1. SHAMS MEHMOOD MIRZA, J.---This is a suit filed by the plaintiff bank under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) seeking recovery of Rs,144,802,140/- from the defendants under the finance facilities granted to defendant No .1 company.
2. The facts of the case as set out in the plaint are that defendant No,1 company availed a Demand Finance (DF) facility in the sum of Rs,100 Million and a letter of credit facility in the sum of Rs,50 million from the plaintiff bank. The plaintiff bank issued facility offer letter dated 17.06.2006 to defendant No,1 company containing the detailed terms and conditions of the DF facility. The defendant company executed finance agreement dated 20.06.2006 in respect of DF facility in terms of which the amounts of DF facility were to be liquidated in 12 equal installments along with mark up. Defendants Nos.2 to 7 executed guarantees on 20.06.2006 in favour of plaintiff bank. It is' stated that full amount of facility was utilized by defendant No,! company. It is also stated that defendant No,1 company had repaid a sum of Rs,33,999,999/- leaving the principal outstanding balance of 66,203,000/- and Rs,15,404,534/- as outstanding mark-up.
3. Under the Letter of Credit (LC) facility, the plaintiff bank established five Inland letters of credit at the request of defendant No,1 company. It is stated that the bills of exchange under the said letter of credit were duly accepted by defendant No,1 company. Except for the payment of Rs,6.300 Million, which amount was adjusted under L.C.0052-00218-07-U, defendant No, 1 company did not pay any amount to the plaintiff bank. It is stated that a sum of Rs,47,115,200/- is outstanding as principal under the LC facility and a sum of Rs,73,622.97 is outstanding as charges (service charges, commissions, postage, Federal Excise duty etc) under the said facility.
4. Upon service of summons, defendants entered appearance and filed a joint PLA No,146-B of 2010 (the "PLA") controverting the stance of plaintiff bank.
5. Learned counsel for the defendants stated that the suit has not been filed by duly authorized person; the plaint does not satisfy the requirement of section 9 of the Ordinance; the plaint is not supported by a duly certified statement of account; the plaintiff bank by using its dominant position obtained the signature of the defendants on blank documents, which have been utilized for the purposes of the present suit; the LC facility expired on 30.06.2007 whereas the plaintiff has relied upon the letters of credit established after the said date for which no sanction was available on record.
6. The allegation that the plaint does not fulfill the requirements of section 9 of the Ordinance is not supported from the record. A perusal of the suit reveals that the contents of the plaint are supported by the agreements/documents and the statements of accounts of the DF and LC facilities which are attached with the plaint. These statements of accounts of DF and LC facilities in conjunction with offers letters, the finance agreements and other documents are sufficient to saddle the defendants with liability. The substance of the allegation by the defendants' counsel is that the plaintiff bank has appended certain documents with the replication, which per se is indicative of the fact that these were relevant documents for the purposes of establishing the liability of the defendants and, therefore, the same ought to have been filed with the plaint. The documents that have been appended by the plaintiff bank with the replication are the statement of current account of defendant No, 1 company as well as a power of attorney of the person who signed the replication.
7. In the case of the DF facility, the disbursements have been made in the current account of defendant No,1 company and the corresponding debit entries exists in the DF account. Where in a suit the financial institution does not rely upon the statement of current account, it is a common practice to allege in the PLA that the financial institution has failed to corroborate the statement of loan account. It is a misconceived argument for a variety of reasons. In Apollo Textile Mills Limited v. Soneri Bank Limited 2012 CLD 337, the Hon'ble Supreme Court, while making reference to the provisions of section 10 of the Ordinance held that "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 amounts disputed by him as repayable to the plaintiff."
8. (emphasis supplied)
9. The reference to the customer's accounts can only mean a customer's statement of current account and in the case of a limited liability company, in addition to the statement of current account, its books of accounts or its audited accounts. The rationale for producing such accounts/statement of current account was explained in paragraph 15 of the said judgment, which reads as under.
10. "The rationale of schematic discipline of Ordinance of 2001 is evident. A banking suit is normally a suit on Accounts which are duly 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 obligated equally to definitively plead and to specifically state their respective accounts." (emphasis supplied)
11. It may be added that in terms of section 10(5) of the Ordinance, a defendant is obliged to file along with the PLA all the documents which support the questions of law and facts raised by him. Obviously, a defendant who impugns the liability set up by the plaintiff bank in its suit and asserts that amounts of finance facility were not disbursed to him must rely on his current account to show the inaccuracy and fallacy of the claim of the plaintiff bank particularly in cases where the amounts of the finance facility are alleged to have been disbursed in the current account. In terms of section 10 of the Ordinance, therefore, a customer is under an obligation to rely on and append the statement of current account with his PLA if he wants to impugn the liability set up by the financial institution in the suit. A defendant cannot simply put up a denial simpliciter in its PLA in answer to a claim of a financial institution in the suit which is backed up by a statement of account and other finance documents. Even otherwise, a bare denial of liability is never held to be a valid denial in law (see Order VIII, Rule 4, C.P.C.).
8. A defendant who while putting up non-disbursal of finance as his defence in the application for leave to defend does not plead and append his statement of current account is not putting forward a valid, bona fide defence requiring recording of evidence unless he sufficiently explains the reasons for his inability to comply with such a requirement. In this regard, a reference to section 6 of the Banker's Books Evidence Act, 1891 (the Act) may be made, which reads as follows.
12. "6. Inspection of books by order of Court or Judge. (1) On the application of any party to legal proceeding the Court or a Judge may order that such party be at liberty to inspect and take copies of any entries in a banker's book for any of the purposes of such proceeding, or may order the bank to prepare and produce, within a time to be specified in the order certified copies of all such entries, accompanied by a further certificate that no other entries are to be found in the books of the bank relevant to the matters in issue in such proceeding, and such further certificate shall be dated and subscribed in manner herein before directed in reference to certified copies.
13. An order under this or the preceding section may be made either with or without summoning the bank, and shall be served on the bank three clear days (exclusive of bank holidays) before the same is to be obeyed, unless the Court or Judge shall otherwise direct.
14. The bank may at any time before the time limited for obedience to any such order as aforesaid either offer to produce their books at the trial or give notice of their intention to show cause against such order, and thereupon the same shall not be enforced without further order."
15. It is thus clear that a defendant, who is not in possession of the statement of his current account, can, upon service of summons in a banking suit, approach a banking Court by making an application under section 6 of the Act for passing of necessary orders for acquiring the same. A defendant who neither appends the statement of current account with his application for leave to defend nor pleads sufficient reasons and circumstances for its absence and also does not file an application under section 6 of the Act cannot object to the filing of his statement of current account with the replication filed by the plaintiff. In such an eventuality, the statement of current account appended with the replication can be looked at by a Court as it is not a liability creating document. It may also be pointed out that in the series of banking recovery laws promulgated from time to time, the Ordinance is the only legislation where the filing of reply to the application for leave in the shape of replication is provided. The object of course is to provide the plaintiff with an opportunity to rebut the averments contained in the application for leave to defend filed by a defendant and if need be, to file documents to support such rebuttal. This is not to say that a plaintiff bank can append any type of document with the replication more particularly the primary documents which create liability and which under the terms of the Ordinance are required to be appended with the plaint. However, where a defendant is obliged to append a document with its application for leave to defend the suit for rebuttal of the liability and does not do so, the plaintiff bank can append the said document with its replication.
9. In regard to a defendant which is a limited liability company, it is all the more necessary for it to place with its PLA the current account statement or its accounts/audited accounts in order to meet the requirements of section 10 of the Ordinance particularly where it denies availing the finance facility or the disbursements of amounts thereunder.
16. Reference in this regard may be made to a judgment reported as Baba Fareed Ghee Industries (Pvt.) Limited etc. v. National Bank of Pakistan 2002 CLD 669. It may be mentioned that the statement of current account is a property of the customer and is routinely provided to the customers by the banks on monthly or quarterly basis. By virtue of the modern technologies, access to the current account is now possible even through telephone, internet etc. As regards the power of attorney filed with the replication, it is of the officer who signed the replication and the need for filing this instrument, according to the learned counsel for the plaintiff bank, arose as the person who signed the plaint was on leave.
17. Section 10 of the Ordinance by its terms imposes a mandatory requirement on the defendant to state all the particulars mentioned in its subsection (4) and to append all the necessary documents as mentioned in its subsection (5) in answer to the claim of the plaintiff. Failure to meet the requirements of section 10(4) and (5) of the Ordinance by a defendant is visited with the penalty of dismissal of his PLA in terms of section 10(6) of the Ordinance. The PLA in the present case does not meet the requirements of section 10(4) and (5) of the Ordinance and as such is liable to be rejected. The consequence of such rejection of PLA is also spelt out in section 10 (11) of the Ordinance, which clearly states that on such rejection the Banking Court shall forthwith pass judgment and decree in favour of the plaintiff. A similar consequence is also provided in section 10(1) of the Ordinance which states that upon default of a defendant in obtaining leave to defend the suit, either in consequence of dismissal or non-filing of the leave application, the allegations of fact made in the plaint shall be deemed to be admitted resulting in passing of a decree by the Banking Court. In the present case, the defendants have failed to fulfill the requirements of section 10(4) and (5) of the Ordinance and no reasons were furnished for non-compliance of the requirements of the said provisions.
18. The next submission made by the learned counsel for the Defendants pertains to the statements of account appended with the plaint. It is argued that a statement of account duly certified in terms of section 2(8) of the Banker's Books Evidence Act, 1891 (the Act) is sine qua non for presenting a valid suit and in the absence thereof the plaint is liable to be rejected. The precise objection taken by the counsel for the Defendants is that the certificate appearing at the foot of the statements of accounts in not signed by the Manager or the principal accountant of the Plaintiff Bank rather it is signed by an Assistant Vice President. In this regard, reliance has been placed on judgments reported as Pakistan Kuwait Investment Company (Pvt.) Limited v. Messrs Active Apparels International etc. 2012 CLD 1036 and United Bank Limited v. Messrs Ilyas Enterprises etc. 2004 CLD 1338. It is, therefore, necessary to comprehend what the Act visualizes a statement of account to be in order to ascertain how well founded the arguments of the learned counsel are in relation to the statements of accounts appended by the plaintiff bank with the suit. It may relevantly be mentioned that the Act does not provides the definition of a statement of account but only defines the certified copy of an entry contained in bankers' book. Section 2(8) of the Act is reproduced hereunder: '2(8) "certified copy" means a copy of any entry in the books of bank together with a certificate written at the foot of such copy that it is 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.'
19. (emphasis is supplied)
20. By virtue of section 4 of the Act, inter alia, a certified copy of any entry in Banker's books is admissible as prima facie evidence in all legal proceedings of existence of such entry. The purport of section 2(8) and section 4 of the Act appears to be to dispense with the requirement of producing the original books of the Banks in legal proceedings and for that purpose it is sufficient, in order for a certified copy of statement of account to be admissible in evidence, if the Bank makes a copy of entries from its books and its Manager or principal accountant provides a certificate at the foot of such statement of account in the manner prescribed by section 2(8) of the Act. In other words, the provisions of the Act dispenses with the requirement of tendering primary evidence (books of the bank) and makes admissible secondary evidence (certified copy of entry in the books of the bank) provided the condition laid down in section 2(8) of the Act is satisfied.
11. Section 2(3) of the Act also defines bankers' books as "bankers' books" include ledgers, day-books, cash-books account-book and all other books used in the ordinary business of a bank;"
21. In the present case, however, what the Plaintiff Bank has appended with the plaint are computer generated accounts. These accounts being the computer generated accounts/ledgers of the Plaintiff Bank, there was no need to put a certificate on the foot of such accounts as prescribed by section 2(8) of the Act and any officer of the Bank could sign the said accounts. As the original accounts have been appended with the suit, which constitute primary evidence, there is no need to file a certified copy thereof which should in turn comply with the requirements of section 2(8) of the Act. It may again be emphasized that the requirement of putting a certificate at the foot of the statement, by virtue of section 2(8) of the Act, is in regard to a copy of the accounts or an entry contained therein and not for the original accounts. This issue has been touched upon in a judgment reported as Habib Metropolitan Bank Limited v. Mian Abdul Jabbar Gihllin 2013 CLD 88 wherein it has been held that:- "It is observed that rapid changes have occurred in the recent years as old and conventional system of banking been done away with to a greater extent. In spite of having conventional and old method banking system latest technology has taken over by way of introduction of electronic and digital methods. It is seen that the defendant has not denied the obtaining of credit facility but has only called in question the statement of accounts prepared electronically by submitting that these statements neither bears signature of bank official nor bank seal.
22. Whereas these statements of accounts clearly stipulate that these are electronically generated documents and do not require any signature. Hence in my view these statements of accounts through which complete picture of the credit facility obtained by the defendants is quite visible would not be considered to be a document no legal authenticity."
23. The judgments cited by the counsel for the Defendants do not relate to the computer generated accounts/ledgers and are, therefore, distinguishable.
12. As regards the DF facility, it was stated that the finance agreement was engineered and that the purchase price mentioned therein was exaggerated. It was submitted that the statement of mark up amount available at page 635 of the suit shows that the plaintiff bank recovered mark up amounting to Rs,21,445,438/- whereas the detailed mark-up statement available at pages 636 to 639 shows that the plaintiff bank has recovered a sum of Rs,109,179,473/- as mark up.
24. Although the defendants have not specifically raised these points in their PLA, this Court has itself examined the statement of mark up account for DF facility and found that there is absolutely no difference between the statement available at page 635 of the suit and the statement at pages 636 to 639 of the suit. The defendants have quite ingeniously taken as payments the amounts which are reflected in entries that were reversed on the credit side of the statement of account for the debits made earlier by the bank. These were all book entries which were reversed and for this very reason the defendants did not show these amounts as payments in their PLA. The plaintiff bank has charged mark up amounting to Rs,15,404,534/- up to 26.02.2010 but the learned counsel for the plaintiff bank candidly conceded that the actual mark up payable up to the expiry of DF facility comes to Rs,1,400,341/-. The claim that mark up amount in the finance agreement has been exaggerated is not backed up by any particulars in the PLA and being a bald allegation is accordingly repelled.
25. Insofar as the LC facility was concerned, it was stated that the LC facility was sanctioned vide facility offer letter dated 20.12.2006 and the agreement executed in regard to the LC facility mentioned 30.06.2007 as the expiry date. It is further stated that apart from one letter of credit established on 08.02.2007, the rest of the four letters of &edit were established beyond the expiry period mentioned in the said agreement. It was also stated that the plaintiff bank cannot charge mark up on a LC transaction whereas it has charged Rs,16,005,282.15 as mark up. The objection regarding opening of the letters of credit after the expiry period mentioned in the agreement is without any force. The facility offer letter relied upon by the plaintiff bank does not mention the expiry date for the LC facility. Even otherwise for each Inland letter of credit, the defendant company has executed an application and agreement for irrevocable documentary credit and has accepted the bills of exchange under the said letters of credit by putting its signatures thereon. The plaintiff bank has also relied upon the commercial invoices and the delivery challans. The objection regarding charging of mark up on LC facility is, however, sustained.
26. In the present suit, the plaintiff bank has also pleaded and relied upon letters written by the defendants in regard to the finance facilities wherein the finance facilities and the amounts payable thereunder were categorically admitted. In letter dated 28.11.2006, it was admitted in clear terms that Rs,95.700 Million has been availed under DF facility and a request was made to disburse the balance amount of Rs,4.300 Million. Similarly, while applying for renewal of finance facilities through letter dated 17.06.2008, the defendants again admitted having availed DF facility in the sum of Rs,100.000 Million and LC facility in the sum of Rs,50.000 Million.
27. Defendant Company's resolution dated 17.06.208 also contained the details of the finance facilities requested from the plaintiff bank. These letters further substantiate the contents of the plaint.
28. It was also argued that the suit has not been filed by a duly authorized person and reliance in this regard was placed on Messrs Muzamil Brothers and another v. Saudi Pak Commercial Bank Limited 2006 CLD 154 6. The precedent case relied upon by the defendants is not at all applicable to the facts of the present case as in the said case leave to defend the suit was primarily granted on account of the fact that the plaintiff had not appended any document in support of the plaint. - including the statements of account. Furthermore, it was observed in the said judgment that no document in support of the assertion that the person signing the plaint was the manager was appended despite the fact that the defendants had rebutted such averment. In the present case, paragraph 2 of the plaint mentioned that Waheed Yousaf was the branch manager/chief manager of the plaintiff's branch at M. M Tower, M. M. Alam Road, Lahore and was empowered under the Ordinance to institute the suit. The contents of paragraph 2 of the plaint have obvious reference to section 9 of the Ordinance which clearly stipulates that branch manager is one of the persons who could file a suit on behalf of a financial institution, the other persons being the attorney holder and persons who are otherwise authorized to institute the suit. The defendants stated the following in reply to paragraph 2 in their PLA:- "Denied being incorrect As stated above, the titled suit has neither been properly instituted nor signed and verified by a competent authority and duly authorized person. Neither the requisite resolution of the Board of Directors of the Plaintiff Bank has been appended with the plaint ,nor any power of Attorney of Bank Officer is available on record, authorizing him to institute the present suit. The alleged attorney is not conversant with the facts of the case. Thus, the suit has incompetently been filed by unauthorized persons. There is no legally valid suit before this Honourable Court and all ensuing proceedings will be without jurisdiction and of no legal effect."
29. It is obvious that the defendants did not challenge or deny the averment in paragraph 2 of the plaint to the extent that Waheed Yousaf was the branch manager/chief manager. While elucidating their objection regarding the incompetency of Waheed Yousaf to institute the present suit, only the absence of two instruments were pressed into service viz., board resolution and power of attorney. A plain reading of section 9 of the Ordinance shows that it empowers three categories of persons to file a suit (a) the branch manager (b) an officer authorized by a power of attorney and (c) an officer who is otherwise authorized by a financial institution. The plaintiff stated in the plaint that Waheed Yousaf was its branch manager/chief manager, which averment was not at all denied by the defendants. The requirements of Section 9 of the Ordinance were thus met with by the plaintiff bank and the parties are not at issue on this c fact. The assertion of the defendants is, therefore, not tenable.
16. The upshot of the discussion is that the defendants have failed to raise any substantial question of fact requiring evidence. Their PLA is accordingly dismissed.The suit filed by the plaintiff is, therefore, decreed in its favour and against the defendants, jointly and severally, in the sum of Rs,114,792,163.97 together with costs of funds as contemplated by Section 3 of the Or dinance. The costs of the suit are also granted.