PLA No, 69-B of 2006 ' SHAHID KARIM, J.---This is a suit for the recovery of Rs,172,528,389.40 along with costs of funds and cost of the suit.
2. Application for leave to defend (PLA No, 69-B of 006) was filed by the defendants Nos.1, 2 and 3 jointly. Through the application for leave to defend, the defendants have sought to raise substantial question of law and fact which entitle the defendants to the grant of unconditional leave to defend the suit and for the suit to proceed for a regular trial upon evidence.
3. Preliminary objections were taken by the learned counsel for the parties and it would be proper for these objections to be taken up ahead of the merits of the suit.
Suit Incompetently Filed:
4. The learned counsel for the defendants submits that the plaint has been signed by Saulat Ali Khan Corporate Head (North) on behalf of the plaintiff-Bank and so is the verification being put by the same officer. However, in the power of attorney which is annexed with the plaint of the said officer, the recital reads as under: "KNOW ALL MEN BY THESE PRESENT that Union Bank Limited, a Company incorporated and registered under the Companies Ordinance, 1984, having its Registered Office at Faisalabad, (hereinafter called "the Bank") doth hereby nominate Khawaja Shaiq lqbal (hereinafter -called "the Nominee") an Officer of the Bank to execute, perform and transact the following acts, matters and things on behalf of the Branch/Department located at Lahore jointly with another Attorney of the Bank/Branch: "
5. In a nub, the learned counsel for the defendants submits that it has been mentioned in the power of attorney issued in favour of the officer who has signed and verified the plaint that the acts mentioned in the power of attorney can only be performed on behalf of the plaintiff-Bank jointly with another attorney of the Bank. According to the learned counsel, since the plaint has not been jointly signed by the said officer along with an officer who was required to be jointly authorized on behalf of the Bank, there shall be deemed to be no suit before this Court to be adjudicated upon.
6. This objection of the learned counsel is nuanced and does not have legal legs to stand up. It is also not borne out from the record since the suit has been filed jointly with another officer of the Bank whose power of attorney had been filed with the plaint and which fact is not denied. This objection in so many words and in such specific detail has not been taken in the application for leave to defend and the defendants have merely raised a general objection to the competency to file the suit. Moreover, the plaint has been signed and verified by one of the officers in whose favour the power of attorney was given and this is permissible by Order, VI, Rule 15 of the Code of Civil Procedure (C.P.C.) with regard to verification of plaint which may be performed by one of the attorneys on behalf of other attorneys. The learned counsel for the defendants in this regard relied upon Habib Bank Limited v. Messrs Ess Emm Ess Corporation Pakistan Limited through Chairman and 5 others (2005 CLD 854), which is a Division Bench judgment of this Court as also Azizullah Shaikh, Bar at Law and another v. Union Bank Limited (2007 CLD 1022) and Soneri Bank Limited v.
Classic Denim Mills (Pvt.) Limited and 3 others (2011 CLD 408), which lay down the rule that such defects with regard to the signing of the plaint, if at all they be considered as defects, were merely irregularities and could not entail the dismissal of the suit for the rejection of the plaint. Therefore, there is no subsistence in the objection raised by the learned counsel for the defendant as to the competency -of the officers who have filed the suit on behalf of the plaintiff-Bank.
Application for Leave to Defend Incompetent:
7. The learned counsel for the plaintiff-Bank has raised a threshold objection to the maintainability of the application for leave to defend on behalf of the defendant No,1 Company. Precisely, the learned counsel submits that there is no resolution of the Board of Directors of the defendant- Company authorizing any officer to file application for leave to defend on its behalf. In the absence of such a resolution by the Board, there will be deemed to be no application for leave to defend on behalf of the defendant-Company, which can be adjudicated upon by this Court.
8. Upon a perusal of the application for leave to defend, it can be seen that the application has purportedly been 'filed on behalf of the defendants Nos. 1, 2 and 3. However, the Board resolution on behalf of the defendant No, 1 . Company has not been filed nor has it been annexed with the application. It is an established principle vouched by respectable authority that a company is a juristic person and acts through its Board of Directors which authorizes its officers or any of them to act on its behalf by an authority conferred in that resolution of the Board of Directors. The learned counsel for the defendants does not deny that a Board resolution has not been filed with the application for leave to defend. However, he submits that the defendants Nos.2 and 3 have signed the application for leave to defend and it should be taken to have been signed on behalf of the defendant No,1 Company as well. This submission of the learned counsel for the defendants is off the mark and does not take into consideration the legal proposition that a company is separate legal entity and must be represented by a duly authorized officer to do all acts on its behalf. The signatures which have been affixed on the application for leave to defend do not at all bring forth any evidence that the application has been filed on behalf of the defendant No,1 Company as well.
If the proposition put forth by the learned counsel for the defendants is accepted, then any officer or director of the Company could bind the Company of its acts and which could cause irreparable damage to the Company in various ways. Obviously this cannot be countenanced and this will raise serious complications with regard to the affairs of a company. The learned counsel for the plaintiff-Bank has relied upon H.B.L. v. Crescent Software Products (Pvt.) Ltd. (2009 CLD 412) and the following observations made by this Court: "S. 10---Civil Procedure Code (V of 1908), 0. XXIX, R. 1---Application for leave to defend suit---Non- filing of resolution of Board of Directors of defendant-company along with leave application--- Effect---Lis on behalf of company without such resolution would have no sanctity---Leave application was dismissed in circumstances. "
9. The learned consel further relied upon Telecard Limited through Authorized Representative v.
Pakistan Telecommunication Authority through Chairman (2014 CLD 415), in which the Supreme Court of Pakistan dealt with the issue in the following manner: "Held, that a us could not be initiated on behalf of a company, which was a juristic person, without having due authority either in terms of its Articles of Association, or 'the Board Resolution; which were conspicuously missing in the present case...Appellant had not even appended any document to establish that the Chief Executive officer (CEO) of the Company, who had allegedly signed the memo of he appeal, had authority to do so...Appeal was dismissed, in circumstances. "
10. The last judgment relied upon by the learned counsel for plaintiff-Bank, which is on all fours with the proposition involved in the instant case is Bankers Equity Ltd. Through Attorney and 5 others v.
Sunflo Cit-Russ Ltd. (formerly known as Sunflo Juices Ltd.) through Managing Director (PLD 1999 Lahore 450), in which it was held that: "S. 10---Application for leave to defend---Signing of such application by unauthorized person--- Effect---Signing of such application by a person not authorized was a Patent illegality and the same rendered the application incompetent."
11. Upon a reading of the portions of the precedents cited above by the learned counsel for the plaintiff-Bank, it is clear that an application for leave to defend on behalf of the company has to be authorized by a resolution of the board of directors and an officer duly authorized by the such resolution can file an application on behalf of the company and none else. It can neither be presumed nor can it be inferred that an application has been duly filed by merely the fact that it has been signed by any of the directors of the company. The objection raised by the learned counsel for the plaintiff-Bank is, therefore, sustainable and it is held that there shall be deemed to be no application for leave to defend On behalf of the defendant No,1 Company.
12. Despite the above and the holding with regard to the application for leave to defend on behalf of the defendant No,1 Company, I shall proceed to briefly adjudicate upon the merits of the case as well and it is evident from the defence put forth by the defendants that there is no case made out for the grant of an unconditional leave to defend.
13. The suit encompasses seven finance facilities which were granted to the defendants. The learned counsel for the defendants has drawn the attention of this Court to the agreements which have been filed in support of the finance facilities. There is a common thread in the arguments of the learned counsel with regard to the objection to all of these agreements. It is that the agreements have not been signed by the plaintiff-Bank or by any one on its behalf and, therefore, the agreements are no agreements in the eye of law as there are no covenants and reciprocal promises which bind the parties and therefore, these agreements must be taken out of consideration as void documents. The primary reliance of the learned counsel for the defendants is on a judgment of Supreme Court of Pakistan reported as Farzand Ali and another v. Khuda Bakhsh and others (PLD 2015 SC 187) and the following observations: "...And where a contract is reduced into writing, not only should it be founded upon the imperative elements of offer and acceptance, but its proof is also dependent upon the execution of the contract by both the contracting parties i.e, by signing or affixing their thumb impression. So that it should reflect and establish their "consensus ad idem" which obviously is the inherent and basic element of the meeting of the minds, which connotes the mutuality of assent, and reflects and proves the intention of the parties thereto. In particular it refers to the situation where there is a common understanding of the parties in the formation of the contract in the absence of which there is neither a concept nor a possibility of a valid contract. But in this case this is conspicuously lacking by virtue of non-execution (non-signing) of the agreement by the appellants, therefore in law and fact it is no contract (agreement)... "
14. On the contrary, the learned counsel for the plaintiff-Bank has relied upon Messrs Jamal Jute BalinR and Co., Dacca v. Messrs M. Sarkies and Sorts, Dacca (PLD 1971 SC 784) in which it was held as under: "...Learned counsel for the appellants has relied upon the judgment reported as Messrs Jamal Jute Baling & Co., Dacca v. Messrs M. Sarkies and Sorts, Dacca (PLD 1971 SC 784) to argue to the contrary, wherein it has been held that "terms of agreement reduced into writing and proved to have been accepted and acted upon by both parties---Agreement, proper and valid even if one party had not signed such agreement". However the conditions are that the agreement should be accepted by the parties who are actually in dispute qua the validity thereof, and the agreement should have been acted upon... "
15. It is not denied by the learned counsel for the plaintiff-Bank that the agreements have not been signed on behalf of the bank yet the learned counsel submits that the defendants do not deny the signatures of these agreements by and on behalf of the defendants. Moreover, the defendants have admitted the repayments to have been made in terms of the agreements by the defendants and, therefore, it does not lie in the mouth of the defendants to deny the execution of the agreements. The proposition put forth by the learned counsel for the defendants would only hold good in case the agreements or their execution is denied by either of the parties when the onus would fall upon the other party to prove its execution. The plaintiff clearly does not deny that the agreements were executed and the defendants also have not denied the execution by the defendants in the application for leave to defend. Therefore, nothing really turns on this objection raised by the learned counsel for the defendants.
16. A snapshot of the defence set up during the course of the arguments would ineluctably lead to the conclusion that these objections have not been taken in the application for leave to defend. In fact, the defendants have raised a counter claim in the application for leave to defend on account of loss and damage for the alleged misfeasance on the part of the plaintiff-Bank. It is admitted that certain facilities were sanctioned by the plaintiffs to the defendants against certain collaterals.
The application then goes on to state the circumstances in which the Company found itself and the economic crises which befell the Company. It has been admitted in paragraph 9 that despite the aforesaid circumstances, the defendant No, I Company "made regular and punctual payment of all sums due and payable by it to the plaintiff". Further, that the plaintiff had agreed to approve additional finances to the defendant No, 1 Company and in this regard a sanction advice was also issued by which the Company was sanctioned an amount of Rs,100 million. In paragraph 10, the defendants admitted that the defendant No,1 Company duly accepted the sanction facility.
"Thereby, a legally binding arrangement was entered into between the plaintiff and the defendant No,1". The plaintiff in the plaint has brought forth the repayments which have been made over the years by the defendants which are not denied by the learned counsel for the defendants nor has it been denied in the application for leave to defend. On the one hand, the finance facilities have been admitted in the application for leave to defend whereas during the course of the arguments the learned counsel for the defendants goes on to deny the execution of the agreement. This is blowing hot and cold to say the least. The learned counsel for the defendants made a flanking rather than frontal attack to the statement of account and no specific objection has been taken to the entries in the statement of account. Be that as it may, the statement of account is verified in accordance with law and complied with the requirements of a valid statement of account. The learned counsel for the plaintiffs has also drawn the attention to the prayer made in the application for leave to defend which claims a decree for a sum of Rs, 321,699,000/- as counter claim by the defendants. Also it has further been prayed that if any amount is found to be due from the defendants, it may be adjusted against the counter claim of the defendants. Suffice to say that a counter claim cannot be sought in an application for leave to defend and in case the defendants had a claim against the plaintiff, a separate suit could have been filed which admittedly has not been done. Moreover, the learned counsel for the defendants during the course of the arguments did not advert to the counter claim nor did he refer to any document which would substantiate or support the purported counter claim set up by the defendants.
17. Learned counsel for the defendants submitted that a schedule of repayments has been mentioned in the plaint which shows that repayments for any excess of the original facilities has been made. Firstly, the defendants do not deny these repayments to be made and thus admit that there was an agreement between the parties. Secondly, the simple explanation to this is that the facilities were granted in the year 2002 and have since then continued to be availed by the defendants. These facilities have thus been rolled-over by the plaintiff-Bank and thus an accumulation of the liabilities as claimed in the plaint, there is a plethora of documents on behalf of the defendant No,1 Company making a request for the roll-over and restructuring of the facilities and acknowledging the liabilities in this regard.
18. It has already been held that there is no application for leave to defend on behalf the defendant No, 1 Company and what remains in the field is the leave to defend on behalf of the defendants Nos .2 and 3. The objections, on behalf of the defendants Nos.2 and 3 as regards their personal guarantees should receive a short shrift. Nothing has been sought in the application for leave to defend with regard to the personal guarantees which are available at pages 199 to 212 of the plaint.
The execution has not been denied and the documents thus stand admitted. It' is trite principle and established by authority that a surety/guarantee cannot be permitted to deny the original finance facility. If an authority is required, reliance can be placed on Messrs Huffaz Seamless Pipe Industries Ltd. And 2 others v. Messrs Security Leasing Corporation Ltd. (2002 CLD 550) and Sahara Trading International (Pvt.) Ltd. And others v. Bank Alfalah Ltd. (2004 CLD 1522).
19. In view of the above, the defendants have failed to raise any substantial questions of law and fact and the application for leave to defend is, therefore, dismissed. Main Case
20. In view of the dismissal of the application for leave to defend, the suit is decreed in favour of the plaintiff-Bank and against the defendants jointly and severally for a sum of Rs, 172,528,389.40 along with costs of funds in terms of section 3 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001. The costs of the suit are also granted.