunction, damages. In the aforesaid suit inter alia a relief for declaration to the following effect has also been sought:- "a. To declare that Defendant No.1 had no authority to disburse distribute the loan/advances to Defendant No.2 against the Plaintiffs additional security subsequent to Letter dated February I, 2008 and the Plaintiff is not liable to repay to the Defendant No.I the amount obtained by Defendant No.2 subsequent to letter dated February I, 2008 of the Plaintiff and Defendant No.2." [Underlining is mine].
49. Per Mr. Faiz H. Shah's stand, no doubt, the 'MORTGAGE DEEDS' etc. were signed and executed by Defendant No.3 VIZ. AURANGZEB son of Muhammad Sharif, however, in his capacity, as an ATTORNEY of Defendant No.2 herein viz, MUHAMMAD IRFAN SON OF MUHAMMAD YAQ00B, but the Plaintiff Bank, herein [Defendant in Suit No.B-54 of 2009], in contravention of Defendant No.3's letter dated February 1, 2008, did provide 'FINANCE FACILITY' to Defendant No.1 thus the mortgages created by Defendant No.2 in favour of the Plaintiff Bank through his registered General Attorney viz. AURANGZEB/DEFENDANT NO.3, herein have become un-enforceable in law. The case of Defendant No.3, in other words is that, the 'mortgages' of immovable properties belonging to Defendant No.2 herein were only meant for providing finance facilities in future and the mortgage4 properties do nothing with the earlier finance facility availed by ZTC i.e. prior to the letter of February 1, 2008. The letter dated February 1, 2008 being relevant is reproduced as under:- "To, The Manager Bank Al-Falah Paper Market Branch, Karachi.
SUB:- REDEMPTION OF PROPERTIES BEARING PLOT NO.108 AND PLOT NO. 109, BLOCK 3 BAHADUR YAR JANG CO-OPERATIVE HOUSING SOCIETY KARACHI.
Dear Sir, I take this opportunity to inform you that my above mentioned properties were mortgaged bonafidely in good faith for a very short period. It has been learnt that no facility has been provided to MIS. Zulfiqar Trading Corporation or to Syed Zulfiqar Ali Rizvi or any of his business concern so far on these properties.
' You are requested not to provide any facility on the basis of above mentioned properties. You are, therefore, requested to redeem my aforesaid properties at the soonest and kindly release and deliver to me all my original documents, and papers at the earliest in respect of the above mentioned properties. [Underlining is mine].
Your early and immediate kind action will be highly appreciated. Thanking you. Karachi Dated:- 01- 02-2008 SD/- AURANGZEB S/O MUHAMMAD SHARIF CNIC NO. 42201-1763679-1"
50. Lastly, Mr. Faiz H. Shah, learned counsel for the Defendant No.3 vehemently prayed that the Defendant No.3 in view of his raising the SUBSTANTIAL QUESTIONS OF FACTS AND LAW be granted 'UN-CONDITIONAL LEAVE TO DEFEND THE SUIT', otherwise, Defendant No.3 shall be seriously prejudiced.
51. IN CONTRA, Mr. Aijaz Hussain Sheerazi, learned counsel for the Plaintiff Bank while, replying in contra on CMA No.9668 of 2009 filed by Defendant No.3, vehemently argued that the Defendant No.3 as being the 'GENERAL ATTORNEY' of Defendant No.2 herein has also signed and executed all the relevant documents on behalf of Defendant No.2 who is MORTGAGOR and has been sued in his such capacity. According to the learned counsel, all the mortgages created by Defendant No.2 'THROUGH HIS ATTORNEY' [Defendant No.3], herein are not only fully binding upon Defendant No.2 but also well enforceable against all the mortgaged properties belonging to Defendant No.2 which have been fully 'detailed' and 'described' in the Memo of Plaint. The mortgages created in favour of the Plaintiff Bank are not only 'REGISTERED MORTGAGES' BUT 'EQUITABLE AS WELL'. Per Mr. Aijaz, the Defendant No.3's contention vis-a-vis the so-called advancing of Finance Facility in contravention of Defendant No.3's letter of February 1, 2008 is absolutely incorrect and without any foundation.
52. Mr. Aijaz Hussain Sheerazi, learned counsel for the Plaintiff Bank while, continuing his arguments contended that since, the Defendant No.2 herein, has failed to FILE ANY APPLICATION for seeking 'LEAVE TO DEFEND THE SUIT', as such, Defendant No.3, in the absence of any 'APPLICATION FOR LEAVE- TO-DEFEND' the suit by Defendant No.2 himself, is in competent in law to raise any objection whatsoever pertaining to and/or regarding the validity and/or enforceability of both kind of murtgages in respect of the 'immovable properties' belonging to Defendant No.
2. It is significant to note that the 'LEAVE TO DEFEND APPLICATION' tiled by Defendant No.3 is in his 'PERSONAL CAPACITY' and not in his 'CAPACITY AS AN ATTORNEY OF DEFENDANT NO.2', as such the Defendant No.3 cannot plead the case of Defendant No.2 herein. Thus, the suit against Defendant No.2, under law, needs to be decreed as prayed. On this aspect of the matter reliance has been placed on the case of NIB Bank Ltd. v. Muhammad Yasir and another [2011 CLD 243], wherein it was observed as follows:- "20. Defendant No.1 neither, appeared nor filed any application for leave to defend the suit. Since no leave to defend application has been filed by the defendant No. I and the plaint of plaintiffs on oath, there is no rebuttal available on record on behalf of the defendant No.1, the court is left with no option but to decree the suit against the defendant No.1 in the sum of Rs. 50,824,777.68 with costs along with costs of funds as certified and determined by the State Bank of Pakistan under subsection (2) of section (3) of the Financial Institutions (Recovery of Finance) Ordinance, 2001 from the date of default till realization." [Underlining is mine (sic.)].
53. Mr. Aijaz Hussain Sheerazi, learned counsel for the Plaintiff Bank lastly submitted that the Defendant No.2's SUIT BEARING NO.B-54 OF 2009 filed by him through his registered 'GENERAL ATTORNEY' viz. AURANGZEB [Plaint as annex 'H' to the plaint], against the Plaintiff Bank and Defendant No.1 herein, for declaration, permanent injunction and damages HAS NO BEARING ON THIS SUIT FOR RECOVERY FILED BY PLAINTIFF BANK. The main stress of the Plaintiff [Defendant No.3 herein] in Suit No.B-54 of 2009, is to the effect that the plaintiff Bank in contravention of his letter dated February 1, 2008 [reproduced herein above] has granted finance facility to Defendant No.1 herein. Per Mr. Aijaz, such contention of Defendant No.3 besides absolutely wrong, baseless merits no consideration. Mr. Aijaz Hussain Sheerazi further submits that as far Suit No.B-54 of 2009 is concerned, the same in fact has become infructuous after declaring section 15 of F.I.O., 2001 by the apex Court as ultra vires. Without touching the merits and demerits of the aforesaid suit at this stage, the same, no doubt, would be decided on its merits in accordance with law. Learned counsel, finally submitted that the 'LEAVE TO DEFEND APPLICATIONS' of Defendants Nos.1 and 3 bearing CMA No.9567 of 2009 and CMA No.9568 of 2009 are liable to be REJECTED, as they have failed to raise any 'SUBSTANTIAL QUESTIONS' OF 'LAW' AND 'FACTS'. Per Mr. Aijaz Hussain Sheerazi, the pleas raised by Defendants besides vague, un-specific are of the general nature which need no recording of evidence.
54. Heard.
55. With regard to the contention of Mr. Asim Mansoor Khan, learned counsel for Defendant No.1 about lack of any 'cause of action' against Defendant No.1, I would like to refer to and also reproduce herein 'Para 16' of the Plaint, which in fact speaks about the 'CAUSE OF ACTION' for filing of the present suit against Defendants. 'Para 16' of the plaint reads as follows:- '16. That the cause of action for filing of the suit arose at Karachi on various dates mentioned hereinabove when the Plaintiff on the request of Defendant No.1 granted the Finance Facility, when the Defendants executed Agreement for Financing and other security documents in favour of the Plaintiff, when Defendant failed to honour their commitments, when the Defendants executed Agreements and when the Defendants defaulted in making payments failed to repay the outstanding amount to the Plaintiff and on all such dates when the Defendants were called upon to make payments, but they ailed/refused/neglected to repay their outstanding liabilities whentNo.2 filed suit through DeendcuttNo.3aain0 the Plaintiff and Defendant No.1, when Defendant No.1 entered in to a Settlement Agreement with the Plaintiff and continues from day to day until the outstanding dues of the Plaintiff are fully paid.' [Underlining is mine].
56.
From bare perusal of the above, it is quite evident that 'CAUSE OF ACTION' for filing of the present suit arose at Karachi on the 'dates' mentioned and referred to in the plaint itself i.e. 17.04.2006, 11.12.2007, 14.12.2007, 26.12.2007, 12.02.2009, 12.3.2009, 12.4.2009, 25.5.2009 etc. when various documents were signed and executed by Defendants No.1 and others. Needless to say, 'cause of action' is the bundle or totality of essential facts which the plaintiff prior to succeed is required to prove the same. On this aspect of the matter reliance can be placed on the Muhammad Tariq Mahmood and 2 others v. Anjuman Kashmiri Bradari Khisht Faroshan through President Abdul Ashfaq and 21 others [2003 CLD 335] wherefrom the relevant portion reads as follows:- "9. ... 'Cause of action' has not been defined in the C.P.C. It is the bundle of facts, which have been alleged by the plaintiff in the plaint. It has been held in the case reported as National Development Finance Corporation v. Messrs Leepa Shoes Ltd., Mitpur 1992 MLD 474 that to ascertain cause of action only the facts stated in the plaint are to be construed to determine whether they constitute a cause of action". It means the whole of the material facts Which it is necessary for the plaintiff to allege and prove in order to succeed. [Underlining is mine].
57. Moreover, in terms of section 9[i] of F.I.O., 2001, where a 'customer' or a 'Financial Institution' commits 'default' in fulfillment of any obligation with regard to any finance, then the 'Financial Institution' or the customer' as the case may be, can validly institute a suit inter alia for recovery before the 'competent forum' available under the law. In the present case, it is significant to note, the Defendant No.!, has neither denied the execution of various documents or availment of the finance facility. Besides in the 'SETTLEMENT AGREEMENT' dated May 25, 2009 [Annexure 'I' to the Plaint], the outstanding amount against Defendant No.1 has also been acknowledged. Not only this, all the Defendants are living in Karachi and all the relevant documents annexed with the plaint etc. have also been signed and executed by the Defendants at Karachi. Apart from the above, 'DEFAULT' in fulfillment of contractual obligations in respect of the 'FINANCE FACILITY' granted to and availed by Defendant No.1, has also been committed/occurred at Karachi, as such, the present suit has been validly and properly filed in terms of section 9[1] of F.I.O., 2001 [Ordinance No.XLVI of 2001]. The contention of Mr. Asim Mansoor Khan, regarding accrual of 'no cause of action' against the Defendants including Defendant No.1 for filing of instant suit, under the circumstances of the case, besides 'MIS CONCEIVED', 'MERITS NO CONSIDERATION' as such repelled.
58. With regard to the 2nd contention of Mr. Asim Mansoor Khan that it is for the Plaintiff Bank to establish that the instant suit has been filed by competent/authorized officers of the Plaintiff Bank, it is worth to mention herein that along with plaint, the Plaintiff Bank has also filed copies of the 'POWER OF ATTORNEYS' of Muhammad Tariq Jawaid son of Abdul Majeed and Syed Sajid Ali Shah son of Syed Hamid Ali Shah through whom the above suit has been filed. To see whether the instant suit has been filed competently or not, I would like to re-produce herein 'PARA 2' of the PLAINT and RELEVANT PART OF 'COMMON CLAUSE 9' from the Powers of Attorneys of Bank's officers as under:- A, Para 2 of the plaint:
2. That this suit is being filed through Muhammad Tariq Jawaid son of Abdul Majeed and Syed Sajid Ali Shah son of Syed Hamid Ali Shah who are the authorised attorneys of the Plaintiff and are well conversant with the facts of the case and are duly authorised to sign and verify the plaint, institute these proceedings and do all such acts, deeds and things which are necessary and incidental thereto.' [Underlining is mine].
B. 'Common clause 9 of the Powers of Attorneys:
9. To commence, prosecute, continue and defend all actions, suits or legal proceedings whether civil, criminal or revenue including proceedings to procure or establish the bankruptcy or insolvency of any person or firm or liquidation or winding up of any company; to withdraw, compromise or refer to arbitration any claims or disputes either in such suits or proceedings or otherwise; to appoint Solicitors, Advocates, Advocates-on-record and other legal agents; to accept service of process and receive notices, to make, sign, verify, execute plaints, applications, affidavits, petitions, written statements, tabular statements, vakalatnamas, warrants of attorney or any other papers expedient or necessary in the opinion of the Attorney. AND GENERALLY to do all acts, deeds and things not herein specifically mentioned but which are necessary or requisite or expedient to carry on and manage the business of the Bank or which are necessary, requisite or expedient for the better and more effectually doing and performing the several acts, deeds and things aforesaid or incidental thereto; AND the Bank does hereby ratify and confirm and agrees to ratify and confirm all and whatsoever the said Attorney shall lawfully do or cause to be done by virtue of this Power, it being declared that all act s and transactions of such Attorney shall, notwithstanding any prior revocation of this Power, be valid and effectual, unless such revocation shall have been previously notified to the person or persons acting or dealing with the said Attorney. [Underlining is mine].
59. The 'Power of Attorney' is a document by virtue of which the Principal assigns to a person as his agent and confers upon such agent the authority of performing the acts specified therein. If, any case-law needs to be cited on this aspect of the matter then, I would like to cite the case of Syed Adnan Ashraf v. Syed Azhar-ud-Din through Attorney [2014 MLD 342] wherein the Power of Attorney was defined in the following words:- "The power of attorney is a written authorization by virtue of which the principal assigns to a person as his agent and confers upon him the authority to perform specified acts on his behalf and thus primary purpose of instrument of this nature is to assign the authority of the principal to another person as his agent." [Underlining is mine].
60. From the above, it is manifestly clear that the present suit has been presented/filed by 'competent authorized officers of the plaintiff Bank as is evident form their 'POWERS OF ATTORNEYS'.
Moreover, under section 9[1] of F.I.O., 2001, the plaint in the case of Financial Institution shall be verified on oath by the Branch Manager or such other officer who is duly authorized by Power of Attorney or 'otherwise'. The word 'otherwise' as used in subsection [1] of 9 of F.I.O., 2001 [Ordinance No.XLVI of 2001], in my view needs not to be given restrictive meanings. Reliance in this regard can be placed on the cases of [a] KASB Bank Limited v. Mirza Ghulam Mujataba and 2 others [2011 CLD 461] and [b] Sardar Abdul Ghafoor Khan and 3 others v. The Federal Land Commission, Islamabad [PLD 1979 Lahore 375] wherein, it was held/observed as follows:- [a]. "18. ...since the plaint in the present suit has been presented by the two signatories who are attorneys and were authorised by the bank, it is valid presentation and suit is maintainable under the law. Even otherwise, section 9(1) of Ordinance, 2001 provides that financial institution may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath by the Branch Manager or such other officer of the financial institution as may be duly authorized, in this behalf by power of attorney or otherwise. A bear reading of above provision would show that plaint can be present by a financial institution before a Banking Court duly signed and verified on oath either by a Branch Manager or such other officer of the bank who holds a power of attorney or has been authorized otherwise. In the present case valid power of attorneys have been brought on record which fulfils the requirement of section 9(1) of Ordinance 2001. Accordingly, I hold that suit has been validly filed and the same is maintainable. [Underlining is mine].
[b]. "3. ...The word "otherwise" according to its dictionary meaning connotes "in any other way" or "any other ways". Its plain ordinary meaning has therefore the effect of enlarging the category of the transactions described by the preceding word or phrase. It is a word of the widest amplitude."
[Underlining is mine].
61.
Moreover, it is also significant to note, that F.I.O., 2001 [Ordinance XLVI of 2001], is a special law which over-rides all other laws in terms of section 4 of F.I.O., 2001. In view of this position as well, any suit filed by the Branch Manager or such other officer of the Financial Institution duly authorised by Power of Attorney as provided in subsection [i] of section 9 of F.I.O., 2001 shall, no doubt, would a valid institution of the suit. Both sections 4 and subsection [i] of section 9 of F.I.O., 2001 respectively read as follows:- a. "4. Ordinance to override other laws.---The provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force."
"Procedure of Banking Court:---(I) Where a customer or a financial institution commits a default in fulfilment of any obligation with regard to any finance, the financial institution or, as the case may be, the customer, may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath, in the case of a financial institution by the Branch Manager or such other officer of the financial institution as may be duly authorised in this behalf by power of attorney or otherwise." [Underlining is mine].
62. Even otherwise, an act done by a person on behalf of another person but without his knowledge or authority may be 'ratified' or 'dis owned' by such another person that is to say in terms of sections 196 and 197 of the Contract Act 1872 [Act No.IX of 1872]. In case, the another person [principal] if, 'ratifies' the act already done/performed then, in such eventuality, the act already done shall be deemed as 'duly performed' by his authority. The act of 'ratification' may be ' expressed' or 'implied' in the conduct of person on whose behalf, the act was done earlier. In the present case, it is significant to mention herein, that the Plaintiff Bank has never 'disowned' the acts being performed by Bank's attorneys. A suit thus, even if, filed [which is not the case herein], by a person[s] having no authority then too such defect, if any, can be 'ratified later on' by the principal. Manifestly, on this ground alone, however, the suing party cannot be knocked out summarily. In fact, it is for the principal to effectively challenge the authority of the agent and not anybody else. Being relevant, I would like to quote herein the 'relevant portion' from the case of Khyam Films and another v, Bank of Bahawalpur Ltd. [1982 CLC 1275 Rel. 1276) which reads as under: "...In my opinion the fact that the person did or did not have authority can effectively be challenged only by the principal. If in spite of the objections taken the principal continues to recognise the authority of the agent to institute the suit I am inclined to think that this would amount to a ratification and the suit would still be a validly instituted suit. I am further clearly of the opinion that it is wrong on the part of the Court below to promptly frame a preliminary issue on such questions and then go on with it for a couple of years before the main claim comes to be considered. Such a practice is to be deprecated, If the plea of the kind as taken in this case is raised it may be tried along with the whole suit. I say so because my impress is that these pleas are taken recklessly and most of the time the idea is to delay the decision of the suit. These delays are detrimental to a healthy commercial practice." [Underlining is mine].
63. In view of all the above, I am of the considered opinion, that the instant suit filed by the Plaintiff Bank, inter alia, for recovery of huge amount of US Dollars 5,204,346.77 a/w cost of funds, cost etc. besides being competently filed, is well maintainable in law. The arguments of Mr. Asim Mansoor Khan on this score as well stand rejected.
64. The next the contention of Mr. Asim Mansoor Khan regarding 'SET OFF'/' SETTLEMENT OF THE CLAIM' of the Plaintiff Bank by DAMAGES/LOSSES 'allegedly caused by the Plaintiff Bank to the Defendant No.1 herein', cannot be entertained and/or accepted in this suit inter alia for recovery of the outstanding amount filed by the Plaintiff Bank. The claim of the so-called 'SET OFF/' SETTLEMENT' of Defendant No.1, in this suit, is not only 'un-ascertained'/un established but also misconceived. The ALLEGED LOSSES/DAMAGES claimed by Defendant No.1 to its' knowledge is a 'subject matter' of a SEPARATE SUIT BEARING NO.182/2009. The Defendant No.l's claim for losses/damages, if any, may be established, however, only after 'framing of issues' and 'recording of evidence' in 'Pro' and 'Contra' thereof by the concerned parties. Regarding this aspect of the matter reliance is placed on the case of Syed Ahmad Saeed Kirmard v. M/s. Muslim Commercial Bank Ltd., Islamabad [1993 SCMR 441] which reads as under:- "A party claiming damages suffered due to breach of contract must establish the contract, the breach thereof and the extent of damages. The onus is on the plaintiff and without discharging it he cannot succeed. Section 73 of the Contract Act prescribes the rule for assessing the damages suffered due to breach of contract: Only such damages can be recovered which naturally arise in the usual course of things from such breach or the parties at the time of making the contract knew that loss or damage in likely to result from the breach. Another principle which is to be kept in mind while assessing damages is that whether the plaintiff was in a position to mitigate the damages and has neglected to avail of it" [Underlining is mine].
65. Presently, it is, however, mis-conceived to urge that the plaintiff's claim for recovery of huge amount in the sum of US $ 5,204,346.77 along with 'cost of fund' and 'cost etc., in any event, can be stated as 'got settled '/'set of' by the alleged claim of losses damages having been put forward by the Defendant No.1 in an independent suit. The stand so taken, by the Defendant No.1, is not only 'self-conflicting' but also 'self-destructive'. On one hand, per Defendant No.l's stand, the Banks' claim in the present suit got automatically settled'/'set of' by the so-called damages/losses allegedly having been suffered by the Defendant No.1 and on the other hand to Its/his knowledge for proving/establishing the alleged claim of damages etc. the Defendant No.1, has already filed a separate suit bearing No.182 of 2009 [Syed Zulflaar All Rizvi v. Bank Al-Falah Limited] against Plaintiff Bank. The conflicting stand so taken, itself shows that Defendant No.1 has no genuine 'cause' and/or 'claim' against the Plaintiff Bank,
66. The(sic.) of Defendant No.1 's contention regarding 'set off as per Para 1' of the LEAVE TO DEPEND APPLICATION bearing CMA No.9567 of 2009 which runs as 'Thus assuming without conceding that the Defendant owed money to the Plaintiff, such has been set-off by the damaRes caused to the Defendant by the Plaintiff'. The contention of Mr. Asim Mansoor to the effect is not only wrong/self- conflicting but also mis-conceived. Under circumstances, THE CLAIM OF 'ADJUSTMENT'/'SET OFF' PUT FORWARD BY DEFENDANT NO.! HEREIN, IS NOT ONLY UNJUSTIFIED BUT ALSO WITHOUT ANY FOUNDATION.
If, any law needs to be cited on the point of self conflicting/self-destructive pleas, I would surely like to refer to the case of Dr. Aftab Shah v. Pakistan Employees Cooperative Housing Soceity Limited and 5 others [2006 CLC 342], wherein it was observed as follows:- "15. ... When one stand is taken at one point of time and a different stand at another, and both stands do not reconcile with each other, then this act by itself lead to the presumption that such person does not have .a genuine cause of action. The conflicting stands amount to destroying ones own cause of action and, therefore, the entire foundation of plaintiffs claim is to be treated as false. [Underlining is mine].
67. Needless to say, Defendant No.1 apart from being the 'SOLE PROPRIETOR OF MIS ZULFIQAR TRADING CORPORATION' [In short ZTC], is also a guarantor in his personal capacity. On this count as well, the defendant No.1 as being a guarantor of facility[ies] granted to and availed by Defendant No.l's 'SOLE PROPRIETORSHIP CONCERN [ZTCI' is liable to pay the outstanding dues of ZTC, of course, in terms of the letter of guarantee [Annexure 'F' to the Plaint] duly signed and executed by Mr. Syed Zulfiquar Ali Rizvi, the sole proprietor of ZTC. Besides, DEFENDANT NO.4, in his capacity as a GUARANTOR is also liable to pay the outstanding dues in terms of his letter of guarantee [Annexure 'F-1' to the Plaint] duly signed and executed by him for liquidation the outstanding liability of 'PROPRIETORSHIP CONCERN'. Indeed, under the terms and conditions of letters of. guarantee, the guarantors as well are duty duly bound to fulfill their obligations. By no excuse, the guarantors could be permitted to avoid their liability under the terms and conditions of personal letters of guarantee as well.
68. Being important some of the relevant 'Common Clauses' of Personal Letters of Guarantees [Annexures 'F' & 'F-1' to the Plaint], having been duly signed and executed by WED ZULFIQAR ALI RIZVI (the sole proprietor of Zulfiqar Trading Corporation] and Defendant No.4 viz, SM. ALi AZHAR read as follows:= I This uarantee shall continue to remain bindin on me/us for the purpose of securing (subject to the limit specified above) all or any monies due to you from time to time notwithstanding any payments made from time to time to you or any settlement of account or any other thing whatsoever, until receipt of written notice of discontinuance by you thereof and notwithstanding such notice. we shall continue to remain liable to you for all sums due and owing to you by the Customer whether certain or contingent at the time of receipt of such notice and also for any credits established for the Customer and or all instruments drawn on you or accepted by you, for the benefit of the Customer and purporting to be on a date on or before the date of receipt of such notice, even though actually paid or honoured after that date.
2. That this guarantee shall remain valid and cover any and all transactions, which may be undertaken by the Customer and shall not be revoked as to future transactions from the date of any change in the constitution of the Customer.
3.
5. Notwithstanding anything herein contained, as between you and the Guarantor(s) none of the Guarantor shall be discharged or exonerated by any variance, made without the Guarantor(s) consent in the terms of any contract or transaction between you and the Customer or (b) by which the Customer be released, or (c) by any act or omission by you the legal consequence of which may be the discharge of the Customer or (d) by making a composition with or, promising to give time to, or not to sue the Customer without the Guarantor(s) previous assent thereto or (e) by any other act omission, dealings or arrangements between the Customer and whereby the Guarantor(s) or any of them as sureties for the Customer would have been discharged or exonerated. You may as you think fit and without reference to me/us and without in any way affecting my/our liability hereunder vary or renew any agreement, contract and other documents under or pursuant to which facilities were executed or renew, release, realize or in any way deal with any securities or rights now or hereafter held by you in respect of the sums due under the said facilities. My/our liability under this guarantee shall be that of principal debtor and you may at your option hold me/us primarily responsible for the liability (ies) of the Customer.
6. Any account settled between you and Customer or any demand by you on the Customer or its/their agent(s) or any judgment or award obtained by you against the Customer or any statement from you stating the monies due to you at any time from the Customer shall be accepted by me/us as conclusive evidence of my/out liability under this guarantee and shall be binding on me/us as and I/we hereby waive all rights to question and or challenged the same.
9. Until all monies due to your and liabilities due from or incurred by the Customer to you shall have been paid or discharged in full I/we shall not either by paying off any sum recoverable hereunder or by any other means or ground claim any set-if or counter claim against the Customer in respect of any liability on my/our part or claim or prove in competition with you in respect of any payment by me/any of us hereunder or be entitled to claim or have the benefit of any set-off counter claim or proof against or dividend composition or payment by the Customer or his estate or the benefit of any other security which you may now or hereafter hold for any monies due to you or liabilities due or incurred by the Customer to you or to have any share therein.
18. This guarantee is in addition and without prejudice to any other securities you may now or hereafter hold from the Customer or any other person and you shall not be obliged to exhaust your recourse against the Customer or the securities before being entitled to payment from me/us under this guarantee.
19. My/our obligation under this guarantee is unconditional and irrespective of the genuineness, legality, validating, regularity or enforceability of any agreement, contract, document or instrument executed by the Customer. [Underlining is mine].
69. As appears, in terms of letter of guarantee[s] the liability of the guarantor[s] is continuing one.
On the continuing liability of a guarantor[s], even for re-scheduled/re-structured/renewed amounts, the guarantors due to and on account of 'prior waiver' of right of 'consent' or 'assent' of a guarantor are liable to pay. In this regard, the case of Mian Aftab A. Sheikh and 2 others v. Messrs Trust Leasing Corporation Limited and another [2003 CLD 7021 is very much relevant. The 'relevant passage' having been reached at, after an 'elaborate discussion' is thus reproduced here-in- below:- "12. In the present case also appellant guarantors had expressly given their consent as per above reproduced clauses 2, 7, 8, 9 and 10 of the letter of guarantee, dates 23-1-1993 and had assented to any subsequent composition of debt, enlargement of time and other variations between the leasing corporation and the company (UL). The guarantee was a continuing guarantee, permitting the creditor and the principal debtor to vary the terms of the leasing agreement. The appellant guarantors had waived their prior right of consent or assent to such variance. In our opinion, contracting parties had a right to contract out of the privilege of release or discharge by executing an agreement of waiver of prior consent/assent in the guarantee. Rescheduling Memorandum of Understanding dated 21-6-1995 was within contemplation of above clauses and, therefore, did not affect discharge of appellants from their guarantee obligations. lt will be hair splitting to state that provisions of section 133 or 135 of the Contract Act visualize consent or assent of the guarantor at the time of variance only and the same cannot be waived by the guarantors in advance. The judgment of the learned Single Judge of Delhi High Court in the case of State Bank of India v.
Machine Well Industries (1983) 5 CC 880)) relied upon by the learned counsel for the appellants is almost on the same principles as the case of Pearl Hosiery Mills (AIR 1961 Punj. 281) which has been dissented from by the learned Division Bench of Karnataka High Court in above-referred case of T.A. Raju v. Bank of Baroda (AIR 1992 Karnataka 108). We in principle agree with the ratio of the case of Bank of Baroda.
13. Furthermore, even if, some of the terms of original, contract can be stated to have been novated by Memorandum of Understanding of 21-6-1995 such novation still did not in any way absolve the appellant guarantors of their obligations under the joint guarantee of 23-1-1993 as they had themselves consented in the letter of guarantee to variance of the original agreement between the leasing corporation and the company (UL). The Privy Council in the case of Partap Singh Mohalabahi v. Keshavlal Harilal (AIR 1935 PC 21) also held that only in absence of a surety's consent, a surety shall not be bound for the obligations under the novated agreement.
14. We are also of the opinion that appellants Nos.] and 3, upon signing rescheduling agreement had even otherwise given their assent to such rescheduling. The Memorandum of Understanding was signed by appellants Nos. 1 and 3 in theircapacity as directors and/or chief executive and chairman of the Company. Guarantee dated 23-1-1993 was also made and executed by them in the same capacity. It cannot, therefore, be argued than consent/assent of said guarantors was separately required at the time of execution by them of the rescheduling agreement. Appellant No. 2, being wife of appellant No. 1 and mother of appellant No.3, cannot be presumed, to be unaware of unwilling to the rescheduling arrangement signed by appellants Nos. 1 and 3 for and on behalf of the company (UL). It was obviously for this reason that none of the above-said appellants had expressly pleaded in their PLA, discharge or their joint guarantee." [Underlining is mine].
70. Besides, under the provisions of Contract Act, 1872 [Act No.IX of 1872], the liability of the guarantors is 'co-extensive' with that of the 'Principal Debtor'. Moreover, anything 'done or 'promise' made for the benefit of the 'principal debtor' is a 'sufficient consideration' as for the guarantor[s] is concerned. The contract of guarantee, it is worth-mentioning, is a contract to perform the 'promise' or 'discharge' the liability of a third person in case, the principal commits 'default'. Being 'selves- explanatory', sections 126, 127 and 128 of the Contract Act, 1872 [Act No.IX of 1872] for ready reference are reproduced as under:- "a.
126. "Contract of guarantee", "surety", "principal debtor" and "creditor". A "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of his default.
The person who gives the guarantee is called the "surety"; the persons in respect of whose default the guarantee is given is called the 'Principal debtor" and the person to whom the guarantee is given is called the "creditor". A guarantee may be either oral or written. b.
127. Consideration for guarantee. Anything done, or any promise made, for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee. c.
128. Surety's liability. The liability of the surety is co extensive with that of the principal debtor, unless it is otherwise provided by the contract." [Underlining is mine].
71. On the basis and strength of the aforesaid provisions of law coupled with the terms and conditions of the letters of guarantees [Annexure 'F' & 'F-1' to the Plaint], THE SOLE PROPRIETOR OF ZULFIQAR TRADING CORPORATION [ZTC] VIZ. SYED ZULFIQAR ALI RIZVI AND S. M. ALI AZHAR/DEFENDANT NO.4, in their 'capacity as guarantors', are also liable for the 'outstanding dues' of ZTC payable to the Plaintiff Bank. Needless to say, in an action[s] being initiated by a 'creditor' against the 'principal customer' and guarantor[s], the creditor, under law is only required to establish the LIABILITY OF THE 'PRINCIPAL DEBTOR' AND OCCURRENCE OF THE EVENT 'DEFAULT' IN FULFILLMENT OF ANY OBLIGATION with regard to any finance on the part of Principal' Customer. The relevant rule laid down in the case of Bank of Baroda I [AIR 1992 Karnataka 108] reads as follows:- "10.1. In City-bank N.A., New Delhi v. Jugilal Kamalapat Jute Mills Co. Limited, Kanpur, AIR 1982 Delhi 487, differing from the view expressed in the aforesaid Pearl Hosiery Mills; case (AIR 1961 Punj. 281), it has been held that it was not necessary for the Legislature to provide the words in the absence of any contract in section 133 or 135 or 141, because the sections themselves speak of consent of the surety regarding variance in the terms of the contract between the principal debtor and the creditor and composition with the principal etc. It has also been further held that in the presence of the words 'without the surety's consent', the words 'in the absence of any contract to the contrary', would have been surplus. Therefore, following a decision of the Privy Council in Hodges v. Delhi and London Bank Ltd. (1900) 27 Ind. App. 168 and A.R. Krishnaswami Ayyer v. Travancore National Bank Ltd. (AIR 1940 Mad. 437), it has been held that the rights conferred on the surety under sections 133, 135 or 141 of the Act could be waived by specific agreement in the deed of guarantee, that, as a matter of fact, such an agreement would amount to consent within the meaning of the aforesaid sections of the Act. [Underlining is mine].
11. ... The words 'unless it is otherwise provided in the contract' occurring in section 128 of the Act will also govern the other provisions contained in the Chapter VIII of the Act and enable the surety to give up the rights available to him under sections 133, 134, 135 and 141 of the Act. It is a settled legal position of law that a legal right can be given up provided such giving up of a legal right under any contract is not hit by section 23 of the Act. Section 133 of the Act makes it clear that any variance made in the contract between the principal debtor and the creditor without the consent of the surety, discharges the surety as to transactions subsequent to variance. This consent of the surety can be obtained either at the time of the contract is made between the principal debtor and the creditor to which the surety gives the guarantee, for making any change or alteration in the contract to be made or not to claim any right or benefit under Chapter VIII of the Act. In other words, in the surety bond/guarantee-bond itself the surety can agree to waive his rights available to him under the various provisions contained in Chanter VIII of the Act. Such waiving of his right by the surety is permissible under section 133 read with section 128 of the Act.
11.1 ... The rights available to the surety under Chapter VIII of the Act, as already pointed out, can be waived by the surety. Therefore, such waiving of right by the surety is neither intended to defeat nor does it defeat any provisions of law. Therefore it is also not possible to hold that the consideration and the object of the agreement of guarantee have the effect of defeating any provisions of law. A recital in the surety bond in question that surety will not be entitled to any of the rights conferred by sections 133, 134, 135, 139 and 141 of the Act cannot be held to defeat the provisions of Chapter VIII of the Act. The rights conferred on the surety under Chapter VIII are not inalienable rights nor those rights have anything to do with the public policy as such. Those rights relate to the contracts entered into by individuals. It is not the case of defendant-3 that the aforesaid recital in the surety bond has been obtained either fraudulently or it involves or implies injury to the person or property of another. It is also not possible to view such a recital as immoral or opposed to public policy.
Public policy is not to defeat the debt of the creditor, it is to ensure that the money of the creditor, is secured and is recoverable in accordance with law,. and the debtor or the surety is not absolved from his liability to discharge the debt except in accordance with law. Therefore, we are of the view that it is not possible to agree with the view as extracted above, expressed in Pearl Hosiery Mills' case AIR 1961 Punj. 281 by the High Court of Punjab. We agree with the aforesaid view expressed in City-bank's case AIR 1982 Delhi 487 by the High Court of Delhi and also approve the view expressed by Kulkarni, J in R. Lilavati's case AIR 1987 Kant.
2." [Underlining is mine].
72. The next point raised by Mr. Asim Mansoor Khan is that all FINANCE AGREEMENTS COUPLED WITH PROMISSORY NOTES, LETTERS OF PLEDGE ETC. have been obtained by Plaintiff Bank in blank cannot be accepted as 'true', and 'genuine ground' ex-facie for the reason that all the documents available on record do belie the Defendants in their such assertion/contention. Neither of the Defendants, it is important to note, has either denied his 'signatures' on/over any of the DOCUMENTS ANNEXED WITH PLAINT nor any sort of 'protest' over the documents have been noted which otherwise, fairly means that AT THE TIME OF SIGNING OF THE DOCUMENTS [annexed with plaint], were duly filled-up figures and dates otherwise, the Defendants would HAVE REFUSED TO SIGN thereon as they were at liberty to do so. In the case of Muhammad Arshad and another v. Citibank N.A., Lahore [2006 SCMR 1347] the apex Court in somewhat identical situation has held/observed as follows:- '... We are not at all impressed by the contention raised on behalf of the petitioners that the genuineness and authenticity of the agreement, dated 26-6-1999 is not above board as the relevant columns were left blank and filled in subsequently by the Bank. For the sake of argument even if it is admitted then why the agreement dated 26-6-1999 was acted upon and pursuant whereof ten installments had been paid and the outstanding liability was reduced from Rs.
21,05,280 (mark-up price) to Rs.17,95,176. In fact the above installments were made as per repayment schedule which was inseparable part of the agreement dated 26-6-1999. It must not be lost sight of that the main object to get the renewed agreement was restructuring of the finance facility and not liquidation of the liability. We have no hesitation in our mind to hold that agreement dated 26-6-1999 was authentic, genuine and executed between the parties and acted upon. A careful perusal of the agreement dated 26-6-1999 would reveal that mark-up was charged in accordance with the terms and conditions and stipulated therein. It is to be noted that in the agreement dated 26-6-1999 it has been stipulated in a categoric manner that the petitioners had also entered into mark-up agreement which was executed on 21-6-1995 and thus, it stood admitted by the petitioners. It would not be out of place to mention here that an amount of Rs.
21,05,280 was mentioned as mark-up in the last agreement. It would be too late in the day to challenge its authenticity on the pretext of certain blank columns. The question which arises here at this juncture would be that as to why certain columns were left blank and if it was so done why the incomplete agreement was signed by the petitioners? No answer could be given by the learned Advocate Supreme Court on behalf of the petitioners. In our considered view the plea of "blank columns" would hardly renders any assistance to the case of petitioners. In view of the provisions as contained in section 20 read with section 118 of the Negotiable Instruments Act, 1881 no benefit could be given to the petitioner on the ground that the agreement was not completely filled in when executed as it would have no substantial bearing on the validity of the agreement. In this regard reference can he made to case Muhammad Sarfraz Khan Rana 1, Government of the Punjab PLD 1990 Lab.
88. It is well-settled by now that "Negotiable Instruments Act provides that where one person signs and delivers to another paper stamped in accordance with law, either wholly blank or having written thereon incomplete negotiable instrument, in order that it may be made, or completed into negotiable instrument, he thereby gives prima facie authority to person who C receives that paper to make or complete it as case may be into negotiable instrument for any amount. Furthermore, section 118 of Negotiable. Instrument Act, provides that presumptions are attached to negotiable instruments, which, inter alia includes that negotiable instrument was made or drawn for consideration and that every instrument bearing date was made or drawn on such date. Held: Documents were given blank as canvassed by appellants even then appellants are estopped to challenge legality, validity and genuineness of said documents." [Underlining is mine].
73. With regard to the contention of Mr. Asim Mansoor Khan that after incorporation of Article 10-A through 18th amendment in the - Constitution of Islamic Republic of Pakistan, 1973, a 'FAIR TRIAL' and 'DUE PROCESS' is/are now fundamental rights of every citizen logged in litigation is concerned, the same, of course, needs no debate at all. But at the same time, another is the important 'ARTICLE 4' OF THE CONSTITUTION OF ISLAMIC REPUBLIC OF PAKISTAN, 1973 which is also relevant in scenario, needs to be noted and essentially considered. Article 4 of the Constitution of Islamic Republic of Pakistan, 1973 specifically says that no action, detrimental to the life, liberty, body, reputation or property of any person shall be taken except in accordance with law. This Article 4 otherwise and in spirit, re-enforces, the legal position, that a person [which indeed would include a litigant] J can be 'DEALT WITH' or 'DEPRIVED' of any of his rights if so prescribed and provided in any other law for the time being in force. Both 'Articles 4' and '10-A' of the Constitution of Islamic Republic of Pakistan, 1973 need to be read together. Both the afore-said Articles for ready reference are reproduced as follows:- "4. (I) to enjoy the protection of law and to be treated in accordance with law is the inalienable right of every citizen wherever he may be, and of every other person for the time being within Pakistan.
(2) In particular-7
(a) no action detrimental to the life, liberty, body, reputation or property of any person shall be taken except in accordance with law. [Underlining is mine]:
(b) No person shall be prevented from or be hindered in doing that which is not prohibited by law; and
(c) No person shall be compelled to do that which the law does not require him to do.
"10-A, Right to fair trial---For the determination of his civil rights and obligations or in any criminal charge against him a person shall be entitled to a fair trial and due process." [Underlining is mine).
74. Undoubtedly, Article 10-A of the Constitution of Islamic Republic of Pakistan, 1971, ensures a 'FAIR TRIAL' and 'DUE PROCESS' but if, 'fair trial' and 'due process' in some eventuality that Is to say like in the Banking matters 'LEAVE TO DEFEND THE SUIT' Is subject to and required to be obtained firstly in terms of Section 10 of F.I.O, 2001 [Ordinance No.XLVI of 2001] then until such 'leave to defend the suit' is obtained a Defendant will not be entitled to defend the suit or otherwise to say a LEAVE TO DEFEND cannot be granted until and unless, the 'MANDATORY REQUIREMENTS' prescribed under section 10 of 2001 are absolutely fulfilled. In any event if for want of the NECESSARY REQUIREMENTS or in absence of LEAVE TO DEFEND APPLICATION suit is decreed in accordance with law as provided under F.1.0., 2001 then too the aggrieved person after 'passing of the decree' would be at liberty, to approach to an APPROPRIATE FORUM for redressal of his grievance[s], however, in accordance section 22 of F.I.O., 2001. In such like eventuality, a defendant could not be permitted to urge the non-affording of a 'FAIR TRIAL' and 'DUE PROCESS' in contravention of the spirit of F.I.O., 2001. As far as THE CASE IN HAND is concerned, all the learned counsel for the contesting parties have been heard, indeed, after fully observing the 'due process of law' and affording a 'fair chance' of hearing to them on their applications of 'LEAVE-TO-DEFEND APPLICATIONS' bearing CMA No.9567 of 2009 and CMA No.9568 of 2009. The pleas and contention raised by the contesting Defendants, however, could not be found 'satisfactory' and 'convincing' on the face of record and law. Rather the same pleas were found 'vague' and based on 'general assertions'. On the aspect of 'FAIR TRIAL' and 'DUE PROCESS', reliance can be placed on the cases [a]. Shabbir Ahmed v. Kiran Khursheed and 8 others [2012 CLC 1236] and [b]. Babar Hussain Shah and another v. Mujeeb Ahmed Khan and another [2012 SCMR 1235], wherein it was respectively observed as follows:- a. "Article 10-A, morphs Article 4 into a more robust fundamental right, covering both substantive and procedural due process. While substantive due process provides a check on legislation and ensures the protection of freedoms guaranteed to a person under the Constitution, procedural due process, which concerns me here, provides that 'each person shall be accorded certain 'process' if they are deprived of life, liberty or property--The question then focuses on the nature of the 'process' that is 'due'. The government always has the obligation of providing a neutral decision maker one who is not inherently biased against the individual or who has personal Interest in the outcome". Due process is now available to every person as a fundamental right and underscores procedural fairness and propriety in determining his civil or criminal rights. The procedure adopted in determining the rights of the parties must at every step pass the test of fairness and procedural propriety and at all iimes must honour the law and the settled legal principles. Article 10-A is not limited to a judicial trial in its strict sense but requires fairness from any forum which determines the rights of a person." [Emphasis and underlining are mine]. b. "11 Although from the very inception the concept of fair trial and due process has always been the golden principles of administration of justice but after incorporation of Article 10-A in the Constitution of the Islamic Republic of Pakistan, 1973 vide 18th Amendment, it has become more important that due process should be adopted for conducting a fair trial and order passed in violation of due process may be considered to be void." [Underlining is mine].
75. Nevertheless, on the pleas of FAIR TRIAL & DUE PROCESS the provisions of FIO, 2001 could not be stated as redundant or otherwise ineffective automatically as argued by Mr. Asim Mansoor Khan, learned counsel for Defendant No.1 . Article '10-A', in my view needs to be read in juxtaposition of Article 4 of the Constitution of Islamic Republic of Pakistan, 1973 which says that "no action detrimental to the life, liberty, body, reputation or property of any person shall be taken except in accordance with law." [Underlining is mine].
76. Significantly, the averments/pleas raised by both the contesting Defendants in their Leave to Defend Application bearing CMA No.9567 of 2009 & CMA No.9568 of 2009 are vague and evasive.
The 'evasive denials' under law, are no denials, rather such denials amount to and/or be construed as admissions. Any case law needs to be cited on this point, one can cite the CASE OF Ghulam Rasool through Legal Heirs and others v. Muhammad Hussain and others [PLD 2011 SC 119] wherein it was observed as under:- "6. ... rather made an evasive denial in their written statement expressing their lack of knowledge in this regard, which is no denial as per the provisions of Order VIII Rules 3, 4 and C.P.C., rather such a denial may be constructed as an admission on their part. [Underlining is mine].
77. The contention of Mr. Asim Mansoor Khan vis-a-vis the 'so-called 'NON-DISBURSEMENT' of the amount under the 2nd Finance Agreement of 14.12.2007 [Annexure 11.3' to the plaint], under the facts and circumstances of the case seems the 'outcome of mis-understanding'. In rescheduling/restructuring, it is important to note, the 'outstanding amount' needs not be disbursed again to the 'customer'. Rather, the outstanding balance amount in such like situation is 'BROUGHT FORWARD' in the 'CERTIFIED STATEMENT OF ACCOUNT'. The arguments of Mr. Asim Mansoor Khan regarding NON-DISBURSEMENT under Finance Agreement of December 14, 2007 [Annexure 'B- 3' to the Plaint] is absolutely mis-conceived. Reliance in this regard is placed on the cases of Habib Bank Ltd. v. Taj Textile Mills Ltd. through Chief Executive and 5 others [2009 CLD 1143] and Citibank N.A. through Branch Manager v. Ameer Alam [2015 CLD 429], wherein, it was held that in restructuring etc. 'PHYSICAL DISBURSEMENT' of balance outstanding amount 'afresh' is not necessary. Further the balance outstanding amount in the case of rescheduling re-structuring is 'BROUGHT FORWARD' in the CERTIFIED STATEMENT OF ACCOUNTS. Even 'Statement of Account' prior to the last finance Agreement is not necessarily to be filed by the Bank/Financial Institution when particularly the outstanding amount at the time of signing the 'LAST FINANCE AGREEMENT' was admitted and acknowledged. The relevant portions from the aforesaid case-laws read as follows:-
78. A. "7. It is quite a simple case of rescheduling and restructuring of a previous finance; when liability of the borrower company became overdue, a request was made by it for the renewal/restructuring thereof; in this behalf the resolution of the company dated 21-9-2002, the offer of the Bank dated 23-10-2002 and the agreement dated 11-12-2002, are sufficient to prove the case of the plaintiff Obviously, in the cases pertaining to restructuring the amount is not disbursed, rather is brought forward envisaging as liability of the customer, and therefore, to argue that as no physical disbursement of the amount was made, resultantly, the claim of the Bank is false or unfounded, is a submission which is misconceived and without merit. I am also not convinced if there has been any fraud or misrepresentation on the part of the Bank in inducing the defendants (except defendant No.6) asking for rescheduling or the execution of all the relevant documents in that regard including the guarantees and the finance agreement. The bald and baseless allegations of fraud cannot be termed as the substantial questions of facts, in the light of admittedly executed documents on account of which the leave can be solicited or granted. I am also not convinced that the plaint lacks in fulfilling the requirements of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The relevant backdrop of the finance arrangement between the plaintiff and the defendants has been appropriately given in the plaint, which is supported by the requisite documents. In view of the above restructuring/rescheduling, it was not obligatory and incumbent upon the Bank to have brought on record the statements of accounts prior to the agreement dated 30-9-2001, through which the restructuring has been made as this was/is an admitted amount duly acknowledged by the defendants. There is no question of the disbursement of the amount involved in the matter, as it is a case of restructuring and not in the nature of a fresh finance, in which the disbursement may become relevant. No vice, illegality or error has been pointed out in the statements of accounts appended with the plaint in support thereof either in view of the provisions of the Ordinance or Banker's Books of Evidence Act. "
[Underlining is mine].
B.
9. As far as the observation by Judge Banking Court No.1, Faisalabad that the appellant-bank had not attached the statement of accounts w.e.f. 1995; it is suffice to observe that in the cases pertaining to restructuring the amount is not disbursed, it is brought forwarded in case of restructuring/rescheduling of previous finance; bank is not obliged to have brought on record the statement of accounts prior to the agreement through which restructuring has been made as this is an admitted amount duly acknowledged by the borrower. [Underlining is mine].
78. Like-wise, the contentions of Mr. Asim Mansoor Khan that the documents including the 'LAST FINANCE AGREEMENT' dated December 14, 2007 [Annexure 'B-3' to the plaint] is VOID FOR WANT OF 'DISBURSEMENT' is of no force, particularly when all the documents [Annexed with the Plaint] on the face of it are not only 'FILLED-UP' but also admitted by Defendants expressly.
Rescheduling/restructuring is always done at the request of a 'customer'. Upon execution of documents, the Defendants or any of them now cannot take turn-about and say, that the 'documents duly signed and executed by them', are void and/or otherwise, not enforceable under the law. The Plaintiff Bank, even under the new. 'set of documents' is well entitled to claim 'PURCHASE PRICE'/'MARKEDUP PRICE', In the case in hand, no doubt, `MARK-UP' was charged on the balance 'outstanding amount', however, on the strength of 'FRESH FINANCE AGREEMENT' of December 14, 2007 which under FIO, 2001 [XLVI of 2001] is not prohibited. Moreover, the FINANCE AGREEMENT of December 14, 2007 is also coupled with 'PROMISSORY NOTE' has not only been acted upon but the amount outstanding as on March 31, 2009 thereunder, has also been acknowledged in 'SETTLEMENT AGREEMENT' dated May 25, 2009 [Annexure 'I' to the plaint] undisputedly having been duly signed and executed between the Defendant No.1 and the Plaintiff Bank. Under circumstances, the contention of Mr. Asim Mansoor Khan that 'FINANCE AGREEMENT' dated December 14, 2007 [ktmexure 'B-3' to the Plaint] is either void or otherwise, not-enforceable under law is rejected. From the case of Muhammad Arshad and another v. Citibank N.A., Lahore [2006 SCMR 1347], the relevant observations on the above aspect of the matter read as follows:- "4. ... We are not at all impressed by the contention raised on behalf of the petitioners that the genuineness and authenticity of the agreement, dated 26-6-1999 is not above board as the relevant columns were left blank and filled in subsequently by the Bank. For the sake of argument even if it is admitted then why the agreement dated 26-6-1999 was acted upon and pursuant whereof ten installments had been paid and the outstanding liability was reduced from Rs.
21,05,280 (mark-up price) to Rs. 17,95,176. In fact the above installments were made as per repayment schedule which was inseparable part of the agreement dated 26-6-1999. It must not be lost sight of that the main object to get the renewed agreement was restructuring of the finance facility and not liquidation of the liability. We have no hesitation in our mind to hold that agreement dated 26-6 1999 was authentic, genuine and executed between the parties and acted upon. A careful perusal of the agreement dated 26-6 1999 would reveal that mark-up was charged in accordance with the terms and conditions and stipulated therein. It is to be noted that in the agreement dated 26-6-1999 it has been stipulated in a categoric manner that the petitioners had also entered into mark up agreement which was executed on 21-6-1995 and thus, it stood admitted by the petitioners. It would not be out of place to mention here that an amount of Rs. 21,05,280 was mentioned as markup in the last agreement. lt is well-settled by now that "Negotiable Instruments Act provides that where one person signs and delivers to another paper stamped in accordance with law, either wholly blank or having written thereon incomplete negotiable instrument, in order that it may be made, or completed into negotiable instrument, he thereby gives prima facie authority to person who C receives that paper to make or complete it as case may be into negotiable instrument for any amount. Furthermore, section 118 of Negotiable Instruments Act, provides that presumptions are attached to negotiable instruments, which, inter alia includes that negotiable instrument was made or drawn for consideration and that every instrument bearing date was made or drawn on such date. Held: Documents were given blank as canvassed by appellants even then appellants are estopped to challenge legality, validity and genuineness of said documents. M. P. R. M. Irulandi Mudaliar v. Syed Ibrahim AIR 1962 Mad. 326; National Bank of Pakistan v. Azizullah Hassan 1984 MLD 1035; Messrs Mach Knitters (Pvt.) Ltd. v. A.B.P. 2004 CLD 535; Iftikhar Hussain Khan of Mamdot V. Ghulam Nabi Corporation PLD 1971 SC 550; United Bank v.
Business Investment Ltd. 1982 CLC 1101; Karim v. Zikar Abdullah 1973 SCMR 100... Presumption, held, would arise under section 118(b) regarding a negotiable instrument bearing a date as having been made or drawn on such date". National Commercial Bank Ltd. v. Muhammad Younus Butt 1980 CLC
90. We are conscious of the fact that "party to proceedings could discharge burden of proof placed upon him under provisions of section 118 of Negotiable Instruments Act either by producing definite evidence showing that consideration had not been passed or by relying upon facts and circumstances of case and also by referring to flaws in evidence of plaintiff and then contending that presumption had been rebutted". Chandan Lal v. Messrs Amin Chand Mohan Lal AIR 1960 Punjab 500; Sundar Singh v. Khushi Ram AIR 1927 Lah. 864 which could not be done." [Underlining is mine].
79. Manifestly, a 'customer' of a Financial Institutions, under subsection [1] of section 3 of F.I.O., 2001, is under legal obligation to fulfill its' commitments in respect of repayments of finance or any other amounts relating to a finance, fulfillment of an 'UNDERTAKING and 'PERFORMANCE OF A PROMISE' which under subsection (1) of section 3 of F.I.O., 2001, is the bound duty of a 'customer'. Re - scheduling, restructuring and renewal of finance[s] undoubtedly, is a 'facility' or 'accommodation' extended to the 'customers' on their requests. Suffice to say, in rescheduling etc., the balance outstanding amount needs not to be disbursed afresh, as being mis-understood by the customers.
The outstanding amount rather is brought forward in the 'STATEMENT OF ACCOUNT' of the customer.
The statement of account, prior to the last Finance Agreement of rescheduling/restructuring also needs not be filed with the plaint strictly, as in restructuring/rescheduling etc. the balance amount is also 'acknowledged' by means of an execution of 'FRESH FINANCE AGREEMENT'. From the case of [A]. Citibank N.A. through Branch Manager v. Ameer Alam [2015 CLD 429 DB], and [B]. Habib Bank Ltd. v. Taj Textile Mill through Chief Executive and others [2009 CLD 1143], the relevant observations, on the concept of 'Renewal'/'restructuring' and 'rescheduling', 'disbursement of the amount' and 'acknowledgment' of the outstanding liability respectively are reproduced as follows:- A. "8. The concept behind Renewal/Restructuring/Rescheduling is that the renewal /rescheduling/restructuring of financial facility only ensues upon default, non-payment or inability in payment of outstanding liability by the customer who normally seeks such concession and upon admission of liability. By soliciting rescheduling or restructuring, a customer in a sense requests postponement of repayment of finance on renewed terms as agreed between the parties. By approving rescheduling/restructuring of a financial facility the bank (as in the present case) foregoes its immediate right of recovery and enforcement of securities against the customer. The effect of rescheduling or restructuring of finance facility is mutually agreed by the parties to be absorbed by future interest or mark up till the agreed date of liquidation of liability. Thus, we are of the opinion that rescheduling, restructuring and renewal is also a facility or accommodation granted by bank to the customer.
This facility has been recognized as "obligation" defined in section 2(e) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Reliance is placed on Habib Bank imited v. Service Fabrics Ltd. and others (2004 CLD 1117) {Lahore}.
9. As far as the observation by Judge Banking Court No. 1, Faisalabad that the appellant-bank had not attached the statement of accounts w.e.f 1995; it is suffice to observe that in the cases pertaining to restructuring the amount is not disbursed, it is brought forwarded in case of restructuring/rescheduling of previous finance; bank is not obliged to have brought on record the statement of accounts prior to the agreement through which restructuring has been made as this is an admitted amount duly acknowledged by the borrower." [Underlining is mine].
B. "7. ...Obviously, in the cases pertaining to restructuring the amount is not disbursed, rather is brought forward envisaging as liability of the customer, and therefore, to argue that as no physical disbursement of the amount was made, resultantly, the claim of the Bank is false or unfounded, is a submission which is misconceived and without merit "....[Underlining is mine].
80. Further as held in the case of M/s Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi [PLD 2002 SC 500] 'mark-up', 'mutually agreed' between the parties on the 'rescheduled amount' is also permissible. From the case of Dadabhoy Cement Industries Ltd. and 6 others v. NDFC, Karachi, the relevant portion on the aforesaid aspect of the matter reads as follows:- "7. ... The argument that the respondent by adding further interest/mark-up on the amount on which interest/mark-up had already been paid, played fraud, has no substance, for, this fact was already in the knowledge of the petitioners as they had agreed to pay the same on rescheduling of the outstanding amount, which has been admitted by the petitioners in their Suit No.416 of 1996 as such, they being the privy to the rescheduling of the loan, cannot turn around to say that further mark-up was fraudulently charged. It is settled law that where allegation of fraud is levelled, it must be specified and details thereof should be given. The contents of MOU were mutually agreed upon between the parties and there is nothing to suggest that the same as executed by fraud, 1 misrepresentation or under duress or coercion." [Underlining is mine].
81. As far as the objection of Mr. Asim Mansoor Khan to the effect that the amount availed by the Defendant has since, been credited in the statement of account of ZTC bearing No.10850001 in 'PAK RUPEES', as such the claim of the Plaintiff Bank in the instant suit in 'US Dollars' and/or 'charging of markup' in US Dollars is concerned, the same besides being frivolous, in-correct is belied by the credit/debit entries made in the Statement of Accounts. The 'CERTIFIED STATEMENT OF ACCOUNTS'
[jointly annexed as 'K-1' to the plaint] itselves mention the currency in US dollars and not in 'PAK RUPEES'. The particulars of the MAIN ACCOUNT reads in the following manner:- Account No. 10850001 Currency: US Dollars Account Holder: Zulfigar Trading Corporation.
82. Likewise, the 'markup account' of ZTC is bearing No.1060240102 and the CURRENCY mentioned thereon is in 'US DOLLARS'. Needless to say, 'statutory presumption of correctness' to the 'debits' and 'credits' entries made in the Statement of Accounts, is also attached. None of 'debit' and 'credit' entries in the 'CERTIFIED STATEMENT OF ACCOUNTS' has either been pin-pointed/ specifically challenged and/or otherwise, denied by the Defendant No.1 . The evasive and bald assertions/denials, besides of no avail to the Defendants, are also no denials in the eyes of law.
Reliance regarding 'STATUTE STATUTORY PRESUMPTION' of correctness attached to the entries made in the %tatement of account, can be placed on the case of United Bank Ltd. v. Messrs Sartaj Industries, through Qaisar labal, Managing Partner and 6 others [PLD 1990 Lahore 99], wherein it was held as under:- "20.... The statement of account annexed with the plaint which has been certified under the Bankers'
Books Evidence Act, shows these deposits as having been made by the defendants and thus presumption of correctness has to be attached thereto when the entries have not in any manner whatsoever been rebutted by the defendants. The aforesaid deposits shall have to be therefore taken as having been made by the defendants on the dates on which these are shown to have been made in the books of accounts of the plaintiff Bank".... [Underlining is mine].
83. Moreover, it is significant to note that even if 'FOREIGN CURRENCY FINANCE' is converted in to 'LOCAL CURRENCY FINANCE' then too, in view of Artilce 3 of Foreign Currency Loans [Rate of Exchange] Order, 1982 [3 of 1982], for the purpose of the repayment/payment, the 'conversion' if any, is of no consequence. It would be advantageous to reproduce hereinbelow section 3 of the aforesaid Order [3 of 1982] which reads as follows:- "3. Rate of exchange applicable to foreign currency loans: For the removal of doubts, it is hereby declared that, notwithstanding anything contained in any other law for the time being in force, the judgment, of any Court or any agreement, contract or other instrument, the rate of exchange, for the purpose of conversion into Pakistan currency for repayment in respect of an outstanding foreign currency loan or any part thereof or interest in respect is thereof payable to a financial institution on the day of commencement of this Order shall be, and shall be deemed at all material times to have been, the rate of exchange in force under Section 23 of the State Bank of Pakistan Act, 1956 (XXX111 of 1956), on the day on which the loan, part or interest is actually repaid or paid to the financial institution; and all parties by whom the loan, part or interest is repayable or payable shall make the repayment or payment accordingly." [Underlining is mine].
84. Evidently, per the aforesaid section 3, it has been provided that notwithstanding anything contained in any other law for the time being in force, the judgment of any Court, or any agreement, contract or any other instrument, the rate of exchange for the purpose of conversion into Pak currency/local currency for the repayment of the outstanding foreign currency facility or part thereof being payable to a Financial Institution shall be deemed at all material times to have been the rate of Exchange in force under section 23 of the State Bank of Pakistan Act, 1956 on the date on which the finance facility or part thereof is actually repaid or paid to the Financial Institution.
85. Being relevant section 23 of the State Bank of Pakistan Act, 1956 is also reproduced hereinunder:- "23. Obligation to buy or sell foreign exchange. The Bank shall sell to or buy from any authorised dealer in Pakistan, approved foreign exchange at such rates of exchange at such places and on such conditions as the Federal Government may from time to time by general, or special order determine. Explanation:- In this section "authorised dealer" means a person for the time being authorised under Section 3 of the Foreign Exchange Regulation Act, 1947, to deal in foreign exchange".
86. On the aforesaid aspect of the matter reliance can be placed on the case of Terni S. PA v. PECO (Pakistan Engineering Company) Ltd. [1992 SCMR 2238], wherein it was held as under:- "28. ...We would therefore, hold that where the money of account in respect of a contract is a foreign currency, or where it is not so but under the contract the particular account claimed is payable in a particular foreign currency, and demand is made for payment in that foreign currency, the Pakistani Courts can give judgment in "so much of that foreign currency or the Pak rupees equivalent thereof at the time of payment". Here it must be stated that where the decree is in such terms, the language of the decree, as stated in para. 18 above, would give the judgment- debtor the option to either make payment in foreign currency or in Pak rupees, and execution can always be taken out by the decree-holder if no payment is made by the judgment-debtor in respect of so many Pak rupees as equal the foreign currency at the ,rate of exchange prevalent on the date the payment is made." [Underlining is mine].
87. As far as the contention of Mr. Asim Mansoor Khan, regarding adjustment of re-payments made by the Defendant No.1 against 'MARKUP AMOUNT' is concerned, the same inter alia cannot be accepted in view of specific provisions of law i.e. explanation provided to subsection 4[b] of section 10 of F.I.O., 2001 [Ordinance XLV of 2001] and section 60 of the Contract Act, 1872 [IX of 1872] which respectively reads as follows:- a. "10. (4) (b)...the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution up to the date of institution of the suit; Explanation. ---For the purposes of clause (b) any payment made to a financial institution by a customer in respect of a finance shall be appropriated first against other amounts relating to the finance, and the balance, if any, against the principal amount of the finance. [Underlining is mine]. b. ............
60. Application of payment, where debt to be discharged is not indicated. Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is not barred by the law in force for the time being as to the limitation of suits.
[Underlining is mine].
88. In view of aforesaid provisions of law the adjustment of re payments by Defendant No.1 against markup amount is proper and not suffers from any illegality. Likewise, from record Mr. Asim Mansoor Khan could not establish charging or any markup over markup or charging of markup beyond expiry date of Finance Agreement[s]. Needless to say the Defendant No.1 herein has duly acknowledged the outstanding amount as on March 31, 2009.
89. From the record, it reveals that the Defendants' objections ard nothing but aimed oriented to prolong the 'swift disposal' of the instant proceedings by way of filing the frivolous/sham objections. The Defendants, however, by means of such sham concocted and pseudo objections/pleas, per Mr. Aijaz Hussain Sheerazi, neither can be succeeded to forestall the repayment of the 'outstanding amounts' nor the payment of agreed 'markup' inter alia in terms of the Finance Agreements available on record. Ex-facie, all the pleas so urged, are not only mis- conceived, misleading but also afterthought. It is significant to note, in the Contract Act, 1872 [IX of 1872] or any other law in field, there exists nothing which prohibits the parties from 'varying' and/or 'altering' the terms of the 'original contract' by executing a 'new contract' on the basis of mutually 'agreed terms' and 'conditions'. The `novation' substitution' of the 'old contract' by new one for rescheduling, restructuring and/or renewal of facility[ies], is always permissible upon 'fresh terms' and 'conditions' if, mutually and voluntarily agreed upon between the parties. All the documents of 'finance facility' including 'finance agreements' are thus besides, valid are absolutely binding against the parties inter alia on the basis of 'DOCTRINE OF PROMISSORY ESTOPPEL'. It is important to note all the Finance Agreements herein have already been acted upon. Regarding 'PROMISSORY ESTOPPEL', since Article 114 of Qanun-e-Shahadat Order, 1984 is relevant, therefore, the same is reproduced as below:- "114. ESTOPPEL. When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing."
90. If, any case-law needs to be cited on the above aspect of the matter, then I would like to cite herein, the case of Arfan Hameed, S.D.O. Mirpur and 42 others v. Secretary, Education, AJ&K Government Civil Secretariat, Muzaffarabad and 3 others [2005 CLC 564], wherein it was held as under:-
10. ... The rule of promissory e.s' toppel is that where one party has, by his word or conduct made to the other party, a clear promise which is intended to create a legal relationship or effect a legal relationship to arise in future knowing or intending that it would be acted upon by the other party to whom promise is made and it is, in fact so acted upon by the other party; that promise would be binding on the party making it and he is not entitled to resile from it."
91. The Defendants, in the case in hand not only admit the execution of 'Finance Agreements', 'Promissory Notes' and 'Settlement Agreement' of May 25, 2009 [Annexure 'I' to the Plaint] etc but also the availment of the subject 'finance facility'. As far as the case of Dr. M. Aslam Khaki v. Syed Muhammad Hashmi [PLD 2000 SC 225] is concerned, to the knowledge of LEARNED COUNSEL FOR CONTESTING DEFENDANTS, it has not ATTAINED ANY FINALITY SO FAR. Moreover, in this regard making of a reference to 'clauses 2&3' of Article 203D and 'clause 2' to Article 203F of the Constitution of Islamic Republic of Pakistan, 1973 seems not out of place. To some extent as being relevant, the same are reproduced as follows:- "Article 203D Powers, jurisdiction and functions of the Court.---(2) If the Court decides that any law or provision of law is repugnant to the Injunctions of Islam, it shall set out in its decision--
(a) the reasons for its holding that opinion; and
(b) the extent to which such law or provision is so repugnant, specify the day on which the decision shall take effect 4[..] [Provided that no such decision shall be deemed to take effect before the expiration of the period within which an appeal therefrom may be preferred to the Supreme Court or, where an appeal has been so preferred, before the disposal of such appeal.]
(3) If any law or provision of law is held by the Court to be repugnant to the Injunctions of Islam,--
(a) the President in the case of a law with respect to a matter in the Federal Legislative List or the Concurrent Legislative List, or the Governor in the case of a law with respect to a matter not enumerated in either of those Lists, shall take steps to amend the law so as to bring such law or provision into conformity with the Injunctions of Islam; and
(b) such law or provision shall, to the extent to which it is held to be so repugnant, cease to have effect on the day on which the decision of the Court takes effect. [Underlining is mine].
Article: 203F Appeal to Supreme Court.---(2) The provisions of clauses (2) and (3) of Article 203D and clauses (4) to (8) of Article 203E shall apply to and in relation to the Supreme Court as if reference in those provisions to Court were a reference to the Supreme Court."
92. Moreover, at this juncture, I would also like to refer to and reproduce herein sections 19, 20 and 21 from the Enforcement of Sharia Act, 1991 [Act X of 1991] as being necessary in the scenario as under: "19. Fulfillment of existing obligations. Nothing contained in this Act or any decision made thereunder shall affect the validity of any financial obligations incurred, including under any instruments, whether contractual or otherwise, promises to pay or any other financial commitments made by or on behalf of the Federal Government or a Provincial Government or a financial or statutory corporation or other institution to make paymetts envisaged therein, and all such obligations, promises and commitments shall be valid binding and operative till an alternative economic system is evolved. [Underlining is mine].
20. ....
21. Laws to be enacted by Majlis-e-Shoora (Parliament) and Provincial Assembly only.
Notwithstanding anything contained in this Act or the judgment of any Court, including the Supreme Court, all laws shall be enacted exclusively by the Majlis-e Shoora (Parliament) and the Provincial Assembly, as the case may be, and no law shall be made or be deemed to have been made unless it is made in the manner laid down in the Constitution." [Underlining is mine].
93. Per Mr. Asim Mansoor Khan, the charging of 'markup' on the rescheduled/restructured amount is not only 'HARAM but also prohibited under BPD's Circulars Nos. 13 and 32 issued y State Bank of Pakistan [In short SBP] on 30.4.1984 and 30.11.1984 respectively. All sorts of transaction based on interest including charging of 'markup' on the 'rescheduled amount', per Mr. Asim Mansoor Khan, is not only 'HARAM' but also prohibited under the aforesaid circulars of SBP. The contention of Mr. Asim Mansoor Khan so raised cannot be accepted inter alia for the obvious reason that all the Defendants are/were fully aware about the charging of 'mark-up' under the 2ND FINANCE AGREEMENT dated December 14, 2007 [Annexure 'B-3' to the Plaint], but despite such knowledge and awareness the 'fresh Finance Agreement' was signed and executed by Defendant No. 1 as per his own 'free choice' and 'sweet will'. The Defendant No.1, as such got himself fully benefitted. In view of this position as well Defendant No.1, now cannot be permitted to say that the 'markup' in terms of the 2nd Finance Agreement dated December 14, 2007 [Annexure 'B-3' to the Plaint], is either not payable or otherwise 'HARAM'. The Defendant No.1 including others thus could not be permitted now to wriggle out from their 'promises' and binding 'commitments' much-less on the basis of false pretexts that is to say, 'mark-up' is either 'HARAM' and/or otherwise, prohibited under tha SBP's Circulars. Needless to say, that the Defendant No.1, on his 'own request' entered into the 2nd Finance Agreement dated December 14, 2007 of December, 14, 2007 [Annexure 'B-3' to the Plaint], as such, now the Defendant No.1 could not resile from the 'AGREED TERMS' and 'CONDITIONS' of the Finance Agreement datediDecember 14, 2007, on the pretexts that the charging of 'markup' under the aforesaid Finance Agreement dated December 14, 2007 is 'HARAM' or otherwise, prohibited as contended by Mr. Asim Mansoor Khan, learned counsel for Defendant No.1 -- Principal Customer.
94. No doubt, under the 'MARKED-UP PRICE SYSTEM 'is PURCHASE PRICE SYSTEM' OF FINANCING, THE 'MARKED-UP PRICE'/'PURCHASE PRICE', cannot be enhanced or reduced unilaterally, otherwise, it would be against the INJUNCTION OF ISLAM as well as BPD's Circulars Nos.13 dated 20.06.1984 and 32 of 26.11.1984. Being relevant both are reproduced as under:- "STATE BANK OF PAKISTAN Banking Control Department Central Directorate Karachi.
BCD Circular No.13 20th June, 1984.
All Banks, Dear Sirs, Elimination of 'RIBA' from the Banking System.
As has been announced by the Finance Minister, it is the intention of Government that the Banking System should shift over to Islamic modes of financing during the course of the next financial year.
These modes of financing have been described in Annexure I. This shift will take place according to the following programme.
(i) As from the 1st July, 1984, all banking companies will be free to make finance available in any of the modes of financing listed in Annexure I. However, as a transitional arrangement, they will also be free to lend on the basis of interest, provided that no accommodation for working capital will be provided or renewed on interest basis for a period of more than six months.
(ii) As from the 1st January, 1985, all finances provided by a banking company to the Federal Government, Provincial Governments, public sector corporations and public or private joint stock companies shall be only in any one of the modes indicated in Annexure I [Emphasis and Underlining are mine].
(iii) As from the 1st April, 1985, all finances provided by a banking company to all entities, including individuals, shall be on the same basis as mentioned in (ii) above.
(iv) The appropriate mode of financing to be adopted in any particular case will be settled by agreement between the banking company and the client. Some possible modes of financing for various transactions have been shown in Annexure [Underlining is mine].
(v) As from the 1st July, 1985, no banking company shall accept any interest-bearing deposits. As from that date, all deposits accepted by a banking company shall be on the basis of participation in profit and loss of the banking company, except deposits received in Current Account on which no interest or profit shall be given by the banking company.
2. The instructions contained in items (i), (ii) and (iii) above shall, however, not apply to on-lending of foreign loans which will continue to be governed by the terms of the loans. Likewise, the instructions contained in item (v) above shall not apply to foreign currency deposits.
3. The above instructions are being issued under the Banking Companies Ordinance, 1962. Further instructions, where necessary, will follow. Please acknowledge receipt. Yours faithfully, (SIBGHATULLAH) Director"
ANNEXURE I Permissible Modes of Financing (A) Financing by lending:--
(i) Loans not carrying any interest on which the banks may recover a service charge not exceeding the proportionate cost of the operation, excluding the cost of funds and provision for bad and doubtful debts. The maximum service charge permissible to each bank will be determined by the State Bank from time to time.
(ii) Qard-e-Hasana loans given on compassionate ground free of any interest or service charge and repayable if and when the borrower is able to pay.
4(B) Trade-related modes of financing including the following.-
(i) Purchase of goods by banks and their sale to clients at appropriate mark-up in price on deferred payment basis. In case of default, there should be no mark-up on mark-up. [Underlining is mine].
(ii) Purchase of trade bills
(iii) Purchase of movable or immoveable property by the banks from their clients with Buy-Back Agreement or otherwise. [Underlining is mine].
(iv) Leasing.
(v) Hire-purchase.
(vi) Financing for development of property on the basis of a development charge.
The maximum and the minimum rates of return to be derived by the Banks from these modes of financing will be as may be determined by the State Bank from time to time.
Trade-related modes of financing including; the following-- Musharika or profit and loss sharing.
Equity participation and purchase of shares.
Purchase of participation term certificates and Modaraba Certificates.
Rent-sharing.
The maximum and minimum rates of profit to be derived by the banks from such transactions will be as may be prescribed by the Staie Bank from time to time. However, should any losses occur, they will have to be proportionately shared among all the financiers. ANNEXURE - II Permissible modes of financing: for Various Transactions Nature of Business I. Trade and Comments
(a) Commodity operations of the Federal and Provincial Governments and their agencies
(b) Export Bills purchased/negotiated under Letters of Credit (other than those under reserve).
(c) Documentary Inland Bills drawn against Letters of Credit purchased/discounted.
(d) Import Bills drawn under Letters of Credit-
(e) Financing of exports under the State Bank's Export Finance charge. Scheme Basis of Finacing Fixed investment Mark-up in price
(i) Exchange Basic differential in the case Of foreign currency bills.
(ii) Commission or mark-down in the case of Rupee bills. Mark-down in price Mark-up in price Service charge/concessional Service and The Scheme for Financing Locally Manufactured Machinery.
(f) Other items of trade and commerce. Fixed investment. Equity participation, P.T.Cs., Leasing or hire-purchase. Working Capital Profit and loss sharing or mark-up. II. Industry Fixed investment Equity participation, P.T.Cs., Modaraba Certificates, leasing, Hire purchase or mark-up. Working Capital Profit and loss showing or mark up. III. Agricutlure and Fisheries
(a) Short-term Finance
(b) Medium and long-term Finance. (i) Tubewells and other wells.
Mark-up. In the case of small farmers and small fishermen who are at present eligible for interest free loans finances for the specified inputs etc., upto the prescribed amount may be on mark-up basis. The mark-up amount may however, be waived in the case of those who re-pay the finance within the stipulated period and payment of the mark-up made by the State Bank to banks by debit to Federal Government Account.
Leasing or hire-purchase. In addition to ownership of machinery, banks wells may create charge on the land in their favour as in the case of other loan to the farmers under the Passbook System.
"STATE BANK OF PAKISTAN Banking Control Department Central Directorate Karachi.
BCD Circular No.32 26th November, 1984.
All Banks and Development Finance Institutions.
Dear Sirs, Elimination of 'RIBA' from the Banking System Bank Charges. Please refer to BCD Circular No. 13, dated the 20th June, 1984.
2. Vide BCD Circular No.7, dated the 28th March, 1984 bank charges except charges for home remittances, have been deregulated. The schedules of bank charges received from the banks show that the following items of bank charges are based on interest:--
(i) Mark-up in the case of import bills under import letters of credit.
(ii) Mark-down in the case of documentary bills drawn against inland letters of credit.
3. The schedules also provide for levy of overdue/penal interest in case of non-retirement/non- payment of inland cheques, bills etc., purchased.
4. In exercise of the powers vested in it under the Banking Companies Ordinance, 1962, the State Bank of Pakistan is pleased to direct that as from the 1st January, 1985, interest, wherever charged by a banking company/development finance institution in any of the, items of bank charges, shall be replaced by a non-interest mode considered appropriate by it. Moreover, overdue/penal interest or mark-up on mark-up shall not be charged by a banking- company/DFI as from that date. Instead, it may take legal steps for recovery of the overdue finance. [Underlining is mine].
5. Please acknowledge receipt. Yours faithfully, (SIBGHATULLAH) Director"
95. Bare perusal of the aforesaid circulars would show that they do not prohibit those parties who 'wish to enter into any 'fresh Finance Agreement' on 'fresh terms' and 'conditions' and that too out of their own's 'free-will' and 'wish'. Per record of the present case, the Defendant No.1, at its' own request entered into a Finance Agreement dated December 14, 2007 [Annexure'B-3' to the plaint] whereby, the Defendant No.1 agreed to pay 'mark-up' on the amount under the aforesaid Finance Agreement in the shape of 'PURCHASE PRICE'. No doubt, under the aforesaid Finance Agreements etc. the Plaintiff Bank, has already acquired vested rights, which now, cannot be taken away of course, THE CIRCULARS OF SBP, are 'NOTIFICATIONS' which are issued at the strength of powers derived from the State Bank of Pakistan Act/Banking Companies Ordinance, 1962 and undoubtedly, they have the force of law. These circulars, however, cannot be termed as 'LEGISLATIVE INSTRUMENTS' of the nature which can curtail the 'accrued vested rights' having already accrued/being accrued in favour of the creditors or otherwise, can override the provisions of law.
Reliance in this regard can be placed on the case of Halo Spinning Mills Ltd. v. International Finance Corporation [2002 SCMR 450], wherein it has been observed as follows:- "27. Learned counsel contended that the winding-up petition against appellant was premature in view of Circular No. 19 (Banking Policy and Regulation Department) because under the Scheme introduced through this Circular appellant ,had an opportunity to settle its outstanding dues with interference of State Bank of Pakistan, therefore, for this reason the process of winding-up of the company was liable to be deferred for a considerable time. Suffice it to observe that conditions of Circular No. 19 legally cannot be considered a document to override the provisions of section 305 of the Ordinance and on account of issuance of Scheme under the Circular the proceedings under section 305 of the Ordinance initiated by respondent-Corporation (IFC) against the appellant were not liable to be postponed." [Underlining is mine].
96. As far as the contention of Mr. Faiz H. Shah, learned counsel for Defendant No.3 vis-a-vis the creation and/or enforcement of the mortgages are concerned, it is needless to say, that the two 'MEMORANDA OF DEPOSIT OF TITLE DEEDS' and 'MORTGAGED DEEDS' involved in the instant case, have not been denied by the Defendant No.3 thus, it is 'established position' that the Defendant No.2 through Defendant No.3 viz. Mr. Auragzeb son of Muhammad Yaqoob [Defendant No.3 herein] mortgaged his two immovable properties mentioned in para 5[i]&[ii] of the pliant. Besides, it is important to mention herein that the 'signing' and 'execution' of 'MEMORANDA OF DEPOSIT OF TITLE DEEDS' is not a requirement of law. In this regard reference can be made to Section 58(f) of Transfer of Property Act, 1882 [IV of 1882], where-under, the delivery of 'title documents' pertaining to any immovable property[ies] to a 'creditor' or his agent with an intention to create security thereon, under law, is called 'MORTGAGE BY DEPOSIT OF TITLE DEEDS'/'EQUITABLE MORTGAGE'. This being the legal provision, the arguments of Mr. Faiz H. Shah, learned counsel for the Defendant No.3, thus found to be devoid of any substance and merit-less as such stand rejected. Section 58(t) of Transfer of Property Act, 1882, for ready reference is reproduced as under:- "58(f) Mortgage by deposit of title-deeds.--- Where a person in the town of Karachi, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.
Provided that, where a mortgage by deposit of title deeds is to be created in favour of a banking company as defined in the Banking Tribunals Ordinance, 1984 (LVI of 1984), the same may also be created by an entry in the record-of-rights against the entry relating to such immovable property.] Needless to say, the proviso inserted to section 58 of Transfer of Property Act, 1882 [IV of 1882] through Finance Act, 1986 came before the Division Bench of the Court in the case of Zafar Mehmood Shaikh v. Prudential Discount and Guarantee House Limited and 4 others [2003 CLD 1740] when after an elaborate discussion, it was finally held/observed as follows:- "14. We have carefully considered the respective contentions of the learned counsel, we find it difficult to subscribe to Mr. Shabbir Ahmed Shaikh 's view which would imply that on one hand the Legislature intended to enlarge the scope of section 58(1) by, stipulating that mortgages through deposit of title deeds could be created anywhere where the Act was applicable and at the same time attempted to restrict it by providing that an equitable mortgage in favour of a Bank could only be made in a particular manner. On the other hand there appears to be a great deal of weight in the opposite point of view canvassed by Messrs Kamal Azfar, Nadim Akhtar Khan and Salim Salaam Ansari. We are therefore, clearly of the view that the proviso only stipulates an additional method of creation of equitable mortgage in favour of a Banking Company without affecting the existing modes of creation of such mortgages. We are therefore, unable to agree with Mr. Shabbir Ahmed Sheikh on this score as well."
97. To meet the objection of Mr. Faiz H. Shah, learned counsel for Defendant No.3 regarding 'quantum' of the 'amount' being secured by the mortgages, I would like to reproduced herein some of the relevant portions from the 'MEMORANDUM OF DEPOSIT OF TITLE DEEDS' that relates to the 'DEPOSIT OF ORIGINAL TITLE DEEDS' and 'MAXIMUM AMOUNT' having been already secured under MoDTD as under:- "1...do hereby confirm having already deposit with your Bank Alfalah Limited... all original title deeds, ... and documents with the intent to create equitable mortgage (mortgage by deposit of title deeds) in your favour for securing to you on a continuous basis, the payment of all sums and/or dues now owing to you or which may at any time hereafter or from time to time become due to you.. .from M/s Zulfiqar Trading Corporation on any account or for whatsoever reason, upto a maximum amount of Rs. 350,000,000 (Rupees three hundred and fifty million only) plus the amount of all your costs, charges, fees, commissions, expenses including any amount of liquidated damages if payable to you or incurred by you. [Underlining is mine].
98. Under section 58[a] of the Transfer of Property Act, 1882 [IV of 18821 a Mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of 'money advanced' or 'to be advanced' by way of a loan an existing or future debt or the X performance of an engagement which may give rise to pecuniary liability. Evidently, a mortgage is created for securing the 'existing' or 'future debt' or the performance of an engagement which may give rise to pecuniary liability.
99. In view of the above, the contention of Mr. Faiz H. Shah, learned counsel for Defendant No.3 that the 'REGISTERED MORTGAGE DEEDS' dated 17.12.2007 [Annexure 'C-2' to the plaint] and 19.12.2007 [Annexure 'C-3' to the plaint] in respect of the Immovable Properties belonging to Defendant No.2 i.e.:- a. Plot No.108/16, Survey Sheet No. 35-P/1, measuring 840 sq.yds, Block 3, Bahadur Yar Jung Co- operative Housing Society, Karachi (Mortgaged Property No.1), situated within registration of district and sub-district Karachi. b. ' Plot No.109/16, Survey Sheet No.35-P/1, measuring 835 sq.yds, Block 3, Bahadur Yar Jung Co- operative Housing Society, Karachi (Mortgaged Property No.2), situated within registration of district and sub-district Karachi. are only meant to secure AN AMOUNT TO THE EXTENT of Rs.2,50,000/- each and not above that amount seems mis-conceived particularly when the same 'Mortgage Deeds' are read and seen in juxtaposition of the 'MEMORANDA OF DEPOSIT OF TITLE DEEDS' [Annexures 'C' and `C-1' to the Plaint]. The arguments thus advanced by Mr. Faiz H. Shah, learned counsel for Defendant No.3 regarding the 'quantum of amount' as being secured, loses its' worth. The two 'DEEDS OF MORTGAGE' [Annexures 'C-2' and 'C-3' to th,-; Plaint] if, read in conjunction with 'MEMORANDA OF DEPOSIT OF TITLE DEEDS' [Annexure 'C' and `C-1' to the plaint] then one can easily understand and ascertain the QUANTUM OF THE AMOUNT actually secured. Manifestly, under the MoTDs an amount upto a maximum of Rs.350,000,000/- each plus cost, charges etc. have also been secured. The aforesaid two immovable properties belonging to Defendant No.2 besides 'registered mortgage' are equitable mortgaged with Plaintiff Bank as such the stand of Mr. Faiz H.
Shah, learned counsel for Defendant No.3 that the secured amount is only to the extent of Rs.2,50,000/- per each deed and not above that amount is repelled as being without any substance.
100. Apart from the above, the 'two immovable properties', the Plaintiff Bank on another property i.e. a Double storey bungalow on Plot No.95, measuring 2000 sq.yds, Khayban-e-Ghazi, Phase VI, DHA, Karachi belonging to Defendant No.4 is claiming creation mortgage in its favour by Defendant No.4, however, the Plaintiff Bank has failed to show or otherwise, establish from the record any document whereby or wherefrom, the creation of any kind of mortgage in its favour is established. For envisaging actual position, paras 4, 5 and 6 of the 'Settlement Agreement' dated May 25, 2009 [Annexure 'I' to the Plaint] besides being relevant are selves-explainatory as such the same are reproduced herein for convenience purposes as under:- "4. That the Customer will create effective mortgage in favour of the Bank on its double story bungalow on Plot No.95, measuring 2000 sq. yds, Khayban-e-Ghazi, Phase VI, DHA, Karachi on or before May 31, 2009. [Underlining is mine].
5. That in case the value of the' property referred to in Clause 4 does not cover the outstanding liabilities after payment of amounts referred to in Clause 2(i), (ii) and (iii) above the Customer will provide further security to meet the shortfall to the satisfaction of the Bank within 15 days from the date of demand by the Bank. [Underlining is mine].
6. The Bank shall redeem (1) Plot No.108/16, Survey Sheet No.35-P/1, measuring 840 sq.yds, Block 3, Bahadur Yar Jung Co-operative Housing Society, Karachi (2) Plot No.109/16, Survey Sheet No. 35-P/1, measuring 835 sq.yds, Block 3, Bahadur Yar Jung Co-operative Housing Society, Karachi ("Mortgaged Properties") and deliver the title documents to the Mortgagor's attorney namely Mr. Aurangzeb when all of the conditions are [Underlining is mine]. the Customer has paid to the Bank US$3,195,1031-(US Dollars three Million one hundred ninety five thousands one hundred three only) in terms of Clause 2(i), (ii) and (iii) above: the Mortgagor has unconditionally withdrawn Suit No.B-54 of 2009 pending in the High Court of Sindh at Karachi;
101. From the record, however, it appears, that the two 'mortgaged properties' belonging to Defendant No.2 and referred to hereinabove could not be released, on account 'default' of Defendant No.1 in view of the 'terms' and 'conditions' of the SETTLEMENT AGREEMENT dated May 25, 2009 [Annexure 'I' to the Plaint]. It is, however, significant to mention herein, that in the SETTLEMENT AGREEMENT dated May 25, 2009 [Annexure 'I' to the Plaint] the Defendant No.1 herein has duly acknowledged the OUTSTANDING AMOUNT as on March 31, 2009 i.e:- Principal : US Dollars 4,795,103.00 Markup: US Dollars 277,417.87
102. The Defendant No.1, nonetheless, failed and/or avoided to pay the same in the stipulated time.
Regarding the 3rd IMMOVABLE PROPERTY i.e. double story bungalow on Plot No.95, measuring 2000 sq.yds, Khayban-e-Ghazi, Phase VI, DHA, Karachi, which per averments in the plaint is belonging to Defendant No.4 and not PROPRIETORSHIP CONCERN [ZTC] and/or its' SOLE PROPRIETOR viz. SYED ZULFIQA ALI RIZVI, then question arises, how the 'customer' /'Defendant No.1' who is the only signatory to the Settlement Agreement dated May 25, 2009 under 'Clause--IV' of the said Settlement Agreement could 'CREATE MORTGAGE' in favour of Plaintiff Bank in respect of the aforesaid double storied bungalow which in actual fact is belonging to Defendant No.4 and not the 'PRINCIPAL CUSTOMER' or its" SOLE-PROPRIETOR'. From all the above, it is crystal clear that the aforesaid 'double storied bungalow' was 'never mortgaged' by Defendant No.4 in favour of the Plaintiff Bank and this position is also clear from the record of the instant case.
103. As far as the releasing of the two 'mortgaged immovable properties' belonging to Defendant No.2/mortgagor is concerned, in this regard I would like to refer to two letters of Defendant No.3 both dated , ,bruary 1, 2008 and one letter of the Plaintiff Bank dated February 7, 2008 which undoubtedly shed light on the subject of release of the two 'mortgaged properties' belonging to Defendant No.2. The aforesaid letters for convenience purposes are reproduced respectively hereinbelow:- A. "To, The Manager Bank Al Falah Paper Market Branch, Karachi.
SUB:- REDEMPTION OF PROPERTIES BEARING PLOT NO.108 AND PLOT NO.109, BLOCK 3 BHADUR YAR JAND CO-OPERATIVE HOUSING SOCIETY KARACHI.
Dear Sir, ' I take this opportunity to inform you that my above mentioned properties were mortgaged bonafidely in good faith for a very short period. It has been learnt that no facility has been provided to MIS Zulfiqar Trading Corporation or to Syed Zulfiqar Ali Rizvi or any of his business concern so far on these properties.
' You are requested not to provide any facility on the basis of above mentioned properties. You are, therefore, requested to redeem my aforesaid properties at the soonest and kindly release and deliver to me all my original documents, and papers at the earliest in respect of the above mentioned properties. [Underlining is mine].
Your early and immediate kind action will be highly appreciated. Thanking you. Karachi Dated:- 01- 02-2008 SD/- AURANGZEB S/O MUHAMMAD SHARIF CNIC NO. 42201-1763679-1"
B.
"ZULFIQAR TRADING CORPORATION (EXPORT & IMPORT HOUSE)
6,7 & 8, 6th Floor, Al-Yousuf Chambers, Shahrah-e-Liaquat, New Challi, Karachi-74200 (PAKISTAN)
1-02-2008 The Manager Bank Alfalah Ltd Paper Market Branch Karachi Sub: Replacement and redemption of Security Plot Nos.108 and 109 Block 3 Bhadurabad-Yar-Jang Cooperative Housing Society Dear sir, With reference to the captioned subject, we hereby request that kindly allow us to replace the above cited properties mortgaged by Mr. Aurangzeb son of Mr. Muhammed Shareef bearing NIC 42201-1763679-1 with our Dalmia property measuring 14,278 SQYD as process on cited properties is getting delayed. [Underlining is mine].
Your kind action in this regards shall be highly obliging. Sincerely yours Sd/- For Zulfiqar Trading Corporation"
C. BANK ALFALAH LIMITED BANK ALFALAH LIMITS February 7, 2008 Mr. Aurangzeb son of Mr. Muhammad Sharif, Flat #301, Plot # 140, Block 3, Zubaida Garden, Sharfabad Karachi Dear Sir, Subject: Token Registered Mortgage or plots Nos.108 and 109, Block-3, Bahaduryar Jang Co-operative Housing Society, Karachi. A/c M/s. Zulfiqar Trading Corporation.
This is with reference to your letter dated 01-02-08, wherein you have requested to redeem properties being plot No.108 and plot No.109, Block-3, Bahaduryar Jang Co-operative Housing Society, Karachi.
We wish to inform you that M/s Zulfiqar Trading Corporation a proprietorship concern of Mr. Syed Zulfiqar Ali Rizvi, has obtained banking accommodation from Bank Alfalah Limtied, Paper Market Branch, Karachi against pledge of Rice. Presently, the value of security is reduced and to secure the indebtedness payable by M/s. Zulfiqar Trading Corporation, bank asked him to provide additional security and for the purpose to secure the indebtedness payable by M/s. Zulfiqar Trading Corporation arranged the above properties and in this regard you being attorney of Mr. Muhammad Irfan signed and executed Mortgage Deed, Memorandum Deposit of Title Deeds, and Documents and General Power of Attorney in favour of Bank Alfalah Limited, therefore, unless M/s. Zulfiqar Trading Corporation may adjust the entire outstanding, the question of redemption of above properties does not arise. [Underlining is mine].
Yours truly, Sd/- Sd/- Authorized Signatory Authorized Signatory Paper Market Branch, SR 7/23 Campbell Street, Serai Quarters. Karachi -- Pakistan Phones: 2211353-358, Fax: 2211243"
104. From perusal of the above letters it is crystal clear that a charge in the shape of mortgages was created by Defendant No.2 through his duly constituted attorney viz. Aurangzeb/Defendant No.3 herein over the two immovable properties belonging to Defendant No.2 in favour of the Plaintiff Bank. It is no body case that the properties referred to and mentioned in the aforesaid letters are not mortgaged with the Plaintiff Bank. Moreover, until the entire outstanding amount is paid by Defendants till then, the question of any redemption of 'mortgaged Y properties' does not arise.
Apart from the above, the UNDERTAKING DATED 11.12.2007 executed by Defendant No.2, also belies the Defendant No.3 in its' adverse assertions i.e. about the creation of mortgages in favour of the Plaintiff Bank. The undertaking dated 11.12.2007 reads as follows:- "UNDERTAKING Muhammed Irfan son of Muhammed Yagoob Soria, Muslim, Adult, holdin C.N.I.C. No. 42301-5165078 resident of 3rd floor, Aisha Manzil Moosa Lane, Karachi Do hereby Solemnly affirm and/declare to undertake as under:
1. That I am executant of this undertaking.
2. That I am the lawful owner of Two plots bearing Nos.108 and 109, Block -3, Bhaduryar fang Co- Operative Housing Society measuring 840 Sq. yd and 885 Sq.-yd respectively which I had purchased vide three separate registered Conveyance/Sale deeds out of which one sale deed registered in respect of plot No.108, which was registered at No.2591, on book No.I before sub- registrar T-Div. Karachi on 17-08-2004 bearing M. F. Roll No.U55997/1998 and two sale deeds registered in respect of plot No.109 for 25% shares and 75% shares respectively, for 25% shares the sale deed was registered at No.3128, serial No.3980, on book No. 1, registered before sub-registrar T- Div. XI, Karachi dated 24-09-2005, microfiled dated 06-10-2004, bearing M.F. Roll No.66107/207I and for 75% share sale deed was registered at No.1119, on book No.1, executed before sub-registrar Gulshan-e-lqbal Town, on 23-02-2007, microfiled on 07-03-2007 bearing M.F. Roll No.17425/4118.
3. That I have appointed Mr..Aurangzeb son of Muhammad Sharif for both of the plots to act as my General attorney on my behalf Vide two Sepaate registered General Power of attorneys out of which one registered at Serial No.2057, registration No.38 on book No.I bearing M.F. Roll No. U3470/4007 executed before Sub-registrar Gulshan-e-Iqbal Town Dated 15-01-2007 in respect of plot No.108, and the other registered at Serial No.1789, registration No.542, on book No. IV bearing M.F. Roll No. U30874/4224 executed before Sub-registrar Gulshan-e-Iqbal Town Dated 25-03-2007 in respect of Plot No.109.
4. That my attorney has submitted the application to M.P.G.O., C.D.G.K for Consolidation of these two plots into one after fulfillment of all formalities and prior approval of Bhaduryar Jang Society Karachi.
5. That the said General power of attorney is still in full force and the said property is free from all sorts of litigations, claims, liens; charges, interests of whatsoever nature.
6. That I am fully aware of the fact that my attorney is dealing with Bank Al-Falah Ltd., [Paper market branch] to mortgage my property and to avail a loan facility against my property, I do not have any objection on this As my General attorney is fully empowered to proceed in this regard and to mortgage, convey/transfer my property or otherwise dispose off the same in any manner.
[Underlining is mine].
IN WITNESS WHEREOF I have executed this undertaking at Karachi on this 11th day of December 2007."
105. Likewise, the arguments of learned counsel for Defendants Nos.1 and 3 regarding non-release of the 'pledged goods' is also without any force. The Defendant No.1, not only failed to fulfill his obligations and commitments regarding repayment and 'sale of pledged rice' as per his letters referred to herein above, but also 'made attempts' to 'cheat' and 'hoodwink', the Plaintiff Bank by submitting a 'FORGED CONTRACT' with one 'ASCOT' and COMMODITIES & COUNTER CORP. The Defendant No.1 however, when failed in achieving its' nefarious designs, thereafter he teamed-up with Defendant No.5 and then they jointly forced the Plaintiff's `MUCADDAM' to leave out the 'premises', where 'PLEDGED RICE' was stored. Thereafter, they succeeded, no doubt, in stealing of the 'PLEDGED RICE' regarding which, nonetheless, criminal proceedings were also initiated by the Plaintiff Bank. The arguments of Mr. Asim Mansoor Khan to the effect that the Plaintiff Bank in any manner has failed and/or avoided to release the 'pledged rice' beside being not convincing cannot be accepted on the face of record. Ex-facie, the allegation of NON-RELEASE of the 'PLEDGED RICE' is nothing but seems an 'attempt' and/or an 'excuse' for justifying the breach of the Settlement Agreement dated May 25, 2009 [Annexure 'I' to the Plaint].
106. A bare perusal of Clauses 2, 5, 7(iii) and 8 of the SETTLEMENT AGREEMENT dated May 25, 2009 would show that the release of 'pledged rice' inter alia was 'subject to payment' of US$ 1,600,000 under clause 2(iv). Even further payments under 'Clauses' 2(i), 2(ii) and 2(iii) as agreed and undertaken by Defendant No.1 were also not made. Evidently, it was Defendant No.1, who failed to make payment on specified date i.e. June 2, June 30 and July 31, 2009, as required by Clause 2(i), 2(ii) and 2(iii) of the Settlement Agreement dated May 25, 2009. [Annexure 'I' to the Plaint]. For and on account of Defendant No.l's failure to perform and fulfill its' obligations, the Plaintiff undoubtedly, is fully entitled and justified to retain all the securities including PLEDGED RICE and therefrom recover its' uptodate dues. All the relevant fact viz-a-viz 'pledged rice' and/or their release has also been fully acknowledged by Defendant No. 1 in writing per documents referred to hereinabove. In view of all these documents, the Defendants or any of them, even not be permitted to assert, a contrary stand in terms of Article 102 of Qanun-e-Shahadat Order, 1984 [10 of 19841 which reads as follows; "102. Evidence of terms of contracts, grants and other disposition of property reduced to form of document. When the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and is all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself or secondly evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained." [Underlining is mine].
107. Apart from the above, as the case in hand is, Defendants Nos.1 and 3 are deemed to be estopped from putting forward any sorts of adverse assertions much-less in contravention of the admitted facts and A documents, unless otherwise the Court in its' discretion so requires. A Being relevant, Article 113 of the Qanun-e-Shahadat Order, 1984 [10 of 19841 is reproduced as follows:- "113. Facts admitted need not be proved.---Nofact need be proved in any proceedings which the parties thereto or their agents agree to admit at the hearing, or which, before the hearing they agree to admit by any writing under their hands, or which by any rule or pleading in force at the time they are deemed to have admitted by their Pleadings: Provided that the Court may, in its discretion, require the facts admitted to be proved otherwise than by such admission." [Underlining is mine].
108. As far as the sale mortgaged under section 15 of F.I.O., 2001, is concerned, it is significant to note that the entire section 15 of F.I.O., 2001 [Ordinance XLVI of 2001] has already been 'held' and 'declared' as 'ultra vires' of the Constitution of Islamic Republic of Pakistan, 1973 in the case of National Bank of Pakistan and 117 others v. SAF Textile Mills Ltd. and another [PLD 2014 SC 283]. The relevant portions/paras therefrom read as follows:- "44. Be that as it may, it is not necessary to adjudicate upon this aspect of the matter, as we have already held that the above mentioned material provisions of section 15 of the Ordinance of 2001 are ultra vires to the Constitution. The rump of the section that remains is incapable of being severed and its presence in the statute would at best be ineffective and at worse cause for further mischief therefore, the entire section 15 of the Ordinance of 2001 is held to be ultra vires to the Constitution. Such a course of action would be in accordance with the law, as laid down by this Court in the case of Baz Muhammad Kakar and others v. Federation of Pakistan through Ministry of Law and Justice, Islamabad and others (N) 2012 SC 870). [Underlining is mine].
45. In the light of aforesaid discussion and in terms thereof the provisions of section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 are held to be ultra vires to the Constitution of the Islamic Republic of Pakistan, 1973."
109. With regard to the 'COMMON CONTENTION' of Mr. Asim Mansoor Khan and Mr. Faiz H. Shah, learned counsel for Defendants Nos.1 and 3 that no further 'mark-up' can be charged on the outstanding balance amount if, the same is got re-structured/re-scheduled even at the request of customer[s] because, in such like situation, no any amount is usually disbursed afresh to the 'customer'/'principal borrower'. In REBUTTAL of this stance, Mr. Aijaz Hussain Sheerazi, learned counsel for the Plaintiff emphatically argued that FIO, 2001 [XLVI of 20011 is a special law and in term of 2[e] of F.I.O., 2001, the Defendants are duty bound to fulfill inter alia the performance of an undertaking or promise that relating to a finance. Moreover, as per section 4 of F.I.O., 2001, the provisions thereof, override all other laws. In view of this position, the provisions contained in the said Sections require strkt compliance. As far as BPD's Circulars Nos.13 and 32 of SBP are concerned, the same being the product of 'sub-ordinate legislature', could not over-ride the provisions of F.I.O., 2001. The 'customers' in any event, are duty bound to fulfill their obligations and duties imposed on them under F.I.O., 2001 [XLVI of 20011. Section 2(3) of F.I.O., 2001 [Ordinance No.XLVI of 2001] being relevant is reproduced as under:- "2. Definitions.- In this Ordinance, unless there is anything repugnant in the subject or context -
(e) "obligation" includes-
(i) any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment or extension of time in payment of any other amounts relating to a finance or liquidated damages; and
(ii) any and all representations, warranties and covenants made by or on behalf of the customer to a financial institution at any stage, including, representations, warranties and covenants with regard to the ownership, mortgage, pledge, hypothecation or assignment of, or other charge on, assets or properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfillment of a promise; and [Underlining is mine].
(iii) all duties imposed on the customer under this Ordinance; and (0 ...
110. It is crystal clear from perusal of clause (e) of section 2 of F.1.0., 2001, [Ordinance No.XLVI of 2001], that all the Bank's customers are 'obliged' and 'duty bound' to not only perform/fulfill their undertakings/promises regarding repment of the outstanding dues but also all other amounts relating to finance as well. The Defendants herein, it is important to note have not only admitted the signing and execution of 'Finance Agreements' coupled with 'Promissory Note[s]' but also all other annexed docuemnts with plaint. Under such circumstances as well, the Defendant No.1 amongst others is not only liable to pay the.agreed 'PURCHASE PRICE' but also other relating 'accrued' charges to the Plaintiff Bank. Besides, the Defendants Nos.1 and 4 in their 'CAPACITY AS GUARANTORS' are also under bounding duty and obliged under the law, to fulfill and perform all their obligations made by them.
111. Needless to say, a Promissory Note[s], under section 118 of Negotiable Instruments Act, 1881 [XXVI of 1881] undoubtedly, attaches itself, the 'presumption of truth'. The relevant section 118 of Negotiable Instruments Act, 1881 [XXVI of 1881] in this regard is reproduced as under:- "118. Presumption as to negotiable instrument of consideration. Until the contrary is proved, the following presumptions shall be made:--
(a) that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;
(b) as to date: that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance: .that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer: that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsement: that the indorsements appearing upon a negotiable were made in the order in which they appear thereon;
(f) as to stamp: that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course: that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been obtained from its lawful owner; or from any person in lawful custody thereof by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
112. Manifestly, under section 118 of Negotiable Instruments Act, 1881 [XXVI of 1881], a 'Negotiable Instrument' not only attaches itself the 'statutory presumption' vis-a-vis 'consideration', 'date', 'time of acceptance' and 'transfer', 'order of endorsement', 'stamping' and as to 'holder in due course' of Negotiable Instrument' but also a special rule of evidence is attracted i.e.:-- 'Until the contrary is proved, the following presumption shall be made:---
(a) Of consideration.---that every Negotiable Instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;
113. The 'statutory presumption' so attached to a 'Negotiable Instrument', of course, without solid proofs and sufficient evidence could not be dispelled. The Defendant No.1, herein it is significant to note, has not only admitted the execution .of all the documents including 'Finance Agreements', 'Settlement Agreement', 'Mortgage Deeds', 'MDOT Deeds' and 'Promissory Notes' but has also admitted/acknowledged the outstanding liability as on March 31 of 2009 in the sum of US $ 5,072,520.87 expressly. Keeping in view of this position, neither the 'presumption' attached to the 'Promissory Notes' coupled with 'Finance Agreements' can be dispelled nor otherwise, the admitted and acknowledgeable liability can be denied and that too merely on the basis of 'evasive' and `un- specific assertions.' The Defendants in the present case have also failed to 'pin-point' any entry in the certified 'Settlement of Accounts' as being wrong or otherwise incorrect and/or disputed. The 'certified statement of account[s] attached to the Plaint, also attach[es] itself/themselves the 'STATUTORY PRESUMPTION OF TRUTH' under Bankers' Books Evidence Act 1891 [Act No.XVIII of 1891].
Regarding the aforesaid aspects of the matter reliance can be placed on the cases of [a]. Askari Commercial Bank Ltd. v. Hilal Corporation (Pvt.) Ltd. and 6 others [2009 CLD 588] [b]. United Bank Ltd. v. Messrs Sartaj Industries through Qaisar lqbal, Managing Partner and 6 others [PLD 1990 Lah.
99], where it was observed as follows:- [a]. "As regards the question of charging mark-up over mark-up, it may be noted that in the first place defendants have not disputed any of the entries contained in the statement of account filed with the plaint and even otherwise plaintiff counsel has taken me through the contents of the plaint and annexures filed with it which shows that the amount of Rs.51,774,883 is outstanding against the defendants as a buy back price in terms of agreement annexure J-2, J-3, J-4 which are agreements of finance and annexures 1-17 and 1-18. The submission of defendant counsel that the Chartered Accountant may be appointed to verify the accounts apparently is of no significance in view of fact that liability to the extent of the amount as noted above seems to be admitted as none of the documents filed with the plaint are in dispute. [Underlining is mine].
[b]. "20. ...The statement of account annexed with the plaint which has been certified under the Bankers' Books Evidence Act, shows these deposits as having been made by the defendants and thus presumption of correctness has to be attached thereto when the entries have not in any manner whatsoever been rebutted by the defendants ... [Underlining is mine].
114.Moreover, the averments/assertions, made by the contesting Defendants Nos.1 and 3 in their leave to defend applications bearing CMAs Nos.9567 of 2009 and 9668 of 2009 are not only vague but also evasive. The EVASIVE DENIALS' it is worth to mention herein are no denials . The allegations of excessive charging of the 'mark-up' on 'mark-up' without 'pin-pointing' in entry in the certified 'Statement of Accounts renders the allegations irrelevant. From the case of Ghulam Rasool through L.Rs. and others v. Muhammad Hussain and others [PLD 2011 SC 119], the relevant observations regarding 'evasive denials' read as follows:- rather made an evasive denial in their written statement expressing their lack of knowledge in this regard, which is no denial as per the provisions of Order VIII, Rules 3, 4 mut, C.P.C., rather such a denial may be constructed as an admission on their part." [Underlining is mine].
115.Undoubtedly, in the case in hand, the Defendant No.1 has not only admitted the 'availment of finance facilities' granted to the proprietorship concern [ZTC] of Defendant but has also acknowledged his/its' liability as per SETTLEMENT AGREEMENT of May 25, 2009 [Annexure 'I' to the Plaint]. Per SETTLEMENT AGREEMENT of May 25, 2009 the Defendant No.!, inter alia also agreed the payment of Mark-up @ 6 months LIBOR plus 3% per annum on the principal outstanding balance amount w.e.f. April 1, 2009 until the full and final payment of all the outstanding amount is made.
For ready' reference clauses 1, 2 and 3 of the 'Settlement Agreement' dated May 25, 2009 [Annexure Ito the plaint] are reproduced as under:-
1. The Customer unconditionally acknowledges and admits that the following liability as at March 31, 2009 is outstanding against the Customer and the same is due and payable to the Bank.
[Underlining is mine].
Principal: US$: 4,795,103.00 Markup: US$: 277,4171.87
2. The aforesaid outstanding liability shall be paid as follows:-
[i] the Customer will pay to the Bank US$ 315,103 [US. Dollars three hundred fifteen thousands one hundred three only] on or before 2nd June, 2009.
[ii] the Customer will pay US$ 1,000,000/- [US Dollars one million only] on or before June 31, 2009; [iii]the Customer will pay an amount of US$ 1,880,000/-[US Dollars one million eight hundred eighty thousands only] on or before July 31, 2009;
[iv] the remaining amount of US$ 1,600,000/- [US Dollars one million six hundred thousand only] shall be paid on or before July 31, 2009 along with markup accrued on the outstanding liability till final payment.
3. The mark-up will continue to accrue on the outstanding balance of the principal with effect from April 1, 2009 until the final date of payment. The mark-up shall be calculated at the rate of 6 months LIBOR plus 3% per annum. LIBOR prevailing on date of disbursement shall be used for this purpose.
116. The Plaintiff Bank, however, without any finance agreement/in absence of any FINANCE AGREEMENT, cannot be permitted or allowed to charge any mark-up beyond the expiry period of the last Finance Agreement [i.e. Annexure 'B-3 to the plaint herein]. To this extent, the arguments of Mr. Asim Mansoor Khan could not be repelled by Mr. Aijaz Hussain Sheerazi learned counsel for the Plaintiff Bank. Moreover, where a FINANCE AGREEMENT does not mention/stipulate any EXPIRY DATE then, the FINANCE AGREEMENT in such eventuality be deemed and treated only for ONE YEAR/365 DAYS. On the aforesaid aspect of the matter reliance is placed on the case of National Bank of Pakistan v. Punjab Building Products Ltd. [PLD 1998 Kar. 302], wherein it was held/observed as under:- The last of such facilities was granted through agreement dated 22-11-1986 in the sum of Rs.2 million and purchase price of the stocks was agreed at Rs.2,400,000. Although the period of finance is not Mentioned in the agreement dated 22-11-1986, the same cannot be stretched beyond a period of 365 days from the date of agreement ..." [Underlining is mine]." ...The plaintiff can claim mark-up only in accordance with the agreement between the parties and for the period of finance.
The claim for mark-up beyond the greed rate is, therefore, disallowed..." [Underlining is mine].
117. As far as the contention of Mr. Asim Mansoor Khan regarding the so-called NON-RELEASE of the 'PLEDGED RICE' and alleged losses is concerned, the same besides without any substances, otherwise, also cannot be entertained in the suit in hand for the obvious reason that regarding the alleged losses/damages, the Defendant No.1 herein has already filed a suit bearing No.B-182 of 2009 [Syed Zulfiaar All Rizvi v. Bank Al-Falah Ltd.] inter alia for recovery of so-called damages/losses caused to him by Plaintiff Bank which, of course, would be tried and decided on its' own merits in accordance with law. The 'SET OFF' so claimed by the Defendant No.1 in his 'LEAVE TO DEFEND APPLICATION', without firstly establishing/ascertaining and adjudicated upon the same, besides, not permissible in law, is without any foundation as well. The damages, it is important to note, can only be proved after leading sufficient evidence by the parties in 'pro' and 'contra' thereof and that too after framing of issues. If any case-law[s] need to be cited on this aspect of the matter then I would like to place reliance on the case of [a]. Syed Ahmad Saeed Kirmani V. M/s. Muslim Commercial Bank Ltd., Islamabad [1993 SCMR 441] and [b]. Messrs Muhammad Siddiq Muhammad Umar v. The Australasia Bank Ltd. [PLD 1966 SC 684], wherein it was observed as follows:- [a]. "A party claiming damages suffered due to breach of contract must establish the contract, the breach thereof and the extent of damages. The onus is on the plaintiff and without discharging it he cannot succeed. Section 73 of the Contract Act prescribes the rule for assessing the damages suffered due to breach of contract. Only such damages can be recovered which naturally arise in the usual course of things from such breach or the parties at the time of making the contract knew that las.) or damage in likely to result from the breach. Another principle which is to be kept in mind while assessing damages is that whether the plaintiff was in a position to mitigate the damages and has neglected to avail of it..." [Underlining is mine].
[b]. "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 his 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 a 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. There is no evidence in the present case that any goods were, in fact, sold by the bank or that the bank still retains any goods as such security.
We cannot, therefore, help observing that after the defendant had admitted that he had an account with the bank and had also borrowed money from the bank on the basis of the arrangement for which he had admittedly executed the provissory notes and the cash agreements there could be no manner of doubt that he had an overdraft account. This has also been corroborated by Inayat Ali, the then Manager of the Delhi Branch. Again, it is clear that the withdrawals had taken place by cheques, the numbers of which have been mentioned in the statement of account (Exh. P. 5). It would have been quite easy for the defendant to challenge the correctness of these entries by a reference to the cheque counterfoils which normally would have been in his possession. The fact that this was not done der. ty shows that the defence was not in a position to challenge the correctness of those entries. The evasive answers given by the defendant as to the details of his transactions with the bank also confirm us in the view that the defendant had no real answer to the claim." [Underlining is mine].
118. Merely, filing of a suit for damages by a 'customer' does not ipso facto entitle him FOR GRANT OF LEAVE TO DEFEND THE SUIT automatically, until and un-less, LEAVE TO DEFEND IN BANKING SUIT IS GRANTED, AN ORDER FOR CONSOLIDATION is passed and 'consolidated issues' are also framed [which is not the case in hand] till then, the pendency of a customer's suit, of course, would be of no avail and/or of any consequence and the suit filed by the Bank/Financial Institution shall proceed independently and, no doubt, needs to be decided swiftly in accordance with provisions of law as contained in F.I.O., 2001. In this regard a reference can be made to the case of Messrs Abdullah Tehseen Trading Company and 15 others v. Platinum Commercial Bank Limited through Chief Manager [2003 CLD 53], wherein it was observed as under:- "Even otherwise learned counsel for the appellants has admitted that no consolidation order was passed by any Court at any stage and that he is only relying upon the said judgment passed by this Court. After having an in-depth study of the aforenoted judgment, passed in writ petitions, we are of the considered view that this Court never directed the learned Banking Court either to hear the suits filed by the appellant No. 2 along with the suit filed by respondent-Bank or the proceedings were consolidated by any Court. In view of this, the solitary argument raised by the learned counsel is unfounded, misdirected and is hereby repelled". [Underlining is mine].
119. With regard to the contention of Mr. Asim Mansoor Khan, to the effect that the amount availed by the Defendant No.1, has since been 'credited' in the accounts of defendant No.1 in PAK RUPEES as such, the Plaintiff Bank, can claim the outstanding amount in Pak Rupees only and not in US DOLLARS. It is suffice to say, that the contention of Mr. Asim Mansoor Khan to this extent cannot be accepted. The nature of transaction per 'CERTIFIED STATEMENT OF ACCOUNTS' also belies the Defendant No.1 in its' stand so taken. The CERTIFIED 'STATEMENT OF ACCOUNTS' as being maintained by the 'Customer' viz. ZTC with the Plaintiff Bank is in 'US DOLLARS' and not in 'PAK RUPEES", therefore, the, arguments of Mr. Asim Mansoor Khan on this score are repelled. The claim of the Plaintiff Bank, evidently, is based on 'US Dollars' thus found permissible. Needless to say, both the accounts of 'PRINCIPAL' and 'MARK-UP' being maintained by ZTC with Plaintiff Bank are in US Dollar and not Pak Rupees. In view of this clear-cut position on record, the contention of Mr. Asim Mansoor Khan to the effect that the amount of facility was credited in the aforesaid account of the corporation [ZTC] in Pak Rupees and not US Dollars is also rejected. The claim of plaintiff Bank in the present case, is based on 'US Dollar' as such 'mark-up'/'cost of fund' can also rightly be charged in US dollars. Even otherwise, in the case laws referred here-in-above, the conversion of US Dollars into Pak Rupees makes no difference, as under law the Defendants/Customers in any event are liable to pay equivalent amount in Pak rupees and that is at the time of ACTUAL PAYMENT.
120. With regard to 'common' contention of Mr. Asim and Mr. Faiz H. Shah that no mark up beyond the expiry periods of the Finance Agreement[s] can be charged or allowed by the Court, it is suffice to say, the contention so raised by the learned counsel for the contesting Defendants Nos.1 and 3 is quite in accordance with law. Undoubtedly, under the Islamic mode of financing, no 'markup' beyond the expiry J period of finance agreement[s] or 'markup' over 'markup' is permissible. J In the instant case, however, the Defendant No.1 amongst others has badly failed to 'pin-point' any entry 'mark-up' over 'mark-up' or any mark-up charged beyond the expiry period of Finance Agreement[s] in the 'CERTIFIED STATEMENT ACCOUNTS' as wrong and incorrect. Significantly, in the case in hand only two finance agreement[s] are involved. Per FIRST FINANCE AGREEMENT DATED 17.4.2006 [Annexure 'B-2' to the plaint], the 'SALE PRICE' and 'Purchase Price' are mentioned in the sum of US dollars 5,000,000. and US Dollar 5,79,714 respectively. The 'purchase price' in terms of the finance agreement was payable on or before 28.2.2007. From the record, however, it appears that Defendant No.1 failed and/or neglected to pay 'PURCHASE PRICE' of US Dollar 5,795,714 as per agreed terms and conditions of the FINANCE AGREEMENT of 17.4.2006. Resultantly on the request of Defendant No.1, however, a second FINANCE AGREEMENT [Annexure B-3 to the Plaint] was, subsequently, signed and executed between Defendant No.1 and Plaintiff Bank. In terms of the SECOND FINANCE AGREEMENT [Annexure '83' to the Plaint], the agreed 'SALE PRICE' was US $ 5,000,000 and 'PURCHASE PRICE' was US $ 5,673,000. Under the 'SECOND FINANCE AGREEMENT' dated December 14, 2007 [Annexure '8-3' to the Plaint], the agreed 'PURCHASE PRICE' was payable to the plaintiff Bank on or before 31.3.2008 i.e expiry date of the Finance Agreement.
121. The Defendant No.1 herein, however, again failed and/or neglected to pay the agreed 'PURCHASE PRICE' in terms of the aforesaid SECOND FINANCE AGREEMENT' as well. Consequently, on the Defendant No. l's request, a 'SETTLEMENT AGREEMENT' dated 25.5.2009 [Annexure 'I' to the Plaint] was signed and executed between the Defendant No.1 and plaintiff Bank. Per, this 'SETTLEMENT AGREEMENT' dated May 25, 2009, the balance outstanding amount as on 31.3.2009, was specifically agreed and acknowledged by the Defendant No. 1 . The acknowledged and admitted amount per the Settlement Agreement dated May 25, 2009 [Annexure 'I' to the Plaint] are as follows:- Principal: US$: 4,795,103.00 Markup : US$: 277, 4171 . 87
122. The Defendant No.1 further undertook and agreed to pay outstanding liability in the manner as bellows:- A the Customer will pay to the Bank US$ 315,103 [US Dollars three hundred fifteen thousands one hundred three only] on or before 2nd June, 2009.
[ii] the Customer will pay US$ 1,000,000/- [US Dollars one million only] on or before June 31, 2009;
[ill] the Customer will pay an amount of US$ 1,880,000/-[US Dollars one million eight hundred eighty thousands only] on or before July 31, 2009;
[iv] the remaining amount of US$ 1,600,000/- [US Dollars one million six hundred thousand only] shall be paid on or before July 31, 2009 along with markup accrued on the outstanding liability till final payment.
123. Besides, under the 'SETTLEMENT AGREEMENT' dated May 25, 2009 [Annexure 'I' to the, plaint], the Defendant [ZTC] also agreed to create effective mortgage on double storey bungalow on Plot No.95, measuring 2000 square yards, Khayaban-e-Ghazi, Phase-V DHA Karachi on or before May 31, 2009 in favour of the Plaintiff Bank. Per averments of the Plaintiff Bank the aforesaid bungalow is owned and belonging to the Defendant No.4 who is not signatory of the Settlement Agreement dated May 25, 2009. Nevertheless, it was also agreed by the Defendant No.1, that in case, if, the value of the 'aforesaid property' fallen short to cover the outstanding liabilities of Defendant No.1 i.e. after payment of US Dollars 5,077,520 tben under such circumstances, the Defendant No.1, shall provide 'further security' for and towards' meeting the shortfall and that too up to the satisfaction of the Bank within 15 days from the date of demand to be made by the Plaintiff Bank after agreed payment.
124. Further, the Bank, no doubt, was agreed to redeem [1] Plot No.108/16, Survey Sheet No.35-P/1, measuring 840 square yards, Block 3, Bahadur Yar Jung Co-Operative Housing Society, Karachi and [2] Plot No.109/16, Survey Sheet No.35-P/1, measuring 835 square yards, Block 3, Bahadur Yar Jung Co-Operative Housing Society, Karachi ["Mortgaged Properties"] and also deliver the 'title documents' to the Morgagor's attorney viz. Mr. Aurangzeeb [Defendant No.3 herein], however, 'subject to fulfillment' of the following conditions:- [i]. the Customer pay to the Bank US$ 3,195,203/- [US Dollars three Million one hundred ninety five thousands one hundred three only] in terms of 'Clauses 2[i], [ii] and [iii]' of the Settlement Agreement dated May 25, 2009 and [ii]. the Mortgagor un-conditionally withdraws Suit No. B-54 of 2009 pending in the High Court of Sindh at Karachi;
125. Apart from the above, it was also agreed between the Defendant No.1/Principal Customer and the Plaintiff Bank that the outstanding liabilities as.on March 31, 2009 shall continue to remain fully secured by and in the manner as below:- a. Mortgagee of the 'Mortgaged Properties' until released in accordance with 'Clause 6' of the Settlement Agreement. b. Mortgage of immovable property mentioned in Clause 4 and any other security provided under Clause 5 of the Settlement Agreement dated May 25, 2009. c. Pledge of 9,632 Tons of Irri rice stored at D-1, D-2, Shed-A, Mushraf Colony, Hawksbay Road Karachi and Shed El, TPX, KPT, Queens Road Karachi to be released on completion of mortgage formalities in respect of double story bungalow on Plot No.95, measuring 2009 square yards, Khayaban-e-Ghazi, Phase-V, DHA Karachi in terms of 'Clause 4' and providing further security to meet the shortfall to the satisfaction of Bank within 15 days from the date of demand by the Bank as per 'Clause 5' of the said Settlement Agreement dated May 25, 2009. [Underlining is mine]. d. Term Deposit Receipt [TDR") # 015988 dated 31-10-2008 for Rs. 23,000,000/- along with profit held with the Bank under its lien any other funds available in the accounts of the Customer held with the Bank and by all securities created through the documents executed by the Customer and the Mortgagor from time to time.
126.Undoubtedly, in the 'SETTLEMENT AGREEMENT' dated May 25, 2009, it was further agreed that in event of non-compliance of any of the terms and conditions of the 'SETTLEMENT AGREEMENT' dated May 25, 2009 or if the Defendant No.1 otherwise, fails to make payment in terms of clause 2 of the 'SETTLEMENT AGREEMENT' dated May 25, 2009 [Annexure 'I' to the plaint] then the Plaintiff Bank will be entitled to immediately recover from the Defendant No.1 and the Mortgagor the entire outstanding amount along with markup through sale of 'pledged stocks' and 'properties mortgaged' in favour of the Plaintiff Bank with or without intervention of the Court. At this point of time it would be appropriate to mention herein that section 15 of F.I.O., 2001 is no more the part of F.I.O., 2001 as the Hon'ble Supreme Court of Pakistan has already declared the same as ultra-vires the Constitution of Islamic Republic of Pakistan, 1973. In view of this position now, the Plaintiff even otherwise, could not sell the mortgaged property[ies] without intervention of the Court, much-less, in terms of section 15 of the F.I.O., 2001 [Ordinance XLVI of 2001].
127.Regarding contention of Mr. Asim Mansoor Khan in respect of entitlement of Defendant No.1 for the benefit of 'prompt paynient bonus' at this juncture I would like to reproduce herein clauses 'l[b], 2 and 3. From the FINANCE AGREEMENT dated 17.4.2006 [Annexure B-2 to the plaint] and FINANCE AGREEMENT dated 14.12.2007 [Annexure B-3 to the plaint] respectively herein below for properly appreciating the contention of Mr. Asim Mansoor Khan, learned counsel for Defendant No.1 on the point of 'Prompt Payment Bonus':- A. FINANCE AGREEMEIVT DATED 17.04.2006 ANNEXURE 'B-2' TO THE PLAINT] Clause 1[b]: The Customer has agreed to sell the goods when acquired from its suppliers, to the Bank for a sum of Rs. USD 5,000,000/- [hereinafter referred to as 'the Sale Price' which amount shall be released by the Bank to the Customer by "on account" payment/s. Clause 2: The Customer has agreed to purchase the said goods from the Bank at a price of Rs. US $ 5,795,714/- [hereafter referred to as the 'Purchase Price'.
Clause 3: The Purchase Price shall be payable by the Customer to the Bank on or before 28/02/2007 in equal installments, the amount and due dates whereof shall be such as the Bank may advise to the customer in due course.
Provided that in the event of the Customer payment the entire Purchase Price on or before the date[sl stated above, the Bank will pay to the Customer Rs. US $ 460,274/- as and by way of prompt payment bonus [wrongly mentioned as bounds]. [Emphasis supplied] B. FINANCE AGREEMENT DATED 14.12.2007 [ANNEXURE 'B-3' TO THE PLAINT] Clause 1[b]: The Customer has agreed to sell the goods when acquired from its suppliers, to the Bank for a sum of Rs. USD 5,000000/- [hereinafter referred to as 'the Sale Price] which amount shall be released by the Bank to the Customer by "on account" payment/s. Clause 2: The Customer has agreed to purchase the said goods from the Bank at a price of Rs. USD 5,673,000/- [hereafter referred to as 'Purchase Price J.
Clause 3: The Purchase Price shall be payable by the Customer to the Bank on or before 31/03/2008 in equal installments, the amount and due dates whereof shall be such as the Bank may advise to the customer in due course.
Provided that in 'the event of the Customer paying the entire Purchase Price on or before the date[s] stated above, the Bank will pay to the Customer Rs. U 337,079/- as and by way -of prompt payment bonus [wrongly mentioned as bounds]. [Emphasis supplied]
128. From perusal of the above 'clauses' of the Finance Agreements, it is quite clear that benefit of the prompt payment as bonus required to be given is evidently, subject to paying the entire 'PURCHASE PRICE' of the respective Finance Agreements on the due dates. The 'prompt payment bonus', per the aforesaid FINANCE AGREEMENTS, seems CONCESSION. Mr. Asim Mansoor Khan, however, argued that PROMPT PAYMENT BONUS over above the agreed 'PURCHASED PRICE' cannot be charged. To this extent the argument of Mr. Asim Mansoor Khan seems correct as once the 'Purchase Price' is settled thereafter, it cannot be reduced or enhanced unilaterally. In the case in hand, admittedly and as is evident from the SETTLEMENT AGREEMENT dated May 25, 2009, the Defendant No.1, has not only failed to fulfill his/its' contractual/legal obligations but also voluntarily acknowledged the outstanding amount in the sum of US Dollars 5,072,520.87 as on March, 13, 2009.
Moreover, per the aforesaid Finance Agreements and clear admission and acknowledgment of liability by the Defendant No.1 as per Settlement Agreement of May 25, 2009 [Annexure 'I' to the Plaint], Defendant No.1 is not entitled to claim the benefits of 'prompt payment bonus' under the prevailing facts and circumstances of the case as the amount of the 'prompt payment bonus' is not above/over the agreed 'PURCHASE PRICE' as argued by Mr. Asim Mansoor Khan, learned counsel for the Defendant No.1 rather it is an amount absolutely under the 'PURCHASE PRICE' as such, it seems a 'concession' and 'not penalty' under the facts and circumstances of the case. On the aspect of 'concession' and 'penalty' from the cases [A]. Fitzholmes v. The Bank of Upper India Ltd.
[AIR 1923 Lahore 548] and [B]. Masood Asif and others v. United Bank Limited [2001 CLC 479], the following portions being relevant are respectively reproduced hereinbelow: A. ...that the words actually mean that 7 per cent is to be charged in the first instance, and that a penalty of 2 per cent is to be added in case of default. The meaning to be attached to the condition as recited is explained very clearly in I.L.R 32 All.
448. In order to avoid the consequences of section 74 of the Contract Act all that the mortgagee need do is to reserve the higher rate as payable under the mortgage, and to provide for its reduction in case of punctual payments."
B. "...The deed clearly states that the 4agreed amount is pounds 6,570,774.25 and U.B.L. agreed to accept pounds 4 million in satisfaction of the debt provided certain conditions were fulfilled. The difference between the debt amount and the amount agreed to be accepted in final satisfaction of the debt is not a penalty but a concession or indulgence given by U.B.L. to the plaintiffs if the latter paid pounds 4 million according to the agreed terms on schedule..."
129. The acknowledgment of liability by Defendant No.1 of the outstanding amount as on March 31, 2009 as per the 'SETTLEMENT AGREEMENT' dated May 25, 2009 [Annexure 'I' to the Plaint] reads as follows:-
1. The Customer unconditionally acknowledges and admits that the following liability as at March 31, 2009 is outstanding against the Customer and the same is due and payable to the Bank.
[Underlining is mine].
Principal: US$: 4,795,103.00 Markup : US$: 277,4171.87 In view of the above, Defendant No.1 is not entitled to claim the benefit 'Prompt Payment Bonus' at this stage under the facts and circumstances of the case when the Defendant No.1 itself/himself has un-conditionally acknOwledged and admitted its/his liability as on March 31, 2009.
130. Moreover, the Defendant No.1, has also failed to fulfill the 'MANDATORY REQUIREMENTS' of subsection [4] of section 10 of F.I.O., 2001 which in the event of failure of the mandatory requirements, renders the 'APPLICATION FOR LEAVE TO DEFEND' liable to be rejected in terms of subsection [6] of section 10 of F.I.O., 2001 [XLVI of 2001]. Being relevant subsections [4], [5] and [6] of section 10 of F.I.O. are reproduced as under:- "10. Leave to defend.
(1) ........................
(2) ................
(3) ...................
(4) In the case of a suit for recovery instituted by financial institution the application for leave to defend shall also specifically state the following:-
(a) the amount of finance availed by the defendant from the financial institution; the amount paid by the defendant to the financial institution and the dates of payments;
(b) the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution up to the date of institution of the suit;
(c) the amounts of finance and other amount crediting to the finance payable by the defendant to the financial institution up to the date of institution of the suit;
(d) the amount if any which the defendant disputes *as payable to the financial institution and facts in support thereof Explanation. --For the purposes of clause (b) any payment made to a financial institution by a customer in respect of a finance shall be appropriated first against other amounts relating to the finance. and the balance, if any, against the principal amount of the finance.
(5) The application for leave to defend shall be accompanied by all the documents which, in the opinion of the defendant, support the substantial questions of law or fact raised by him,
(6) An application for leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement."
131. On the non-maintainability of the 'LEAVE TO DEFEND APPLICATION BEARING CMA NO.9567 OF 2009 FILED BY DEFENDANT NO.!, on account of and due to lack of the fulfillment of the 'mandatory requirements' as per subsections [3], [4] and [5] of section 10 of F.I.O., 2001 [Ordinance XLVI of 2001], I would like to cite herein the case of Apollo Textile Mills Ltd. v. Soneri Bank Ltd. [PLD 2012 SC 268], wherein it was held/observed as follows:- "17. Non impleadment under subsections (3) and (4) of section 10 and section 9(3) ibid of accounts in terms of the said provisions, entails legal consequences under subsections (1), (6) and (11) of section 10 of the Ordinance, 2001. These provisions read as under:-- "10. Leave to defend---(1) In any case in which the summons has been served on the defendant as provided for in subsection (5) of section 9, the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court as hereinafter provided to defend the same; and, in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff on the basis thereof or such other material as the Banking Court may require in the interest of justice.
10(6).---An application for leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement.
10(11).---Where the application for leave to defend is rejected or where a defendant fails to fulfil the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant."
18. The Financial Institutions (Recovery of Finances) Ordinance, 2001 i.e. is a special law. It provides a special procedure for the banking suits. The provisions of the Ordinance, 2001 under section 4 thereof override all other laws. The provisions contained in the said Sections require strict compliance. Non-compliance therewith attract as above referred, consequences of rejection of leave petition along with decree etc. etc. [Underlining is mine].
Applying all the settled and well known principles to determine the mandatory construction of a provision of law, the said provisions cannot but be held to be mandatory. This Court in the case of 'Niaz Muhammad v. Fazal Raqib' (PLD 1974 SC 134) held that:-- "It is true that no universal rule can be laid down for the construction of statutes as to whether mandatory enactments shall be considered directory only or obligatory, with an implied nullification for disobedience. It is the duty of the Courts to try to get at the real intention of the legislature, by carefully attending to the whole scope of the statute to be construed. As a general rule however, a statue is understood to be directory when it contains matter merely of direction, but not when those directions are followed up by an express provision that, in default of following them, the facts shall be null and void. To put it differently, if the Act is directory, its disobedience does not entail any invalidity; if the Act is mandatory disobedience entails serious legal consequences amounting to the invalidity of the act done in disobedience to the provision".
[Underlining is mine].
19. In this case, the application for leave to defend the suit filed by the petitioners did not fulfill the requirements of section 10(3), (4) and (5) of the Financial Institutions (Recovery of Finances)
Ordinance XLVI of 2001. It was admittedly not in conformity with the said mandatory provisions. No cause or the reason for inability to comply with said requirements was shown. Instead it was expressly admitted by the learned Senior Advocate Supreme Court for the petitioners before the High Court and also before us that the petitioners failed to fulfil the mandates of the said provisions and did not plead the required Accounts. The petitioners/defendants thus attracted the prescribed legal consequences of --
(i) Rejection of their leave petition under section 10(6);
(ii) Non-entitlement under section 10(1) to defend the suit for not obtaining leave to defend the suit in terms provided for in section 10;
(iii) The allegations of fact in the plaint were deemed under section 10(1) to have been admitted by them; and
(iv) A judgment and decree against them and in favour of the plaintiff bank under section 10(1) and
(11) ibid.
132. The case-laws cited by. Mr. Asim Mansoor Khan, learned counsel for the Defendant No.1 after perusal besides being found quite distinguishable, in my view, do not cover and apply strictly to the facts and circumstances of the present case in hand.
133. As far as the liability of Defendants is concerned, it is admitted position on record that Defendant No.3, is neither a guarantor nor mortgagor but he performed and acted in capacity' as a duly 'constituted attorney' of the Defendant No.2/mortgagor. Defendant No.1, sole proprietor of ZTC the Principal Customer] along with Defendant No.4 are also liable in their capacities as guarantors. Needless to say Defendant No.2 has failed and/or avoided to file any application[s] for 'LEAVE-TO-DEFEND' the instant suit, as such, the allegations of facts in the plaint, are deemed to be admitted by Defendants Nos.2 and 4 in terms of section 10[1] of F.I.O., 2001. The present suit against them thus needs to be decreed in favour of the Plaintiff Bank on the basis of such 'presumptive admission' or any other materials which Banking Court may require in the interest of justice.
Significantly, in present case, Defendant No.4 has also been sued in his capacity as mortgagor but the Plaintiff Bank, however, has failed to establish the creation of any mortgage in its' favour by the Defendant No.4 as such the claim of the Plaintiff to this extent is declined. Manifestly, the 'LEAVE-TO - DEFEND APPLICATION' filed by Defendant No.3 is in his 'PERSONAL CAPACITY' and not in his capacity AS AN ATTORNEY OF DEFENDANT NO.2, as such, Defendant No.3 under circumstances, cannot be permitted to plead the case of Defendant No.2 in absence of any 'LEAVE-TO-DEFEND APPLICATION' by Defendant No.2 by him [Defendant No.2].
134. Under the given circumstances, the liability of Defendant No.3 is limited only to the extent of his acts already performed by him in his as an attorney of Defendant No.2 and nothing more. The LEAVE-TO-DEFEND APPLICATION' of Defendant No.3 bearing CMA No.9668 of 2009 under section 10 of F.I.O., 2001 thus stands 'disposed of in view of the observations made herein.
135. For and in view of all the above, Defendant No.1 has failed to raise any substantial questions of facts and law as such, the 'LEAVE TO-DEFEND APPLICATION' filed by Defendant No.1, bearing CMA No.9567 of. 2009 under section 10 of F.I.O., 2001 stands rejected and consequently, the Plaintiff's suit is decreed against Defendants Nos.1, 2 and 4 jointly and severally in the sum of US Dollars 5,072,520.87 plus cost of funds w.e.f. April 01, 2009 till realization of the decretal amount in terms of section 3 of F.I.O., 2001. Besides, a restraining order per prayer 'Clause-2', a 'FINAL DECREE' for sale of the MORTGAGED PROPERTIES belonging to Defendant No.2 i.e. (i) Plot No.108/16, Survey Sheet No.35- P/1, measuring 840 square yards, Block 3, Bahadur Yar Jung Cooperative Housing Society, Karachi
(ii) Plot No.109/16, Survey Sheet No.35-P/1, measuring 835 square yards, Block 3, Bahadur Yar Jung Cooperative Housing Society, Karachi and sale of the 'PLEDGED RICE' as mentioned in para 5[iv] of the plaint is also passed.
136. As far as the third immovable property viz. double storey bungalow on Plot No.95, measuring 2000 square yards, Khayaban-e -Ghazi, Phase VI, DHA Karachi, is concerned, the Plaintiff Bank has failed to establish the creation of any charge/mortgage over the property belonging to Defendant No.4, as such decree for sale of the said immovable property under the facts and circumstances of the case, is declined. Cost of the suit is also awarded.