SHEZADA MAZHAR, J.---This is a suit filed by the plaintiff/bank under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the F.I.O., 2001) seeking recovery of Rs,351,769,166/- as on 31.03.2011 along with costs of the suit as well as costs of funds under section 3 of F.I.O., 2001 from the defendants.
2. The facts necessary for disposal of the present application are that plaintiff/Bank sanctioned/granted two finance facilities i) Letters of Credit (L/C) for 250 Million and Running Finance (RF) for Rs,100 Million to defendant No,l. The offer letter of the said facilities is placed on record by the plaintiff/Bank.
3. The agreement for L/C facility is dated 01.07.2007 where under finance amounting to Rs,250.00 Million was granted to defendant No,l. It is the case of the plaintiff bank that on the instructions of defendants Nos, l, 16-letters of credit were issued in favour of the foreign beneficiaries amounting to Rs,177.966 million. Out of the said 16-letters of credit only 3 were adjusted in full whereas 4th letter of credit was partially adjusted and the total outstanding principal amount under L/C facility is Rs,145.00 Million. All the documents relating to 16-letters of credit are attached with the suit including copies of the letters of credit, applications for letter of credit, Trust receipts, bills of lading, commercial invoices, packing lists and Bills of Exchange. Plaintiff/Bank has also claimed mark-up amounting to Rs,62.2 million as on 31.03.2011 over the L/C facility. Plaintiff/Bank has also claimed under the L/C facility an amount of Rs,1600/- as postage, Rs,8000/- as flat commission, Rs,16000/- as swift charges, Rs,213,559.42 as service charges and Rs,274,608.93 on account of Federal Excise charges. The total outstanding under the L/C facility comes to Rs,237.805 Million.
4. The Running Finance (RF) facility was sanctioned vide offer letter dated 08.03.2006. The agreement of said financing was executed between the parties on 09.03.2006. All the documents with regard to the security were also executed and attached with the plaint including the letter of Guarantee by defendants 2 and 4 as well as mortgage of the property situated at Mouza Bachowki Mahaja, District Kasur. This facility was renewed and enhanced in the year 2007. The agreement for enhancement is also placed on record along with documents executed as security. On 04.08.2007 the Running Finance facility was once again extended and agreement dated 01.07.2007 is placed on record and all documents of security including letter of guarantee by defendants 2, 3 and 4 as well as MODT of the property. According to the last enhancement agreement of finance the Running Finance facility was to expire on 30.06.2008 and the principal amount outstanding in RF facility is Rs,109.338 Million and mark-up outstanding as on 31.03.2011 Rs,26,089504/- No further extension was made in the RF finance. It is the case of the plaintiff/Bank that defendant No,1 has specifically admitted its liabilities under the finance facilities vide its letter dated 14.04.2010 whereby a settlement proposal was submitted by defendant No,l. It is further claimed by the plaintiff/Bank that this letter is specifically mentioned in para 16 of the plaint and defendants have not denied even evasively in the PLA. Therefore, the letter constitutes clear admission of liability and the suit is liable to be decreed as prayed for.
5. Upon service of summons, defendants entered appearance and filed a joint PLA No,161-B/2011 controverting, the stance of plaintiff/Bank.
6. Learned counsel for the defendants stated that the suit has not been filed by duly authorized person; that the plaint does not satisfy the requirement of section 9, F.I.O., 2001; that the plaint is not supported by a duly certified statement of account; that the plaint is not supported by the documents sued and relied upon by the plaintiff/Bank. It is also claimed by the learned counsel for the defendants that along with the replication plaintiff/Bank has filed number of documents which entitle the defendants for the grant of leave to defend. In support of his contention learned counsel has relied upon Leave granting order dated 20.05.2013 in C.O.S. # 3/2009, Leave granting order dated 24.06.2013 in C.O.S. # 2/2011, Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others 2011 CLD 408 (Karachi), Saudi Pak Commercial Sank Ltd through Attorney v. Nazimuddin and another 2009 CLD 1195 (Karachi) and Nusrat Textile Mills Ltd and 8 others v. United Bank Ltd. through Attorney 2005 CLD 1421 (Lahore). It is also claimed by learned counsel for the defendants that statement of account has been signed by different persons without name, date and designation which is not in accordance with law and therefore defendants are entitled for grant of leave to defend the suit un-conditionally. In this regard learned counsel relied upon National Bank of Pakistan through Manager v. Messrs Mujahid Nawaz Cotton Ginners through Partners and 6 others 2007 CLD 678 (Lahore), Messrs Soneri Bank Limited v. Messrs Compass Trading Corporation (Pvt.) Limited through Director/Chief Executive and 3 others 2012 CLD 1302 (Sindh) and Messrs C.M (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587 (Lahore). In support of objection with regard to the power of attorney learned counsel for the defendants has relied upon PICIC Commercial Bank Limited v. Spectrum Fisheries Limited 2006 CLD 440 (Karachi), National Insurance Corporation and others v. Pakistan National Shipping Corporation and others (2006 CLD 85) and Messrs A.M. Industrial Corporation Limited v. Alaz Mehmood and others (2006 SCM R 437). Lastly it is claimed by learned counsel for the defendants that as un-conditional leave has been granted to the plaintiff/Bank in the suit for damages filed by the defendants, therefore, in view of the law laid down in Messrs First Women Bank Limited v.
Registrar, High Court of Sindh Karachi and 4 others (2004 SCM R 108), Muhammad Khalid Butt v.
United Bank Limited 2003 CLD 911 (Lahore), Muhammad Nawaz v. Zarai Taragiati Bank Limited through Manager and 2 others 2013 CLD 1390 (Lahore) and Order dated 12.02.2014 passed in Civil Appeal No,2059/2004 and C.M.A. No,2172/2013, the defendants are entitled for grant of leave to defend the present suit.
7. I have heard the learned counsel for the parties and have also gone through the record of the case with their able assistance.
8. The emphasis of learned counsel for the defendants was that as the plaintiff/Bank has filed documents along with the replication, therefore, the defendants have become entitled for grant of leave and there is no need to further consider the matter and in view of the judgments cited by the learned counsel for the defendants, they are entitled for the grant of leave. The matter is not that simple. The judgments relied upon by the leaned counsel have different facts and circumstances and therefore, not applicable to the case in hand. The two orders of this court are passed without discussing the additional documents while following the law laid down in Saudi Pak Commercial Bank Ltd through Attorney v. Nazimuddin and another 2009 CLD 1195 (Karachi). In Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others 2011 CLD 408 (Karachi), the plaintiff/Bank failed to file complete statement of account along with plaint, therefore, leave to defend the suit was granted, whereas in Saudi Pak Commercial Bank Ltd. through Attorney v. Nazimuddin and another 2009 CLD 1195 (Karachi) plaintiff/Bank filed application to place on record certain documents after filing of leave to defend application therefore, court granted leave to defend the suit on the ground that defendant had no opportunity to respond/rebut the said documents and in the reply to application of the plaintiff/Bank the defendants had challenged those documents.
Similarly in Nusrat Textile Mills Ltd. and 8 others v. United Bank Ltd. through Attorney 2005 CLD 1421 (Lahore) plaintiff/Bank filed application to place on record certain agreement after filing of leave to defend the suit by the defendants and therefore, the court while allowing the application granted leave to defend the suit to the defendants on the ground that they had no opportunity to rebut those documents.
9. It is truthful that in PLA defendants can rebut or reply to only those allegations/claims of the plaintiff which are mentioned in the plaint and if the plaintiff is allowed to raise new plea in the replication, then the defendants will not be able to rebut the same. Firstly this court has held in National Bank of Pakistan v. Messrs Trend Hosiery Pvt. Ltd. and others 2012 CLD 1078 (Lahore) that there is no prohibition in law for filing rejoinder to replication. Further, there exists no provision in C.P.C. for filing replication, however, the court can allow any party to file replication. Nevertheless under Banking law i,e, F.I.O. a provision specially deals with the filing of replication i,e, section 10(7) which states; "The plaintiff shall be given an opportunity of filing a reply to the application for leave to defend, in the form of replication".
10.The purpose of allowing plaintiff to file replication is nothing but to clarify any ambiguity created through the application for leave to defend by the defendants but if in the replication plaintiff tries to set up a new case then the same cannot be considered. The issue of replication came up before this court in Sat Narian v. Pheroze Behramji and others (AIR 1936 Lahore 35) wherein the replication was considered as part of pleadings if it clarify the matter already stated in plaint. Whereas in Syed Mohsin Raza Bukhari and 4 others v. Syed Azra Zenab Bukhari (1993 CLC 31) a new case was set up in replication, therefore, ignored. Recently this court in COS 210/2010 while relying upon above two judgments dealt with the issue of documents filed with replication in the following manner; "The above said discussion will show that through replication the plaintiff could not set up a new case but it could be read the part of pleadings when it is meant for clarification, this is the reason that reply to the customer's application, the plaintiff has been permitted to file reply in the form of replication, hence the argument of learned counsel that documents filed with the replication could not be considered the part of pleading in view of Article 10-A of the Constitution of the Islamic Republic of Pakistan, 1973 is not persuasive. However, if the replication and its documents set up a new case definitely then the court has to ignore the newly set up case for example if the plaintiff files a suit claiming that defendant opened letter of credit and failed to pay the liability, the defendant denies the said facility, the plaintiff in replication states that in fact the defendant availed the demand finance and letter of credit facilities, the defendant adjusted the letter of credit facility and the suit amount represents the liability of demand finance, then it will be a new case and the court has to ignore the new facts while deciding leave application unless the plaintiff amends its plaint".
11. From the above it is clear that in case ',he plaintiff/Bank has tried to set up a new case through the documents attached with the plaint, then the defendants are entitled for the grant of leave to defend and in case the additional documents are nothing but further clarifying the claim made in the plaint, then leave cannot be granted. Therefore, it is necessary to analyze the documents attached with the replication by the plaintiff bank.
12. The first document attached with the replication is the reply/justification to the entries defendants have specifically disputed in the PLA. All the entries of this reply/justification statement are from the statement of account and the explanations are also in the statement of account but in short form which has been explained in detail in the document attached with the replication, therefore, it cannot be said that through these documents plaintiff/Bank has tried to set up a new case.
13. The plaintiff/Bank has also attached copies of the cheques, statement of imports made by the defendant company since 2006 onward and other L/C facilities documents. Through none of these documents sets up any new case against the defendants as the offer letter dated 08.03.2006 clearly shows the different facilities including L/C facility. Further the offer letter dated 04.08.2007 which is not denied by the defendants clearly states receiving of already existing L/C- facility and therefore, no case for grant of leave to defend is made out on this ground.
14. Even otherwise defendants have raised numerous objections on the documents attached with the plaint as well as challenged number of entries in the statement of account, however, not attached their own accounts with PLA. Under the law i,e, section 10(5) of the F.1.0., a defendant is required to file along with the PLA all documents which support the questions of law and facts raised in the application. The defendant No,1 which is a private limited company should have pleaded its case on the .basis of its own accounts. However, in the case in hand, no such accounts have been placed on record by the defendants.
15. The Hon'ble Supreme Court In Apollo Textile Mills Limited v. Soneri Bank Limited (2012 CLD 337) while making reference to section 10 of the F.I.O. states; "A defending customer is thus obliged to put in a definite response to the banks accounting and has under section 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".
Customer's accounts mean the books of accounts as well as the audited accounts of the company. It is claimed in the PLA that plaintiff/bank is liable to account for Rs,793,891,536.24. Had defendant No,1 paying extra amounts or the bank was not adjusting the amounts or charging amounts which were not due to the bank? If so then such objections would have arisen on comparison of the customer's accounts with the accounts of the bank. Further the amount of Rs,793,891,536.24 must have been considered in company's accounts but as the company's accounts are not attached, therefore, the objection is nothing but for the sake of objection. The rationale for producing such accounts is also dealt with by the HonIble Supreme Court in above referred judgment and in para 15 it was held as under:- "The rationale of schematic discipline of Ordinance of 2001 is evident. A banking suit is normally a suit on Accounts which are duly ledgered and maintained compulsorily in the books of Accounts under the prescribed principles/standards of Accounting in terms of the laws, rules and Banking practices. As such instead of leaving it to the option of the parties to make general assertions on Accounts, the Ordinance binds both the sides to be absolutely specific on accounts. The parties to suit have been obligated equally to definitively plead and to specifically state their respective accounts".
In absence of customer's account the objections raised by the defendants in the PLA regarding different entries of the statement of account are of no consideration.
16. Further perusal of the plaint reveals that plaintiff bank has specifically stated in para 16 of the plaint regarding the settlement proposal and defendants acceptance of the same by signing the proposal in the following words:- "That the defendants have time and again expressly acknowledged their liability but have not cleared the outstanding. The acknowledgement of liability letters and statements of CD accounts (002191-000-4) and 00293-000-2) are attached as Annexure M. In 2010, at the defendants' request, the plaintiff issued a Settlement Proposal dated 14.04.2010 to the latter (Annex-N). Under the same, the outstandings were to be restructured and rescheduled on the terms and conditions stipulated therein. The defendants' signed the afore-referred Proposal as well as the repayment schedule attached thereto. The said Proposal, amongst other conditions, envisaged the execution of a Settlement Agreement. The defendants took a volte face, refused the execution thereof and failed to abide by other contractual terms agreed to in the proposal".
In the PLA defendants have even not made evasive denial of the same. In the PLA defendants submitted a joint reply to Paras 3 to 18 in the following words; "3 to 18 Only admitted to the extent that defendant No,1 is duly incorporated under the provisions of the Companies Ordinance, 1984 and have its office/place of business at the address mentioned in the plaint. The contents of the rest of the paragraphs under reply are not admitted to be correct hence are denied. The objections regarding the alleged finance facilities, execution of purported security and finance documents, mortgage of property(s) and guarantees have been agitated in detail under the contents of paragraphs "A" to "J" under the questions of law and facts raised above and the same are reiterated in reply to these paragraphs and the paragraphs under reply are denied accordingly. Since the documents were obtained by the plaintiff bank in blank and have been filled unilaterally and in a fraudulent manner by the plaintiff Bank and the guarantees and charge/mortgage instruments are also not meant for the finance facilities forming the subject matter of the suit, it is vehemently denied that any liability can either be created on the basis of the said documents mentioned in the paragraphs under reply or the same could be enforced against the defendants under the law. The objections and pleas agitated on the said documents under the questions of law and facts raised above are reiterated in reply to the paragraphs under reply and the same are denied accordingly.
The alleged finance facilities, documents and liabilities mentioned in the paragraphs under reply have seriously been refuted and detailed reasons have been furnished under the questions of law and facts raised above, contents whereof are reiterated in reply to these paragraphs as well and the paragraphs under reply are denied accordingly".
17. The bare reading of the above reply reveals that the defendants have not even made an evasive denial regarding the settlement proposal and its acceptance by them. Evasive denial amounts to admission and in this regard reference is made to Inam Naqshband v. Haji Shaikh Ijaz Ahmad (PLD 1995 SC 314) wheiein it was held as under; "In paragraph 10 of the Written Statement the assertion of the plaintiff made in paragraph 10 of the plaint was not clearly and specifically denied. Instead, it was said that the plaintiff had no cause of action. An examination of rule 5 of Order VIII of C. P. C. will show that the allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted except as against a person under disability".
Similarly in National Bank of Pakistan v. General Tractor and Machinery Co. Ltd. and another (1996 CLC 79) Sindh High Court at Karachi held as under:- "The first sentence of para. 9 of the written statement is entirely vague and meaningless and is, in fact, an example of the utter frivolity in pleadings which, unfortunately, has become prevalent and needs to be curbed. There is, however, no denial, in para. 9 of the written statement, of the signature on, and the contents of the letter of 10th August, 1972. The defendants must, therefore, be taken, in view of the provisions of Order VIII, Rule 5, C.P.C., to have admitted the signature on, and the contents of, the letter".
18. The same view wai also taken in Louise Anne Fairley v. Sallad Ahmad Rana (PLD 2007 Lahore 300), Sheikh Muhammad Kashif Zia and another v. Bank of Punjab through Constituted Attorney and another (2004 CLD 388) by this court as well as in MCB Bank Limited v. Eastern Capital Ltd. and 7 others (2011 CLD 84) wherein also it was held:- "The learned counsel for the plaintiff also invited my attention to the replication with which a Resolution of the Eastern Capital Ltd., dated 29.06.2009 is attached as Annexure "C" which, shows that Mr. Munir M. Ladha and Mr. M. Samad Ladha, both the Directors of the company were authorized to negotiate/finalize with the Muslim Commercial Bank Limited (plaintiff) for rescheduling/restructuring/settlement of liabilities on behalf of the company and besides this Board Resolution there is another letter attached dated 27.06.2009 as Annexure "D" which shows the terms and conditions of rescheduling/restructuring/settlement of liabilities in the sum of Rs,45, 963,345 being principal amount, costs of funds up to 31.5.2009 and legal expenses were already settled. This document was prepared by the plaintiff and forwarded to the defendant No,1 which was accepted by the defendant No,1 and it was duly signed by the duly authorized representatives of the defendant No,1. Learned counsel for the plaintiff argued that in view of the clear admission and signature on the document attached with the replication, interim decree may be passed in the sum of Rs,45,963,345 and defendants may be allowed leave to defend".
19. Even otherwise while submitting the requirements of section 10(4), F.I.O., the defendants have admitted availing of finance facilities up to Rs,986.000 Million. It is claimed that an amount of Rs,2071.555 Million have already been paid. However, as mentioned above no document was attached with the application to substantiate this claim.
20. Further it its claimed that due to the pending suit of the defendants wherein un-conditional leave has already been granted to the plaintiff bank, defendants are entitled for the grant of leave to defend in the present suit and in this regard relied upon certain judgments apart from a recent judgment of the Hon'ble Supreme Court Zeeshan Energy Ltd and others v. Faysal Bank Ltd. (2014 CLD 696). I am afraid the facts of the said cases are totally different from the facts of the case in hand and therefore not applicable. In the Supreme Court judgment the finance facility was equity based and the suit of the defendants was prior in time. There are no such facts in the case in hand, therefore, this objection is also of no consideration.
21. It is further observed that the defendants claimed that the documents were obtained in blank and that the charge/mortgage instruments are also not meant for the finance facilities forming the subject matter of the present suit. Firstly 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. Secondly nothing has been said in the PLA about the finance against which charged and mortgage documents were executed. Therefore, this objection is also liable to be dismissed.
22. I am also not convinced that the plaint lacks in fulfilling the requirements of section 9 of the F.I.O. A perusal of the suit reveals that the contents of the plaint are supported by the agreements/documents and the statement of accounts of the finance facilities availed by the defendant company are also attached. Hence the relevant backdrop of the finance agreement between the plaintiff and the defendants has been appropriately given in the plaint which is supported by the requisite documents so the requirements of section 9 of the F.I.O. are duly fulfilled.
23. As far as the objection as to the filing of the suit by the person not duly authorized by the plaintiff bank is concerned, bare perusal of the plaint crystalizes that suit has been filed by duly authorized attorney, Mahboob-ul-Hassan whose registered power of attorney is attached with the plaint. A registered document is per se admissible in evidence and therefore there was no requirement of filing the board resolution or any other document along with the said power of attorney. Even otherwise the requirement of section 9(1), F.I.O. is of the authorized person only and the power of attorney of the authorized person is available on the court file which is sufficient to fulfill the requirement of section 9(1) of the F.I.O.
24. The upshot of the above discussion is that no defense whatsoever has been set up with respect to the amount claimed by the plaintiff bank, consequently, the PLA No,161-B/2011 stands dismissed.
The plaintiff bank has proved the disbursement of finance facilities as well as its availing by the defendant No,l.
25. It is however observed that finance agreement with regard to Running Finance expired on 30.06.2008 and the plaintiff bank has claimed mark-up after the said period which they are not entitled to claim under the law therefore the markup as claimed by the bank after the expiry of the finance facility agreement is not allowed. It is also observed that Defendant Company has paid an amount of Rs,18,377,379/- on account of mark-up from 01.07.2008 up to 30.06.2010 this amount is to be deducted from the principal outstanding amount of the Running Finance Facility. After deduction of this amount the total principal amount is Rs,90,960,147.24/- in Running Finance Facility and nothing is due on account of mark-up. In the L/C facility the finance agreement does not allow markup as the purchase price and sale price in the said agreement is same, therefore, in view of law laid down in Haji Fazal Elahi and Sons through Muhammad Tariq v. Bank of Punjab and another 2004 CLD 162 (Lahore) and United Bank Limited through Manager and Attorney v. Messrs Shafique Plastic and another 2005 CLD 1564 (Lahore) the plaintiff/Bank is not entitled to claim markup from the defendant company. Therefore, on account of L/C facility an amount of Rs,145,000,000/- on account of principal amount and Rs,274,608.93 on account of other charges of the L/C facility are due and recoverable from the defendants. In the L/C facility defendants are also liable to pay cost of funds from the date of lodgment of each L/C. the dates are given as under:- LC number Date of Lodgment 2008/00096 11 July, 2008 2008/00069 11 July, 2008 2008/00146 18 July, 2008 2008/00147 21 July, 2008 2008/00148 21 July, 2008 2008/00145 28 July, 2008 2008/00180 4 August, 2008 2008/00185 18 August, 2008 2008/00195 26 August, 2008 2008/00143 26 August, 2008 2008/00202 15 September, 2008 2008/00191 22 September, 2008 2008/00190 22 September, 2008 2008/00193 22 September, 2008 2008/00201 22 September, 2008 2008/00192 22 September, 2008
26. In this view of the matter, the suit of the plaintiff bank is decreed in favour of the plaintiff bank and against the defendants jointly and severally for an amount of Rs,236,234,756.17. The plaintiff bank is also entitled to the cost of suit as well as cost of funds from the date of default i,e, 01.07.2011 in R.F. Facility and from each date of L/C lodgment as mentioned in the table above till the date of realization of the funds as determined by the State Bank of Pakistan under section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Decree sheet be prepared accordingly.