AZIZ-UR-REHMAN, J.---The Plaintiff Bank has filed the present suit on 22.5.2012 against the Defendant under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, inter alia for Recovery of PKR 465,591,170.03 and US$ 439,147/- along with Cost of Funds and Cost of Suit, Sale of pledged/hypothecated assets/goods etc. with the following prayers:- a. A judgment and decree be passed in favour of the Plaintiff Bank and against the Defendants jointly and severally for the payment of PKR 465,591,170.03 [Rupees Four Hundred Sixty Five Million Five Hundred Ninety One Thousand One Hundred Seventy and Three Paisas Only]. And US$ 439,147/- [US $ Four Hundred Thirty Nine Thousand One Hundred Forty Seven Only]; b. Hypothecated Goods/Assets ordered to be sold for realization of the decretal amount and proceeds thereof be adjusted towards the decretal amount. The details of the hypothecated Goods/Assets are as under: "All present and future goods, stocks, raw material including stocks of rice [all kinds of rice], stock in trade stock in transit, finished, unfinished goods, processed, unprocessed, stored and lying at T.P.X, Plinth C-7 and E-6, Karachi, and Plot numbers 1 and 2, Phase II, Hawksbay Road, Karachi"
"All the customer's present and future goods, merchandise, products, stocks, stocks-in-trade, raw materials, tools and spares, work in progress, finished and unfinished goods, now or hereafter stored, or located or lying at factory premises at Karachi in transit or elsewhere in Pakistan comprising of all present and future stocks, movable assets of the Customer including work in process, stocks in trade etc. or any other place of storage/godown in Pakistan and all such aforesaid goods in the course transit including goods referred by and released under trust receipts and future goods/stocks that may be brought into the above place of storage/godowns."
All the customer's present and future book debts and receivables, outstanding moneys, receivable, claims, bills, contracts, engagement securities, rights and assets including all documents related thereto together with the benefit of all rights and contracts entered into by the customer in this regard." c. Pledged Hypothecated Goods/Assets ordered to be sold for realization of the decretal amount and proceeds thereof be adjusted towards the decretal amount. The details of the Pledged Goods/Assets are as under: "All present and future goods, stocks, raw material including stocks of rice [all kinds of rice], stock in trade, stock in transit, finished, unfinished goods, stored or lying at T.P.X, Ninth C-7 and E-6, Karachi, and Plot numbers 1 and 2, Phase II, Hawksbay Road, Karachi: d. Cost of funds in accordance with sections 3 and 17 of the Ordinance from 30.4.2012 till satisfaction of decreed amount be granted; e. If the sale proceeds are found to be insufficient, the remaining amount may be recovered by selling other movable and immovable property or properties belonging to the Defendant when discovered and pointed out by the Plaintiff Bank after passing of the personal decrees against the Defendants by this Hon'ble Court; f. Cost of the suit also be awarded; g. Any other better/consequential relief which this Hon'ble Court may deem fit may also kindly be granted in the best interest of justice.
2. The brief relevant facts leading to the above prayers are as under:-
3. The Plaintiff is a Banking Company duly licensed by the State Bank of Pakistan to carry on banking business in Pakistan and, as such, is a 'Financial Institution' within the meaning of and as defined in section 2(a) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 while, Defendant herein, is a sole proprietor and doing business in the name and style of Zulfiqar Trading Corporation', engaged in the business of exports and imports and has availed various finance facilities from the Plaintiff Bank. Defendant thus also falls within the meaning of 'Customer' as defined under section 2(c) of Financial Institutions (Recovery of Finances) Ordinance, 2001 [In short F.I.O., 2001].
4. The instant suit has been instituted by the Plaintiff Bank through Syed Shahrukh Jamal son of Syed Arif Jamal and Ghulam Ali Hassan son of Ghulam Sibtain, are not only principal officers of the Plaintiff Bank but also competent and authorized to institute the present suit and also to do other acts necessary or incidental for proper prosecution of the case. Besides, they are well conversant with the facts of the case and have thus 'signed' and 'verified' the plaint on oath.
5. The Plaintiff Bank from time to time at the request of the Defendant inter alia sanctioned FAPC-I Facility, FE-25 Facility and RF Facility, in favour of the Defendant. For and in respect of FAPC-1 facility, Defendant signed and executed various documents. Copies of Plaintiffs sanction advice and other relevant documents duly 'signed' and 'executed' by the Defendant are annexed with the plaint as Annexures 'P-3' to 'P/13'. All the said documents are dated 26.12.2007 and find mention in paras 6, 7, 8, 9 and 10 of the plaint.
6. Out of the aforesaid documents there are four [04] Agreements for Finance all dated 26.12.2007, which have been entered into between the Plaintiff Bank and Defendant and are annexed to the plaint as Annexures 'P-4', 'P-5', 'P-6' and 'P-7' respectively. The details of dates of execution, 'sale prices', 'purchase prices', expiry dates,and Mark-up/Profit as given in the said Finance Agreements respectively are as follows:- S # EXECUTION DATE OF FINANCE AGREEMENTMUTUALLY FIXED SALE PRICESMUTUALLY FIXED PURCHASE PRICESEXPIRY DATE OF FINANCE AGREEMENTMARK-UP AMOUNTS [Column `D' (-)
'C'] A B C D E F
1. 26.12.2007 Rs.460,000,000Rs.547,431,512 30.6.2008 Rs.87,431,512/-
2. 26.12.2007 Rs.110,000,000 Rs.136,077,540 30.6.2008 Rs.26,077,540/-
3. 26.12.2007 Rs.325,000,000Rs.402,047,26030.6.2008 Rs.77,047,260/-
4. 26.12.2007 Rs.325,129,000 Rs.386,925,78030.6.2008 Rs.61,796,780/- TotalRs.252,353,902/-
7. As securities, against the finance facility granted and availed, Defendant also executed hypothecation agreement and letter of hypothecation of Receivables both dated 26.12.2007 for Rs,547,431,510/- and Rs,386,925,780/- respectively. Besides, a pledged letter/agreement dated 26.12.2007, was signed/executed by Defendant. The details of the goods/stocks thereunder are:- "All present and future goods, stocks, raw material including stocks of rice (all kinds of rice), stocks in trade, stock in transit, finished, unfinished goods, stored or lying at T.P.X, Plinth C-7 and E-6, Karachi, and Plot numbers 1 and 2, Phase II, Hawksbay Road, Karachi."
8. Upon the request of defendant, another finance facility viz. FE-25, was also sanctioned by the Plaintiff Bank. Defendant in consideration thereof, signed/executed various documents i,e, [i].
Finance Agreement on Mark-up basis [for imported exports] under SBP Circular F.E.25 Scheme] foreign currency financing on Mark-up basis for an amount upto US$ 14,805,020/- [Annexure 'P/14' to the plaint] [ii]. Demand Promissory Note dated 26.12.2007 for the purchase amount of US$ 17,601,000/- [Annexure 'P/15' to the plaint] [iii]. General Financing and Collateral Agreement dated 26.12.2007 [Annexure 'P/16 to the plaint], [iv]. Letter of Hypothecation for Receivables [Annexure 'P/17' to the plaint], [vi]. Hypothecation Agreement dated 26.12.2007 [Annexure 'P/18' to the plaint].
9. Per Plaintiffs version, the said finance facility was also disbursed as per Defendant's requests/letters from time to time along with Contract No,E 746, Geneva dated 2.11.2006 [Annexure 'P-20' to the plaint], Defendant signed, executed Various Undertakings and Demand Promissory Notes [collectively annexed with plaint as 'P-21' at page 251 to page 309] in favour of the Plaintiff Bank. The said facility was subsequently adjusted/converted to FPC-I facility. The Markup on the FE- 25 facility, as averred by the Plaintiff Bank remained outstanding. As per the Books of Accounts, on 30.4.2012, a sum of US$ 439,147/- [US$ Four Hundred Thirty Nine Thousand One Hundred Forty Seven only] is outstanding and payable by the Defendant to the Plaintiff Bank. For and in order to avail the ERF Facilities [Pre-shipment], the relevant documents submitted by the Defendant to Plaintiff Bank are: [i]. Forms-D, [ii]. Undertakings Part-I, [iii]. Sales Contracts, and [iv]. Demand Promissory Notes annexed with plaint as Annexures 'P-24' to 'P-27'.
10.Defendant, however, failed and/or avoided to adjust the outstanding liabilities in respect of above LCs/Contracts, therefore, upon expiry of specified time, SBP, debited its amounts, granted under ERF Facility, from the accounts of Plaintiff Bank along with fines, leaving Plaintiff Bank at liberty recover the outstanding amount from the Defendant. The requisite details of ERF Facility [pre-shipment], contracts numbers and outstanding principal amount i,e, Rs,305,200,000/- [Rupees Three Hundred Five Million Two Hundred Thousand only], etc in respect of which, Defendant committed default are as under : FAPC-ERF (Pre-Shipment)
ERF Loan No, Own SourcesContract No. Amount of AdvanceDestination Outstanding Principal 958/08 ZTC/2K8/001 Rs.76,900,000/- Jakarta, IndonesiaRs.76,900,000/- 959/08 ZTC/2 K8/001 Rs.123,200,000/-Jakarta, IndonesiaRs.12,200,000/- 960/08 ZTC/2 K8/001 Rs.46,200,000/-Jakarta, IndonesiaRs.46,200,000/- 961/08 ZTC/2 K8/001 Rs.58,900,000/-Jakarta, IndonesiaRs.58,900,000/- Total Rs.305,200,000/- R.F. FACILITY 11.Defendant on 01.12.2008, requested the Plaintiff for renewal/enhancement of RFF i,e, Running Finance Facility [Annexure 'P-29' to the plaint], which was not only accepted by Plaintiff Bank vide Facility Offer Letter dated 1.12.2008[Annexure 'P-30' to the plaint] but was also acknowledged by Defendant. The sanctioned/approved Running Finance Facility [RFF], was in the sum of Rs,2 000 000/, Per Agreement of Finance dated 1.12.2008 [Annexure `P-311, entered into between the Plaintiff Bank and Defendant, 'sale price' and 'purchase price' were mutually fixed at Rs,2,000,000/- [Rupees two million only] and Rs,2,100,000/-. [Rupees two million one hundred thousand only]. The 'purchase price' payable on or before 28.2.2009. In respect of Running Finance Facility, Defendant, also signed and executed various documents i,e, Demand Promissory Note for Rs,21,00,000/-, Letter of Continuity, General Financing and Collateral Agreement, Personal Guarantee of Zulifquar Ali in the sum of Rs,2,100,000/-. All the aforesaid documents are of 1.12.2008. As security, for RF Facility as well, Defendant signed and executed 'Hypothecation Agreement' and Letter of Hypothecation of receivable both dated 1.12.2008 for an amount of Rs,2,857,000/- on the Stock of Rice, Super Basmati, Iree-9, or any kind of rice, finished, unfinished, in trade/transit, stored at Godown at Zulfiqar Trading Hawksbay Road, Karachi, or elsewhere, in Pakistan.
12.On 12.1.2010, Plaintiff Bank, pursuant to the Defendant's request for renewal of finance facility dated 14.09.2010 [Annexure 'P/39' to the plaint], again through its' facilities offer letter dated 12.1.2010 [Annexure 'P-40' to the plaint], sanctioned/ approved/enhanced RF Facility of Rs,2 million which was duly acknowledged and accepted by Defendant. The Plaintiff and Defendant, this time as well entered into an Agreement for finance facility dated 26.01.2010 [Annexure 'P-41' to the plaint], whereby 'sale price' was fixed at Rs,2 million and purchase price was fixed at Rs,2.4 million.
The purchase price, as per this Annexure '13-41' to the plaint, was payable on or before 28.2.2010. For and in respect of this facility, Defendant also executed 'Demand Promissory Note' for Rs,2,400,000/-, Letter of Continuity and Personal Guarantee of Syed Zulfiqar Ali in the sum of Rs,2,400,000/-. All the said documents are dated 26.1.2010.
13.Apart from the above documents, Defendant also executed Letter of Hypothecation-Current Assets dated 26.1.2010 for Rs,2,800,000/- on the present and future goods/stocks etc. as referred to and mentioned in para 28 of the plaint. Defendant, despite availing of the RF facility, however, failed and/or avoided to discharge its' payment obligations. According to the Plaintiffs version, as on 30.4.2012, a sum of Rs,2,422,623.03 is due and payable on account of Running Finance Facility [RFF].
The Plaintiff Bank, though on various occasions have made requests/demands for the payment of the outstanding amounts but Defendant despite acknowledgment of liability[ies] vide its' letter dated 1.11.2010, [Annexure 'P-53' to the plaint], has failed to liquidate the outstanding amounts in respect of all the facilities granted to and availed by Defendant.
14. The Plaintiff Bank, as required under section 9(3) Financial Institutions (Recovery of Finances)
Ordinance, 2001 [In short F.I.O., 2001], has given the requisite 'breakup'/'summary' in respect of all the subject facilities i,e, [i] FAPC-I, [ii] FE-25 and [iii] RF, which respectively runs as follows:-
(i) FAPC-1 FACILITY OF RS,305,200,000/- A.The amount of finance availed by the Defendant [being the total amounts withdrawn by the Defendant from time to time. [Amounts-and dates as reflected in Annexure `13/28'] B.[Rs,305,200,000/-] B.1 The amounts in respect of the principal paid by the Defendant to the Plaintiff Bank [being the total amounts deposited by the Defendant from time to time. [Amounts and dates as reflected in Annex 'P/28'] [NIL] B.2 The amounts in respect of the markup paid by the Defendant to the Plaintiff Bank [Amounts and dates as reflected in Annex'P/28'] [NIL] C 1 the amount of principal relating to the finance payable by the Defendant to the Plaintiff Bank upto 30.4.2012. [Amounts and dates as reflected in Annex 'P/28'] [NIL] C.2 The amount of markup and other charges still payable by the Defendant towards the Plaintiff Bank upto 30.4.2012. [Amounts and dates as reflected in Annex 'P/28'] [Rs,157,968,547/-] C.3 Total amount payable by the Defendant upto 30.4.2012 (C.I+C.2). [Amounts and dates as reflected in Annex 'P/28'] [Rs,463,168,547]
(ii) FE-25 A. The amount of finance availed by the Defendant [being total withdrawal from 31.12.2007 till 29.7.2008]. [Amounts and dates as reflected in Annex P/23] B.[US$12.960,000/1 B.1 The amounts paid by the Defendant to the Plaintiff Bank in respect of Principal [being total deposits]. [Amounts and dates as reflected in Annex 'P/23'] [US$12,960,000/-] B.2 The amounts paid by the Defendant to the Plaintiff Bank towards markup. [Amounts and dates as reflected in Annex 'P/23'] C.[NIL] C.1 The amounts of principal relating to the finance payable by the Defendant to the 'Plaintiff Bank upto 30.4.2012. [Amounts and dates as reflected in Annex 'P/23'] [NIL] C.2 The amounts of markup payable by the Defendant towards the Plaintiff Bank from 31.12.2007 to 30.04.2012. [Amounts and dates as reflected in Annex .'P/23'] [US$ 439,147] C.3 Total amount payable by the Defendant upto 30.4.2012 (C.1 + C.2). [Amounts and dates as reflected in Annex 'P/23'] [US$ 439,147]
(iii) RUNNING FINANCE FACILITY OF RS,2,000,000/- A. The amount of finance availed by the (being the total amount withdrawn by the Defendant from time to time. [Amounts and dates as reflected in Annex P/46] B.[Rs,1,999,115.88] B.1The amounts in respect of the principal paid by the Defendant to the Plaintiff Bank [being the total amounts deposited by the Defendant from time to time. [Amounts and dates as reflected in Annex P/46] [Nil] B.2The amounts in respect of the mark-up paid by the Defendant to the Plaintiff Bank. [Amounts and dates as reflected in Annex P/47] C.[Rs,620,000/-] C.1. The amounts of principal relating to the finance payable by the Defendant to the Plaintiff Bank upto 29.3.2012 [Amounts and dates as reflected in Annex P/46] [Rs,1,999,115.88/-] C.2 The amounts of mark-up and other charges still payable by the Defendant towards' the Plaintiff Bank upto 31.3.2012 [Amounts and dates as reflected in Annex P/47] [Rs,423,507.15] C.3. Total amount payable by the Defendant upto 31.3.2012 (C.1+C.2) [Amounts and dates as reflected in Annex P/46] [Rs, 2,422,623.03/- TOTAL AMOUNT PAYBALE A. FAPC-I facilityRs.463,168,547/- B. RF facility Rs.2,422,623.03 TOTAL PKR Rs.465,591,170.03 AND C. FE 25 US$ 439,147/- 15.Per Plaintiffs stand, 'RF Facility' sanctioned to the Defendant was of Rs,2,000,000/- [Rupees Two Million Only]. The Defendant, as averred by the Plaintiff from time to time, withdrew various amounts from its' account and in turn also deposited amounts in the said account. The Plaintiff Bank according to its' version, has charged markup on a day to day basis i.e mark-up charged on the exact amount that was withdrawn on a particular day and based on total turnover i,e, aggregate credit amounts, subtracted from aggregate debit amounts.
16.On filing of above suit on 22.5.2012, process under section 9(5) of F.I.O., 2001, was issued to the Defendant by all requisite modes. In response of service, Defendant filed his Leave-to-Defend Application bearing C.M.A. No,9247 of 2012 on 7.8.2012. In the Leave-to-Defend Application under section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 [C.M.A. No,9247 of 2012], the availment and utilization of the finance facilities w,e,f, 31.10.1997, has not been denied, however, per Defendant's stand, Plaintiff got signed and obtained the charge/financial documents in blanks.
The Plaintiff Bank apart from the above, has charged 'mark-up' over 'mark-up' and that too in absence of any valid and enforceable Finance Agreement[s]. According to Defendant's stand Rs,630.00 million, has been paid/adjusted w,e,f, March, 2008 to August, 2008, towards' full and final satisfaction of Plaintiffs claim regarding finance facility[ies] granted to and availed by the Defendant. Moreover, Plaintiff had assured that mark-up amount and other charges, charged by the Plaintiff Bank shall be waived off.
17.Regarding claim of the Plaintiff Bank, as set-forth in the plaint and pertains to three [03] credit facilities [i]. FAPC-I, [ii]. F-25 and [iii]. Running Finance Facility/Temporary Over-draft Facility (new), it was averred in the Leave-to-Defend application [C.M. No,9247 of 2012] that except last Facility.
Plaintiff Bank's claim in respect of other two facilities is false and bogus. The Export Finance Facility as alleged, was never disbursed. Defendant, nevertheless, at the same time has alleged that by selling the assets the liability has been paid off. The claim of the Plaintiff Bank against the Defendant besides, time barred, is outcome of 'Mark-up' over 'Mark-up'. In Leave-to-Defend Application [C.M.A. No,9247 of 2012], it has further been alleged that complete statements of accounts pertaining to main account No,010101841-0' and Askari Saving Deposit Account [ASD], have not been placed on record, by Plaintiff Bank. Per Defendant's stand an amount of Rs,450.0 Million has been paid in A/C N.010101841-0.
18.In the Leave-to-Defend Application, under the heading of preliminary objections, it has been alleged that 'mandatory requirements' of section 9(3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, have not been complied with, as such, the Plaintiffs suit is liable to be dismissed. Moreover, the statement of account pertaining to FAPC-I [Annexure 'P-28' to plaint] and relating to period of 1.7.2008 to 26.4.2012, is not only incomplete but contains bogus entries which cannot be deemed and treated as a true statement of account.
19.Like-wise, the statement of account [Annexure P/23 to the plaint] relating to FE-25 facility, is nothing but a statement of mark-up charged and receivable on FE-25 facility, from 02.01.2008 to 26.04.2012. All the entries made in the said statement of account [Annexure 'P-23' to the plaint], are vague, false, fabricated and inflated. No any statement of account vis-a-vis principal portion of FE- 25, has been filed by plaintiff Bank. The claim of Plaintiff Bank, as such, is not tenable under the law and deserves to be rejected. Besides, the claim of Plaintiff Bank in respect of Export Facilities FAPC-I and FE-25, is not only time barred but based on 'closed' and 'past transactions'. As far as, the statement of accounts [Annexures 'P/46' and 'P/47'], pertaining to temporary Running Finance Fkility/Overdraft Facility [new] are concerned, the same being not readable cannot be rebutted. 20.Per Defendant's version, non-filing of complete and correct statement of accounts, as alleged, is a gross violation of section 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, and for this reason as well, the suit is liable to be dismissed. Moreover, the plaintiff's claim is not only baseless, false, exaggerated, but also based on concocted and sham pleas. The claim of the plaintiff Bank, according to Defendant, is nothing but based on 'Markup' over 'Markup' and Miscellaneous charges, which is not permissible to be granted in favour of the Plaintiff Bank under law. Moreover, the plaintiff has not only distorted the true facts but also has concealed various aspects of the matter, which, in view of Defendant is matter of evidence.
21.The plaintiff's claim though based on various documents, however, those documents were got signed in blank from defendant, hence, contractual obligation if any, incurred there-under, cannot be enforced. The agreements for financing i,e, Annexures 'P14' to 'P/7' and 'P-14' along with other charge documents annexed with plaint as Annexures 'P-8' to 'P-13', 'P-24' to 'P-27' and 'P-15' to 'P-18', per Defendant's version, are manipulated documents. Neither of such documents was ever executed nor otherwise, thereunder any facility was either requested or disbursed in favour of the defendant. Moreover, the charged documents i,e, Annexures 'P-8' to 'P-13', 'P-24' to T-27' and 'P-15' to 'P-18', signed and executed on 26.12.2007, are not in favour of Plaintiff Bank. No doubt, Contract No,746 dated 02.10.2007, Geneva, Switzerland [Annexure P-20 to the plaint], was executed between Defendant and Ascot Commodities NV Geneva Branch but the same was also submitted to Plaintiff Bank, along with Annexures 'P-19' and 'P-21' to the plaint for financing, as was, required for pre- disbursement requirements. The plaintiff, however, did not grant and/or disburse any finance facility thereunder to the Defendant.
22.Likewise, Annexures 'P-24' to 'P-27' to the plaint are manipulated and selves-contradictory documents. Neither any facility was disbursed in terms of the said documents nor otherwise, the said documents find any support from any of the statement of accounts available on record.
Rather, most of the documents pertain to 'closed and past transactions'. The obligations, thereunder, if any, has been fulfilled by the Defendant. In Leave-to-Defend Application [C.MA.
No,9247/2012], the authenticity and admissibility of all the document annexed with the plaint has/have been challenged though signatures thereon, have not been denied. Per Defendant's stance, unless complete evidence, is led in the matter till then, true liability[ies] of Defendant could be determined as Plaintiff by violating rules and regulations, has charged 'Mark-up' over 'Mark-up' beyond expiry dates of Finance Agreements which cannot be done under SBP's Circulars and laws.
For this reason as well the claim of the Plaintiff Bank besides being exaggerated cannot be granted as prayed. Plaintiff, as alleged by Defendant, has no 'cause of action' against the Defendant for filing of the above suit for recovery of the outstanding amount. Lastly, in Leaveto-Defend Application [C.M.A. No,2947 of 2012], it has been prayed that the Defendant be granted un- conditional Leave-to-Defend for defending the above suit, as Defendant, in his opinion, has raised substantial questions of law and facts which require evidence.
23.In response to Leave-to-Defend Application [C.M.A. No,2947 of 2012], Plaintiff Bank, has filed its'
REPLICATION' under section 10(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001, wherein, each and every assertion/allegation contrary to the stand of Plaintiff Bank has been denied. Per 'REPLICATION', Defendant has admitted 'Temporary Overdraft Facility', as narrated in Paras 19 to 29 of the plaint. The Defendant at present, as per Plaintiffs contention, is liable to pay Rs,1,250,000/- on account of ToF. According to the Plaintiffs version, even beyond January, 2007, Defendant continued to avail finance facilities but in return Defendant failed and/or avoided to fulfill its' contractual obligations in respect of repayments. The obtaining of any documents in blank, as alleged, by Defendant, was vehemently and specifically denied. Since, Defendant has not denied his signatures on any of the charge and/or financial documents, annexed with the plaint.
For this reason it cannot be believed that any document was obtained in blank. Even, Defendant has failed to place on record a single document in support of his claim/contentions. All allegations leveled by Defendant are not only of general nature but also un-specific and sham, as such, they do not call for any consideration.
24.The objection vis-a-vis non-fulfillment of the mandatory provision of section 9(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001, according to plaintiffs version, besides mis- leading call for the wisdom of defendant. In this regard, reference can be made to 'para 34' of the plaint. In the 'break-up'/'summary', reference to relevant duly certified statement of accounts have been made i,e, Annexures 'P-23', 'P-28', 'P-46' and 'P-47'. All the statements of accounts contain true and correct entries. None of the entries made in statement of accounts duly certified under Bankers' Book of Evidence, 1891, has been denied by Defendant specifically. In view of correct and complete statement of accounts, available on record Defendant's allegations, are not only mis- leading but also mis-conceived. In the 'Replication', it has further been averred that all documents, at the time of signing, were properly filled-in and Defendant, of course, after reading and understanding the same had signed it voluntarily. Neither any of the documents, 'BEARS ANY PROTEST' or otherwise, signatures thereon have been denied by Defendant.
25. Defendant, though on hand admits the availment of facilities but on the other hand, in same breath, he is alleging that no any facility was requested, availed or disbursed to Defendant, while, on the other hand Defendant, is alleging that Annexure 'P-4' to 'P-18' and 'P-24' to 'P-27' to the plaint were got signed and executed in blank. As far as, the change of name of Plaintiff Bank from Askari Commercial Bank Ltd to Askari Bank Ltd is concerned, according to Plaintiff, it was done/changed only after approval of State Bank of Pakistan [In Short SBP] and Securities Exchange Commission of Pakistan [SECP], after following due process of law. The change in the name of Plaintiff Bank, in any event, does not absolve the Defendant of its' liabilities. Defendant by no means can wriggle out of its' contractual obligations/binding commitments. The Askari Commercial Bank Ltd and Askari Bank Ltd., in fact is one and same entity. In case in hand, since, Defendant has fully availed the finance facilities, therefore, under law, he is liable to pay the outstanding amounts without making/advancing hollow and false excuses.
26.It is significant to note, Defendant has duly acknowledged his liabilities, vide Letter dated 1.11.2010 [Annexure 'P-53' to plaint]. The transaction involved herein, thus cannot be alleged as 'closed' and 'past transaction' or otherwise, time barred. All the documents, annexed with the plaint beside, genuine, authentic are well enforceable, as Defendant has not denied his signatures thereon. Besides, Defendant has also failed to file any suit for cancellation of such documents. The plaint in suit besides 'verified on oath' is also supported with 'certified statements of accounts' as required under section 9(2) of F.I.O., 2001. The 'certified statements' of accounts besides being in accordance with Bankers' Book of Evidence, 1891, are showing 'debit' and 'credit', entries wherefrom, claim of the Plaintiff Bank can easily and fully be established. All the requisite materials/documents having been duly signed and executed by Defendant in respect of the subject transactions in default. Besides, certified, signed and duly stamped statements of accounts, as required under Bankers' Books of Evidence, 1891, are available on record. No doubt, all these documents, fully support the Plaintiffs claim for recovery etc. No Mark-up over Markup, as alleged by Defendant has been charged.
27.Along with plaint, complete statement of accounts of each facility i,e, [i]. FAPC-I Facility, [ii]. FE- 25 Facility and [iii]. RF Facility, in respect of which Defendant committed default in his payment obligations are annexed with the plaint as Annex 'P-28', 'P-23' and 'P-46'. Defendant, it is needless to say, has badly failed to pin-point any alleged wrong and/or illegal entry[ies] in the duly 'certified statement of accounts' i,e, 'P-28', 'P.-23' and 'P-46'. The pleas raised by Defendant besides, being not acceptable cannot be given any weight. All the entries made in the 'certified statement of accounts', per Plaintiffs version, are not only true, but also attach it selves the presumption of correctness. Moreover, per Plaintiffs stand, Defendant has failed to comply with/fulfilled the 'mandatory requisites' as provided under section 10(3) and (4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 [In Short F.I.O., 2001] and that too without showing any plausible/cogent reason of his inability to comply with mandatory requirements of law. The Leave-to-Defend Application [C.M.A. No,9247 of 2012], as urged, by Mr. Bahzad Haider, is liable to be rejected. No doubt, Leave-to-Defend application, filed by Defendant if, does not comply with the 'mandatory requirements' of subsections (3), (4) and (5) of section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, as the case in hand is, then, of course, the same is liable to be rejected under subsection (6) of section 10 of F.I.O., 2001. Defendant, besides, has failed to raise any substantial questions of law and facts on the basis whereof he may be granted Leave-to-Defend of the suit in hand. Lastly, a prayer has been sought for rejection of Leave-to-Defend Application [C.M.A. No,9247 of 2012] and of decreeing the suit, as prayed, consequently.
28. On 24.4.2017, when the above suit came-up before me then, keeping in view the legal position that no ancillary/interlocutory application[s], filed by a Defendant can be entertained unless, such Defendant is allowed to defend the suit. In this regard, if any case-law needs to be cited, I would like to refer to the case of Shaikh Muhammad Usman v. Judge Banking Court-I, Lahore and another [2015 CLD 257]. The relevant observations therefrom read as follows:- "6. The scheme of the Financial Institutions (Recovery of Finances) Ordinance, 2001 is that the suit involving the financial matters between the Financial Institutions and the customers should be decided expeditiously in a summary manner and all the vexatious and mala fide pleas of defence should be curtailed so that the proceedings may be completed within shortest possible time. For this purpose, subsection (3) of section 10 of the Ordinance, 2001 has been specifically enacted which provides that an a application for leave to defend should be in the form of written statement. It further provides that the written statement should contain a summary of substantial questions of law as well as facts in respect of which in the opinion of the defendant evidence is required to be recorded. If subsection (3) is read with subsection (10) of the Ordinance, 2001 it becomes manifest that the Banking Court without loss of time is required to frame issues as soon as ,the leave to defend is granted and the case shall then be, fixed for recording of evidence and disposal of suit. Thus, the legislature with specific purpose has directed the defendant to summarize the substantial questions of law and facts in the application for leave to defend the suit.
In the present case the application for leave to defend the suit was filed on 18-3-2010 and thereafter before grant of leave an ancillary application was filed on 13-5-2014 in which the petitioner-defendant took a diametrically opposite defence. It is an established principle that before grant of leave to defend the suit the defendant cannot move the Court to adjudicate upon any of his rights of defence. The law specifically prohibits taking into consideration the defence of the defendant before leave to defend is granted. As a specific procedure has been provided under the law that the defence of any nature involving legal or factual controversy can only be considered after the grant of leave to defend the suit and any ancillary application would not be maintainable. This Court in a judgment reported as Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager (2003 CLD 245) has settled the principle that the defendant cannot file any ancillary/ interlocutory application unless he is allowed by the Court to defend the suit. The dictum laid down by this Court has been further followed by this Court in a judgment reported as Falcon Ventures (Pvt.) Ltd. through Chief Executive, Iftikhar Ahmad v. Punjab Banking Court No,II, Lahore and another (2004 CLD 726) and it was observed that the defendant cannot even file any interlocutory application in order to raise point of jurisdiction of Court till the leave to defend was granted. [Emphasis supplied] 29.The Leave-to-Defend Application [C.M.A. 9247/2012], was thus taken-up. I heard Mr. Hamid Idrees, learned counsel for Defendant and Mr. Behzad Haider, learned counsel for the Plaintiff Bank and with their assistance also gone through the available record minutely.
30.Mr. Hamid Idrees, learned counsel for Defendant while, arguing Leave-to-Defend Application [C.M.A. No,9247 of 2012], vehemently, contended that the Plaintiffs suit as 'framed' and 'filed' is not maintainable inter alia for the reasons that the Plaintiff Bank, has failed to fulfill/comply with the mandatory requirements, as provided under subsection (3) of section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001. Next, Mr. Hamid Idress, urged that all documents [annexed with plaint] were signed in blank. While, advancing arguments, Mr. Hamid Idrees, referred to various finance agreements and Promissory Notes, available on record, and contended that the same besides, without consideration have been obtained in blank. Defendant, under Finance Agreements, available on record has never availed any finance facility from the Plaintiff Bank. Per Defendant's version all annexed documents with the plaint have been signed by Defendant in blank. Moreover, all the entries made in the certified statement of accounts are incorrect and bogus. The claim of the Plaintiff Bank, according to Mr. Hamid likees, is nothing but based on 'Mark- up' over 'Mark-up', having been charged contrary to the Finance Agreements. Per Mr. Hamid Idrees, learned counsel for Defendant, upon Renewal of Finance Facilities, no any fresh amounts were disbursed to Defendant. Be this is the position, he urged that all documents 'signed' and 'executed' by Defendant vis-a-vis. Renewal of Facilities, are not only without consideration, in-valid but also under the law are not enforceable. Mr. Hamid Idrees, further contended that the amounts availed by Defendant, if any, has been repaid through sale of immovable properties i,e, to say in the sum of Rs,450 Million. [Rupees Four Hundred Fifty Million only].
31.For and in view of the above, Mr. Hamid Idrees, learned counsel for Defendant forcefully submitted that Defendant under the facts and circumstances of the case deserves to be granted un-conditional Leave-to-Defend as Defendant has raised substantial questions of laws and facts which need evidence in the opinion of Defendant.
32.In contra, Mr. Behzad Haider, learned counsel for Plaintiff Bank argued that the Leave-to- Defend Application [C.M.A. No,9247 of 2012], filed by the Defendant under section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, is liable to be rejected under subsection (6) of section 10 of Financial Institutions (Recovery of Finances) Ordinance 2001, because, Defendant has failed to show any genuine/cause for his inability to comply with 'mandatory requirements', as provided under subsection (4) of section 10 of F.I.O., 2001. Per learned counsel for Plaintiff Bank, Defendant, from time to time used to collect statement of accounts for its 'audit/income tax purposes' but has never raised any objection vis-a-vis the entries made in the certified statement of accounts, as 'wrong' or otherwise incorrect.
33.Per Mr. Behzad Haider, learned counsel for Plaintiff Bank, no 'Mark-up' over 'Mark-up', as alleged by Defendant, has been charged. The 'mark-up' charged by the Plaintiff Bank is quite in accordance with Finance Agreements/law. According to Mr. Bahzad Haider, Defendant has badly failed to pin-point any entry in the 'certified statement of accounts' as false and incorrect. The 'allegations leveled in the Leave-to-Defend Application bearing C.M.A. No,9247 of 2912, are not only un-specific, evasive but also of general nature. Further, no document, as alleged, was ever obtained in blank. The Defendant, otherwise, could not have signed/executed the document voluntarily. None of the documents bears any Protest on the part of Defendant. The allegations leveled/pleas raised by the Defendant are not only after-thought but also without any foundation, as such, cannot be accepted.
34.Lastly, Mr. Behzad Haider, learned counsel for Plaintiff Bank urged that the Leave-to-Defend Application [C.M.A. No,9247 of 2012] filed by Defendant besides, not maintainable in law, is liable to be rejected and consequently, Plaintiffs suit deserves to be decreed, as prayed.
35.Heard.
36.As far as Defendant's objections vis-a-vis blank documents, Mark-up over Mark-up, charging of Mark-up beyond expiry of finance agreements are concerned, the same are objections of routine nature and clearly aimed to prolong the swift disposal of the Plaintiffs suit. Defendant, it is significant to note, has not denied his signatures on the documents, which on the face of it are duly filled-up. By taking pseudo pleas the Defendant, in my view, neither can succeed or otherwise, avoid the payment of the outstanding amounts in terms of Finance Agreements/Undertakings< and Promissory Notes, available on record. The pleas raised by Defendant in actual fact are not only mis-conceived but also after-thought. If, any document, as alleged, had contained blanks then, why it was signed. Moreover, none of the documents bears thereon any protest on the part of Defendant regarding such baseless allegations. Un-specific, general and evasive denials, are no denials in the eyes of law.
37.Regarding renewal of finance facility[ies], it is worth to note under Contract Act, 1872 [IX of 1872], there exists nothing which prohibits parties from varying and/or altering the terms and conditions mutually. Renovation/substitution of old agreement[s] by a new one for re-scheduling, restructuring or renewal of finance facility[ies] is always permissible. All documents pertaining to finance facilities including finance agreements, promissory notes and undertakings etc., available on record are duly filled, as such, beside binding are valid documents. Moreover, all the finance agreements involved in the case in hand have also been acted upon. Under law, one cannot 'approbate and reprobate' or otherwise, wriggle out of the commitments made at the time of availing the finance facilities.
38.With regard to the contentions of Mr. Hamid Idrees, that charging of 'mark-up' on the rescheduled/renewed amount though it was done at the request of Defendant is 'HARAM' and prohibited under BPD Circulars 13 and 32, issued by State Bank of Pakistan on 30.4.1984 and 30.11.1984. The contention of Mr. Hamid Idrees, cannot be accepted obviously for more than one reasons. Defendant in the case in hand, was fully aware of charging of 'mark-up under the finance agreements for renewal but despite such awareness, 'fresh finance agreements' was/were signed and executed, as per his own 'free-will' and 'wish'. Defendant thereafter, has not only acted upon the finance agreement[s] but also he got himself benefitted from such renewals. Defendant for this reason as well cannot be permitted to say that 'mark-up' charged in terms of finance agreement[s] for renewal, is either 'HARAM' or otherwise, the Banks' dues are not payable. By no means, at this stage Defendant can resile from his/its' commitments, undertakings and promises, made by Defendant voluntarily.
39.Mr. Hamid Idrees, learned counsel for Defendant next contended that upon restructuring/rescheduling of finance facility[ies], no any amount was disbursed afresh to customer/principal borrower, as such, all the documents signed and executed by Defendant are without consideration. In opposition thereof, Mr. Behzad Haider, learned counsel for the Plaintiff, argued that F.I.O., 2001, is a special law and as per section (2)(e) of Financial. Institutions (Recovery of Finances) Ordinance, 2001, Defendant is duty bound to fulfill the performance of undertakings, promises and commitments vis-a-vis repayment of finance facility[ies]. The customer, as urged, under law, is duty bound to fulfill their obligations and duties imposed under Financial Institutions (Recovery of Finances) Ordinance, 2001 [In short F.I.O., 2001].
40.Being relevant, section 2(e) of F.I.O., 2001 [Ordinance XLVI of 2001], is reproduced hereinbelow: "2. Definitions.- In this Ordinance, unless there is anything repugnant in the subject or context - (a)............
(b).............
(c)..............
(d)................
(e) "obligation" includes (i)any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment or extension of time in payment of any other amounts relating to a finance or liquidated damages; and (ii)any and all representations, warranties and covenants made by or on behalf of the customer to a financial institution at any stage, including representations warranties and covenants with regard to the ownership mortgage, pledge, hypothecation or assignment of or other charge on, assets or properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfillment of a promise; and [Underlining is' mine].
(iii) all duties imposed on the customer under this Ordinance; and (f)............................
41.Manifestly, in terms of section 2(e) of Financial Institutions (Recovery of Finances) Ordinance, 2001, a bank's customer is obliged and duty bound not only to perform/fulfill his/its' undertakings promises made in respect of re-payments of the outstanding dues including other amounts relating to finance facility, availed. It is worth to mention that Defendant herein besides admitting the signing/execution of finance agreement[s]/promissory notes have also admitted other documents. For and in view of this position, Defendant is liable to pay not only agreed 'purchase price' but also other accrued charges, if any.
42.Moreover, Defendant, in the case in hand, has also signed 'Promissory Notes' which under section 118 of Negotiable Instruments Act, '1881, [XXVI of 1881] attaches itselves the presumption of truth. Section 118 of Negotiable Instruments Act, 1881 [XXVI of 1881] being relevant is reproduced herein below:- "118. Presumption as to negotiable instrument of consideration. Until the contrary is proved, the following presumptions shall be made:-- (a)that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration; (b)as to date: that every negotiable instrument bearing a date was made or drawn on such date; (c)as to time of acceptance: that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d)as to time of transfer: that every transfer of a negotiable instrument was made before its maturity; (e)as to order of endorsement: that the indorsements appearing upon a negotiable were made in the order in which they appear thereon; (I) as to stamp: that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course: that the holder of a negotiable instrument is a holder in due cows provided that, where the instrument has been obtained front its law the owner; or from any person in lawful custody thereof by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or, fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
43. Not only, under section 118 of Negotiable Instruments Act 1881 [XXVI of 1881], a 'statutory presumption' vis-a-vis 'consideration', 'date', 'time of acceptance' and 'transfer', 'order of endorsement', 'stamping' and as to 'holder in due course' of Negotiable Instrument' is attached to a negotiable instrument but the same also attracts a special rule of evidence. This position is quite evident from the following stipulations:- 'Until the contrary is proved, the following presumption shall be made:-- (a)Of consideration.---that every Negotiable Instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration; (b)..............................
(c)..................................
44. On the aforesaid aspect of the matter, reliance can be placed on the cases of [i]. Muhammad Arshad and another v. Citibank N.A., Lahore [2006 SCMR 1347], [ii]. Habib Bank Ltd. v. Taj Textile Mills Ltd. through Chief Executive and 5 others [2009 CLD 1143]. The relevant extracts therefrom respectively read as follows:- i. 2006 SCMR 1347
4. We are not at all impressed by the contention raised on behalf of the petitioners that the genuineness and authenticity of the agreement, dated 26-6-1999 is not above board as the relevant columns were left blank and filled in subsequently by the Bank. For the sake of argument even if it is admitted then why the agreement dated 26-6-1999 was acted upon and pursuant whereof ten instalments had been paid and the outstanding liability was reduced from Rs,21,05,280 (mark-up price) to Rs,17,95,176. In fact the above installments were made as per repayment schedule which was inseparable part of the agreement dated 26-6-1999. It must not be lost sight of that the main object to get the renewed agreement was restructuring of the finance facility and not liquidation of the liability. We have no hesitation in our mind to hold that agreement dated 26- 6-1999 was authentic, genuine and executed between the parties and acted upon. A careful perusal of the agreement dated 26-6-1999 would reveal that mark-up was charged in accordance with the terms and conditions and stipulated therein. It is to be noted that in the agreement dated 26-6-1999 it has been stipulated in a categoric manner that the petitioners had also entered into mark-up agreement which was executed on 21-6-1995 and thus, it stood admitted by the petitioners, It would not be out of place to mention here that an amount of Rs,21,05,280 was mentioned as mark-up in the last agreement. It would be too late in the day to challenge its authenticity on the pretext of certain blank columns. The question which arises here at this juncture would be that as to why certain columns were left blank and if it was so done why the incomplete agreement was signed by the petitioners? No answer could be given by the learned Advocate Supreme Court on behalf of the petitioners, In our considered view the plea of "blank columns" would hardly render 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 it would have no substantial bearing on the validity of the agreement. In this regard reference can be made to case Muhammad Sarfraz Khan Rana v. Government of the Punjab PLD 1990 Lah.
88. 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 C receives that paper to make or complete it as 'case may be into negotiable instrument for any amount. Furthermore, section 118 of Negotiable Instruments 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.... [Underlining is mine]. ii. 2009 CLD 1143.
7. ...when liability of the be Tower company became overdue, a request was made by it for the renewal/restructuring thereof; in this behalf, the resolution of the company dated 21-9-2002, the offer of the Bank dated 23-10-2002 and the agreement dated 1i-12-2002, are sufficient to prove the case of the plaintiff. Obviously, in the cases pertaining to restructuring the amount is not disbursed, rather is brought forward envisaging as liability of the customer, and therefore, to argue that as no physical disbursement of the amount was made, resultantly, the claim of the Bank is false or unfounded, is a submission which is misconceived and without merit. I am also not convinced if there has been any fraud or misrepresentation on the part of the Bank in inducing the defendants (except defendant No,6) asking for rescheduling or the execution of all the relevant documents in that regard including the guarantees and the finance agreement. The bald and baseless allegations of fraud cannot be termed as the substantial questions of facts, in the light of admittedly executed documents on account of which the leave can be solicited or granted I am also not convinced that the plaint lacks in fulfilling the requirements of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The relevant backdrop of the finance arrangement between the plaintiff and the defendants has been appropriately given in the plaint, which is supported by the requisite documents. In view of the above restructuring/rescheduling, it was not obligatory and incumbent upon the Bank to have brought on record the statements of accounts prior to the agreement dated 30-92001, through which the restructuring has been made as this was/is an admitted amount duly acknowledged by the defendants. There is no question of the disbursement of the amount involved in the matter, as it is a case of restructuring and not in the nature of a fresh finance, in which the disbursement may become relevant. No vice, illegality or error has been pointed out in the statements of accounts appended with the plaint in support thereof either in view of the provisions of the Ordinance or Banker's Books of Evidence Act.
[Underlining is mine] .
45. In the case in hand, Defendant has not only admitted the execution of documents i,e, finance agreements, promissory notes but has also acknowledged the outstanding liability as on November 01, 2010. The acknowledged liability cannot be denied merely on the strength of evasive and unspecific assertions. Moreover, Defendant has also failed to pin-point any entry in the 'certified statement of accounts', as being wrong or incorrect. It is needless to say that entries made in the 'certified statement of accounts' attach itselves the statutory presumption of truth that is to say under the Bankers' Books Evidence Act, 1891 [Act XVIII of 1891]. Besides, the Defendant has not specifically disputed any of the entries contained in the 'certified statement of accounts' annexed with the plaint. Reliance in this regard, can be placed on the cases of [a]. UBL v. Messrs Sartaj Industries through Qaiser Iqbal, Managing Partners and 6 others [PLD 1990 Lahore 99], [b] Askari Commercial Bank Ltd. v. Hilal Corporation [Pvt.] Ltd. and 6 others [2009 CLD 588] wherein, it was observed as follows:- [a].PLD 1990 Lahore 99 "20. ...The statement of account annexed with the plaint which has been certified under the Bankers'
Books Evidence Act, shows these deposits as having been made by the defendants and thus presumption of correctness has to be attached thereto when the entries have not in any manner whatsoever been rebutted by the defendants... [Underlining is mine].
[b].2009 CLD 588 "As regards the question of charging mark-up over mark-up, it may be noted that in the first place defendants have not disputed any of the entries contained in the statement of account filed with the plaint and even otherwise plaintiff counsel has taken me through the contents of the plaint and annexures filed with it which shows that the amount of Rs,51,774,883 is outstanding against the defendants as a buy back price in terms of agreement annexure J-2, J-3, J-4 which are agreements of finance and annexures 1-17 and 1-18. The submission of defendant counsel that the Chartered Accountant may be appointed to verify the accounts apparently is of no significance in view of fact that liability to the extent of the amount as noted above seems to be admitted as none of the documents filed with the plaint are in dispute. [Underlining is mine].
46. Mr. Hamid Idrees though has argued that the Plaintiff suit is not maintainable and liable to be dismissed but he did not pin-point any defect on the basis whereof, Plaintiffs suit can be dismissed.
Contrary to the above, it is Defendant's Leave-to-Defend Application [C.M.A. No,9247 of 2012], which on the face of it is not in conformity with the provisions of section 10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001. It is Defendant who, in his own wisdom, has failed/avoided to plead the requisite accounts and that too without showing any cause or reason for his inability to do the needful. Both parties to a suit under the provisions of sections 9 and 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, are under legal obligations to plead and state the nature of accounts. In this regard, reference can be made to subsections (3) of section 9 and subsections (3), (4) and (5)(6) of section 10 of Financial Institutions (Recovery of Finances)
Ordinance 2001. Being relevant, the same are reproduced hereinabove:
9. Procedure of Banking Courts.- (1)................
(2).................. (3) The plaint, in the case of a suit for recovery instituted by a financial institution, shall specifically state:- (a)the amount of finance availed by the defendant from the financial institution; (b)the amounts paid by the defendant to the financial institution and the dates of payment; and (c)the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit.
(4)
10. Leave to defend.- (1)...............
(2)........................
(3) The application for leave to defend shall be in the form of a written statement, and shall contain a summary of the substantial questions of law as well as fact in respect of which, in the opinion of the defendant, evidence needs to be recorded.
(4) In the case of a suit for recovery instituted by a financial institution the application for leave to defend shall also specifically state the following:- (a)the amount of finance availed by the defendant from the financial institution; the amounts paid by the defendant to the financial institution and the dates of payments; (b)the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit; (c) the amount if any which the defendant disputes as payable to the financial institution and facts in support thereof: Explanation.- For the purposes of clause (b) any payment made to a financial institution by a customer in respect of a finance shall be appropriated first against other amounts relating to the finance and the balance, if any, against the principal amount of the finance.
(5)The. application for leave to defend shall be accompanied by all the documents which, in the opinion of the defendant, support the substantial questions of law or fact raised by him.
(6)An application for leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement.
(7)...................
(8)..................
(9)......................
(10)....................
(11)......................
(12)........................
47.Under sections 9 and 10 of F.I.O., 2001, parties to a suit are obliged to specifically/identically mention/plead in plaint and Leave-to-Defend Application, the amount of finances availed by a Defendant from the financial institution, the amounts paid by the Defendant to the financial institution and dates of repayment as well as the amount of finance and other amounts relating to the finance facility payable by a Defendant to a financial institution upto the date of institution of suit for recovery. Defendant, it is significant to note, has been saddled with the additional responsibility to also specify the amounts, if any, which the Defendant disputes as payable to the financial institution and facts in supports thereof. In the case in hand, Defendant, however, has failed to put forward a definite response to the accounts of Plaintiff Bank which, indeed, is a compulsory requirement of law. The Financial Institutions [Recovery of Finances] Ordinance, 2001, it is needless to say is a special law and provides special procedure for banking suit. Under section 4 of F.1.0., 2001, the provisions of Ordinance, 2001 over-ride other laws.
48. Since, Defendant herein has failed to fulfill the mandatory requirements, as provided, under section 10(3) and (4) of F.I.O., 2001, therefore, on account of such non-compliance, Leave-to- Defend Application [C.M.A. No,9247 of 2012] filed by the Defendant is liable to be rejected. Reliance in this regard can be placed, on the case of Apollo Textile Ltd. v. Soneri Bank Ltd. [2012 CLD 337]. The relevant observations regarding legal consequences, vis-a-vis non-compliance of section 10[3][4] of F.I.O., 2001 reads as follows:- "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." [Underlining is mine].
49. According to the Plaintiff, Defendant has availed/withdrawn Rs,305 Million of FAPC-I facility from time to time but failed to pay any amount towards the liquidation of principal amount of FAPC-1 facility , granted to and availed by Defendant in the plaint, on account of 'Mark-up' and other charges upto 30.4.2012 Plaintiff is claiming Rs,157,968,547/-. As far as, FE-2 facility is concerned, the amounts availed by the Defendant w,e,f, 31.12.2007 till 29.7.2008 is US$ 12,960,000/-. This principal amount availed was subsequently, converted to FAPC-I Facility. Towards' Markup of FE-2 Facility, Plaintiff Bank is only claiming US$ 439,147/-. Regarding Running Finance Facility [RFF] of Rs,2 Million Defendant availed Rs,1,999,115.88 but has failed to pay any amount towards' the principal outstanding amount, granted to and availed by Defendant. Towards' Mark-up on RFF, Defendant, however, has paid Rs,620,000/-. The remaining outstanding amount on account of principal, Mark- up and other charges, is Rs,2,422,623.03 only.
50. The 'break-up' of the outstanding amounts on account of FAPC-I Facility, FE-25 Facility and RF Facility payable by the Defendant to the Plaintiff is as under : A.FAPC-I facilityRs.463,168,547/- B.FE-25 US$ 439,147/- C RF facility Rs.2,422,623.03 Total PKR Rs.465,591,170.03
51. Against the claim of Plaintiff Bank, Defendant, in its letter of November 01, 2010 while, admitting its' liability in the sum of Rs,935 Million approximately has alleged the repayment of Rs,700 Million. In Leave-to-Defend Application [C.M.A. No,9247 of 2012] at page 19 of the Court file, the amount allegedly re-paid by the Defendant is Rs,630 Million only. This amount of Rs,630 Million if is deducted from the admitted liability of Rs,935 Million then the balance comes to Rs,305 Million.
Being relevant, Defendant's letter dated 1.11.2010 [Annexure 'P-53' to the plaint] is reproduced herein-below:- ZULFIQAR TRADING CORPORATION (EXPORT AND IMPORT HOUSE)
6, 7 and 8, 6th Floor, Al-Yousiff ChambeRs, Shahrah-e-Liaquat, New Challi, Karachi-74200 (PAKISTAN)
Phone : 92-21-2638702, 2638504, 2213232, 2213233 Fax : 92-21-2628202 E-mail. : zetcoa group . com & zetco@groups. net Website www. zetcogroup . com November 01, 2010 The Head SAM, Askari Bank Ltd.
Karachi.
Dear Sir, Proposed Settlement of Liabilities Kindly refer to our various meetings and discussion with you and also with Mr. M.R. Mehkari, the President and CEO, regarding the adjustment of liabilities in the name of Zulfiqar trading Corporation with Main Branch, Karachi and Syed Zulfiqar Ali Rizvi with New Chali Branch, Karachi.
As you are well aware that in the past 1 had been routing through export business worth billions of rupees through your Bank; proceeds were realized well in time and within refinance period giving you substantial earnings.
During 2007, I suffered heavy losses in my rice business due to delayed shipments, which resulted in the deterioration of rice quality. My liabilities at that time with bank were secured by open pledge of rice and DAP totaling to Rs,100.0 M only against total liability of Rs,935 M approximately. Due to the bank's continuous support in the past, 1 provided various properties to secure the bank as a good gesture of my intentions and to cover the outstanding liabilities. These properties were thereafter sold by mutual agreement. I also sold rice and DAP whatever price I could get, as a result my liabilities were reduced by Rs,700.0 M It may also be noted that I paid sizeable mark-up amounts to the bank.
Present liability was a direct result of: i. Delayed shipments, cancellation of orders, deteriorating quality and destruction of rice and DAP due to rain etc. ii. Heavy exchange losses incurred due to loans of FE-25, which were availed when the exchange rate was 60.0 and when converted the rate had jumped to approximately Rs, 78.0 to a US Dollar. iii. Payments of Rs, 77.0 M in mark-up only during 2008/2009.
It was my desire to adjust all the liability of the Bank but the circumstances have not been favorable. I have not been in business for the last more than three years or so. All my assets have been disposed of to reduce the bank's liability and 1 do not have sufficient cash flow to restart the business on a scale, which can take care of the liabilities. [Underlining is mine].
I have been making efforts to raise certain funds, especially for Askari Bank Ltd because it has been supportive of my business. As a result, I have been successful to a certain extent. Keeping in view this and above circumstances, 1 can offer the following settlement proposal: 1) I will pay Rs, 250.0 M as full and final settlement of my liability with your Bank, Rs,248.0 M in the account of Zulfiqar Trading and Rs,2.0M in my personal name at New Chali Branch.
2)This amount will be paid in the shape of pay order within November 2010 after your written approval and undertaking to the following.
3)All security documents signed and executed by me will be returned to me in original. Bank will also issue clearance letter and my name will be removed and cleared from CIB.
I have unfortunately no other means to raise any further money or assets to dispose of therefore this may be considered as a final adjustment figure.
Thank you Yours Sincerely, Sd/- Syed Zulfiqar Ali Rizvi Proprietor 52.The above claim and proposal/offer of Defendant, it appears, was not accepted and as such, the dispite remained un-resolved.
53.As far as, the Plaintiffs clam is concerned, I would like to refer to the Bank's letter of 25 August, 2009 [Annexure 'P-51' to the plaint], where-from, it transpires that the overdue amount as on 31.7.2009 against FAPC-I [US$] FE-25 facility was Rs,305.200 Million and the Mark-up amount then outstanding was Rs,74.715 Million. The total amount outstanding on account off principal and Mark- up as on 31.7.2009 comes to Rs,379.915 Million. The Plaintiff Bank's letter dated August 25, 2009 [Annexure 'P-51' to the plaint] reads as under: askaribank LIMITED MB/CR/Dated: August 25, 2009 Fax # 2628202 Mr. Syed Zulfiqar Ali Sole Proprietor Zulfiqar Trading Corporation 6/6, 7 and 8, Al Abid Chambers, Shahrah-e-Liaquat, New Challi, Karachi.
Dear Sir, Sub: Adjustment/Paym ent of Bank's dues.
This is with reference to various meetings with our officials and discussion regarding captioned subject wherein you were advised to adjust overdue of Rs,305.200 M against FAPC-I (US$) FE-25 facility and markup of Rs, 74.715 M thereon as on 31.07.2009 as your account has been classified since March 2009.
We regret to note that despite our constant followup you have not paid any payment towards adjustment of FAPC-1 loan and markup thereon.
You are therefore, finally advised to adjust overdue amount of Rs,305.200 M against FAPC-I(US$)
FE-25 facility along with Markup of Rs,74.715 M as on 31.07.2009 without further loss of time, otherwise the bank will be constrained to take appropriate action to safeguard its interest.
[Underlining is mine].
Matter may be treated on top priority basis.
Regards, Sd/- Vakeel A. Sheikh Asst. Manager Sd/- Arshad Saeed Vice President Sd/- Nusrullah Khan VP/Branch Manager
54. According to the Plaintiff, on account of RF facility an amount of Rs,2,422,623.03 is also outstanding. Regarding RF Facility [RFF] the finance agreement dated 26.01.2010, is available on record [Annexure 'P-41' to the Pliant]. The 'sale price' under the said Agreement is Rs,2,000,000/- and 'purchase price' mutually agreed is, Rs,2,400,000/-. The purchase price under this Agreement was payable on or before 28.02.2010. The maximum 'Mark-up' which the Plaintiff bank can charge on the 'Sale Price' of Rs,2,000,000/- is. Rs,400,000/- [Rupees Four Hundred Thousand only]. The total availed amount under the RF facility is Rs,1,999,115.88 and 'Mark-up' paid there against by Defendant is Rs,620,000/-. Under Running Finance Facility [RFF] Plaintiff Bank in my view, has charged Mark-up of Rs,220,000/- in excess which amount is liable to be adjusted against the cost of funds to be charged by the Plaintiff Bank in terms of section 3(2) of F.I.O., 2001. It is worth to mention that no 'Mark-up' beyond expiry date i,e, 28.02.2010, can be charged by the Plaintiff Bank except cost of fund.
56(sic.) For the foregoing discussion, Defendant, has not only failed to raise any substantial questions of law and facts but also failed to fulfill-the 'mandatory requirements' of section 10[3][4] of F.I.O., 2001therefore, the 'Leave-to-Defend Application' bearing C . M . A . No,9247/12 besides, being without any substance is found incompetent in law thus is rejected.
57. Resultantly, the Plaintiffs suit is decreed for the following sums:- [i].Rs,305.200 M + Rs,74.715 M outstanding against FAPC-I (US$) FF-2 facilities as on 31.07.2009.
[ii].Rs,1,999,115.88 outstanding against Running Finance Facility. [iii] US$ 439,147 i,e, outstanding 'Mark-up' on FE-25 facility.
Plus cost of funds in terms of section 3(2) of F.I.O., 2001 from the date of defaults w,e,f, 31.07.2009, 28.02.2010 and 30.04.2012 on the aforesaid outstanding amounts mentioned at (i), (ii) and (iii) respectively of each facility till realization of the decretal amount. Besides, the Plaintiffs suit is also decreed by way of passing a final decree for the sale of hypothecated and pledged goods, as prayed. The liability of the Guarantor in his personal capacity, however, shall remain limited to the extent of guaranteed amounts. Cost of suit is also awarded.
All pending applications having become infructuous, are also dismissed.