1. ABID AZIZ SHEIKH, J.---This is a suit under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance) seeking recovery of Rs,339200712.99/- along with cost of suit and cost of fund against the defendants.
2. 2.Brief facts as per averment of plaint are that plaintiff bank allowed two finance facilities to the defendant company in 2010 which were renewed vide its offer letter dated 27.4.2011. The first facility is Running Finance Facility (RF) of Rs,50 million and second facility is Cash Finance Facility (CF) of Rs,250 million. The said finance facilities were secured through mortgage, hypothecation charge and pledge stock. The defendants Nos,2 and 3 also executed personal guarantees. The plaintiff bank claimed that defendants have failed in repaying the amount availed against said finance facilities to the plaintiff bank, hence instant suit was filed.
3. 3.In response to notices, defendants entered appearance and filed their joint application for leave to defend the suit (PLA) No,53-B/2013.
4. 4.Learned counsel for the applicants/defendants while arguing PLA contends that suit has been filed by incompetent person. He elaborates that nothing has placed on record to show that Mr. Sohail Younas was Branch Manager and further as per power of Attorney of Muhammad Shakeel Butt, the suit could only be filed by him jointly along with "A" class power of Attorney Holder which authority has not been conferred on Sohail Younas, hence suit is not maintainable. He further submits that plaintiff bank had procured blank documents and filled up these blank documents subsequently. To support this submission, he referred to documents at pages, 162, 163 and 178 of PLA and compared them with documents at pages 77 and 137 of the plaint. He next argued that Statement of Accounts of CF and RF are not certified in accordance with section 2(8) of the Bankers' Book Evidence Act, 1891 (Act of 1891), as no date, name or designation of authorized person has been mentioned in the certificates of these Statement of Accounts. Submits that such certificate is required even under section 12 of the Electronic Transactions Ordinance, 2002 (Ordinance 2002). Learned counsel further submits that as per plaint, amount of RF and CF were renewed and disbursed on 27,4.2011, however, according to statement of accounts, no such disbursement was made on 27.4.2011. He further submits that expiry date of Finance Agreements of these facilities was 31.3.2012, however, mark up statement of Account shows that mark up has been charged much beyond said expiry date. He submits that at pages 17 and 18 of the PLA, number of debt entries are mentioned which were executed on Saturday and no credit entries are shown against said debt entries. He contends that Saturday being holiday, no such transactions could take place in Bank on said date. He contends that notification of State Bank of Pakistan to open certain branches of various Banks was not applicable to Model Town Branch of plaintiff bank.
5. Learned counsel next contends that admittedly stock has been pledged with the plaintiff bank against CF facility and unless the pledge stock is returned to defendants, the amount secured against said pledge stock cannot be recovered. Learned counsel submits that plaintiff bank as well as defendants have filed FIRs dated 08.1.2013 regarding misappropriation of pledge stock and plaintiff bank's FIR was subsequently cancelled, therefore, the plaint to the extent of amount secured through pledge stock is liable to be dismissed. Learned counsel placed reliance on Messrs Dhrala Oil Mills through partners/Guarantors and others v. The Bank of Punjab through Branch Manager (2014 CLD 153), Habib Bank Limited v. Messrs Madina Rice Ice Mills Sargodha through Proprietor and others (2015 CLD 829), Pak Oman Investment Company Limited v. Chenab Limited and 9 others (2016 CLD 1903), Messrs Soneri Bank Limited v. Messrs Compass Trading Corporation (Pvt.) Ltd. through Director/Chief Executive and others (2012 CLD 1302), Elbow Room and others v.
6. MCB Bank Limited and others (2014 CLD 985) and Habib Metropolitan Bank Limited v. Abid Nisar (2014 CLD 1367).
7. 5.Learned counsel for the plaintiff bank in response to argument on PLA contends that it is a case of admitted liability. He submits that in paras 12 and 13 of the plaint, the plaintiff has specifically referred to letters written by (defendants where liability of running finance facility and case finance facility was admitted. Submitted that reply to these paragraphs in PLA are evasive, which amounts to admission on part of defendants. He submits that suit was filed by Branch Manager and even otherwise Power of Attorney of Mr. Sohail Younas and Muhammad Shakeel Butt to file this suit are placed on record. He submits that none of the documents were signed in blank or filled up subsequently. Contends that mark up has not been charged beyond expiry limit of Finance Agreements. Further submits that statement of accounts are duly certified and signed by Branch Manager and Bank's Attorney as required under section 2(8) of the Act of 1891. He submits that in any case, all these accounts are computer generated ledgers and does not require signatures on their foot in terms of section 2(8) of the Act of 1891. Learned counsel further submits that none of the debit entries have been challenged by defendants in PLA. He submits that no doubt certain transactions took place on Saturday because bank branch was opened on Saturday in view of State Bank of Pakistan circular dated 14.10.2011. He submits that defendants have availed Cash Finance facility and Running Finance facility since 2010 and on 27.4.2011, the said finance facilities were only renewed and no fresh facility was extended, hence there was no question of fresh disbursement on 27.4.2011. He further submits that statement of accounts from March, 2010 till January, 2013 has been placed on record which establishes the liability of defendants. In response to allegation of misappropriation of pledged stock, learned counsel-submits that bank can file suit without selling pledged stock and matter relating to short fall of pledged stock and responsibilities of parties in this regard can be determined in execution proceedings at the time when collateral security is required to be accounted for and brought to sale to recover the decretal amount.
8. 6.I have heard the learned counsel for the parties and perused the record with their able assistance. The claim of plaintiff bank is that it allowed two finance facilities to the defendant company i,e, Running Finance facility Rs,50 million and Cash Finance facility Rs,250 million which were secured through various security documents including personal guarantees of defendants Nos,2 and 3. Plaintiff bank has annexed letters dated 10.5.2012, 20.6.2012, 05.7.2012, 31.10.2012 and 02.1.2013 with suit in which defendant company has specifically admitted the availing of Running Finance facility of Rs,50 million and Cash Finance facility of Rs,250 million. The plaintiff bank in paras 12 and 13 of the plaint has also referred to those letters by defendant company, however, in response to said paras 12 and 13 in PLA, the defendants have not specifically denied execution of these letters. It is settled law that mere evasive denial is not sufficient to rebut the duly signed documents which are also supported by statement of account and other finance documents. This Court in The Bank of Punjab through Branch/Chief Manager v. Messrs Khan Unique Developers Pvt.
9. Ltd. through Chief Executive Officer and 9 others (2016 CLD 29) held that "a defendant cannot simply put up a denial simpliciter in its PLA in answer to a claim of financial institution in the suit which is backed up by statement of account and other finance documents". The august Supreme Court in Ghulam Rasool through L.Rs and others v. Muhammad Hussain and others (PLD 2011 Supreme Court 119) held that evasive denial in written statement is no denial rather such denial may be construed as an admission on their part. Even otherwise, bare denial of liability is never held to be a valid denial in view of provision of Order VIII, rule 4 of Code of Civil Procedure, 1908 (C.P.C.).
10. 7.The argument of the defendants that suit is not filed by competent person has no basis. The suit has been filed through Mr. Sohail Younas and Muhammad Shakeel Butt. Mr. Sohail Younas is a Branch Manager which is evident from facility letter dated 27.4.2011 signed by him as a Branch Manager and also signed by Chief Executive of the defendant company. Even otherwise, Power of Attorneys of both these persons are on record. The argument of defendants counsel that Muhammad Shakeel Butt being a power of attorney holder of B-category could only file suit jointly with holder of power of attorney of A-category is correct, however, the Power of Attorney of Mr. Sohail Younas shows that it is A-category power of Attorney, hence this requirement has also been fulfilled. In view of above, it cannot be said that suit is filed by incompetent person.
11. 8.Learned counsel for the defendants vehemently argued that statement of accounts being not in conformity with law has no basis. I have carefully considered this argument, the perusal of statement of accounts relied upon by the plaintiff bank and placed on record, shows that these are computer generated ledgers, which do not required certification on their foot in terms of section 2(8) of the Act of 1891 as held by this Court in Messrs Khan Unique case supra. The relevant observations are as under:-
11. <i>The next submission made by the learned counsel for the Defendants pertains to the statements of account appended with the plaint. It is argued that a statement of account duly certified in terms of section 2(8) of the Bankers' Books Evidence Act, 1891 (the Act) is sine qua non for presenting a valid suit and in the absence thereof the plaint is liable to be rejected. The precise objection taken by the counsel for the Defendants is that the certificate appearing at the foot of the statements of accounts in not signed by the Manager or the principal accountant of the Plaintiff Bank rather it is signed by an Assistant Vice President. In this regard, reliance has been placed on judgments reported as Pakistan Kuwait Investment Company (Pvt.) Limited v. Messrs Active Apparels International and others 2012 CLD 1036 and United Bank Limited v. Messrs Ilyas Enterprises and others 2004 CLD 1338. It is, therefore, necessary to comprehend what the Act visualizes a statement of account to be in order to ascertain how well founded the arguments of the learned counsel are in relation to the statements of accounts appended by the plaintiff bank with the suit. It may relevantly be mentioned that the Act does not provide the definition of a statement of account but only defines the certified copy of an entry contained in bankers' book. Section 2(8) of the Act is reproduced hereunder: `2 (8) "certified copy" means a <u>copy of any entry in the books of bank</u> together with a certificate written at the foot of such copy that it is true copy of such entry, that such entry is contained in one of the <u>ordinary books of the bank </u>and was made in the usual and ordinary course of business and that such book is still in the custody of the bank, <u>such certificate</u> being dated and subscribed by the principal accountant or manager of the bank with his name and official title.' (emphasis is supplied)
12. By virtue of section 4 of the Act, inter alia, a certified copy of any entry in Banker's books is admissible as prima facie evidence in all legal proceedings of existence of such entry. The purport of section 2(8) and section 4 of the Act appears to be to dispense with the requirement of producing the original books of the Banks in legal proceedings and for that purpose it is sufficient, in order for a certified copy of statement of account to be admissible in evidence, if the Bank makes a copy of entries from its books and its Manager or principal accountant provides a certificate at the foot of such statement of account in the manner prescribed by section 2(8) of the Act. In other words, the provisions of the Act dispenses with the requirement of tendering primary evidence (books of the bank) and makes admissible secondary evidence (certified copy of entry in the books of the bank) provided the condition laid down in section 2(8) of the Act is satisfied. 11.
13. Section 2(3) of the Act also defines bankers' books as "bankers' books" include ledgers, day-books, cash-books account-book and all other books used in the ordinary business of a bank:"
14. In the present case, however, what the Plaintiff Bank has appended with the plaint are computer generated accounts. These accounts being the computer generated accounts/ledgers of the Plaintiff Bank, there was no need to put a certificate on the foot of such accounts as prescribed by section 2(8) of the Act and any officer of the Bank could sign the said accounts. As the original accounts have been appended with the suit, which constitute primary evidence, there is no need to file a certified copy thereof which should in turn comply with the requirements of section 2(8) of the Act. It may again be emphasized that the requirement of putting a certificate at the foot of the statement, by virtue of section 2(8) of the Act, is in regard to a copy of the accounts or an entry contained therein and not for the original accounts. This issue has been touched upon in a judgment reported as Habib Metropolitan Bank Limited v. Mian Abdul Jabbar Gihllin 2013 CLD 88 wherein it has been held that:- "It is observed that rapid changes have occurred in the recent years as old and conventional system of banking been done away with to a greater extent. In spite of having conventional and old method banking system latest technology has taken over by way of introduction of electronic and digital methods. It is seen that the defendant has not denied the obtaining of credit facility but has only called in question the statement of accounts prepared electronically by submitting that these statements neither bears signature of bank official nor bank seal. Whereas these statements of accounts clearly stipulate that these are electronically generated documents and do not require any signature. Hence in my view these statements of accounts through which complete picture of the credit facility obtained by the defendants is quite visible would not be considered to be a document having no legal authenticity." </i>
9. The Statement of Account produced in present case being not copies of any entry in the books of Bank but are computer generated accounts/ledgers of the bank, there was no need for their certification under section 2(8) of the Act of 1891 or even under section 12 of Ordinance, 2002. The case law referred above is squarely applicable in present case. In any event, statements of accounts have been certified and signed by Branch Manager. The date is also mentioned on each page of the statement of account which satisfy the requirement of law. The case law relied upon by learned counsel for the defendants do not relate to computer generated accounts/ledgers, therefore, same are distinguishable.
15. 10.In paras 17 and 18 of the PLA, defendants has challenged various entries on the ground that these are debit entries without showing corresponding credit entries and these transactions took place on Saturday which was bank holiday. The perusal of these alleged entries shows that these are not debit entries rather these are only debit balance entries in the account of the defendants, hence there was no question of any credit entries against these entries. Further the plaintiff in rebuttal to PLA has placed on record State Bank of Pakistan (SBP) circular No,11 of 2011 dated 14.10.2011, where to facilitate business community, it was decided that certain branches of banks will remain open on Saturday. This circular support the claim of plaintiff bank that bank was opened on Saturday and transactions were duly executed. In presence of SBP circular, on mere assumption asserted by defendants that Saturday was holiday, these entries cannot be declared unauthorized or invalid.
11. Learned counsel for the defendants has forcefully argued that pledge stock was in custody of plaintiff bank which has been misappropriated and FIR in this respect has been registered by defendants, therefore, plaintiff bank cannot seek recovery from defendants of amount, unless pledge stock be returned. This issue has already been discussed by this Court in National Bank of Pakistan v. Ali Akbar Spinning Mills Limited and others (COS No,126 of 2011) where while relying upon various judgments of august Supreme Court as well as by this Court, it was held that availability or otherwise of the pledged stock is a question that can be determined in execution proceedings at the time when collateral security be required to be accounted for and brought the sale. Therefore, it alone does not furnish a ground of defence to the defendants for grant of leave. Relevant finding of this Court in judgment referred supra is reproduced as under:- <i>'Learned counsel for the defendants submitted that pledged stocks were in the custody of the plaintiff bank and therefore, the plaintiff bank cannot seek recovery from defendant No,1 unless it is in the position to return the pledged stock. This aspect has already been exhaustively dealt with by a judgment reported as <u>Habib Bank Limited v. Orient Rice Mills and others</u> (2004 CLD 1289) wherein it was held that "Section 176 of the Contract Act empowers the plaintiff-Bank to file its suit without selling the pledged rice and to treat the pledgee as a collateral security only. Clearly this option has been exercised by the plaintiff-Bank. The matter relating to any short fall in the pledged stock of rice and the responsibility therefore can be determined in execution proceedings at the time the collateral security is required to be accounted for and brought to sale. The rights and obligations of the plaintiff-Bank as pledge and those of the defendant-Company under sections 151 and 152 of the Contract Act, which were referred to by the learned counsel for the defendant- Company, can also be determined at the time of realization of the collateral security." Further more, in Messrs Muhammad Siddique Muhammad Umar v. The Australasia Bank Limited (PLD 1966 SC 684), it was held that loss of pledged goods does not absolve the debtor from his liability and that a debtor can only claim an adjustment once the sale of the pledged goods is actually held. Along similar lines is the judgment reported as Siddique Wollen Mills and others v. Allied Bank of Pakistan (2003 CLD 1033), wherein the Hon'ble Supreme Court held that in a suit filed by the bank only the liability of the debtor has to be adjudicated and the dispute regarding pledged goods does not constitute a bona fide dispute. This position has recently been reinforced and accepted by a learned Division Bench of this Court in a judgment passed in RFA No,274 of 2010 titled Messrs Ibrahim Oil Mills and others v. MCB Bank Limited. It is, thus, clear that availability or otherwise of the pledged stock is a question that can very well be determined in the execution proceedings and that it does not furnish any ground of defense to the defendants for grant of leave to defend the suit. This objection even otherwise has no merit as the entire Principal amount of cash finance (Pledge) facility has been adjusted by the defendants and the plaintiff is only claiming mark up thereunder".</i> The above view was also express by this Court in following judgments. <u>In <i>Messrs Crystal Enterprises v. Platinum Commercial Bank Ltd. </u>(2002 CLD 868) held that "Learned counsel for the appellant next argued that the respondent-bank is under law required to account for the imported goods in its custody. This may be so. However, this is a matter, which can only arise in the execution proceedings, when the collateral security is realised in such proceedings through sale of the same".
16. In Faisal Bank v. Zamindara Rice Mills (2007 CLD 1164) it was held that "merely because the pledged goods are lost or the pledge is unable to return the same does not in every eventuality confer upon the pledger a right to an equitable set off nor is always a complete defence to a suit for recovery of the debt secured by said pledge. Liability of the pledge in such eventuality is circumscribed by sections 151 and 152 of the Contract Act".
17. In Messrs Khalid Oil Mills v. Muslim Commercial Bank Ltd. (2005 CLD 1565) it was held by the Division Bench of this Court that "the only ground vehemently urged by the learned counsel is to the effect that stock of the appellants pledged with the respondent-bank lying in the godown was stolen/misappropriated at the instant of the Manager of the respondent-Bank. On a court question, it is conceded that a criminal case has been registered qua the said occurrence wherein the appellants have been nominated as accused and they are on bail. This plea with reference to the institution of criminal case cannot be advantageously used by the appellants with reference to the recovery of the amount in question through the suit of the respondent-Bank".</i> 12.The above legal position has also been candidly conceded by learned counsel for the plaintiff bank, who submits that matter relating to short fall in the pledged stocks will be determined in execution proceedings when the collateral securities are required to be sold. In view of above discussion, mere dispute regarding pledged stock cannot be a ground to grant leave to defend to the defendants. The case law relied upon by the defendants is not relevant to the facts and circumstances of this case.
18. 13.The argument of learned counsel for the defendants that blank documents have been executed has also no substance. Perusal of so called blank documents including agreement of finance and personal guarantees appended with the PLA, shows that same are not exactly the same which are duly executed and filed with the plaint. Therefore, it cannot be said that plaintiff bank has filled the blank documents subsequently.
19. 14.On plea of the defendants that excess mark up has been charged, I have carefully gone through the statement of accounts and found substance in this argument. Admittedly, the Finance Agreements for Running Finance facility and Cash Finance facility are dated 27.4.2011 and expiry date of these agreements is 31.3.2012. Mark up statement of accounts shows that excess mark up of Rs,26262945/- in Cash Finance facility and Rs,5251683/- in Running Finance facility has been charged beyond the expiry date i,e,31.3.2012 of Finance Agreements. It is settled law that bank is not, entitled for the mark up beyond expiry date of Finance agreements, however, it may recover cost of fund from date of default. In view of above, claim of excess mark up of Rs,31514627/- is denied to the plaintiff bank.
20. 15.In view of above, subject to deletion of amount of mark up recovered after expiry date of Running and Cash Finance facilities, plaintiff claim in the suit is substantiated by agreements, statement of accounts as well as letters written by defendant No,1 itself. Defendants have not been able to raise any substantial question of fact or law requiring recording of evidence for its resolution. Consequently, PLA, is dismissed and suit of the plaintiff bank is decreed in favour of the plaintiff bank and against the defendants jointly and severally for amount of Rs,307686085.99/-