' 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 14.11.2015, passed by the learned Banking Court-II, Hyderabad decreeing the Suit No.73/2014 against the appellants jointly and severally for Rs.94,61,478/- 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.
2. Briefly the facts of the case are that on 06.03.2014 Soneri Bank Limited filed suit No.73 of 2014 against the appellants M/s. Shahid Ansari and Gulrez Ansari for recovery of Rs.94,61,478.93, costs of funds and costs of the Suit, 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-1, Hyderabad, which was subsequently made over to the learned Banking Court-II, Hyderabad. The case of the plaintiff-bank is that the defendant No.1 is a proprietor of M/s. Shahid Ansari and Company engaged in the business of Automobiles dealership, the defendant No.1, had availed the finance facility and then got the finance facilities renewed/enhanced from time to time since 2004. Lastly the plaintiff-bank on the request of the defendant No.1 renewed running finance limit for Rs.8.500 Million on mark-up. Of 06 months KIBOR 4% per annum to the defendant No.1 on 01.07.2011 with expiry date 30.06.2012. The defendant No.2 had mortgaged his property bearing Bungalow No. 14/B, Survey No. 168/8, measuring 496 Sq. Yards situated at Civil Lines, Cantonment, Hyderabad and had stood guarantor for repayment of finance facility availed by the defendant No.1 from the plaintiff-bank. The defendants had also executed various financing and security documents including finance agreement dated 01.07.2011, promissory note dated 01.07.2011, facility letter dated 01.07.2011, undertaking for utilization of funds dated 01.07.2011, debit authority letter dated 01.07.2011, letter of hypothecation dated 01.07.2011, memorandum confirming deposit of title deeds and mortgage deed etc., as security for repayments of the finance facility availed by them. The defendant No.1 has fully availed and utilized the aforesaid finance facility and paid some amount to the plaintiff-bank towards the adjustment of outstanding amount, but he made default in making repayment of amount of finance, as a result thereof an amount of Rs.94,61,478-93 is outstanding against the defendants as on 30.06.2012, hence the plaintiff-bank filed the above 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 20.03.2014 and English daily newspaper "The Nation" Karachi, dated 21.03.2014, the defendants appeared in the learned Banking Court-II, Hyderabad 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 07.09.2015 and the suit was decreed in favour of the plaintiff-bank and against the defendants jointly and severally for Rs.94,61,478/- 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 vide judgment and decree dated 14.11.2015, hence this appeal.
4. Learned advocate for the appellants has mainly contended that the signatures of the defendants were obtained on the blank documents, which have no legal effect; the defendants have already paid the amount of finance, which they had availed and the mortgage of the property was got redeemed by them; the respondent-bank had not complied with the mandatory requirements of section 9 of the Ordinance; the appellants are not liable to pay the said repaid amount of finance; 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 14.11.2015, passed by the learned Banking Court; 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 suit after allowing the parties to adduce their evidence, He has placed his reliance on the cases of MCB Bank Limited v. Eastern Capital Ltd. And 7 others (2011 CLD 84), Habib Metropolitan Bank Limited through Attorney v. Century 21 Textile and Sportswear (Pvt.) Limited and 3 others (2014 CLD 729) and Elbow Room and another v. MCB Bank Limited (2014 CLD 985).
5. Conversely, the learned advocate for the respondent-bank has mainly contended that the plaintiff-bank had complied with the mandatory requirement of section 9 of the Ordinance and the statement of account filed with the plaint contained all the entries of amounts in accordance with the provisions of the Bankers Books Evidence Act, 1891; the defendants/appellants themselves 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; the appellants have partially paid off their financial obligations, but subsequently they committed default and thereby they acted upon the renewal documents etc., and therefore, they are estopped to challenge the said documents; the appellants did not deny execution of the financing documents etc., in their application for leave to defend, but they attempted to defraud the lawful claim of the respondent-bank by falsely contending that their signatures were obtained on the blank documents; they had failed to make out their case for grant of their 'application for leave to defend the suit, which was rightly dismissed by the learned Banking Court and ultimately decreeing the suit accordingly. He, therefore, prays that the appeal may be dismissed. He has placed his reliance on the cases of Apollo Textile Mills Ltd. And others v. Soneri Bank Ltd. (2012 CLD 337), Muhammad Akhtar Hookmani and others v. Faysal Bank Limited (2015 CLD 227), Muhammad Arshad and another v. Citi Bank N.A., Lahore (2006 SCAM 1347), Messrs Pacific Plastic Cottage Industry through Proprietor and 2 others v. Askari Bank Ltd. And another (2015 CLD 1964), Equity Participation Fund v. Messrs Abbrasive Products Co. Limited and 4 others (2012 CLD 971), Citibank N.A. Through Branch Manager v. Ameer Alam (2015 CLD 429), IGI Investment Bank Limited through Attorney v. Messrs _Admore Gas (Pvt.) Ltd. And another (2014 CLD 1354), Habib Metropolitian Bank Ltd. v. Mian Abdul Jabbar Gihillin and another (2013 CLD 88), NIB Bank Ltd. v. Highnoon Textile Ltd.
And 3 others (2014 CLD 763), Messrs Habib Bank Limited through Senior Manager v. Messrs R. G.
Match Industries (Pvt.) Ltd. Through Chief Executive and 3 others (2014 CLD 1015), Habib Bank Limited v. Service Fabrics Ltd. And others (2004 CLD 1117), Habib Bank Ltd. v. Raj Textile Mills Ltd.
Through Chief Executive and 5 others (2009 CLD 1143).
6. We have heard the learned counsel for the parties and have gone through the material available on the record.
7. From the perusal of the plaint, it would be seen that in paragraph-17 thereof, the respondent- bank had clearly disclosed the requisite details of finances etc., 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 would be seen that they have not complied with the mandatory requirements of subsections (4) and (5) of section 10 of the Ordinance. Under subsection (4), ibid, 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) ibid, 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) ibid, 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) ibid, 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) ibid, 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 is thus 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--
(i) 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 bank 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 in their application for leave to defend the suit, the defendants/appellants have not denied their signatures on the financing and security documents and execution thereof, and no material has been placed on record to establish that they have already repaid the amount of finances availed by them and got the mortgage of the property redeemed or that they are not liable to pay the amount claimed in the suit by the respondent- bank, therefore, there was no material before the learned Banking Court that could create any doubt with regard to the claim of the respondent-bank, and as such, there was no question of recording evidence. 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 an such assertion regarding obtaining the signatures of the defendants on blank documents. Moreover, 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 prima 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, validity and genuineness of the said documents in view of the provisions of section 20 ibid. Moreover the presumptions are attached to the negotiable instruments that the same were made or drawn for consideration etc., in view of the provisions of section 118 of the Negotiable Instruments Act (XXVI of 1881). In case of Muhammad Arshad and another v. Citibank N.A., Lahore (2006 SCM R 1347), the Hon'ble Supreme Court has held that:- "4 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 would have no substantial bearing on the validity of the agreement 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 Negottable Instrument 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. "
11. 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 clown by the Hon'ble Supreme Court in the case of Apollo Textile Mills Ltd. (supra).
12. 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 others 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, tae 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."
' In case of Equity Participation Fund v. Messrs Abbrasive Products Co. Limited and 4 others (2012 CLD 971), a learned Division Bench of this Court, has held that:- "11. It is settled in a number of judgments that one of the essential features of the mandatory provision is not merely use of word "shall" which may be used merely to stress importance of compliance of particular requirement emphasized or prescribed in the enactment. Ordinarily where consequences of failure to coniply with the direction or requirement of a statute are not stated, the direction is treated as directory and not mandatory. However there is consensus of judicial opinion where directions to do some thing in a particular manner entail some penalty or consequence, like in the instance rase the consequences...For not complying with the requirements of subsections (3), (4) and (5) of section 10 ibid; unless sufficient cause is shown, is visited by rejection of application for leave makes a provision mandatory. "
13. The citations quoted by the learned counsel for the appellants being distinguishable on facts and circumstances of the case in hand, are not attracted to this case.
14. 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.
15. Foregoing are the reasons of our short order announced by us on 16.03.2016, whereby the appeal and the listed application were dismissed with no order as to costs.