PLA Nos.46-B/2005 and 57-B/2005 SHEZADA MAZHAR, J.---The plaintiff/bank has filed suit for recovery of Rs.117,531,376.74/- with costs of funds under section 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001 (F.I.O., 2001) claiming that defendant No.1 obtained finance facility from the plaintiff/bank, which remained outstanding and therefore, filed a suit for the recovery of above said amount out of which the amount of Rs.64,169,399.00 was on account of principal amount whereas an amount of Rs .53,361,977.74 is outstanding on account of mark-up upto 09.05.2002.
2. The above two petitions for leave to defend in the suit were filed by respondents Nos.1 to 4. PLA No.57/2005 filed on behalf of defendants Nos.1 to 3 and PLA No.46/2005 has been filed by defendant No.4. In both the PLAs, defendants Nos.1 to 4 has admitted certain liabilities therefore, on the basis of admitted liabilities interim decree dated 19.09.2013 was passed against respondents Nos.1 to 3 for an amount of Rs.14,842,927.00 whereas against defendant No.4, the same was decreed for an amount of 9.00 million. Vide order dated 09.09.2013, this Court directed defendants Nos. 1 to 3 as well as defendant No.4 to submit their accounts on the basis of which they claimed, that the balance amount claimed by the plaintiff bank is not outstanding against them, but despite the lapse of over a year none of the defendants have filed their accounts.
3. Vide order dated 23.09.2014 the right to argue the PLAs filed by defendants Nos.1 to 4 was also closed by this Court as defendants Nos.1 to 4 never appeared to argue the matter. Today when the case came up for hearing on the PLA No .55-B/2005 filed by defendant No.5, representative of defendants Nos.1 to 3 appeared and once again sought adjournment for arguments on the PLAs. In the interest of justice this Court granted time till the court hours to argue the PLAs, however, none appeared on behalf of defendants Nos.1 to 3. On behalf of defendant No.4, learned counsel appeared and made his submissions on the PLA.
4. Perusal of the PLAs filed by defendants Nos.1 to 3 as well as defendant No.4 reveal that similar objection has been raised by both set of defendants. It is alleged in the PLAs that the suit has not been filed by duly authorized person and that no privity of contract exists between the plaintiff and defendants Nos.1 to 2. It is claimed that defendants Nos.1 and 2 never authorized defendant No.4 Muhammad Iqbal to deal with the plaintiff/bank and mark up has been charged without agreement between the plaintiff and defendant No.l. It is specifically claimed in the PLA by defendant No.2 that he remained out side Pakistan from July, 2001 to 17.07.2004 and in his absence defendant No.4 has entered into an agreement, therefore after the agreement dated 28.03.2003, the plaintiff bank cannot file suit against defendant No.4 or against defendants Nos.1 and 2 as the agreement dated 28.03.2003 was executed without any consent/authorization of defendants Nos.1, 2 and 4. It is also claimed that suit is time barred as admittedly the finance facility was sanctioned in the year 1998 whereas the suit was filed in the year 2005, which is beyond limitation, therefore, the same is liable to be dismissed on this ground.
5. On the other hand, learned counsel for the plaintiff bank has vehemently denied the assertions of the applicants/defendants and stated that the objection raised is only an attempt to escape from the liability. It is also submitted by the learned counsel for the plaintiff bank that the defendant firm has time and again acknowledged the liability and therefore the defendants/applicants cannot claim benefit of section 19 of the Limitation Act 1908:
6. The basic objection of defendants Nos.1 to 4 is with regard to the limitation of the suit us admittedly the finance was sanctioned in the year 1998 and the suit was filed on 16.09.2005 and therefore the same is time barred. However perusal of the documents attached with the plaint reveals that along with the plaint, the plaintiff/bank has also placed on record the letters whereby defendant No.1 time and again have admitted the liability of the plaintiff/bank and in this regard reference has been made to letter dated 13.09.1999 wherein defendant No.1 has specifically admitted the outstanding liability and defendants No.l's firm has sought the favorable response of the proposal submitted by defendant No.1 . Another undated letter is present on the file, which has been received by the plaintiff/bank on 25.04.2002 wherein the request for grant of time for outstanding liability has been made. There is proposal on behalf of defendant No.1 firms dated 31.05.2002 by Tahir Saddiqui and Company who are authorized by defendant No.l's firm vide its letter dated 10.05.2002 to negotiate the settlement of the defendant's firm liabilities again with the plaintiff/bank. Another letter dated 22.07.2002 is also available on file wherein a proposal for settlement of long outstanding dispute was made. Similar letter dated 07.09.2002 and 26.03.2002 also deals with proposal to settle the long outstanding dispute.
7. In presence of said letters the benefit of sections 19 and 21 of the Limitation Act, 1908 is available to the plaintiff bank as on each of the acknowledgment a fresh cause of action accrues to the plaintiff bank and the suit cannot be termed as time barred. The last acknowledgement is dated 26.03.2003 and admittedly the suit was filed on 16.09.2005 therefore, within limitation. It is also observed that none of the defendants 2 to 4 have denied the other letters mentioned above except letter dated 26.03.2003 therefore the suit is within time. In this regard reference is made to the law laid down in Pakistan v. Waliullah Sufyani (PLD 1964 Dhaka 1), Messrs M. G. Kadir & Co. v. Abdul Latif (PLD 1970 Karachi 708) and Messrs Rising Sun Company through Partner Mr. Farooq Aftab and another v. Bank of Oman Ltd., Lahore through General Manager and 3 others (2005 CLD 1242). In all the referred matters it is held that acknowledgment in writing of debt due renew the period of limitation.
8. The other objection of the defendants was with regard to the authority of' the one partner to deal on behalf of the firm. According to the defendants no authority was given to any of the partner to obtain loan or to settle the loan and therefore the other partners are not liable. In this regard reference is made to section 19 of the Partnership Act 1908, which states as under:-
19. Implied authority of partner as agent of the firm (1) Subject to the provisions of section 22, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm.
' The authority of a partner to bind the firm conferred by this section is called his "implied authority".
(2) In the absence of any usage or custom of trade to the contrary the implied authority of a partner does not empower him to--
(a) Submit a dispute relating to the business of the firm to arbitration;
(b) open a banking account on behalf of the firm in his own name;
(c) compromise or relinquish any claim or portion of a claim by the firm;
(d) withdraw a suit or proceeding filed on behalf of the firm;
(e) admit any liability in a suit or proceeding against the firm;
(f) acquire immovable property on behalf of the firm;
(g) transfer immovable property belonging to the firm; or
(h) enter into partnership on behalf of the firm."
(i)
9. Bare reading of the above section reveals that all the partners have impliedly authority to act on behalf of the firm no where in the PLA, the defendants have denied. the execution of the partnership deed. Therefore in view of the above Section all the partners are liable for the acts of the other partners. Even otherwise, if they had not authorized the partner to deal with the plaintiff bank then how they have partially admitted the liability of the defendant firm? Defendants Nos.2 to 4 admittedly have admitted finance liability and also admitted that certain amounts are outstanding, therefore in presence of said admissions, defendants Nos.2 to 4 have no authority to challenge the authority of one of the partner of the firm who has made dealing with the plaintiff bank on behalf of the firm. Defendants Nos.2 to 4 cannot say that they are absolved from the liability as the partner who has dealt with the plaintiff bank was not duly authorized by the defendant firm. In this regard reference is made to United Bank Ltd. v. Credence Electronics and others (PLD 1998 Karachi 325). In both the referred judgments it was held that dealing by one partner on behalf of the firm binds all other partners. Learned counsel for the defendants 2 to 4 have made reference to section 19(2)(e) of the Partnership Act to state that they are exempt in view of the said clause. In this regard suffice it to say that the settlement or adjustment was not done in any proceeding but during the day to day affairs of the firm. Therefore the said provision is not applicable to the case in hand.
10. In view of the above discussion, the PLA 's filed by defendants Nos. 1 to 4 are hereby dismissed.
11. As PLA filed by defendants Nos.1 to 4 has been dismissed and the disbursement and utilization is proved not only from the statement of account placed with the plaint by the plaintiff bank but also from the admission made by the defendants Nos. 1 to 4 in the PLA's therefore, the suit of the plaintiff bank is decreed for the balance remaining amount against the defendants Nos. 1 to 4.
PLA No.55-B/2005
12. With regard to PLA 55-B/2005, defendant No.5 claimed that he left the partnership firm on 01.07.1998 and the liability was incurred in November, 1998, therefore, he is not liable and in this regard he relied upon the partnership deed dated 01.07.1998 as well as the rectification in the partnership record. He also claimed that suit is time barred as the acknowledgement of liability dated 26.03.2003 is after the limitation therefore, the benefit of section 19 of the Partnership Act cannot be extended in favour of the plaintiff/bank. It is also claimed by defendant No.5 that there is no impliedly or express authority in the partnership deed for obtaining loan and the authority available under section 19 is not extendable in view of section 19(c) of the Partnership Act, 1932.
Learned counsel further claimed that grant of loan was not an act of firm as no authorized document has been placed on the record. Further there is neither any provisional guarantee nor any mortgaged deed of the property of the defendant No.5 on record therefore the suit to his extent is liable to be dismissed. For the limitation, learned counsel for defendant No.5 has relied upon Habib and 8 others v. Hail Muhammad and 3 others (PLD 1970 Karachi 495).
13. With regard to no authority to compromise learned counsel for the defendant No.5 has relied upon Messrs New Era Builders, Karachi v. Pakistan Insurance Corporation and another (PLD 1977 Karachi 822). Lastly learned counsel for defendant No.5 submitted that no pivirty of contract exists between the defendants and the plaintiff/bank, therefore, suit against defendant No.5 is liable to be dismissed.
14. Perusal of the PLA reveals that defendant No.5 had full knowledge regarding defendant No. 1 's dealing with the plaintiff/bank and also the fact that the business of the firm is being carried out on the basis of finance facilities. It is claimed by defendant No.5 that he retired himself on 01.03.1998, however neither any document with regard to his retirement nor any such document was filed with the plaintiff/bank. It is observed that certain documents have been attached with the PLA by defendant No.5 to show that he resigned on 01.03.1998 and the said change was reported to the Registrar of firms, however the said change was noted in the record of the firm by the Registrar in the year 2001 after the disbursement of the finance facilities. Further, admittedly no intimation whatsoever was given to the plaintiff/bank by defendant No.5 with regard to his alleged resignation from the firm.
15. Reading of para (g) of the preliminary submissions reveals that liability incurred by the other defendants was in violation of express agreement between brothers. The said express agreement (partnership deed dated 01-07-1998) has been placed on record by defendant No.5 which shows the resignation of the defendant No.5 as on 30.06.1998. This partnership deed itself negates the claim of defendant No.5 who has claimed that he has resigned on 01.03.1998. The other objections of time barred as well as the authority of one partner have already been discussed and dismissed in the PLA's of Defendants Nos. 1 to 4 therefore no need to discuss them here again.
1.6. In view of what has been discussed above, the application for leave to defend the suit filed by the defendant No.5 is also dismissed.
17. Resultantly the suit of the plaintiff is decreed in favour of the plaintiff bank and against the defendant for recovery of Rs.64,169,399 on account of principal amount and Rs.53,361,977.74 on account of mark-up along with costs of the suit. The plaintiff/bank shall also entitle to the costs of funds as determined by the State Bank of Pakistan from the date of filing of the suit i.e. 16.09.2005 till the realization of the amount.