'SHAHID KARIM, J.---This is a suit for the recovery of Rs,599,706,458.41 with costs of funds in terms of prayer made in the plaint as well as costs of the suit.
2. The application for leave to defend was filed on behalf of the defendants Nos.1 to 6. The defendants Nos.7 and 8 were proceeded I against ex parte vide order dated 6.7.2011.
3. According to the averments of the plaint, the defendant No,1 is a company limited by shares and the defendants Nos.2 to 8 are being sued in their capacity as guarantors/mortgagors of the finance facility, which was extended to the defendant No,1 and are thus covered by the definition of the term 'customer' as used in Financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance, 2001).
4. The plaintiff has given a historical background of the relationship between the plaintiff-bank and the defendant-Company. It is stated that the Company opened its current account on 07.10.2006 and made a written request on 30.09.2006 supported by a resolution of the board of directors for the grant of the finance facilities mentioned in paragraph 5 of the plaint. The finance facilities requested for were granted and apart from finance agreement, various other documents as security documents were executed between the parties. On 11.6.2007 and 11.10.2007 a request was made for the renewal of the facilities already granted which again were preceded by the board resolutions. A swa p arrangement was also suggested with regard to the liabilities of the defendant-Company from Askari Bank Limited. The said request was approved vide offer letter dated 10.12.2007. The finance facilities so approved were availed to swap the liabilities from Askari Bank Limited and further finance facilities were granted which have been enumerated in paragraph 6 of the plaint. Once again, various documents were executed in support of the finance facilities.
5. On 13.11.2008, vide a letter by the defendant-Company the facilities which were granted to the Company were once again requested to be renewed/enhanced. Once again the parties executed finance agreements and other documents. This was accomplished on 01.12.2008 in consideration of the grant of the facilities mentioned in paragraph 7 of the plaint. The plaintiff-bank formally issued an offer letter dated 13.01.2009 in respect of the said facility. The expiry date of the last of these facilities was 30.11.2009. Meanwhile, according to the contents of the plaint, further finance facilities were requested for including a one-off Finance Against Packing Credit (One-off FAPC)/Temporary Running Finance (TRF) facility in the sum of Rs,50 million. Subsequently the defendant Company expressed its inability to adjust the One-off FAPC/TRF facility and requested for an extension in the expiry date of the said facility which was, thereafter, extended up to 31.12.2009 and the parties executed a finance agreement dated 01.05.2009. It is the case of the plaintiff-bank that the defendants failed to adjust FAPC/TRF facility according to its obligations and vide letter dated 5.8.2009 made a further request to adjust the One-off FAPC by transfer of funds through TRF facility.
6. According to paragraph 10 of the plaint, the defendant-Company again approached the plaintiff-bank through letter dated 22.6.2009 with a request for the grant of One-off enhancement in the FAFB facility in the sum of Rs,20 million and a One-off Foreign Bills Purchase (One-off FBP) facility in the sum of Rs,30 million. This request too was acceded to vide offer letter dated 16.7.2009.
At a subsequent time, the defendant-Company again requested the plaintiff-bank for the enhancement of One-off FBP facility from Rs,30 million to Rs,70 million vide letter dated 19.8.2009 which too was granted vide offer letter dated 27.8.2009 with an expiry on 31.12.2009. On 02.11.2009, the defendant-Company wrote a letter to the plaintiff-bank and requested for the conversion of short term finance facility into a Demand Finance (DF) facility in the sum of Rs,200 million. Through a loan application form, the defendant-Company requested for the renewal of the aforementioned finance facilities for another year on 12.11.2009. This request of the defendant-Company was again granted and the finance facilities were renewed and an agreement was executed on 01.12.2009.
Simultaneously, the request of the defendant-Company for conversion of the short term finance facilities into a DF facility was also granted and an offer letter was duly issued on 9.3.2010, which was acknowledged by the defendant-Company and signatures by the Chief Executive Officer were affixed in acknowledgment thereof. The entire terms for the grant of the facility have been mentioned in the offer letter dated 9.3.2010. The details of the renewal and restructuring of the facilities vide the offer letter have been mentioned in paragraph 12(a) of the plaint. The expiry date of these facilities was 30.11.2010. In conderation for the grant of the facilities to the defendant- Company various agreements and other documents were executed between the parties which have been referred to in paragraph 12(b) of the plaint. Further, in consideration of these finance facilities as also as a security, the defendants mortgaged their properties with the plaintiff-bank as mentioned in paragraph 15(A) of the plaint. By way of further security hypothecation charge over the current assets of the plaintiff-bank was also created in favour of the plaintiff-bank. The charges which were so created on the properties as also on the assets of the Company were duly registered with the Securities and Exchange Commission of Pakistan (SECP) and charge certificates and acknowledgments issued by the SECP have been annexed with the plaint. The amount which is now due and payable by the defendants according to the contents of the plaint have been delineated in paragraph 16 of the plaint, specifically with regard to each facility separately.
7. Application for leave to defend was filed by the defendants Nos.1 to 6. Primarily, the case of the defendants is based on the dispute regarding the actual amount payable by the defendant- Company and other defendants. The facts narrated in the plaint as also the grant of various facilities and the execution of the finance agreements and other documents is broadly not disputed by the defendants. This is evident from a statement in terms of section 10(4) of the Ordinance, 2001 which has been brought forth in the application for leave to defend filed by the defendants. According to the said statement filed by the defendants, the net amount payable is Rs,264,108,288/- and an amount of Rs,335,598,170/- has been disputed. The defendants also disputed the payment of the mark up which has been claimed to have been entirely paid.
Therefore, the defence raised by the defendants merely relates to the actual amount due and sought to be recovered by the plaintiff-bank. The submissions with regard to each facility and the defence raised by the defendants with regard thereto is dealt with in seriatim as follows.
DF Facility
8. The learned counsel for the defendants submits that the DF finance facility, as per paragraph 20 of the plaint, was created for the purposes of adjusting the FAPC facility in the sum of Rs,I50 million and FAFB facility in the sum of Rs,50 million. According to the learned counsel, the only amount now being claimed by the plaintiff-bank is an amount with regard to DF facility of Rs,200 million mentioned in facility No,6 in the facility letter dated 9.3.2010. It is relevant to mention here that according to the contents of the plaint as also the learned counsel for the plaintiff-bank, the plaintiff-bank claims to recover the amounts which have been renewed and restructured by this facility letter by which the facilities were restructured and renewed at the requests of the defendants and in respect of which the defendants have fallen in breach. In a nub, according to the learned counsel for the defendants, the only amount due and payable is an amount of Rs,200 million against the grant of DF facility and nothing is due and payable with regard to the FAFB and FAPC facilities as claimed in paragraph 24 of the plaint.
9. The learned counsel for the defendants has referred to page 476 of the plaint which is a part of the facility letter dated 9.3.2010 where the DF facility has been mentioned as facility No,6. According to the learned counsel, the statement of account with regard to this facility commences at page 2563 of the plaint and the last page is at 2573. According to the last entry in the said statement, the liability with regard to the FAPC facility shows a Nil balance and there is no statement of account or any entry showing a balance of Rs,I35 million against FAPC facility as claimed by the plaintiff-bank.
Likewise, at page 3301 of the current account statement maintained by the defendant-Company, the DF facility has been shown at as adjusted and no withdrawal has been shown. The primary submission of the learned counsel is that the claim as against FAPC and FAFB facilities is unlawful as the statement of account shows a Nil balance which leads to the conclusion that these facilities were adjusted and the only amount due is against the DF facility.
10. We must bear in mind that the facility offer letter of 09.03.2010 was with regard to the renewal and restructuring of certain finance facilities already being availed by the defendants. Some of these facilities were fresh facilities whereas others were merely renewed or restructured so as to enable the defendants to repay the amounts already due from them and which had not been paid in terms of the obligations cast upon them by way of earlier finance agreements. The entire basis of the statements made by the learned counsel for the defendants has to be viewed in this context.
The learned counsel for the plaintiff-bank has explained in detail the defence raised by the learned counsel for the defendants with regard to the adjustment of FAPC and FAFB facilities. According to the learned counsel for the plaintiff-bank a chart with regard to the existing facilities as well as the proposed facilities has been given in the facility offer letter dated 9.3.2010. He has explained and retorted to the defence raised by the defendants with reference to the chart given in the facility offer letter. It will bear reiteration that the defendants do not dispute the facility offer letter of 9.3.2010 which bears the signatures of the Chief Executive Officer of the defendant- Company on behalf of the defendants. According to the learned counsel for the plaintiff-bank, the FAPC facility of Rs,150 million and a portion of FAFB facility to the tune of Rs,50 million was converted into a DF facility at Rs,200 million. A facility mentioned at serial No,2(a) i.e, FAFB-sub limit facility of Rs,130 million and the remainder of 60 million from the FAFB facility was converted into a facility of Rs,190 million and was designated as FAFB-sub limit. This restructuring explains and substantiates the claim of the plaintiff-bank with regard to DF facility and FAFB facility separately.
11. The learned counsel for the plaintiff-bank has also relied upon the entry with regard to the Nil balance in the statement of account which has been relied upon by the learned counsel for the defendants to urge that since the balance stood at Nil, the only liability which could be claimed against the defendants was in respect of the DF facility. The learned counsel for the plaintiff-bank has referred to paragraph 16(b) of the plaint to bring home the contention that the amounts were transferred to a new account which was described as the non-performing loan account and, therefore, there is no basis for the claim of the defendants that the liability against those facilities stood at Nil and nothing can be claimed in respect thereof. The entire statement of account of the NPLA has been annexed with the plaint and is at pages 6, 7 and /8 of the concise statement filed by the learned counsel for the plaintiff-bank. This should virtually take care of the submissions made by the learned counsel for the defendants with regard to the claim being confined to Rs,200 million merely with regard to DF facility. The claim of the plaintiff-bank in respect of the FAFB facility as well as FAPC facility of Rs,60 million and Rs,135 million respectively is supported by statement of account and has been validly and properly explained by the learned counsel for the plaintiff- bank and no cavil can be taken to it. Certainly, the claim with regard to DF facility is a separate claim and since this has been admitted to be payable by the defendants, there is no need to advert to this aspect in view of the conclusions drawn hereinabove.
No actual transaction:
12. The learned counsel for the defendants laid great stress on the fact that no actual disbursements were made with regard to these facilities and in this regard he has referred to paragraph 17(a) of the plaint in order to establish that no actual transaction took place whereas the plaint tries to depict otherwise. The precise submission of the learned counsel for the defendants is that these are mere book entries and no actual disbursements have been made to the defendants and thus the defendants are not 'liable for the repayment of the amounts claimed in the plaint. In this regard, he has referred to paragraph 17(g) in order to bring home his contention that where there is a actual disbursement, it is correspondingly shown as an entry in the current account statement maintained by the defendant-Company. This submission of the learned counsel should receive a short shrift. It is not denied by the learned counsel for the plaintiff-bank and is pretty much evident from a reading of the facility offer letter of 9.3.2010 that the facilities were renewed and restructured as a result of the arrangement reflected in the said facility offer letter. This merely means that in respect of existing entries certain adjustments are made and for the purpose book entries are made which are in the contemplation of the contracting parties and it is not necessary in these cases that an actual disbursement should take place. There is a healthy body of case law which has been developed on this aspect. Reference can be made to Habib Bank Ltd. V. Taj Textile Mills Ltd. Through Chief Executive and 5 others (2009 CLD 1143), NIB Bank Ltd. v.
Dewan Textile Mills Ltd. (2012 CLD 141), Messrs Ibrahim Oil Mills through Proprietor and 2 others v.
MCB Bank Limited (2015 CLD 802) and Syed Abbas AU v. Bank of Punjab through Manager and others (2015 CLD 1409). Moreover, at the time of the grant of the renewal and restructuring of the facilities vide facility offer letter dated 9.3.2010, the defendants were aware of the nature of the facilities being granted as also that for the purposes of the restructuring of these facilities, certain book entries will have to be made and adjustments of the earlier outstanding dues will also be part of the restructuring agreement. It does not lie in the mouth of the defendants to urge otherwise.
13. The learned counsel for the defendants lastly submitted that the mark up has been charged beyond the expiry period on 31.12.2010. The learned counsel for the plaintiff-bank however submits that a chart has been produced by which the mark up beyond the period of contract has been deleted and the plaintiff-bank merely claims for the recovery of an amount of Rs,583,989,263/- instead of the amount originally claimed in the plaint.
14. Another fact which will have a gravitational pull on the determination to be made on the application for leave to defend is a letter dated 02.12.2010 to which a reference has been made in paragraph 23 of the plaint. According to the learned counsel for the plaintiff-bank there is no denial of this letter by the defendants. At the end of this letter, after reciting the various problems faced by the defetklants-Company with regard to the repayment schedule of the finance facilities and after admitting that the finance facilities had been availed by the defendants-Company from the plaintiff-bank, a chart has been reproduced which shows the outstanding amounts which are due to the plaintiff-bank from the defendant-Company. A further request by this letter has been made to reschedule the credit line by considering the cash flow impacts and other E circumstances mentioned in that letter. This letter has been written by the Chief Executive Officer of the defendant-Company and no denial is forthcoming from the defendants. According to the learned counsel for the plaintiff-bank, the claim in the plaint is merely to the extent of the liabilities which have been admitted vide this letter by the defendant-Company. In my opinion, this letter should be sufficient to saddle the defendants with the liabilities which are now admitted vide this letter with more. Needless to mention, the request made by this letter on 02.12.2010 was not acceded to by the plaintiff-bank. However, the admission brought forth in this letter is sufficient to hold that the defendants are liable for the repayment of the amount mentioned in the said letter by the defendant-Company itself.
15. In view of the above, the defendants have failed to raise any substantial question of fact or law in the application for leave to defend F which is hereby dismissed.
Main Case
16. In view of the dismissal of the application for leave to defend, the suit is decreed in favour of the plaintiff-bank and against the defendants jointly for a sum of Rs,583,989,263/- along with costs of G funds in terms of section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.
The costs of the suit are also granted.