' KHADIM HUSSAIN M. SHAIKH, J.---Through the captioned 1st appeal filed under section 22 of Financial Institutions (Recovery of Finances) Ordinance, XLVI of 2001, the appellants have called in question judgment and decree dated 15.09.2011, passed by the learned Banking Court-II, Hyderabad decreeing Suit No,46/2011 against the appellants jointly and severally for Rs, 1,84,04,300/- along with the cost of funds of the Financial Institution from the date of default till satisfaction of decree as certified by the State Bank of Pakistan from time to time and with costs except 20% liquidated damages.
2. Briefly the facts of the case are that on 08.04.2011 National Bank of Pakistan filed Suit No,46 of 2011 against M/s. Abdullah and Muhammad Iqbal Brothers, Sindh Small Industrial Corporation, Mirwah Road, Mirpurkhas and 2 others for recovery of Rs,1,84,04,300/- along with 20% liquidated damages, costs of funds, costs of the suit and markup, under section 9 of Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), which hereinafter will be referred to as the Ordinance for the sake of brevity, in the learned Banking Court-I, Hyderabad, which was subsequently made over to the learned Banking Court-II, Hyderabad. The case of the plaintiff-bank is that the demand finance limit of Rs,11.500 Millions was sanctioned in favour of the defendants for the purpose of installation of Project of Carpets and Felts Industry vide sanction advice dated 17.03.2006, which was disbursed to the defendants in three trenches, first trench on 22.03.2006, second trench on 03.07.2006 and third trench on 20.10.2006 against mortgage of Plot Nos. 73, 74, 80 and 81 situated at Sindh Small Industries Estate Corporation at Mirwah Road, Mirpurkhas as security for re-payment of the loan amount. The defendants failed to adjust the outstanding liability within the stipulated time, therefore, on their request, the schedule was re-structured by sanctioning demand finance with working finance facility limit of Rs,11.000 Millions and demand finance of mark-up for Rs,2.000 Millions vide sanction advice dated 06.10.2008. The defendants executed agreements for finances, promissory note, memorandum of deposit of title deeds, guarantees, undertakings and authority letter and also deposited lease deed, village Form-II, certificate from Sub-Registrar, Extract from Property Register Ward-B, Mirpurkhas, original sale deed of House No, 394 Ward-B, Additional mortgage deed of Plot Nos. 73, 74, 80 and 81, having also executed irrevocable Power of Attorney in favour of the plaintiff-bank. As the defendants failed to adjust the amount even according to the re-structured schedule, leaving the balance of Rs,1,84,04,300/- as outstanding amount against them, hence the plaintiff-bank filed the aforesaid suit.
3. In response to the summons, issued through all four modes prescribed under the Ordinance, including publication in Urdu daily newspaper "Jang" Karachi dated 31.05.2011 and English daily newspaper "The Nation" Karachi, dated 29.05.2011, the defendants appeared in the learned Banking Court and filed application under Section 10 of the Ordinance, seeking leave to defend the suit, which was dismissed by the learned Banking Court vide order dated 15.9.2011 and the suit was decreed in favour of the plaintiff-bank and against the defendants jointly and severally for Rs,1,84,04,300/- along with the cost of funds from the date of default till satisfaction of the decree as certified by the State Bank of Pakistan from time to time with costs except 20% liquidated damages mentioned in prayer clause "d" of the plaint, vide judgment and decree dated 15.09.2011, passed by the Learned Banking Court-II, Hyderabad, hence this appeal.
4. Learned advocate for the appellants reiterating the grounds urged by the appellants in their application for leave to defend the suit filed before the learned Banking Court, has mainly contended that the defendants had suffered heavy loss during the course of erection and installation of mill, suffering further due to thunder storms and rains; so also because of late arrival of Chinese Engineer for installation of the plant and machinery etc. Hence they could not be able to repay the loan amount; the bank authorities obtained signatures of the defendants on blank documents; the repayments made by the appellants were suppressed by the respondent-bank, per him, the same were not disclosed in the statement of account filed with the plaint; the respondent-bank has charged extra mark-up and the appellants are not liable to pay the said repaid amount and extra mark-up; the appellants had raised substantial questions of law and fact which required evidence for their resolution; and, per him, unconditional leave to defend the suit ought to have been granted to the appellants by the learned Banking Court. He, therefore, prays that the impugned judgment and decree dated 15.09.2011, may be set-aside and the matter may be remanded to the learned Banking Court, by granting the appellants leave to defend the suit with directions to learned Banking Court to decide the same after allowing the parties to adduce their evidence. He has placed his reliance on the cases of Al-Hadayat Textile through Proprietor and 2 others v. Soneri Bank Limited (2003 CLD 105), Messrs Ravie Ass Ciate (Private) Limited through Director and 10 others v. Industrial Development Bank of Pakistan through Senior Vice-President (2005 CLD 393), Faysal Bank Limited v. Badin Board Mills and 6 others (2010 CLD 442) and Zarai Taraqiati Bank Limited through Manager v. Syed Furrakh Hussain Shah (2006 CLD 171).
5. Conversely, the learned advocate for the respondent-bank has contended that the plaintiff- bank had complied with the mandatory requirement of Section 9 of the Ordinance and the statement of account contained all the entries of amounts in accordance with the provisions of the Bankers' Books Evidence Act, 1891; but the defendants/appellants had not complied with the mandatory requirements of section 10 of the Ordinance, as no requisite details regarding amount of loan availed by them, repayments made by them and the amount outstanding against them, were disclosed in their application for leave to defend the suit; there were no thunder storms and rains in the relevant period and the area was not affected by any natural calamity nor was it declared as calamity hit area by the Government; there is also no notification for postponing the recovery of the loans advanced by the Financial Institutions; and the appellants had failed to make out their case for grant of their application for leave to defend the suit; per him, the learned Banking Court rightly decreed the suit vide impugned judgment and decree dated 15.09.2011, by dismissing their application for leave to defend the suit filed by the appellants/defendants, vide order dated 15.09.2011. He, therefore, prays that the appeal may be dismissed. He has placed his reliance on the cases of National Bank of Pakistan v. Messrs A. I. Brothers (Private) Limited and others (2007 CLD 1356) and Industrial Development Bank of Pakistan, Karachi v. Messrs Zamco (Pvt.) Ltd. And 10 others (2007 CLD 217).
6. We have heard the learned counsel for the parties and have gone through the material available on the record.
7. A perusal of the plaint reveals that in paragraphs-12, 14 and 15 thereof, the respondent-bank had clearly disclosed the requisite details, as required under the provisions of section 9 of the Ordinance. Record further reveals that relevant documents were also filed by the respondent-bank along with the plaint in support of its claim. Thus, there was no default on the part of the respondent-bank in complying with the requirements of Section 9 of the Ordinance.
8. However, from the perusal of the defendants' application for leave to defend the Suit it reveals that they have not complied with the mandatory requirements of subsections (4) and (5) of section 10 of the Ordinance. Under subsection (4) of the Ordinance, the defendants were required to disclose (a) the amount of finance availed by them from the plaintiff-bank, (b) the amounts paid by them to the plaintiff-bank and the dates of payments, (c) the amount of finance and other amounts relating to the finance payable by them to the plaintiff-bank up to the date of institution of the Suit, and (d) the amount, if any, which they dispute as payable to the plaintiff-bank, and the facts in support thereof. None of the above particulars have been disclosed by the defendants in their application for leave to defend. Under subsection (5) of the Ordinance, the defendants were required to file all such documents along with their application, which, in their opinion, support the purported substantial questions of law and fact allegedly raised by them. The implications for not complying with the mandatory requirements of subsections (4) and (5) of the Ordinance, are specifically provided in subsection (6) of section 10 of the Ordinance, which provides that an application for leave to defend which does not comply with the requirements of any of subsections (3), (4) and/or (5) of section 10 of the Ordinance, shall be rejected unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement. The defendants have not only failed in fulfilling the mandatory requirements of subsections (4) and (5) of the Ordinance, but they have also failed to disclose any sufficient cause for their inability in complying with the same. The effect and implications for not complying with the Mandatory provisions of subsections
(4) and (5) of the Ordinance, have been discussed in detail by the Hon'ble Supreme Court in the most recent authoritative, pronouncement in the case of Apollo Textile Mills Ltd. And others v. Soneri Bank Ltd., (PLD 2012 Supreme Court 268 = 2012 CLD 337). Some of the paragraphs of the cited authority, which are relevant for the purposes of deciding the instant appeal, are reproduced here for convenience and ready reference:- "14. The plaintiff institution and the defending 'customer' have identical statutory responsibility respectively under sections 9(3) and 10(4) to plead and state clearly and particularly the finances availed by a defendant, repayments made by him, the dates thereof and the amounts of finance repayable by such defendant who has also been saddled with the additional responsibility to also specify the amounts disputed by him.
' A defending customer in this obliged to put in a definite response to the banks' accounting and has under sections 10(3) and (4) to compulsorily plead in answer in the leave petition his accounts as well as the facts and amount disputed by him as repayable to the plaintiff.
15. The rationale of the schematic discipline of Ordinance of 2001 is evident. A banking suit is normally as suit on Accounts which are duly ledgered and maintained compulsorily in the books of Accounts under the prescribed principles/standards of Accounting in terms of the laws, rules and Banking practices. As such instead of leaving it to the option of the parties to make general assertions on Accounts, the Ordinance binds both the sides to be absolutely specific on accounts.
The parties to a suit have been obliged equally to definitely plead and to specifically state their respective accounts.
16. To scope of the suit thus becomes well defined. The controversies are confined to the claimed and/or the disputed numbers, facts and reasons thereof. Unnecessary controversial details, the evidence thereto and the time of the trial, are curtailed. The trial would remain within the laid out parametrical scope of the claimed and the disputed accounts.
17. ....................................
18. The Financial Institutions (Recovery of Finances) Ordinance, 2001 i.e, is a special law. It provides a special procedure for the banking suits. The provisions of the Ordinance, 2001 under section 4 thereof override all other laws. The provisions contained in the said Sections require strict compliance. Noncompliance therewith attract as above referred, consequences of rejection of leave petition along with decree etc. Etc.
19. In this case, the application for leave to defend the suit filed by the petitioners did not fulfil the requirements of section 10(3), (4) and (5) of the Financial Institutions (Recovery of Finances)
Ordinance XLVI of 2001. It was admittedly not in conformity with the said mandatory provisions. No cause or the reason for inability to comply with said requirements was shown. Instead it was expressly admitted by the learned Senior Advocate Supreme Court for the petitioners before the High Court and also before us that the petitioners failed to fulfil the mandates of the said provisions and did not plead the required Accounts. The petitioners/defendants thus attracted the prescribed legal consequences of:-
(1) rejection of their leave petition under section 10(6);
(ii) non-entitlement under section 10(1) to defend the suit for not obtaining leave to defend the suit in terms provided for in section 10;
(iii) the allegations of fact in the plaint were deemed under section 10(1) to have been admitted by them; and
(iv) a judgment and decree against them and in favour of the plaintiff Dank under section 10(1) and (11) ibid. "
(Emphasis added)
9. Upon further examination of the application for leave to defend the suit filed by the appellants before the learned Banking Court, it reveals that the ground regarding suppressing the repayments allegedly made by the appellants by the respondent-bank was not taken before the learned Banking Court. Moreover, no material has been placed on record to establish that the repayment, if any, made by the appellants was suppressed by the respondent-bank and thus this contention of the learned counsel for the appellants regarding suppressing the alleged repayments is untenable.
So far the contention of the learned counsel for the appellants that the signatures of the defendants were obtained on blank formats is concerned, the same from face of it is not only vague and baseless assertion, but it has become now a common assertion being generally taken by the defaulting borrowers in their application for leave to defend the suit. Furthermore, the learned advocate appearing for the defendants before the learned Banking Court did not advance any argument on such assertion regarding obtaining the signatures of the defendants on blank documents. Even then it was observed by the learned Banking Court in its order dated 15.09.2011, whereby the application for leave to defend the suit filed by the appellants/defendants was dismissed, that the documents, executed by the defendants having been annexed with the plaint, show that the documents were executed and signed by the defendants and they are not blank.
Further more, section 20 of the Negotiable Instruments Act (XXVI of 1881), which provides a complete answer to such contention, is reproduced here for the sake of convenience and ready reference:- "20. Inchoate stamped instruments. (1) Where one person signs and delivers to another a paper stamped in accordance with the law relating to stamp duty chargeable on negotiable instruments, either wholly blank or having written thereon an incomplete negotiable instrument, in order that it may be made, or completed into a negotiable instrument he thereby gives pima facie authority to the person who receives that paper to make or complete it, as the case may be, into a negotiable instrument for the amount, if any, specified therein, or, where no amount is specified, for any amount, not exceeding, in either case, the amount covered by the stamp.
(2) The person so signing shall, subject to the provisions of subsection (3), be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course, for the amount specified in the instrument of filled up therein: "
10. A plain reading of the above provisions of law reveals that where one person signs and delivers to another a paper stamped in accordance with law, either wholly blank or having written thereon an incomplete negotiable instrument, in order that it may be made, or completed into a negotiable instrument he thereby gives prima facie authority to the person who receives that paper to make or complete it, as the case may be. Thus even for the sake of argument if it is presumed that the defendants had put their signatures on the blank documents, even then the defendants legitimately cannot Challenge the legality and validity of the said documents in view of the provisions of section 20 ibid more so when the defendants have admitted availing of finance facilities, disbursement thereof to them and non-adjustment thereof by them as discussed in the coming paragraph.
11. Record further reflects that in their application for leave to defend the suit, the defendants/appellants in paragraph-5 have stated that the defendants suffered heavy loss during the course of erection and installation of mill; the firm faced natural calamities of thunder storms and torrential rain falls; the late arrival of Chinese Engineer for installation of the plant and machinery; the above facts have also been admitted by the plaintiff-bank while granting and re- scheduling the loan facility; due to above reason the defendants could not pay the overdue installments; and in paragraph-16 thereof, it is further stated that the defendants never avoided the payments deliberately, but due to unavoidable circumstances requested the plaintiff for extension in grace period. Thereby manifestly the defendants/appellants have admitted availing of the finance facilities; disbursement thereof to them; restructuring the schedule by sanctioning the subsequent finances; and, non-adjustment of the loan amount.
12. On a query it was frankly conceded by the learned counsel for the appellants that the appellants did not comply with the mandatory requirements of section 10 of the Ordinance in their application for leave to defend the suit and non-compliance therewith attracted consequences of rejection of the application for leave to defend along with decree etc. Etc. In view of the law laid down by the Hon'ble Supreme Court in the case of Apollo Textile Mills Ltd. (supra).
13. In view of the categorical admissions made by the appellants that the finance facilities were availed by them and their liability towards the outstanding amount of the respondent-bank has also not been denied; no specific entry in the statement of account was pointed out by the appellants in order to make the respondent's claim doubtful, therefore, no substantial question of law or fact existed before the Banking Court requiring evidence, and as such there was no occasion for granting leave to defend the suit to the appellants. It is well-settled that if the defendant admits availing of the facility and liability to pay is not denied, the defendants would be deemed to have failed to make out a case for the grant of leave to defend.
14. The views expressed by us hereinabove are also supported by the decisions of the Superior Courts. Reference may be made to case of Siddique Woolen Mills and othirs v. Allied Bank of Pakistan (2003' CLD 1033), wherein the honourable Supreme Court was pleased to hold that since the petitioners in the said case had not denied their liability towards the respondent, therefore, the trial Court had rightly passed the impugned order; in case of Messrs Aima Industries (Pvt.) Ltd. And others v. Allied Bank of Pakistan Ltd., (2003 CLD 1770), a learned Division Bench of Peshawar High Court has held that the defendant was not able to point out any wrong or bogus entry in the statement of account creating doubt in one's mind regarding its authenticity and the appeal filed against the judgment of the trial Court, decreeing the suit of plaintiff-bank, was dismissed; in case of Travel .Kings (Pvt.) Limited through Chief Executive and 4 others v. Union Bank Limited and 2 others, (2004 CLD 460), the decree passed by the Banking Court was upheld by a learned Division Bench of Lahore High Court as the defendants had admitted the availing of loan facilities; in case of Tariq Javed and another v. National Bank of Pakistan (2004 CLD 838), a learned Division Bench of Lahore High Court has held that bare assertion of incorrectness of statement of accounts can in no way be, given any weight or made basis for grant of leave to defend the suit; and, in case of National Bank of Pakistan through Zonal Chief and others v. Messrs Power Textile Industries Ltd.
Through Chief Executive and others (2004 CLD 1239) a learned Division Bench of Lahore High Court, has held that:- "5......the allegations that the documents are fabricated and manufactured, are bald allegations and also contradict the case of the appellant, because on the one hand, they have not denied the availing of the facilities and also claim to have paid certain amounts towards the discharge of their liability, but on the other hand, have denied the documents in vague and general terms by not raising any specific plea qua the fabrication or forgery of the particular documents. They have also not denied to the execution of the guarantees and the mortgage documents, executed in favour of the plaintiff-Bank. "
15. The case laws relied upon by the learned counsel for the appellants being distinguishable on facts and circumstances of the case in hand, are not attracted to this case and all of them are also prior to the above dictum laid down by the Hon'ble Supreme Court in case of Apollo Textile Mills Ltd.
(supra).
16. In view of what has been discussed above and the law laid down by the Hon'ble Supreme Court and the decisions of the Superior Courts supra, we are of the considered view that the appellants had failed in raising any substantial question of law or fact, therefore, the Banking Court was fully justified in dismissing their application for leave to defend and decreeing the Suit against them, and as such, the impugned judgment and decree do not require any interference by this Court and the-instant appeal filed by the appellants is liable to be dismissed.
17. Foregoing are the reasons of our short order announced by us on 17.03.2016, whereby the appeal and the listed application were dismissed with no order as to costs.