'IJAZ UL AHSAN, J.---This is a suit for recovery of Rs, 150,340,569.58 with profit, mark up, liquidated damages, cost of funds and expenses from the date of default till realization of the decretal amount. It is alleged in the plaint that on the request of the defendants, it allowed a running finance facility up to Rs,195 Million to the defendants through credit facility letter dated 01.11.2005, which signed and accepted by the defendants. They also executed mark up agreement for finance dated 01.11.2005. The aforesaid facility was secured, inter alia, through mortgage of property No,110- B-III, Gulberg III, Lahore measuring 4 Kanals 17 Marls and 130 Sq Ft jointly owned by the defendants.
Equitable mortgage was created in favour of the plaintiff by deposit of original title documents with the plaintiff bank. Token mortgage was also created through registered deed dated 18.10.2006. The plaintiff alleges that in order to avail the aforesaid facility, the defendants signed and executed amongst other the following documents at dated 01.11.2005. i) Demand Promissory Note. ii) Continuing Personal Guarantees. iii) Irrevocable Authority to Recover Accrued Mark up. Iv) Letter of Arrangement/Undertaking. v) Letter of continuity.
'According to the details furnished in the plaint, an aggregate amount of Rs,221,790,040.23 was disbursed to the defendants in their accounts from 2005 to March, 2008 from time to time, while the defendants repaid an aggregate amount of Rs, 101,812,777.81 as a part of the ongoing relationship arising out of the running finance facility. In the corresponding Mark up accounts from the years 2005 to 2008, the total debit against the defendants up to 31.03.2010 was Rs,76,245,189.18, against which the defendants have credited a total amount of Rs,45,881,882.02 from time to time.
2. It is alleged that the defendants did not make repayment as agreed and only made irregular payments towards their liabilities. The last payment made by the defendants was on 30.03.2009.
Since then nothing has been repaid and the default continues. The account statement maintained by the plaintiff indicates that as of 31.03.2010, the defendants owe a sum of Rs,150,340,569.58 to the plaintiff, which is due and payable by the defendants as per the following details:- i) Principal. Rs, 119,977,262.42 ii) Mark Up. Rs,30,363,307.16 Total. Rs, 150,340,569.58 This is the amount that the plaintiff claims from the defendants together with cost of funds, profit, mark up etc. From the date of default till realization of the decretal amount.
2. The suit was filed on 17.05.2010, when summonses were issued to the defendants through ordinary mode, bailiff/process server registered post, acknowledgement due and courier service.
Notice was also directed to be published in daily "Nation" and "Jang". The defendants were duly served and a petition for leave to appear and defend the suit was filed on their behalf.
3. The plaintiff has filed replication to the petition for leave to appear and defend the suit, which has been examined. Arguments of the learned counsel for the parties have been heard today. The learned counsel for the defendants submits that the suit has incompetently been filed on behalf of the plaintiff bank and the board resolution appended with the plaint suffered from inherent defects.
It is submitted that under section 18(1) of the Financial Institutions (Recovery of Finances)
Ordinance, 2001 the banks are prohibited from obtaining blank documents. It is claimed that the plaintiff bank obtained signatures of the defendants on blank documents, which cannot be used against the defendants. It is further argued that the contents of the plaint suffer from lack of necessary details and is based upon illegal, false and manipulated documents. It is further maintained that execution of the documents was not on account of free consent of the defendants, rather, it was result of fraud, misrepresentation and deceit played by the plaintiff bank upon the defendants.
4. It is 'further argued that the plaintiff bank had assured a finance facility to the tune of Rs,195 Million. The learned counsel points out that as is evident from the account statement, the said facility was not disbursed in its entirety to the defendants and the plaintiff bank was guilty of withholding funds that it had promised to disburse. It is further pointed out that the statement of account filed with the plaint does not fulfill the requirements of Financial Institutions (Recovery of Finances) Ordinance, 2001. It is finally argued that the plaintiff bank has claimed substantial interest, mark up on mark up and penal interest on facilities allegedly granted to the defendants.
According to the pronouncements of the Superior Courts, no interest is chargeable on facilities granted by local banks to local companies. It is, therefore, prayed that it is a fit case for grant of unconditional leave to appear and defend the suit.
5. The learned counsel for the plaintiff bank, on the other hand has reiterated contents of the plaint.
He submits that the defendants were allowed to avail running finance facility as agreed between the parties. Entries in the account statement appended with the plaint clearly demonstrate that the defendants have availed the facility to the maximum and it was only after the defendants failed to fulfill their liability and pay their dues as agreed, the plaintiff asked them to clear their liabilities, which remain outstanding even after adjustment of the amount kept under the lien of the bank in a separate bank account. It has categorically been denied that any mark up or interest has illegally been charged or that any undated or blank documents have been obtained from the defendants.
It is further pointed out that the mark up has been charged in accordance with the agreed terms and conditions and no illegality has been committed in this respect. He further submits that mark up has been charged in accordance with the mark up agreement and in line with the instructions issued by the State Bank of Pakistan, which have been followed in their letter and spirit. The learned counsel for the plaintiff has pointed out that a sum of Rs,75 Million was kept under lien by the plaintiff in a separate bank account of the defendants as security against the facility. It was never disbursed, as is obvious from the account statement, it was only credited to the facility account and adjusted against the liability of the defendants on 13.08.2008, when the defendants had failed to make payment as agreed. It is finally submitted that the defendants have failed to meet the requirements of section 10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001.
As such the application for leave to appear and defend the suit is liable to be dismissed and the suit of the plaintiff is liable to the decreed in terms of section 10(6) of the F.I.O.
6. I have heard the learned counsel for the parties at length and examined the record with their assistance. The plaint in the suit has been signed by Mr: Azhar Ahmad Herl and Akhtar Masih, who have been duly authorized to do so pursuant to duly registered power of attorneys. The resolution of the Board of Directors of Royal Bank of Scotland passed on 21.08.2007 authorizing Mr. Naveed A.
Khan jointly with either Mr. Amanullah Khan or Mr. M. Shahzad Sadiq to execute power of attorneys in favour of different officers of the bank. The power of attorneys signed in favour of Mr. Azhar Ahmad Herl and Akhtar Masih have been signed by Shahzad Naqvi, and Shahzad Sadiq pursuant to the powers granted to them by the Board through the aforesaid resolution. Consequently, it is held that the suit has been competently filed by an authorized representative of the plaintiff bank. I have gone through various facility and security documents attached with the plaint and have asked the learned counsel for the defendants to point out any document, which is blank, undated or un-witnessed. The learned counsel has not been able to show or point to any such document. A perusal of the documents indicates that all necessary details along with the amounts disbursed, amounts repaid and the balance amount recoverable from the defendants have been given. It is also noticed that the defendants have admitted in their petition for leave to defend the suit that they had availed the facility as alleged by the plaintiff bank. Further, they neither deny their signatures on any documents, nor do they deny execution of the said documents. The only defence taken by the defendants is that the said documents were obtained by fraud, misrepresentation or deception. The learned counsel for the defendants was unable to substantiate the said allegation.
It is noticed that the facility was allowed in 2005, when the aforesaid documents were executed.
The suit was filed in the year 2010, during which time, the defendants continued to operate their accounts and utilize the facilities granted to them by the plaintiff bank: At no stage, did they challenge any documents or approach any court of law with the allegation that they had been adverted into signing or executing any document in favour of the plaintiff bank. It is also significant to note that the defendants mortgaged their property in favour of the plaintiff bank by way of deposit of title deed. Further they not only deposited the original title document of the property but also executed a registered mortgaged for a token amount in favour of the plaintiff bank. At no stage did the defendants agitated this matter before any court of competent jurisdiction that the mortgage had fraudulently been created or that the original title document had fraudulently been obtained. As far as the argument of the learned counsel that a sum of Rs,195 Million, which was allowed to the defendants, was never disbursed to them is concerned, suffice it to say that it is rather simplistic argument. It is common knowledge that the sum of Rs,195 Million represented the principal limit of the facility which the defendants were allowed to avail. The bank never promised not did the defendants every attempt to withdraw the entire amount of Rs,195 Million is one go. The essence of the running finance facility is that remaining within principal limit of the facility, the customer is allowed to withdraw the amount. According to its business requirements and repay the amount from time to time, of which the bank maintained the record. The amount repaid can be utilized towards payment of principal as well as mark up. That is one reason that the Plaintiff bank maintains two different accounts, one for disbursement and recovery of the principal and the other for accrual and repayment of mark up. I have asked the learned counsel for the defendants to point out any error or mistake in the account statement or to identify any entry, which may be incorrect or to produce any prima facie evidence to show that any amount that may have been paid by the defendants were not reflected in the account statement. The learned counsel for the defendants has not been able to produce any evidence or show any improper entry in the account statement. I have carefully examined the account statement and find that it meets the requirements of Bankers' Books Evidence Act. The account statement contains datewise debit and credit entries, which have been maintained in the regular course of business. Further the account statement is duly verified in accordance with the provisions of Bankers' Book Evidence Act, which carries a presumption of truth with it. Although the presumption is rebuttable, the defendants have not been able to produce any document or show from any entry in the account statement that the plaintiff bank has illegally recovered interest or charged mark up on mark up. As far as the amount of Rs,75 Million is concerned, it is evident from a perusal of the offer letter that this amount was agreed to be kept in a lien account. The defendants were entitled to receive return on the said amount at the agreed rates. However, the essence of the bank right on lien account is that in case the customer defaults, the bank has a right to exercise its right of lien and adjust the amounts kept under its lien to recover its dues. It was in exercise of this right that the plaintiff bank adjusted the aforesaid amount. The learned counsel for the defendants has not been able to find any fault or show any illegality, exercised by the bank of its lien over the aforesaid amount.
7. I find that the plaint is duly supported by the statement of account as well as the documents attached with the plaint. The petition for leave to appear and defend the suit does not raise any substantial questions of law or fact in respect of which evidence needs to be recorded. I, therefore, find that this is not a fit case for grant of leave to appear and defend the suit. Consequently, the application for leave to appear and defend the suit is rejected.
8. As a result, the averments made in the plaint are deemed to be admitted. Therefore, a decree is passed in favour of the plaintiff bank against the defendants jointly and severally the sum of Rs,150,340,569.58 with costs and cost of funds from the date of default till realization of the decretal amount. The claim of the plaintiff for liquidated damages is dis-allowed. The defendants shall pay the decretal amount within 30 days from today failing which the decree holder bank may move an appropriate application for execution of the decree.