C.M.A. No, 247 of 2012 by Defendants Nos.1 to 3 AZIZ-UR-REHMAN, J.---The Plaintiff has filed the instant Suit on 18-11-2011 under section 9 of the Financial Institutions [Recovery of Finances] Ordinance, 2001 [Ordinance XLVI of 2001] for recovery of Rs,65,252,355/- [Rupees. Sixty Five Million, Two Hundred Fifty Two Thousand and Three Hundred Fifty Five only] plus 'cost of fund' through Syed Farhan Abbas son of Muhammad Naqi (late) being a Principal Officer/duly Constituted Attorney of the Plaintiff's Institution with the following prayers:- a. Grant judgment and decree against the defendants which they are liable to pay jointly and severally for a total sum of Rs,65,252,3554 [Rupees Sixty Five Million Two Hundred Fifty Two Thousand Three Hundred Fifty Five only] along with cost of funds as latest rate fixed by the State Bank of Pakistan from default till final realization. b. Decree for attachment and sale of mortgaged immovable property being land bearing Bungalow No,F-I 15, Block-F, North Nazimabad, Karachi measuring 800 Sq. Yds. Along with fixture and fitting thereof. c. Other relief which this Honourable Court may consider just, proper and equitable under the circumstances of this case.
2. Briefly the relevant facts arising to the filing of the above suit are as follows:-
3. Plaintiff is a financial institution in terms of section 2(a) of F.I.O., 2001 and Defendant No,1 is a 'principal customer', Defendants Nos.2 and 3 beside 'Guarantors' are 'Mortgagors' and Defendant No,4 is a 'Guarantor' only as such, all of them fell within the definition of 'customers' as per section 2(d) of F.I.O., 2001 [Ordinance XLVI of 2001].'
4. The Plaintiff Institution, upon the Defendant No, l's request sanctioned 'Musharaka Finance Facility' to the Defendant No,1 in the sum of Rs,50 million which amount of facility was not only disbursed but also fully availed by the Defendant No,
1. The aforesaid Facility granted to and availed by 'Defendant No,' 1-'Principal Customer' was also got renewed by the Defendant No,1 from time to time and lastly the facility was renewed in the year, 2008. For and to secure the aforesaid finance facility, the Defendant No,1 in their capacity as a 'Principal Customer' also signed and executed 'financial documents' including an 'Agreement for Financing' on 'Musharaka Basis' dated 19-03- 2008, having been duly signed and executed by the Defendant No,1 in the sum of Rs,50.00 million with a time period of five years.
5. For and to secure the re-payment of the outstanding dues to the Plaintiff, the Defendant No,2, who is a duly 'constituted attorney' of Defendant No,3 besides, depositing the 'original titled deeds' of immovable property belonging to Defendant No,3 'signed' and 'executed' a registered 'mortgage deed' and 'Memorandum of Deposit of Title Deeds' in favour of the plaintiff in respect of the 'immovable property' i.e, all piece and parcel of land bearing Bungalow No, F-115, Block-F, North Nazimabad, Karachi measuring 800 Sq. Yds. Which per averments is belonging to Defendant No,3.
Besides, Defendant No,4. Viz. Takaful Pakistan Limited, has also 'signed' and 'executed' a 'Financial Performance Guarantee' dated 16.04.2008 [Annexure 'C' to the Plaint] on behalf of defendant No, I- 'Principal Customer' in favour of plaintiffs Institution whereby, a total sum of Rs,51,757,500/- [Rupees Fifty Million Seven Hundred Fifty Seven Thousand and Five hundred only] has been secured. Apart from the above, Defendants Nos.2 and 3 in acknowledgment of their liabilities and to further secure the 'finance facility' granted to and availed by the Defendant No,1 'signed' and 'executed' personal guarantees' [Annexures 'D-2' and 'D-3' to the Plaint] and 'Memorandum of Deposit of Title Deeds'
[Annexures 'B' to the Plaint] whereby, an equitable mortgage over and regarding the aforesaid property has also been created. Besides a 'Mortgage Deed' [Annexure 'Br to the Plaint] was also signed and executed in,respect of land bearing No,115, measuring 800 sq.Yds. Situated at KDA Scheme No,2, North Nazimabad, Karachi belonging to Defendant No,1, which was duly executed by Defendant No,2 as being son and duly constituted attorney of Defendant No,3.
6. To further secure the repayment to the plaintiff, the defendant No,1 also signed and executed a 'Demand Promissory Note' dated 02.04.2008 in the sum of Rs,85,150,000/- [Annexure 'D-1' to the Pliant] in favour of the plaintiff. The Defendants not only voluntarily accepted the 'terms' and conditions' but also agreed to fulfill their obligations as per mutually agreed 'terms' and 'conditions'.
Notwithstanding the above, the Defendants, however, failed and/or neglected to repay the outstanding amount and that too despite repeated requests. The documents 'signed' and 'executed' by the Defendants and as referred to in the 'plaint' are annexed with the plaint as Annexure 'A', 'A-1', 'B', 'C' and 'D', and 'D-1' to 'D-4'. The plaint is also supported with a duly 'Certified Statement of Account' as per subsection (8) of section 2 of Bankers' Book Evidence Act, 1891 [Act No,XVIII of 18911 which is Annexure 'E' to the Plaint.
7. The "break-up" of the amounts as required in terms of subsection (3) of section 9 of F.I.O., 2001 [In short F.I.O., 2001] and as given in plaint reads as follows:- a. Amount of Finance availed by the Defendant from the Financial Institution Rs,50,000,000/- b. Amount paid by the Defendant to Financial InstitutionRs,13,640,616/- c. Amount agreed by Defendant (As per D.P.Rs,85,150,000/- Note) d. The amount of Finance and other amounts relating to Finance Payable by the Defendant to the Financial Institution upto 16-10-2011Rs,65,252,355/- Total outstanding payable Rs, 65,252,355
8. The 'cause of action' as averred in the 'plaint' has been arisen within the territorial jurisdiction of this Court in favour of the Plaintiffs Institution and against the defendants on various occasions/dates as referred to and mentioned in 'Para-11' of the plaint. Since, the defendants' have failed and/or avoided to liquidate the 'outstanding liability' and that too despite of making repeated requests, hence this suit for recovery of Rs,65,252,355/- [Rupees Sixty Five Million Two Hundred Fifty Two Thousand Three Hundred Fifty Five only], has been filed on 18.11.2011.
9. Upon filing of the above suit, 'process' under subsection (5) of section 9 of F.I.O., 2001 [In short F.I.O., 2001], was issued to the Defendants Nos.1 to 4 by all modes including 'Courier', 'Registered post A.D.' and 'Publication' in two Newspapers i.e, Daily 'Dawn' English and Daily 'Jung' Karachi, both dated 09-12-2011. In response, the Defendants No,1 to 3 filed their 'Application for Leave to Defend' the suit under section 10 of F.I.O., 2001 bearing C.M.A. No:247/2012. Defendant No,4, as being a guarantor, had also come forward and filed its' Application for Leave to Defend the suit' under section 10 of F.I.O., 2001 bearing. C.M.A. No,246/2012. In the Leave to Defend Applications, all the Defendants besides, denying the 'averments' and assertions' made in the plaint also denied their liability. On behalf of the Defendants Nos.1 to 3, several 'PRELIMINARY OBJECTIONS' have also been raised which run as follows:- a) This Honourable Court got no jurisdiction to entertain the present case in presence of clause 23 of Musharika Investment Agreement in which the matter has to be decided by an Arbitrator, hence this suit is liable to be return to the plaintiff for referring the said matter before the Arbitrator. b) That the person who has signed/verified the plaint is not holding any proper power of Attorney. c) That no resolution of the Board of Directors has been produced regarding filing of the instant suit. Hence suit not maintainable and liable to be dismissed. d) That under Article 10-A of the Constitution of Islamic Republic of Pakistani 1973 the defendant is entitled for grant of Leave to Defend the suit being fundamental right. e) That the present suit filed by the plaintiff as a counter blast of Suit No,B-90/2009 on this score alone the defendant is entitled for grant of Leave to Defend. f) That in presence of Financial Institutions [Recovery of Finances], Ordinance, 2001, the Negotiable Instruments Act, 1981 prevails. g) That the Plaintiff has not come to this Hon'ble Court with clean hands and the instant suit is based on surmise, conjecture and misuse of various documents. h)
That the plaintiff violated the terms of Musharaka Finance and filed suit with mala fide intentions. i)
That the suit is not maintainable as is not filed in accordance with subsection (3) of section 9 and section 18 of Financial Institutions [Recovery of Finances], Ordinance, 2001. j) That the present suit based on the blank documents which were filed up by the plaintiff for filing of this suit hence present suit is liable to be dismissed. k) That the charge documents bearing fake signatures of the answering defendants. l) That the statement of account is also not prepared by the plaintiff in accordance with the Bankers' Books Evidence Act. m) That no cause of action in law and fact has been accrued to the plaintiff against the defendant for the alleged claim and the above suit is based on bogus/forged documents and false statement of account.
10. The case 'built-up' by the plaintiff and the 'amount claimed' in the suit was not only "disputed' but also denied as being false, frivolous and not payable by the Defendants at all. Likewise, the 'equitable' and 'registered mortgage' created by the Defendant No,2 in his 'capacity' as a duly constituted attorney of Defendant No,3, as per Annexures 'B' and 'C' was also disputed, inter alia, on the ground, as being, not enforceable under the law. Regarding personal 'letters of guarantees'
[Annexure 'C' and 'D-2' to 'D-3' to the Plaint], it has been asserted by the Defendants that these documents were got 'signed in blank' as such, the same are also not enforceable under the law as being void.
11. In answer to aforesaid Applications filed by Defendants for seeking Leave to Defend the suit [C.M.A. No,246 of 2012 and C.M.A. No,247 of 2012], the Plaintiff's Institution, in response thereto have also filed its' replies [replica] wherein, the 'averments' and 'assertions' made by the Defendants were not only controverted but also emphatically denied as being false, frivolous, mis-conceived, mis-leading and incorrect. As far as, the Defendant No,4, is concerned, against it, nevertheless, the above suit was subsequently dismissed on 24.10.2015. The relevant 'part of order' dated 24-02-2013 pertaining to Defendant No,4 reads as follows:- 1) Learned counsel for the Plaintiff submits that since along with this leave to defend application, compromise agreement dated 23.08.2008 has been filed therefore, under instructions, he does not press this suit against defendant No,4. Accordingly, the suit is dismissed as against defendant No,4. Office is directed to mark necessary note on the title of the plaint. [Underlining is mine]
12. Lastly, on 21-10-2015, when the above suit came-up before me for hearing of C.M.A. No,247/2012 being an Application under section 10 of F.I.O., 2001, filed by Defendants Nos.1 to 3, then I heard Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 and Mr. Khalil Ahmed Siddiqui, learned counsel for the Plaintiff and with their valuable assistance I also gone through the record minutely.
13. Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 mainly argued his case in the light of 'PRELIMINARY OBJECTIONS' referred to and reproduced hereinabove. Mr. Khaleeq Ahmed though frankly admitted the 'existing relationship' of Financial Institution and Customers, inter alia, under the 'MUSHARIKA INVESTMENT AGREEMENT', however, he argued that despite execution of 'MUSHARAKA INVESTMENT AGREEMENT', of 19th March, 2008 [Annexure `A-1' to the Plaint], the plaintiff, unilaterally did withhold, that is to say, with 'mala fide intentions', the 'payment'/'disbursement' of Rs,50 million as per 'MUSHARAKA INVESTMENT AGREEMENT'. Per Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3, the answering Defendants are/were also compelled to allow the 'adjustment' of Rs, 11,579,336/- as being 'balance outstanding amount' of 'Lease Finance' and the 'investment' of Rs,2,600,000/- with the plaintiff's sister concern viz. M/s. BRR Guardian Mudariba that being the amount of 'premium' of Five years, allegedly to be paid to the Defendant No,4 by the Defendant No,l.
14. Besides, learned counsel contended that 'such adjustment' was made however, without the free 'consent' and 'permission' of Defendant No,l. In view of this position, learned counsel forcefully submitted that the 'lis' involved in the case in hand thus could not be resolved much-less to say, without 'framing issues' and 'leading of evidence' by the parties in 'pro' and 'contra' thereof. In view of this position as well, Mr. Khaleeq Ahmed urged in vehemence that the Defendants Nos.1 to 3 be granted 'unconditional Leave to Defend' the above suit otherwise, the Defendants Nos.1 to 3 shall be seriously prejudiced. Finally, Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 made reference to Article 10A of the Constitution of Islamic Republic of Pakistan, 1973, and strenuously submitted that after 'incorporation' of Article 10-A in the Constitution of Islamic Republic of Pakistan, 1973, now providing opportunities of a 'fair trial' and 'due process', of course, is a fundamental right of each and every litigant, as such, on this 'score' as well, the Defendants Nos.1 to 3 deserve to be granted 'un-conditional' leave to defend the suit.
15. Learned counsel for the Defendants Nos.1 to 3; next contended that the signatures of the 'answering Defendants' have been obtained on 'blank documents' as such, the same besides void are not enforceable under law. It was next argued by Mr. Khaleeq Ahmed, learned counsel for Defendants Nos.1 to 3 that the Defendant No,2, who is 'attorney' of Defentlant No,3, at the relevant time, was not in a position to execute any 'Memorandum of Deposit of Title Deeds' [Annexure 'B' to the Plaint], as actually he was not the 'owner' of the Bungalow No,F-115, Block-F, North Nazimabad, Karachi. Moreover, the signatures appearing on, the registered 'mortgage deed' [Annexure 'B-1' to the Plaint] beside, forged are fabricated and this can conveniently be seen and noticed if, the 'disputed signature(s) are compared/tallied with the 'admitted signatures' of 'Defendant No,2, appearing on the 'Vakalatnama' and 'Leave to Defend Application' bearing C.M.A. No,247 of 2012.
According to Mr. Khaleeq Ahmed, the learned counsel for the Defendants Nos.1 to 3, the 'Principal Customer'/'Defendant No,!', was in fact compelled to execute 'financial 'guarantee' [Annexure 'C' to the Plaint] in favour of Defendant No,4, as such, the 'premium' paid to the Defendant No,4, was under 'coercion' and 'compelling circumstances'. Not only this, even the 'Letters of Guarantees'
[Annexures 'D-2' and 'D-3' to the Plaint] were got ,signed in blank and now, the same have been filled-up with dates and figures unilaterally, of course, with mala fide intentions and in a calculated manner.
16. Mr. Khaleeq Ahmed, learned counsel for Defendants Nos.1, 2 and 3, further submitted that as per calculations of the Defendants Nos.1 to 3, only an amount of Rs,9,52,644.00/- is still outstanding and payable. Nothing above that amount, as claimed by Plaintiff's Institution, in the plaint is due and payable. Finally, Mr. Khaleeq Ahmed, emphatically submitted that the Plaintiffs suit as 'framed' and 'filed' deserves to be 'rejected' or in the 'alternative', the Defendants Nos.1 to 3, be granted un- conditional 'leave to defend' the above suit, otherwise, the answering Defendants shall be seriously prejudiced.
17. In 'contra' Mr. Khalil Ahmed Siddiqui, learned counsel for Plaintiff forcefully argued that the Defendants Nos.1 to 3, have not only taken false and frivolous pleas in their 'Leave-to-Defend Application' but the 'Leave to Defend Application' itself does not fulfill the 'mandatory requirements' of subsections (3), (4) and (5) of section 10 of F.I.O., 2001. As such, the same is liable to be rejected straight away in term of subsection (6)- of section 10 of F.I.O., 2001 [Ordinance XLVI of 2001]. Per learned counsel, the Defendants besides, acknowledging the liability did fail to deny their signatures on the 'Financial' and 'Security documents'. As far as, the plea of 'blank documents' is concerned, per learned counsel for the Plaintiff's Institution, all the documents brought on record are duly filled, as such, the allegations vis-a-vis the documents as being blank, are not only after thought but also without any 'foundation'. Neither any document, as alleged, was taken in blank or otherwise, the documents were of signed forcibly. All the documents on the face of it are duly signed and filled-up. All the documents besides being 'genuine' are duly 'filled-up' thus belie the Defendants Nos.1 to 3 in their version to the contrary. Learned counsel for the Plaintiff further argued in 'vehemence' that 'despite existence' of the 'Arbitration clause' in the 'Musharaka Investment Agreement' of 19th March, 2008, the Plaintiff's suit, as 'framed' and 'filed' under section 9 of F.I.O., 2001, is well competent and maintainable under the Banking Jurisdiction of this Court inter alia for the 'obvious reason' that in the Financial Agreements, even the existence of an 'Arbitration Clause' does not prohibit a Financial Institution to invoke the jurisdiction of Banking Court in terms of provisions contained in F.I.O., 2001 which admittedly is a special law and provisions thereof, no doubt, have the effect notwithstanding anything inconsistent therewith contained any other law for the time being in force' including the provisions of Arbitration Act, 1940 [Act No,10 of 1940]. The Recovery Suit, thus filed by the Plaintiffs' Institution, is not only well maintainable but also deserves to be decreed as prayed.
18. Heard.
19. With regard to the 'preliminary legal objection' at [a], which is to the effect that this Court has no jurisdiction to entertain the instant suit in view of presence of an 'Arbitration Clause 23' of the 'Musharaka Investment Agreement' of 19th March, 2008 under which clause, per Mr. Khaleeq Ahmed, the matter needs to be decided by an 'ARBITRATOR' exclusively and not by this Court in the suit in hand. Being relevant 'clause 23' from the 'Musharaka Investment Agreement' is reproduced as under:- "23. ... in the event of any dispute between the parties, that is not amicably resolved, regarding this agreement or the implementation thereof on notice of either party, the dispute shall be submitted to arbitration under Arbitration Act, 1940."
20. Vis-a-vis the aforesaid contention Mr. Khaleeq Ahmed, learned counsel for Defendants Nos.1 to 3, it is suffice to say, that F.I.O. Of 2001 is a 'special law' and the provisions thereof, of course, have effect 'notwithstanding' anything inconsistent therewith contained in any other law for the time being in force. Besides, under subsection (4) of section 7 of F.I.O., 2001, no Court other than a 'Banking Court', shall have or exercise any jurisdiction whatsoever with respect to any matter to which the jurisdiction of 'Banking Court' extends under F.I.O., 2001 [Ordinance XLVI of 2001] including a 'decision' as to the 'existence' or 'otherwise' of a finance. The word 'otherwise' needs not to be given a restricted meanings. For ready reference it seems appropriate to reproduce herein subsection (4) of section 7 of F.I.O., 2001 which reads as under:- "[4] Subject to subsection [5], no Court other than a Banking Court shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Banking Court extends under this Ordinance, including a decision as to the existence or otherwise of a finance and the execution of a decree passed by a Banking Court. "[Underlining is mine].
Apart from subsection (4) of section 7 of F.I.O., 2001, Section 4 of F.I.O., 2001 also being relevant is reproduced as under: - "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."
21. Now, if subsection (4) of section 7 of F.I.O., 2001, is read in juxtaposition of section 4 of F.I.O., 2001, then one can conveniently reach the conclusion that even a 'decision' as to the 'existence' or 'nonexistence' of finance also fell 'exclusively' within the jurisdiction of Banking Court and not of any other Court, what to say, about the jurisdiction of an ARBITRATOR. The words, a decision as to the 'existence' or 'otherwise' of loan or finance as used in subsection (4) of section 7 of F.I.O., 2001, in my view also brings the 'dispute' even, if it is arising in terms of 'Clause 23' of 'Musharika Investment Agreement of 19th March, 2008 within the jurisdiction of 'Banking Court', exclusively. The Arbitrator in view of subsection (4) of section 7 of F.I.O., 2001 even does not exercise colourful jurisdiction regarding existence and/or non-existence of a finance. The word 'otherwise' in my humble view not only extends to the 'existence', 'non-existence', of a 'loan' or 'finance' but also embraces within its' ambit a 'decision' vis-a-vis the dispute regarding the 'Musharaka Investment' Agreement' of 19th March, 2008 and/or implementation thereof. For and on this aspect of the matter, I 'would like to refer to the case of Lalchand and 2 others v. Officer on Special Duty, Federal Land Commission and 3 others [1984 CLC 2396], wherein the court while, deliberating upon the word 'otherwise', has made the following observation:-- "3. ... In our view, also the word "otherwise" in the proviso in question embraces not only transactions in the nature of gifts but also any other transaction whereby right or interest in land is transferred or created. A transfer of land through exchange will also be covered by the word "otherwise".
' Apart from the above, the word 'otherwise', has also been dilated upon in the case of Sardar Abdul Ghafoor Khan and 3 others v. The Federal Land Commission, Islamabad [PLD 1979 Lahore 375], the relevant portion of debate therefrom reads as follows:- "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."
22. Keeping in view the above, I am of the considered opinion that even and despite existence of an 'Arbitration Clause' in the 'Musharaka Investment Agreement', this Court is well within its' jurisdiction' to 'adjudicate upon' the 'dispute in question' between a Financial Institution and Customer[s] as in my view the same is arising out of and purely relating to the grant and availment of the finance facility granted to and availed by Defendant No,!. The dispute, since is pertaining to the recovery of the outstanding amount[s] on account of 'Finance Facility' granted to and availed by the Defendant No,1, thus exclusively fell within the jurisdiction of this Court. Moreover, to the 'Musharaka Investment Agreement', the 'other Defendants' except 'Defendant No,1' are not parties as such this Court can appropriately and suitably adjudicate upon the 'lis' in hand and 'notwithstanding', the existence of an 'Arbitration Clause 23' in the 'Musharaka Investment Agreement' of 19th March, 2008.
Besides, none of the parties in the case in hand, at no any stage, even otherwise, had/has ever tried to invoke the said 'arbitration clause'. For this reason as well the arguments of Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 upon being found without any substance stand repelled. On the aforesaid aspect of the matter, reliance can be placed on the case of Messrs Allied Bank Limited v. Messrs Golden Eagle Enterprises and 9 others [1999 MLD 64] wherein, in somewhat like situation, it was observed as follows:- The arguments of the learned counsel for the defendants that the dispute between the parties be referred to arbitration in accordance with clause 19.02 of the Vehicle Lease Agreement between the plaintiff-Bank and defendant No,1 is misconceived for the following reasons:-
(i) The plaintiff has filed, this suit against ten defendants including. Golden Eagle Enterprises, (defendant No,1); who is the principal borrower and nine guarantors of the loan, who have executed - various documents to secure repayment of the loan. The Vehicle-Lease Agreement, which contains the Arbitration Clause is between the Bank and defendant No,1 the principal borrower only. The remaining parties in these proceedings are not signatories to the Vehicle Lease Agreements which is one of the documents in support of the Banks claim. The Bank's claim is inter alia, based upon the Promissory Note executed by defendant No,1, the guarantees-executed by defendants Nos. 2, 3 and 4, Memorandum of Deposit of Title Deeds by defendant No,6 and Acknowledgment of Liability and promise dated 18-08-1997 to pay the same by defendant No,6.
The Plaintiff's claim, therefore, cannot be referred to arbitration under the aforesaid clause.
Counsel's arguments that as the guarantors and other various defendants come within the definition of customer and as such they should by implication be treated as parties to the Lease Agreement which they have not signed is beyond reason and cannot be accepted. The judgments cited by the defendants are not applicable to the present circumstances.
(ii) The Banking Court has been established under section 4 of the Act with exclusive jurisdiction to deal with dispute between a Bank and its customers and/or borrowers", The definition of borrower includes a surety or intermediate Defendants Nos.2 to 10 are prima facie sureties for the payment of loan. Section 7(4) clearly states that no Court other than a Banking Court shall have or exercise any jurisdiction with respect of any matter to which the jurisdiction to deal with disputes between, a Bank and its customers/borrowers. It is an established Law that where a Special Tribunal has been created to adjudicate specified disputes such disputes cannot be referred to arbitration even if there is an Agreement between the parties to that effect. The dispute must be decided by Special Tribunal created for this purpose. (1998 CLC 1592, 1995 CLC 1024 and PLD 1996 SC 77)
(iii) This is not a suit to be decided under Summary Procedure provided in C.P.C. Which according to defendants' counsel can be referred to arbitration (1990 MLD 2027 and 1995 CLC 1024) This is a suit filed under the Act before the Special Tribunal established for deciding special - disputes between a Bank and its customers/borrowers. This is one such dispute. The judgment cited by the learned counsel for the defendants is not applicable to the present case. [Underlining is mine].
23. With regard to 'preliminary objections' at [b] and [c], which are to the effect that person who has 'signed' and 'verified' the 'plaint' is not holding any proper 'Power of Attorney', and/or any 'resolution' of Board of Directors [In short BoD]. At this juncture, I would like to refer to and reproduce herein subsection (1) of section 9 of F.I.O., 2001 [Ordinance No,XLVI of 20011, which reads as follows:- "9. Procedure of Banking Courts.---(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 be duly authorised attorney or otherwise." [Underlining is mine].
24. Bare perusal of above provision of law would show that the 'plaint' in case of a 'Financial Institution' is to be 'verified on oath' by the 'Branch Manager or such other officer of the Financial Institution as may be duly authorized by 'Power of Attorney' or 'otherwise'. The word 'otherwise' referred to in subsection (1) of section 9 of F.I.O., 2001 [Ordinance No,XLVI of 2001], it is worth to observe, needs not to be given 'restrictive meanings'. The word 'used' otherwise' in my considered view also embraces within its' shell, apart from, the 'Powerof-Attorneys' any other documents i.e, 'Special Power of Attorney', and/or Letter of Authority/Board's Resolution, on the strength etc. Whereof, a person becomes competent to 'verify' the 'plaint on oath' and also institute the same in Banking Court.
25. In the case in hand, 'it is significant to note that the 'verification' of the 'plaint' has been done by one Syed Farhan Abbas son of Syed Muhammad Naqi, who is a duly 'constituted attorney' of the Plaintiff's Institution. For ready and convenience purposes the 'verification clause' of the 'plaint' and 'relevant clauses' from the 'General Power of Attorney' [In short GPA] dated 25th May, 2001 as being duly signed and executed by one Mr. Abdus Samad Khan, Chief Executive of the Plaintiff's Institution in favour of 'Syed Farhan Abbas' son of Muhammad Naqi [late] respectively are reproduced herein below:- a. Plaint "I, Syed Farhan Abbas son of Syed Muhammad Naqi do hereby state on solemn affirmation and oath that whatever is stated above is true and correct to the best of my knowledge, belief and information." b. Relevant Clauses from General Power of Attorney in favour of Syed Farhan Abbas son of Muhammad Naqi [late] read as follows: I. To. Commence, prosecute and sue and be sued in respect of defend, compound and abandon all actions, suits, Claims, demands and proceedings, and to appear and be pleaded in any Court, High Court of Pakistan, Supreme Court, Tribunal of Magistrate in any Civil, Criminal of Commercial proceedings whatsoever, or before any Arbitrator, Judicial Municipal, Revenue or their officer or person having by law or consent of the of parties authority to hear evidence.
[Underlining is mine].
II. To adjust settle, compromise, allow time for payment or satisfaction of any debts due to the company and submit to arbitration, all actions, suits, claims disputes and letters which may arise at any time between the company and any person or persons. To enter into and make, executed, and do all such contracts, agreements, receipts, payments, instruments and things whatsoever and also all such assurances transfers and conveyances to the company and to do such other acts, deeds and things as may be necessary or convenient for any of the purposes of the company III. To make, sign, execute, present and file all applications including leave to defend application, Replications, Counter Affidavits, Petition's, Plaints, Appeals, Application for Review, Revision, Written Statements, Warrants of attorney, Vakalatnama or any other documents expedient of necessary executed presented or filed in any Court, Tribunal or office in relation to any of the purpose aforesaid and to receive back such documents. [Underlining is mine].
26. Moreover, under sections 196 and 197 of the Contract Act [Act No,IX of 1872], where acts are done by one person on behalf of another, but without his 'knowledge or 'authority', he may elect to 'ratify' or to disown such acts. If, he ratifies then, the same effects will follow as if, all that acts had been 'performed' by his authority. Such 'ratification' may be 'expressed' or 'implied' in the conduct of the person on whose behalf the acts have been done. For and in view of this legal position, even a suit if, filed by a person having 'no authority' then too, the 'principal' can later-on ratify the defect, if any. Actually, it is for the 'principal' to effectively challenge the authority of 'the agent' and not by anybody else. Being relevant, I would like to quote herein more 'relevant portion' from the case of Khyam Films and another v. Bank of Bahawalpur Ltd. [1982 CLC 1275] 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].
27. With regard to the 'Preliminary Objection' at [d] and contention of Mr. Khaleeq Ahmed in vehemence thereon 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' has now become a 'fundamental right' of every citizen, in my view, needs no debate at all, however, the another important Article i.e, 'ARTICLE 4' OF THE CONSTITUTION OF ISLAMIC REPUBLIC OF PAKISTAN, 1973 besides being important needs to be 'noted' and 'considered' in the scenario in hand, which 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 of the Constitution of Islamic Republic of Pakistan, 1973, no doubt, actually and ex-facie ensures the 'treatment' but strictly in accordance with the relevant law which in the case in hand is F.I.O., 2001. Both 'Articles 4' and '10-A' of the Constitution of Islamic Republic of Pakistan, 1973 thus necessarily needs to be read in juxtaposition of each other. One provision of the Constitution of Islamic Republic of Pakistan, 1973, of course, cannot be struck down and/or diluted on the basis of another provision of Constitution of Islamic Republic of Pakistan, 1973. Both the aforesaid Articles being relevant for ready reference are reproduced as under:- "4. (1) 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---
(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].
28. Of course, Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973 not only ensures 'fair trial' but also 'due process', however, in accordance with the relevant law, which in the case in hand, is F.I.O., 2001. It is needless to observe, that as and when a 'fair trial' is not provided in accordance with relevant law in filed then, indeed, an 'aggrieved person', may seek his remedy before an appropriate forum in appropriate proceedings, however, in accordance with the law in force. No doubt, in the present case, not only 'due process' but a 'fair trial' as well has been provided the Defendants under F.I.O., 2001. The arguments of Mr. Khaleeq Ahmed that on the touch stone of Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973, the Defendants are entitled to have an order for grant of leave to Defend the Suit automatically in my view is not only mis- conceived but also misleading as such repelled.
29. As far as the contention of Mr. Khaleeq Ahmed regarding 'preliminary objections' at 'e', which is to the effect that since, the present suit, filed by the Plaintiffs Institution is nothing but a counterblast.' of Suit No,B-90 of 2009 as such, on this score alone, the Defendants Nos.1 to 3 are entitled for grant of Leave-to-Defend the above suit is concerned, the same in my view, besides mis-conceived, mis-leading, calls for the 'wisdom' of Defendants Nos.1 to 3. Merely, by way of filing of a suit against the right of the Plaintiffs Institution to sell the mortgaged property bearing Bungalow No,F-115, Block F, North Nazimabad, Karachi, which property is admittedly belonging to Defendant No,3 and Defendant No,2 who is not only the son but also a duly 'constituted attorney' of his mother/Defendant No,3, has not only executed 'mortgaged deed' [Annexure 'B-1' to the Plaint] but also MDoTD [Annexure 'B' to the Plaint] both dated 16th April, 2008 by no means can be alleged a counter blast suit. It is important to note that the Plaintiffs Institution, indeed, has Power to sale the 'mortgaged property' in terms of 'Musharaka Investment Agreement' of 19th March, 2008 [Annexure 'A-1' to the Plaint]. The relevant 'clause' therefrom in this regard reads as follows:- "It is further agreed:
1. In case of default, Bank has the right to sell, transfer or dispose of any or all of the held as collateral for the recovery of principal and profit amount. Further Bank can do all these acts without any recourse to the Court and NOC from P.M. PACKAGES. Nor does Bank require to provide any prior information to P.M. PACKAGES for any of its acts regarding selling and disposal of the pledged collateral. In the event the collateral shall be sold for less than the amount then outstanding from P.M. PACKAGES, the Pledgor shall be liable to pay the sums as fall short of the outstanding amount." [Underlining is mine].
30. Merely, on the basis of a suit filed by the Defendants Nos.1 to 3, against the Plaintiff's Institution, the Defendants Nos.1 to 3 do not become as urged by Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 automatically entitled for the grant of 'Leave-to-Defend the suit. Moreover, the provision of section 10 of the Code of Civil Procedure, 1908 [Act V of 1908] under subsection (4) of section 9 of F.
1.0., 2001 has no application to and regarding the suits filed under F.I.O., 2001. Being relevant, I would like to refer to and reproduce herein subsection (4) of section 9 and 'subsection (8)' of section 10 of F.I.O., 2001 respectively as follows:-
(i) "(4) The Provisions of Section 10 of the Code of Civil Procedure, 1908 (Act V of 1908), shall have no application for and in relation to suits filed hereunder."
(ii) "(8) Subject to section 11, the Banking Court; shall grant the defendant leave to defend the suit if on consideration of the contents of the plaint, the application for leave to defend and the reply thereto it is of the view that substantial questions of law or fact have been raised in respect of which evidence needs to be recorded.
31. From the above, it is quite clear that 'until' and 'unless' a Defendant succeeds in raising 'substantial questions' of 'law' or fact which otherwise, also require evidence then, no Leave-to- Defend the K suit, may be granted to the Defendant[s] merely on the basis of a suit filed by the Defendant[s] . In this regard reliance can be placed on the cases of [A] Messrs Abdullah Tehseen Trading Company and 15 others v. Platinum Commercial Bank Ltd. Through Chief Manager [2003 CLD 53] and [B] Messrs Habib Bank Ltd. v. Messrs Marvi Laboratories and 8 others [1999 MLD 3456].
The relevant observations therefrom respectively read as follows: A. "5. Upon the examination of the judgment, rendered by this Court, in the aforesaid petitions, we find that it was held that the suits filed by the appellant No,2 shall deem to be pending before Banking Court and decided in accordance with law. It is evident therefrom that at no stage, this Court directed, as erroneously convassed by the learned counsel of the appellants, that those suits would be decided along with the suit, wherefrom the instant appeal has arisen. We do not find any order on record, either passed by the learned Banking Court at any point of time or by this Court in those writ petitions, that the suits .Filed by appellant No,2 and another were consolidated with the suit filed by the respondent-Bank. 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] B. "Mr. A. Aziz Khali; has not been able to show as to what prejudice has been caused to the defendant on account of entertainment of the present proceedings by this Court in exercise of jurisdiction under Act XV of 1997. The said objection, therefore, is repelled. As regards the proceedings filed by the defendant No, 1; being Suit No, 1090 of 1997, suffice to observe that the parties in the two suits are different and the principle of res subjudice cannot be attracted to the present case. In any event, the provisions of section 10, C.P.C. Have specifically been made inapplicable to the proceedings filed under Act XV of 1997. In the circumstances, filing of Suit No,1090 of 1997 can in no way bar proceedings in the present matter... "[Underlining is mine]
32. In so far as, the contention of Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 viz-a-viz the 'preliminary objections' at 'f, 'g', 'h', 'I' and 'k'l which are to the effect that in presence of F.I.O., 2001, the Negotiable Instrument Act, 1881 [Act XXVI of 1881] is to prevail, the Plaintiffs Institution has approached this Court with unclean hands and/or otherwise, the Plaintiffs Institution has committed any violation of 'Musharika Investment Agreement' of 19th March, 2008 and/or that the present suit is based on the 'blank documents' which have been filled-up by the Plaintiffs Institution at the time of filing of the instant suit is concerned, it is suffice to say, that Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 either did fail and/or otherwise, avoid to advance convincing arguments on the above referred objections. Nevertheless, from the record, it is quite evident that the 'Musharika Investment Agreement' of 19th March, 2008 [Annexure 'A-1' to the Plaint], is not only coupled with 'Promissory Note' [Annexure 'D-1' to the Plaint] but also duly filled with dates and figures. All the other documents available on record besides duly filled-up with 'dates' and 'figures' etc and are duly signed by Defendants. These documents evidently belie the Defendants in their versions to the contrary. It is also significant to note, that Defendants Nos.1 to 3 have also failed to specifically deny their signatures on the documents annexed with the plaint. Moreover, at no earlier stage/at the time of signing of the 'documents' no sort of protest was recorded by any of the Defendants which 'ex-facie' means that all the documents annexed to the plaint are/were duly filled-up documents that that is to say, with 'date' and 'figures'. Even otherwise, the Defendants Nos.1 to 3 would have refused the signing of documents if, it contained any blank as alleged by the Defendants, at the time of signing and execution of the documents. At this stage it does not lie in the mouth of defendants to deny the documents much-less after acting upon the documents and availing of the 'financial facility' granted to and availed by the Defendants. Otherwise, also these documents have not been challenged in any appropriate proceedings at an appropriate stage.
Indeed, under law, one cannot 'approbate and reprobate'. In the case of Muhammad Arshad and another v. Citibank N.A. Lahore [2006 SCMR 1347], the Hon'ble Supreme Court of Pakistan while, dilating upon the issue of blank documents in somewhat similar situation has held 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 be made to case Muhammad Satfraz Khan Rana v. Government of the Punjab PLD 1990 Lah.
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 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."
33. Out of the various 'Preliminary Objections, raised on behalf of Defendants Nos.1 to 3 and dealt with herein above, the three other crucial Preliminary Objections raised in Leave-to-Defend Application bearing C.M.A. No,247 of 2012 filed by Defendants Nos.1 to 3 read as follows:- "i) That the suit is not maintainable as is not filed in accordance with subsection (3) of section 9 and section 18 of Financial Institutions [Recovery.Of Finances], Ordinance, 2001." "l) That the statement of account is also not prepared by the plaintiff in accordance with the Bankers' Books Evidence Act." "m) That no cause of action in law and fact has been accrued to the plaintiff against the defendant for the alleged claim and the above suit is based on bogus/forged documents and false statement of account.
34. As far as the aforesaid two. 'Preliminary Objections' at T and '1' are concerned, it is significant to note, that the Plaintiffs Institution, in my humble view, has duly complied with the requisite 'mandatory requirements' of subsection (3) of section 9 of F.I.O., 2001 [Ordinance XLVI of 2001] and this position, indeed, is quite evident from Para-12' of the plaint. Moreover, the requisite 'dates' can conveniently be seen and noted from the 'Certified Statement of Account' annexed with plaint, which evidently not only contain the 'dates' but also 'Debit', 'Credit' and 'Balance Entries', therein.
Besides, the 'Certified Statement of Account'[Annexure 'E' to the Plaint] also bears the requisite Certificate. Moreover, it has also been duly signed by VP/Head of SAM and Chief Financial Officer of the Plaintiffs Institution. Besides, rubber stamp has also been affixed thereon.
35. As far as the 'Preliminary Objection at 'm' vis-a-vis 'cause of action' is concerned, this objection in view of 'Para-11' of the plaint is not only incorrect but also mis-leading. Being relevant 'Para-11' of Plaint is reproduced herein below:- "11. The cause of action accrued to the Plaintiff at Karachi within the jurisdiction of this Honourable Court against the Defendants firstly when the banker-customer relationship was established between the parties; thereafter when the Facility was granted to the Defendants which was extended from time to time; thereafter when the Defendants signed and executed security documents (annexure B to b-4) in favour of Plaintiff, when limit of finance expired and finally when Defendant failed to fulfill his responsibilities under the agreement and defaulted in repayment of his responsibilities under the agreement and defaulted in repayment of his liabilities which continues from day to day, till date."
In view of the above, the Preliminary Objection regarding 'cause of action' raised by the Defendants Nos.1 to 3 besides, mis-conceived, misleading is also meritless as such stand repelled.
36. Regarding mortgage created in favour of the Plaintiffs Institution by Defendant No,3 through her son and duly constituted attorney viz. Mr. Saleem Akhtar over and in respect of immovable property bearing Bungalow No,F-115, Block-F, North Nazimabad, Karachi is not an 'equitable mortgage' but also 'registered mortgage'. It is significant to note, that under section 58[a] of the Transfer of Property Act, 1882 [IV of 1882], a Mortgage is the transfer of an interest in a specific immovable property that is to say, 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 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. In view of this position, the Plaintiffs Institution is also entitled to have a 'FINAL DECREE' for sale of the mortgaged property belonging to Defendant No,3 i.e, Bungalow No,F-115, Block-F, North Nazimabad, Karachi.
37. The aforesaid 'proviso' inserted to section 58 of Transfer of Property Act, 1882 [IV of 1882] through Finance Act, 1986 had earlier came-up before the Division Bench of this Court in the case of Zafar Mehmood Shaikh v. Prudential Discount and Guarantee House Limited and 4 others [2003 CLD 1740] when, Division Bench of this Court after an 'elaborate discussion', 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." [Underlining is mine].
38. With regard to the liability of guarantors [i.e, Defendants Nos.2 and 3], it is worth mentioning that the 'liability' of the Guarantors is 'coextensive' with that of the 'Principal Debtor' [herein Defendant No,1], unless, in the letter of guarantee it is otherwise, provided. Moreover, anything 'done' or 'promise made' for the benefit of the 'principal debtor', indeed, is a sufficient consideration, as far as, the surety is concerned. The letter of guarantee,' in spirit is a 'contract' to perform the 'promise' or 'discharge' the liability of 3rd person, however, as and when default occurs. Being relevant, sections 126, 127 and 128 of the Contract Act, 1872 [Act No,IX of 1872] for convenience purposes are respectively reproduced herein below:- 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 coextensive with that of the principal debtor, unless it is otherwise provided by the contract."
39. For and in view of the aforesaid provisions of law and keeping in view the 'terms and conditions' of letters of guarantee [Annexure 'D-3' and 'D-4' to the plaint] in the case in hand, I have come to the conclusion that Defendants Nos.1 and 2 as being 'guarantors' are also liable to liquidate the liability/dues outstanding against the Defendant No,1 obviously, for the reason that the liability of the 'principal' and 'guarantors' is co-extensive in 'terms' of section 128 of the Contract Act 1872 [Act No,IX of 1872]. Moreover, in an action, that is initiated by a 'creditor' against the 'principal' borrower'/ 'customer' and guarantor[s]. The 'creditor under law, is only required to 'establish' the 'liability' of the 'principal debtor' and the 'occurrence of default' as well. In the cases of [a]. Bank of Baroda [AIR 1992 Karnataka 108] and [b]. Messrs Huffaz Seamlen Pipe Industries Ltd. And 2 others v. Messrs Security Leasing Corporation Ltd. [2002 SCMR 1419], relevant rules pronounced on the liability of the guarantors respectively read as follows:- (i). "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 Pun].
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 section 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 suretybond/guarantee-bond itself the surety can agree to waive his rights available to him under the various provisions contained in Chapter 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 pubic 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].
"17. As regards contract of guarantee, rights and liabilities of the parties are to be determined with reference to terms and conditions of the guarantees. The guarantors cannot take in corporated in the principal agreement, unless the same is reflected in a contract of guarantee executed by the guarantors as liabilities of the principal and of guarantors though arising from the same transaction, are distinct. In an action by a creditor against a guarantor the former is only required to establish the liability of the principal debtor and occurrence of default or breach of the terms leading to the liability. The guarantor cannot resort to technicalities to defeat the claim of the creditor. Even where the contract becomes unenforceable against the principal debtor, yet, the guarantor would still be liable for the surety he had executed, unless there was any covenant to the contrary." [Underlining is mine].
40. The letters of guarantee [Annexures 'D-1' and 'D-2' to the Plaint] are not duly signed and executed by the Defendants Nos.1 and 2 for the due 'payment' and 'discharge' of the 'principal amount' of facility but also for mark-up etc. Accrued thereon. Besides, under and in 'terms' & 'conditions' of the letters of guarantees, the guarantors have also ensured the due 'observance' and 'performance' of all the 'terms', 'conditions' and 'obligations' imposed under the 'Musharaka Finance Agreement '. Being relevant some of the relevant clauses i.e, 1, 2, 6, 10, 12 and 14 of the letter of guarantee are reproduced hereinbelow:-
1. Payment of all amounts claimed under this Guarantee will be made within two days of your simple demand in writing by the Company without reference or recourse to the customer/ borrower and notwithstanding any dispute, protest or litigation by the customer/borrower.
2. My/our liability under this Guarantee shall be as that of the customer/borrower and as a principal obligor in terms of the Musharaka Facility Agreement and the company may at its option hold me/us primarily responsible and liable for the obligations of the customer/borrower.
6. This Guarantee shall be continuing security to the company and shall not be discharged or prejudiced by me/our making payment against any one or more claims hereunder, or by refinance or discharge of the customer/borrower from its obligation to the company by operation of law or otherwise, or by the Musharaka Facility Agreement or any one or more' provisions thereof being unenforceable in law or otherwise, or by the customer/borrower or any person on behalf of the customer/borrower having paid to the company at any time amounts in excess of the customer/ borrower's liability to the company; or by the company being otherwise indebted at any time to the customer/borrower for any reason.
10. The Company shall be at liberty and have power without any further consent from or notification to me/us and without in any way affecting my/our liability under this Guarantee, to renew or modify the terms of the Musharaka Facility Agreement or substitute the Musharaka Facility Agreement with and other Musharaka Facility Agreement with the Customer/Borrower and to grant to the Customer/Borrower or any person liable with or for the Customer/Borrower, whether as guarantor or otherwise, any time or indulgence and to determine, enlarge or vary the Customer/Borrower's rights and/or obligations to the Company and to vary exchange or refinance any other securities held by or to be held by Company for or on account of the liabilities and obligations intended to be secured by this Guarantee or any part thereof and to compound or make any other arrangements with the Customer/Borrower or any person so liable with or for the Customer/Borrower so the Company may in its absolute discretion think fit.
12. This Guarantee shall be additional to and shall not prejudice or be prejudiced by any other guarantee or security held by the Company or to be held by the Company in future in respect of the liabilities and obligations of the Customer/Borrower.
14. This Guarantee shall be valid and remain in force till such time the Customer/Borrower has repaid all its liabilities and performed all the obligations to the company and the company has discharged the Customer/Borrower in writing and the original of this guarantee is duly cancelled and discharged by the company and returned to me/any of us, notwithstanding that prior to such cancellation/discharge and return of this Guarantee, we have made payments in respect of any one or more claims made by the company under. This Guarantee.
41. Mr. Khalil Ahmed Siddiqui, learned counsel for the Plaintiff's Institution conversely, argued in vehemence that the Plaintiff's Institution, indeed, has duly fulfilled all the 'mandatory requirements' in terms of section 9 of F.I.O., 2001. The 'certified statement of account' available on record has also been duly prepared and 'certified' in accordance with Bankers' Books Evidence Act, 1891 [Act No,XVIII of 1891]. The Defendants' have badly failed to pin-point any 'lacuna' left in the Statement of Account [Annexure 'E' to the Plaint]. Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 is right in urging that 'lacuna' if, left at the time of filing of 'plaint' cannot be cured and/rectified at the time of filing of replication in answer to Leave-to Defend Application as then the Defendant[s] would have no opportunity to rebut the new 'built-up' case and/or challenge other 'documents' suitably if, brought on record through replication. To the extent, I am also of the view that the 'mandatory requirements as per section 9 of F.I.O., 2001, in no way, can be postponed/or otherwise, cured subsequently by way of replication. The opportunity' as being provided to a Financial Institution' in terms of subsection (7) of section 10 of F.I.O., 2001 [XLVI of 2001] of course is a 'limited opportunity' to the extent of 'reply' only in answer to the 'Leave to Defend Application[s]'. Reliance on this aspect of the matter can be placed on the case of Habib Metropolitan .Bank Limited v. Abid Nisar [2014 CLD 1367], wherein it was observed as under:- "...Compliance of mandatory provision of law is more important than wisdom of individual which negates such compliance. The scheme of sections 9 and 10 of Ordinance 2001 is such that once a suit is filed and leave application is preferred the consequences must follow as the scheme of Ordinance 2001 does not provide filling up of lacuna at later stage and hence not curable."
42. Mr. Khalil Ahmed, learned counsel for the Plaintiff's Institution, next argued that it are the Defendants Nos.1 to 3, who have badly failed to perform their 'contractual obligations' in terms of 'Musharaka Investment Agreement' dated 19.03.2008 [Annexure 'A-1' to the Plaint]. The Plaintiff Institution, under such compelling circumstances has constrained to file the above suit, inter alia, for the recovery of its outstanding dues/amount in the sum of Rs,65,252,355/- etc. According to Mr. Khalil Ahmed Siddiqui, learned counsel for Plaintiff's Institution, the Defendants Nos.1 to 3 in their 'APPLICATION FOR LEAVE TO DEFEND' bearing C.M.A. No,247 of 2012, have not only admitted the relationship of a 'Financial Institution' and 'Customers' but also the execution of 'financial' and 'security documents'. They have also admitted the availment of the subject 'finance facility' and the outstanding amount to some extent. In support of his contention Mr. Khalil Ahmed Siddiqui, learned counsel for Plaintiff's Institution focussed the attention of this Court towards Defendants No,l's letter dated March 12, 2008 which reads as follows:- "PACKAGES [SMC-PRIVATE-LIMITED] A-20/A, Textile Avenue Karachi, Phone: 2574532-35 Fax:2574536 Dated: Wednesday, March 12, 2008.
Mr. Ayaz Dawood Chief Executive First Dawood Investment Bank Limited Head Office - Karachi.
MOSHARAKA FINANCE OF RS 50 M -5 years. Dear Sir, This has reference to the discussion between your and Mr. Saleem Akhtar Qureshi in which, you have agreed to approve a Mosharaka Finance Facility of Rs,50 M for 5 years under the repayment guarantee of M/s. Takaful Pakistan Limited.
M/s. Takaful Pakistan Limited has given its approval, in principle, to issue the above-referred Takaful Guarantee. As the facility is fully covered by the repayment guarantee of M/s. Takaful Pakistan Limited, a competitive pricing is requested.
We further undertake to settle the existing outstanding [duly reconciled] against the disbursement of Rs, 50 M under this agreement.
Regards, Yours truly, Sd/- MRS. ANJUM SALEEM MANAGING DIRECTOR
43. Besides, the Defendants Nos.2 and 3 have also created valid mortgages, in favour of the Plaintiff's Institution, Mr. Khalil .Ahmed Siddiqui, learned counsel for Plaintiff's Institution further argued that 'EVASIVE' and 'UNSPECIFIC DENIALS' on the part of Defendants Nos.1 to 3 in their 'LEAVE TO DEFEND APPLICATION' [C.M.A. No,247 of 2012] are unpermissible under Order VIII, Rule 4, C.P.C. The 'evasive denials' rather tantamount to 'admissions' under Order VIII, Rule 5, C.P.C. Moreover, in view of the 'EXECUTION OF FINANCIAL' and 'SECURITY DOCUMENTS', 'Musharaka Investment Agreement' dated 19.08.2008 [Annexure 'C' to the plaint] and Promissory Note etc. The 'evasive denials' of Defendants Nos.1 to 3, beside afterthought are meaningless. For ready reference Order VIII, Rules 4 and 5, C.P.C. Are reproduced 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."
44. Mr. Khalil Ahmed Siddiqui, learned counsel for the Plaintiff's Institution further argued that in many 'case-laws' the Honourable Superior Courts of this country have already held that 'strict compliance' of section 10[3][4115] of the Ordinance, 2001 [In short F.I.O., 2001], is 'MANDATORY IN NATURE' and in a situation of 'non-compliance', it would render the 'Leave to Defend Application', as being in-competent in law unless, 'SUFFICIENT CAUSE' is disclosed by the Defendant[s] for his/their inability to comply with such requirement of law. The Defendant's 'LEAVE-TO-DEFEND APPLICATION', bearing C.M.A. No,247 of 2012 in the case in hand is without 'any disclosure' of 'sufficient cause' for non-compliance of subsection 10[3][4][5] of section 10 of F.I.O., 2001 as such the same is liable to be rejected under section 10[6] of F.I.O., 2001 [Ordinance XLVI of 2001]. Not only a Defendant[s] but the Financial Institution is also under legal obligation to fulfill the 'mandatory requirements' of sections 9 and 10 of F.I.O., 2001 otherwise, both have to face the same consequences. On this aspect of the matter reliance can be placed on the case-laws [a]. Faysal Bank Ltd. v. Genertech Pakistan Ltd. And 6 others [2009 CLD 858] [b]; Habib Bank Ltd. v. M/s Sabcos (Pvt.) Ltd. [2006 CLD 244] and [c]. Bank of Khyber v. M/s Spencer Distribution Ltd. And 14 others [2003 CLD 1406], wherein it was observed respectively as follows:- A. ..............................
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 defendant by virtue of section 10 of the Ordinance. The relevant portion whereof is reproduced hereunder"
"Leave to defend.---(1)
(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 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 company with any such requirement. [Underlining is mine].
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 of section 10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Even otherwise, no triable issue or lausible 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.,specicallmentiontheal 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 noncompliance 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 subsection's (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, lain 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 mine].
45. As far as, the contention of Mr. Khaliq Ahmed Siddiqui, learned counsel for Defendants Nos.1 to 3 vis-a-vis the absence of any cause of action is concerned, it is suffice to say, that bare perusal of 'para 17' of the 'plaint' would show and establish that 'CAUSE OF ACTION' for filing of the present suit has arisen at Karachi on the 'dates' referred to in the plaint itself i.e, when various 'finance' and 'security documents' were 'signed' and 'executed' by Defendants Nod.1 to 3. It is significant to note that, 'cause of action' is the bundle or totality of 'essential facts' which a Plaintiff prior to succeed is required to prove the same. Reliance on this aspect of the matter can be placed on the case of Muhammad Tariq Mahmood and 2 others v. Anjuman Kashmiri Bradari Khisht Faroshan through President Abdul Ashfaq and 21 others [2003 CLC 335] wherein it was observed 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., Mirpur 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].
46. It is quite significant from the record that the Defendants' objections are nothing but aimed only to prolong the 'quick disposal' of the present suit by way of raising the baseless allegations and objections. The Defendants nevertheless, by means of such pseudo, frivolous and concocted objections/pleas, however, could not succeed to forestall the proceedings. Ex-facie, all the pleas urged on behalf of Defendants Nos.1 to 3 are not only 'mis-conceived' but also 'mis-leading'. In the contract Act, 1872 [IX of 1872] or any other law in field, it is significant to note, there exists nothing which may prohibit 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'Psubstitution' of the 'old contract' by new one for rescheduling, restructuring and/or renewal of facilities, it is needless to say is always permissible upon 'fresh terms' and 'conditions' if, mutually and voluntarily agreed upon between the parties. In the case in hand the financial and security documents including 'Musharaka Investment Agreement' of 19th March, 2008 are thus not only valid but also absolutely binding upon the parties thereto inter alia on the basis of 'DOCTRINE OF PROMISSORY ESTOPPEL'. Moreover, the 'Musharaka Finance Agreement' has also been acted upon. Vis-a-vis the 'PROMISSORY ESTOPPEL'. Article 114 of Qanun-e Shahadat Order, 1984 as being relevant, is reproduced herein 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."
Any case case-law if needs to be cited on the aforesaid aspect of the matter, then one can conveniently refer to 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 estoppel 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."
47. As far as the contention of Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 regarding adjustment of the amounts is concerned the Defendant No,1 itself authorised the Plaintiff's Institution to adjust the amounts towards' the appropriation. In this regard contents of the Defendant No, l's letter of April, 2008 not only speak for themselves but also belie the Defendants No, 1 to 3 in their version. The aforesaid referred reads as under:- "PACKAGES [SMC-PRIVATE-LIMITED] A-20/A, Textile Avenue Karachi, Phone: 2574532-35 Fax: 2574536 Tuesday, April, 2008.
Mr. Ayaz Dawood Chief Executive First Dawood Investment Bank Limited Head Office Karachi.
ADJUSTMENT OF DEAL 8661 - Lease Finance of Rs,18,168,815/- Dear Sir, This has reference to your approving the Mosharaka Finance of Rs, 50 M against the guarantee of M/s. TAKAFUL PAKISTAN LIMITED.
Out of the above disbursement, we authorize you to deduct the following sum aggregating to Rs, 14,197,336/- towards the following appropriation:-
1. A sum of Rs,11,597,36/- be appropriated towards the full and final adjustment of the subject facility (Lease Finance under deal 8661), as mutually agreed upon. You are requested to issue a FINAL LIABILITY SETTLEMENT CERTIFICATE against this facility.
2. Invast the sum of Rs, 2,600,000/- with BRR Guardian Modaraba on account of the premium payable to.-TAKAFUL PAKISTAN LIMITED as and when payable to TAKAFUL PAKISTAN LIMITED during its life of 5 years. However, it was agreed that this investment will fetch a return of 11% periodically payable to us. In this regard kindly obtain confirmation from M/s. TAKAFUL PAKISTAN LIMITED, so that the renewal of the policy is automatically done, in order to fully cover the risk. [Underlining is mine].
In view of the above, we solicit earlier processing the disbursement of Mosharaka Facility of Rs, 50 M. Regards, Yours truly, Sd/- MRS. ANJUM SALEEM PROPRIETOR"
48. With regard to the contention of Mr. Khaleeq Ahmed, learned counsel for Defendants Nos.1 to 3 about and in respect of the creation and/or enforcement of the mortgages is concerned, it is important to note that the 'MEMORANDUM OF DEPOSIT OF TITLE DEEDS' [Annexure 'B' to the Plaint] and 'MORTGAGED DEEDS' [Annexure 'B-1' to the Plaint], could not be denied by the Defendant No,3 and/or Defendant No,2, who is the son and duly 'constituted General Attorney' of Defendant No,3 much- less on the basis of false and frivolous pleas. It is an 'established position' that the Defendant No,3 through Defendant No,2 viz. Mr. Saleem Akhtar is not only son of Defendant No,3 but also a duly constituted attorney of her mother has mortgaged her 'immovable property' which is well 'described' and 'mentioned' in para 4 of the 'Plaint'. Moreover, is needless to say, that the 'signing' and 'execution' of a 'MEMORANDUM OF DEPOSIT OF TITLE DEDS', is not a requirement of law. For and in this regard, I may made reference to section 58(f) of Transfer of Property Act, 1882 [IV of 1882].
Under the aforesaid section of law, it is quite significant too note, that the delivery of 'title documents' pertaining to any immovable property[ies] to a 'creditor' or his agent with an intention to create security thereon is called 'MORTGAGE BY DEPOSIT OF TITLE DEEDS'/'EQUITABLE MORTGAGE'. In view of this legal provision, the arguments of Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3, in my view, is not only devoid of any substance but also merit-less thus stand rejected. For ready reference and convenience purposes section 58(f) of Transfer of Property Act, 1882 [IV of 1882], is reproduced as under:- "58(1) 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.]
49. As far as the liability[ies] of the Defendants is concerned at this juncture, I would like to refer to section 2(e) of the F.I.O., 2001 [Ordinance No,XLVI of 2001], which reads as follows:- "2. Definitions.- In this Ordinance, unless there is anything repugnant in the subject or context -
(a) .
(b) . . .
(c) . . .
(d) . . .
(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 bf 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
50. From bare perusal of clause (e) of section 2 of F.I.O., 2001, it is manifestly clear that the Bank's customers [in the present case Defendants Nos.1 to 3] are not only, under legal obligation and duty bound to perform and fulfill its'/their 'undertakings' and 'promises' viza-viz repayments of the outstanding amount of the finance facility granted to and availed by the Defendant No,1 but also in respect of all other amounts relating to a finance i.e, 'mark-up' charges etc. In the case in hand the 'Musharaka Finance Agreement' is also coupled with a 'Promissory Note[s]' dated 2.4.2008 [Annexure 'D-1' to the Plaint]. In view of this position, the Defendants No,1 to 3 as such, are liable to pay and liquidate the outstanding amounts as per 'Musharaka Finance Agreement' dated 19th March, 2008. It is significant to note that a 'Promissory Note under section 118 of Negotiable Instruments Act, 1881 [XXVI of 1881], attaches itself the 'presumption of truth'. Section 118 of Negotiable Instrument Act, 1881 [XXVI of 1881] being relevant is reproduced hereinbelow:- "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."
51. Indeed, the presumption attached to a 'Negotiable Instrument' is not only 'statutory' but also 'mandatory' in nature. Such 'statutory presumption' ex facie cannot be dispelled in absence of any solid proofs. Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3, though did not specifically deny the signatures of the Defendants on the financial and security documents including 'Promissory Note' in the sum of Rs,85,150,000/- [Annexure 'D-1' to the Plaint] but he urged that such 'documents' were obtained in blank and/or otherwise, these 'documents' as alleged are without 'consideration' The documents available on record, however, speak otherwise. In the of Muhammad Sabir v. Khalilur-Rehman [2002 CLD 1545] the Court while, dilating upon, the statutory presumption attached to a Negotiable Instrument under section 118 of the Negotiable Instruments Act, 1881 [XXVI of 1881], has observed as follows:- "The contention of the learned counsel for the appellant that the Promissory Note, was not executed on 24-5-1982 but on a date 6-10-1987. Such contentions cannot be sustained for more than one reason, firstly under section 118 of the Negotiable Instruments Act, presumption is attached to a Negotiable Instrument, as to receipt of consideration, date of execution, time of receipt of consideration, date of execution, time of acceptance, time of transfer, order of endorsement, as to stamp and holder in due course are presumed unless, contrary is proved. It is settled position in law, where statutory presumption is attached as to existence of any fact, then any person setting up a plea in rebuttal, takes upon himself to prove such plea in rebuttal.
Defendant/appellant challenged such presumption, placing reliance that the Promissory Note, was executed along with alleged agreement executed between the parties on 6-10- 1981....Contention of the learned counsel for the appellant that once the consideration has been denied by him, burden was shifted on the plaintiff/respondent to have proved the consideration.
Such arguments are fallacious in relation to inchoate instrument. Section 118(a) of the Act lays down a special rule of evidence contrary to the general rule of burden of proof as already discussed above. Burden to dispel statutory presumption is always on a party seeking to negotiate or rebut the presumption as to existence of consideration. Once, the execution is admitted then it was for the defendant/appellant to disprove consideration. For reference see Mst.
Sughran Begum and 11 others v. Haji Mir Qadir Bukhsh and 2 others (PLD 1986 Quetta 232 DB) and United Bank Ltd. v. Mrs. Bilquees Begum and 3 others (1988 CLC 1613) and S.K. Abdul Aziz v.
Mahmoodul Hassan and 3 others (1988 CLC 337)." [Underlining is mine].
52. As far as the contention of Mr. Khaleeq Ahmed, learned counsel for the Defendants Nos.1 to 3 with regard to the 'dismissal' of the suit against Defendant No,4 and the alleged 'prejudice' stated to be caused to the Defendants Nos.1 to 3 is concerned, the same, in my view, is not only without any substance but also merits no consideration. In this regard I would like to reproduce herein some of 'relevant clauses' of 'Compromise Agreement' in respect of P.M. Packages' Financing dated 23rd August, 2008 executed between [i]. First Dawood Investment Bank Limited [FDIBL], [ii]. Takaful Pakistan Limited [TPL], [iii]. Mr. Saleem Akhtar Qureshi, Proprietor of M/s S. Q. Corporation [SAQ] read as follows:- "WHEREAS FDIBL had entered into A Musharaka Investment Agreement dated 19th March, 2008 with P. M Packages (PMP), a sole proprietorship concern, under which a financial facility was disbursed by FDIBL, valuing Rs,50.00 Million on 16th April, 2008.
AND WHEREAS TPL issued the Financial Performance Guarantee dated 16th April, 2008 to FDIBL to secure the facility extended by FDIBL, to PMP and in consideration thereof FDIBL assigned to TPL the interest in the property already mortgaged with them by PMP, a residential house No, F-115, Block-F, Nortti Nazimabad, Karachi belonging to and with the consent of PMP and mortgagor under an assignment agreement dated 16th April, 2008 duly executed by FDIBL,. TPL, PMP and the Mortgagor.
AND WHEREAS PMP failed to comply with the payment plan as enunciated in the Musharaka Investment Agreement and therefore FDIBL have served the legal notices as per terms of the respective Musharaka Investment Agreement, Assignment Agreement, and Financial Performance Agreement.
AND WHEREAS the parties FDIBL, TPL and SAQ wish to settle the matter amicably, the following arrangement is agreed by and between the aforesaid parties:
1. That FDIBL will call the guarantee of TPL and TPL will accordingly transfer the collateral held by it on behalf of SAQ as soon as a clear letter to this effect is received by TPL from SAQ.
2. The balance amount will be recovered by FDIBL along with mark-up for the intervening period on the outstanding amount out of the disposal of the property mortgaged with FDIBL, after calling of the guarantee.
3. That SAQ, who was the arranger of the transaction as well as depositor of the collateral for the said Guarantee with TPL is a party interest in the purchase of the aforementioned property. FDIBL and TPL have no objection to SAQ as indicating his interest as a preferential buyer of the said property.
4. That TPL hereby revokes any lien/right on the pledged residential property belonging to PMP (owned <u>by Mrs. Razia Amir also known as Razia Sultana wife of Muhammad Amir Khan and mother of Mr. Muhammad Saleem Akhtar) located at F-115, Block-F, North Nazimabad, Karachi, measuring 800 Sq. yds. and presently valued at around Rs, 54 million, in favour of FDIBL. Since the said property is already mortgaged and registered in FDIBL's name and FDIBL has fill custody and control of its title documents, FDIBL shall henceforth take all requisite measures to dispose of the said property on behalf of TPL in order to realize the balance of its finance amount from the sale proceeds of the same. </u> [Underlining is mine].
That SAQ hereby offers and undertakes to purchase the said property against the highest bid if required to cover the shortfall and in the event of the bid amount falling short of the outstanding financed amount due to FDIBL, shall make up for such difference. In the event SAQ fails to make up for the deficit, if any, the same will be indemnified by TPL within 60 days from the date of such demand '
53. From bare perusal of the above 'COMPROMISEIY AGREEMENT' dated 23rd August, 2008 in respect of PM PACKAGES' financing, it is absolutely clear that 'SOLE PROPRIETOR' of PM PACKAGES, had not only 'acknowledged' the availment of 'finance facility' in the sum of Rs,50.00 million but also the 'outstanding liability'. Also, it is significant to note, that Defendant No,2, is not only the 'sole proprietor' of Defendant No,1 'Principal Customer' but also duly 'constituted attorney' of his mother 'Defendant No:3'/'mortgagor'. Besides, the Defendant No,2 as being sole proprietor of Defendant No,1 and duly 'constituted attorney' of Defendant No,3, is also party to the aforesaid compromise agreement. As such, now he cannot be permitted to shed 'doubt' and/or otherwise, raise any frivolous objections vis-a-vis the above tripartite compromise Agreement reached between the parties thereto.
54. Apart from the above, the Defendants Nos.1 to 3 have not only failed but also avoided to challenge order dated 24.02.2015 whereby, the instant suit against Defendant No,4 was dismissed for and in view of the aforesaid Compromise Agreement of 23rd August, 2008 reached between the Plaintiffs Institution, Defendant No,2 and Defendant No,4. Order dated 24.02.2015 it is needless to say, has already attained finality. In view of this position, the arguments of Mr. Khaleeq Ahmed regarding dismissal of the above suit and the alleged prejudice stated to be caused to interest of Defendants Nos.1 to 3 also merits no consideration as such repelled.
55. Upon consideration of the contents of the 'plaint' the Application under section 10 of F.I.O., 2001 for leave to defend the suit bearing C.M.A. No,247 of 2012 filed by the Defendants Nos.1 to 3 and 'Replication' of the Plaintiff's Institution in answer to the Leave-to-Defend Application of Defendants Nos.1 to 3 and hearing of the arguments of the learned counsel for the concerned parties, I have come to the conclusion that the Defendants Nos.1 to 3 have failed to raise any substantial questions of law and facts which may need recording of evidence. Under circumstances, while, rejecting the Leave-to-Defend Application bearing C.M.A. No,247 of 2012, the Plaintiff's suit against the Defendants Nos.1 to 3 is decreed jointly and severally in the sum of Rs,65,252,355/- [Rupees Sixty Five Million Two Hundred Fifty Two Thousand and Three Hundred Fifty Five only] plus cost of funds as certified by State Bank of Pakistan from time to time in terms of subsection (2) of section 3 of F.I.O., 2001. Besides, a final decree for attachment and sale of the mortgaged property as per prayer clause (b) is , also passed along with cost of suit.