' MUSHTAQ AHMAD TARAR, J.---Through this Appeal the appellants have assailed the judgment and decree dated 06.05.2011 passed by the learned Judge Banking Court-III, Multan against the appellants for recovery of Rs, 52,10,539/40 along-with costs of the suit and cost of funds in Civil Suit No, 329 of 2009 filed by the respondent-bank.
2. The respondent-bank filed suit with the averments that the appellants availed the Cash Finance Facility etc from the respondent-bank since 1999-2000 to 2006-2007 for the promotion of their fertilizer and pesticides business by way of renewing/enhancing the said facility in full and/or as required from time to time from the account maintained with the respondent-bank; that lastly on the request of appellant No, 1 dated 25.08.2007, the respondent-bank renewed the Cash Finance Facility to the tune of Rs, 5,000,000/-, vide C.A. No, Nil dated 31.8.2007 on the security of hypothecation of stocks of pesticides and existing mortgaged properties as mentioned in para No, 7 of the plaint; that the said renewed Cash Finance Facility was repayable on or before 31.08.2008 along-with mark up 3-month kibor +6.75 bps payable on quarterly basis; that for the due performance of the renewed Cash Finance Facility, the appellant No, 1/appellants executed the charge documents including Memorandum acknowledging creation of Mortgage by deposit of title deeds for continuation of the said limit on 1.09.2007 as per prevailing banking practice and traditions in the light of FAL dated 1.09.2007; that in order to further secure the said renewed Cash Finance Facility, the appellants have already executed some documents including Mortgage Deed etc; that the appellant No, 1/appellants availed the Cash Finance Facility in aggregate of Rs, 7,005,655.57 against total repayments in aggregate of Rs, 1,085,428.53 anti still a sum of Rs,5,920,227.04 is outstanding and recoverable from the appellants as evident from the Statement of Account annexed with the plaint. In the suit, the respondent-bank prayed for recovery of alleged outstanding amount of Rs, 5,920,227.04.
3. The appellants after appearance submitted petition for leave to appeal and defend the suit mainly on the following grounds:-
(1) that in the year 1999 they applied for availment of Cash Finance Facility to the respondent- bank up to Rs, 30,00,000/- and subsequently they did not submit any request for availment of any finance facility;
(ii) that they made payment of Rs, 3,109,909/- but the respondent-bank adjusted the said amount towards mark up illegally;
(iii) that the respondent-bank renewed the said availment till the year 2006 but without request of the appellants;
(iv) that the documents attached with the plaint are forged and some one has mis-utilized blank signed papers which the respondent-bank had received from the appellants at the time of disbursement;
(v) that Memorandum of deposit of title deed has never been executed by the appellants and even otherwise the alleged documents have not been executed in accordance with law;
(vi) that the statement of account filed by the respondent-bank does not bear requisite certificate as per law, the same cannot be considered as statement of account and the suit of bank shall be deemed to have been filed without any statement of account and no reliance can be placed upon said statement of account;
(vii) that substantial questions of law and facts have been raised by the appellants, hence, they be allowed to appear and defend the suit.
4. The replication to the leave application was filed by the respondent-bank. On 06.05.2011. The learned Judge Banking Court-III, Multan dismissed the application of the appellants for leave to appear and defend the suit and on the same day through impugned judgment and decree dated 06.05.2011, decreed the suit of the respondent-bank for recovery of Rs,5,210,539/40 against the appellants with costs of the suit and cost of funds.
5. Learned counsel for the appellants contended that no statement of account as required under the provisions of section 9(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("F.I.O. 2001") was filed by the respondent-bank along with the plaint and one statement of account annexed by the respondent-bank was neither prepared and certified in accordance with law nor it was the complete statement of account as necessitated under the provisions of section 9(2) of F.I.O., 2001 and the Bankers' Books Evidence Act, 1891; that the learned trial court without deciding objection on statement of account dismissed the leave application of the appellants and decreed the suit in hasty manner even without discussing the evidentiary value of the documents annexed with the plaint by the respondent-bank; that the appellants have paid the amount of Rs, 3,109,909.00 against the Cash Finance Facility but no detailed statement was filed by the respondent-bank; that the appellants took specific plea that they did not make any request for renewal after 30.06.2006 and the alleged documents on their behalf are not genuine; that through the leave application the appellants have raised substantial questions of law as well as facts which should have been resolved after recording the evidence of the appellants; that the order for dismissal of leave petition and the decree and judgment dated 06.05.2011 are not sustainable under law. Learned counsel for the appellants has placed reliance on "Messrs C.M. Textiles (Pvt.)
Limited through Chairman and 5 others v. Investment Corporation of Pakistan" (2004 CLD 587), "Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others" (2011 CLD 408), "Elbow Room and another v. MCB Bank Limited" (2014 CLD 985), "Messrs Soneri Bank Limited v. Messrs Compass Trading Corporation (Pvt.) limited through Director/Chief Executive and 3 others" (2012 CLD 1302), "Zohair Akhtar v. Jawad Adil" (2006 YLR 1510), "Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others" (2003 CLD 931), "National Bank of Pakistan through Manager v. Messrs Mujahid Nawaz Cotton Ginners through Partners and 6 others"
(2007 CLD 678) and "Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd." (PLD 1966 Supreme Court 684).
6. On the other hand, learned counsel for respondent-bank argued that it was running finance and there was no need to submit statement of account for the previous period starting from 1999 to 2007; that the Cash Finance Facility was renewed on the request of appellant No, 1 dated 25.08.2007 to the tune of Rs,5,000,000/- on the security of hypothecation of stocks of pesticides and existing mortgaged properties; that the learned trial court has passed the decree while discussing the admitted documents of the appellants; that statement of account was prepared and certified according to law and mere non-mentioning of names of the attesting officer on the statement is no ground to discard statement of account; that the appellants remained failed to provide any substantial question for the grant of leave in their leave application and the learned Judge Banking Court has rightly rejected their application; that the decree dated 06.05.2011 has been passed in favour of the respondent-bank in accordance with law. He placed reliance on "Habib Bank Ltd. v. Messrs Doaba Corporation through Proprietor and another". (2009 CLD 845), "Habib Bank Ltd. v. Service Fabrics Ltd. And others" (2004 CLD 1117), "Apollo Textile Mills Ltd. Through Chief Executive and Director and 3 others v. Soneri Bank Limited through Manager/Principal Officer"
(2011 CLD 1655) and "NIB Bank Ltd. v. Dewan Textile Mills Ltd." (2012 CLD 141).
7. Arguments heard, record perused and judgments referred by both the parties considered.
8. It is matter of record that the respondent-bank has filed recovery suit against the appellants under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Section 9(2) of the Ordinance referred supra provides that the plaint shall be supported by a statement of account which in the case of a financial institution shall be duly certified under the Bankers' Books Evidence Act, 1891 and all other relevant documents relating to the grant of finance. Under these provisions it is must and mandatory for the plaintiff to submit with the plaint the statement of account duly prepared and certified under the Bankers' Books Evidence Act, 1891. Section 2(8) of the Bankers' Books Evidence Act, 1891 provides as under:- "2(8) "Certified copy" means a copy of any entry in the books of a bank together with a certificate written at the foot of such copy that it is a true copy of such entry, that such entry is contained in one of the ordinary books of the bank and was made in the usual and ordinary course of business, and that such book is still in the custody of the bank, such certificate being dated and subscribed by the principal accountant or manager of the bank with his name and official title. (emphasis provided).
9. In this case the respondent-bank has prayed for the decree of an amount of Rs, 5,920,227.04 and along-with the plaint the respondent-bank has annexed one page statement of account from 01.09.2007 to 09.03.2009 of Account No, 670-0010-5, showing non-interest Cash Finance, according to which the appellants availed Cash Finance,Facility of Rs,5,000,000/- and the same is outstanding against the appellants. He has annexed another one page statement for the same period of Account No, 678-0010-2 of other assets and mark up, whereas, one page statement of account No, 679-0010-5 of Customer Liabilities markup for the said period was also annexed.
Although these statements have been certified and signed by one officer and one Manager but neither the name of Manager nor the name of Officer as required under the provisions of section 2(8) of the Bankers' Books Evidence Act, 1891 are present underneath their signatures. Likewise, no date is mentioned that when these statements were certified by the Manager and the Officer of the Bank.
10. As per settled "Banking Practices", every amount/sum advanced or paid to a customer or sum expended/incurred for and on behalf of a customer by a Banking Company is entered as "debit" in the ledger of the bank. Simultaneously the money received from or on behalf of -customer is entered as a customer's "credit". The net result so arrived at is shown in the ledger as a credit or debit balance. On the basis of these entries in the ledger a Statement of Account truly, faithfully and duly reflecting date wise entries is prepared by the bank for each account for all practical purposes. Such statement of Account bearing true and complete account profile is required to be regularly conveyed to the customers informing them of their account position and obligations towards the bank or vice versa. Such "Statement of Account" containing true copies of entries in the books of a bank, when certified as per section 2 of the Bankers' Books Evidence Act, 1891, attains the status of prima facie evidence of the existence of such entries in the bankers' books as per section 4 of Act ibid. The Statement of Account so certified becomes admissible in evidence of the matters, transactions and accounts therein recorded like the original entry unless otherwise disputed.
11. The alleged statements of accounts above referred annexed by the bank with the plaint do not show all transactional entries, debit and credit entries, rate of mark up, rate of excise duty and rate of commitment charges etc. The plaintiff/respondent bank claimed these documents to be statement of accounts. But we are not convinced with this stance of respondent due to the reasons that these documents can at maximum be called respondent's Certificate of Balances. These statements cannot be termed or defined as a Statement of Account which is required to show each and every entry as pertaining in the ledger or account book of a Banking Company. In the absence of Statement of Account showing all debits and credits entries and dates thereof as entered by the respondent-bank in the ledgers and books of accounts from the disbursement to the date of the suit, no presumption of admissibility in terms of Bankers' Books Evidence Act, 1891 can be given to the above-said Certificate of Balances. The above mentioned alleged Statement of Accounts attached by the Bank with the plaint can only be treated as certificate regarding alleged balance amounts but the same cannot be treated or admitted as true statement of account prepared and certificated under the provisions of Bankers' Books Evidence Act, 1891.
12. In case of "United Bank Ltd. v. Ilyas Enterprises through Proprietor Mr. Ilyas Malik and 2 others"
(2004 CLD 1338), it has been held that where the certification of the Statement of Accounts are not found to be in accordance with the definition of "Certified Copy" under section 2(8) of the Bankers'
Books Evidence Act, 1891, such Statement of Accounts are not be treated as certified copies of the entries of the book of account. It has also been held in the case of "Messrs C.M. Textile Mills (Pvt.)
Ltd. Through Chairman v. Investment Corporation of Pakistan" (2004 CLD 587), by the Division Bench of this Court that the document which is merely a Certificate of Balance cannot be treated or defined as Statement of Account and that in the absence of Statement of Account showing all the debits, credits, and dates thereof as entered by the Banking Company in the ledgers and books of the Accounts from the disbursement of loan amount till the date of the suit, no presumption of truth or correctness can be attached to such Certificate of Balance and the same is not admissible in evidence and has no evidentiary value. In case of "Elbow Room and another v. MCB Bank Ltd."
(2014 CLD 985), the Division Bench of Sindh High Court at Karachi in para No, 10 of the judgment observed as under:- "We have also gone through the order passed by the learned Banking Court dated 2.10.2012, whereby, application for leave to defend the suit, filed by the appellants, was dismissed. It appears that the learned Banking Court has ignored the mandatory provisions of section 9(2) of the Ordinance, 2001 and sections 2(8) and 4 of the Bankers' Books Evidence Act, 1891 while dismissing the said application and has wrongly treated the break-up of liabilities as statement of account which did not contain the requisite information and detail as required under proper statement of account hence, the impugned judgment/decree passed by the Banking Court is not sustainable in law. "
13. A serious question as to the effect of non-filing of the Statement of Account along with the plaint in terms of section 9 of the Financial. Institutions (Recovery of Finances) Ordinance, 2001 is thus involved in the suit. The impugned judgment and decree passed by the learned Judge Banking Court-III, Multan reveals that the learned Judge was not even conscious of this mandatory requirement. He neither considered nor adverted to the above discussed fatal deficiency in the suit filed by the respondent-bank. He mechanically proceeded to pass the impugned decree which could not have been based upon a legally inadmissible document, i.e, the Certificate of Balances.
The respondent-bank failed to comply with the mandatory provisions of law by filing a suit through a plaint unsupported by a legal and admissible Statement of Account.
14. The appellants in their leave application have specifically mentioned that they availed the Cash Finance Facility of the amount of Rs, 3,000,000/- and they made payment of Rs, 3,109,909/-, whereas, the bank has not placed on record any Statement of Account along with the plaint to show debit and credit entries on behalf of the appellants prior to September, 2007 for the period started from 1999-2000 and this fact has also been ignored by the learned Banking Court.
15. The Financial Institutions (Recovery of Finances) Ordinance, 2001 is a special law which regulates the relationship between Financial Institutions and the customers. This special law provides different obligations for the financial institutions and the customers which are to be fulfilled while instituting the plaint or applying leave to defend in the matter. Section 9(2) of the Ordinance, 2001 clearly provides that the plaint shall be supported by Statement of Account which in the case of Financial Institutions shall be duly certified under the Bankers' Books Evidence Act, 1891 and all supported documents reflecting to the grant of finance. After fulfilling the requirement of section 9 of the Ordinance, 2001 by the plaintiff, the defendant has to apply for leave to defend and fulfill its part of obligation. When in the leave application the appellants took specific plea that the respondent-bank has instituted suit on the basis of incomplete Statement of Account which does not bear requisite certificate having no evidentiary value, it was for the learned trial court to take this question of law seriously and to decide the same on merits before rejecting the leave application of the appellants.
16. Under the provisions of section 9(2) of the Financial Institutions (Recovery of Finances)
Ordinance, 2001, it was the duty of the respondent-bank while instituting the plaint in the Banking Court to file certified complete Statement of Account along with the plaint as certified under the provisions of Bankers' Books Evidence. Act, 1891. The purpose of this obligation upon respondent/plaintiff is to give fair opportunity to the appellants/defendants to come up with cogent justification and ground for leave to defend. Whether the defendants have fulfilled requirements of subsections (3) and (4) of section 10 of the Ordinance, 2001 referred supra, or not, this issue could only be taken into consideration provided the plaintiff first should fulfill requirement of subsection (2) of section 9 of the Ordinance, 2001. The filing of complete and accurate Statement of Account with the plaint is a mandatory requirement which defect cannot be rectified through replication. If leave to defend application is dismissed while relying upon the incomplete and uncertified Statement of Account, it will tantamount the violation of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and will also amount infringement of constitutional and fundamental right of fair trial of the appellants/defendants which right has been granted under Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973.
17. The learned trial court in the impugned judgment has observed that the affidavit attached with the leave application is defective and is not stamped as required under the law, hence, the appellants cannot rely upon it. We have perused the affidavit of appellant No, 1 annexed by the appellants in support of the leave application which is the requirement of law. Although it is shorter in form but it embodies the requisites of an affidavit which has been duly signed by appellant No, 1 and the same is duly attested by an Oath Commissioner. The only deficiency that it is not in an elaborate form, does not render the same ineffective. Resultantly, the findings of learned trial court for discarding the affidavit are not correct. We have fortified our view from the judgment of the Division Bench of this Court passed in case of "Zohair Akhtar v. Jawad Aadil" (2006 YLR 1510).
18. In view of above discussion and observations, we are of the considered view that the impugned judgment and decree dated 06.05.2011 are not sustainable under law. Resultantly, we accept, this appeal and set aside the impugned judgment and decree dated 06.05.2011 passed by the learned Judge, Banking Court-III, Multan and as sequel the application filed by the appellants for leave to defend the suit is accepted subject to the condition of submission of surety bond in the sum of Rs,52,10,539/40, i.e, equal to the decretal amount before the learned trial court within fifteen days of their appearance before learned trial court and the case is remanded to the learned Judge Banking Court-III, Multan for decision afresh on merits in accordance with law. The parties are directed to appear before learned Judge Banking Court-III, Multan on 11.12.2015 for further proceedings. The parties to bear their own costs.