AZIZ-UR-REHMAN, J.---The plaintiff has filed the above suit on 03.01.2014 under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, for recovery of Rs.162,344,199/- along with liquidated damages, costs, charges and cost of funds, till the realization of the whole amount with following prayers:- "a. for payment and recovery of Rs. 162,344,199/- with future Mark-up at applicable rate from the date of filing of the suit till the date of final payment. b. for permanent injunction restraining the Defendant, its employees, agents or any other person acting for and on behalf directly and or indirectly from selling, alienating, disposing of or creating third party rights in any manner whatsoever in respect of the Hypothecated Assets charged in favour of the Plaintiff c. for sale of the Hypothecated Assets mentioned in para 5 above. d. for attachment and sale of all the movable and immovable assets and properties of the Defendant to recover the outstanding amount of the Plaintiff. e. for payment of cost of funds in terms of section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 on the aforesaid suit amount from the date of default till the date of realization. f. the suit may kindly be decreed with cost of fund and all other costs, charges and expenses incurred by the Plaintiff during the pendency of the suit. g. Any other relief, which the Hon'ble Court may deem fit in the circumstances of the case may also be granted.
2. Succinctly the relevant facts in the background are as follows:-
3. Plaintiff as averred, is a company incorporated under the laws of Pakistan having its registered office at 1st Floor, Tower-A, Finance and Trade Centre, Shahrah-e-Faisal, Karachi, wherefrom, it is carrying on its investment business. The suit in hand has been filed by Mr. Mohsin Raza son of Mukhtar Hussain, who is duly authorized Attorney of the Plaintiff and well conversant with the, facts of the case. Besides, he is duly authorized to sign, verify the plaint, institute the instant proceedings and do all other acts, deeds and things being necessary and incidental thereto.
4. Defendant, it is not out of place to mention herein was formally incorporated as a Private Limited Company as Renfro Crescent (Pvt.) Limited; which later on, was merged with and into Cresox (Pvt.)
Limited, having incorporated and existing under the laws of Pakistan and having its office at A-40, SITE, Mangopir Road, Karachi.
5. Per Defendant's request, it availed various finance facilities from the Plaintiff company i.e. from time to time and, as such, is a 'customer' of Plaintiff Company, as defined in section 2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001 [In short FIO, 2001]. The various finance facilities granted to and availed by Defendant, as stated was based upon Defendant's requests, representations and warranties including the following facilities:- i. A term finance facility of Rs.120,000,000 [Finance Facility-11 under State Bank of Pakistan's LTF- EOP Scheme pursuant to Finance Agreement dated June 13, 2007 as amended by First Addendum to Finance Agreement dated July 17, 2007. Second Addendum to Finance Agreement dated October 24, 2007 and Third Addendum to Finance Agreement dated May 11, 2012 [Finance Agreement-I].
The aforesaid Finance Facility-I, per Plaintiff's version was fully availed and utilized by the Defendant. Defendant defaulted in its repayment obligations and failed to make payments of the overdue installments in the year, 2011 on the respective due dates as more particularly mentioned in paragraph 7 of the pliant. Defendant thus requested the Plaintiff for Rescheduling of Finance Facility-1. The Plaintiff's request so made for rescheduling was allowed in terms of Third Addendum of Finance Agreement dated May 11, 2012. In view of the rescheduling the Mark-up over due as on April 17, 2012 [Effective date of Rescheduling] was frozen until June 30, 2013. ii. A term Finance Facility of Rs. 50.000,800/- [Finance Facility-11] under State Bank of Pakistan's LTFF Scheme pursuant to Finance Agreement dated December 18, 2009 as amended by First Addendum to Finance Agreement dated May 11, 2012 [Finance Agreement-II]. This Finance Facility- II as well was fully availed and utilized by the Defendant. Regarding this Finance Facility-II Defendant also committed default in its repayment obligations. Defendant thus not only ignored but also failed to make payments of the overdue installments in the year, 2011 on their respective due dates as more particularly mentioned in paragraph 7 of the plant. Defendant, nevertheless, requested the Plaintiff for Rescheduling of Finance Facility-II as well. Regarding Finance Facility-II since, the State Bank of Pakistan had already recovered the overdue principal amount of Finance Facility-11 from the Plaintiff: Defendant under such scenario requested the Plaintiff to convert the overdue principal portion into a term Finance Facility. The Plaintiff upon such request thus allowed the rescheduling in terms of the Addendum to Finance Agreement of May 11, 2012.
6. For and in view of Rescheduling the Mark-up overdue, as on April 17, 2012 [Effective date of Rescheduling], was frozen until June 30, 2013. The principal amount of Finance Facility-II, overdue as on April 17, 2012 [Effective date of Rescheduling] was, however, converted into a Term Finance Facility of Rs.9,375,000/-. [Finance Facility-III], pursuant to the Finance Agreement dated May 11,2012 [Finance Agreement-III].
7. To secure repayment of Finance Facilities granted to and availed by Defendant and in consideration thereof, the details of securities created by Defendant in favour of the Plaintiff are as follows:- i. A first charge by way of hypothecation of all plant, machinery and equipment, with all essential parts and other assets shown as fixed assets of the CPL, affixed, installed, located or to be affixed, installed and attached thereto or therein at the factory or premises of CPL located at A-40 Mangopir Road, SITE, Karachi or kept in godowns wherever in Pakistan in the course of transmit, shipment or delivery to or from the factory/godowns with all the benefits of all rights relating thereto, pursuant to Letter of Hypothecation for plant and machinery dated July 5, 2007 as amended by First Supplemental Letter of Hypothecation for plant and machinery dated November 2, 2007; ii. A charge by way of hypothecation of all plant, machinery and equipment, with all essential parts and other assets shown as fixed assets of the CPL, affixed, installed, located or to be affixed, installed and attached thereto or therein at the factory or premises of CPL located at A-40 Mangopir Road, CITE, Karachi or kept in godowns wherever in Pakistan in the course of transmit, shipment or delivery to or from the factory/godowns with all the benefits of all rights relating thereto, pursuant to Letter of Hypothecation for plant and machinery dated December 21, 2009; and
8. The aforesaid Finance Facilities, were fully availed and utilized by Defendant. The Defendant, in breach of the agreed terms and conditions as laid down in various financial and security documents having been duly signed and executed, however, failed and/or neglected to repay the outstanding amount on its due dates and that too despite several requests and reminders.
Defendant, thus not only continued to consistently renege on their commitments and promises but also failed to pay the outstanding amounts in respect of the Finance Facilities granted to and availed by Defendant. For and account of such default a sum of Rs.162.344.199/-, as on November 30, 2013, remained outstanding against Defendant.
9. The Plaintiff Institution despite its efforts to persuade Defendant to repay/adjust its outstanding liabilities, however, failed and/or avoided to honour its' commitments as per Finance Agreements etc. having been voluntarily executed by Defendant. The Defendant thus not only remained defaulter but also caused 'monetary loss' to Plaintiff. The Plaintiff as a last resort recalled the Finance Facilities through Legal Notice dated May 8, 2013. Defendant, however, neither replied the aforesaid Legal Notice of May 8, 2013 nor otherwise, re-paid its outstanding dues/liabilities. The attitude of Defendant, regarding to repay the outstanding amounts is nothing but a clear cut refusal, hence the instant suit was filed on 03.01.2011 for and in view of 'cause of action', stated to be arisen in favour of Plaintiff and against Defendant on several occasions as referred to and mentioned in Para 10 of the plaint inter alia for recovery of Rs.162,344,199/-, under section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 before this Court.
10. Along with Plaint copies of various documents have been enclosed i.e. Sub-Power of Attorney dated 10.08.2012 executed in favour of Mohsin Raza son of Mukhtiar Hassan [Annexure 'A' to the Plaint]. Power of Attorney in favour of Agha Ahmed Shah son of Agha Akber Shah [Annexure All to the Plaint], Extract of Board Resolution [Annexure 'A/2' to the plaint]. Certificate of Incorporation of Change of name dated 10.12.2010 [Annexure 'A/3' to the Plaint], Sanction Letter dated 10.05.2007 [Annexure 'B' to the Plaint], Finance Agreement dated 13.06.2007 (Annexure B/1 to the Plaint]. First Addendum to Finance Agreement dated 17.07.2007 [Annexure 'B/2' to the Plaint]. Second Addendum to Finance Agreement dated October 24, 2007 [Annexure 'B/3' to. the Plaint]. Third Addendum to Finance Agreement dated 11.05.2012 [Annexure `B/4' to the Plaint]. Sanction Letter dated 24.11.2009 [Annexure 'C' to the Plaint]. Finance Agreement dated 18.12.2009 [Annexure 'C/1' to the Plaint].
11.Apart from the above, other documents i.e. Addendum to Finance Agreement dated 11.05.2012 [Annexure 'C/2' to the Plaint]. Sanction Letter regarding Term Finance Facility dated 8.5.2012 [Annexure 'D' to the Plaint]. Finance Agreement regarding Term Finance Facility of Rs.9,375.000/- dated 11.05.2012 [Annexure 'D/1' to the Plaint]. Letter of Hypothecation for Plant and Machinery dated 05.07.2007 Annexure `E' to the Plaint]. Charge Registration Certificate dated 09.07.2007 [Annexure 'E/1' to the Plaint]. First Supplementary Letter of Hypothecation for Plant and Machinery dated 02.11.2007 [Annexure 'E/2' to the Plaint]. Acknowledgment of Filing of 'Form-16' dated 07.11.2007, [Annexure 'E/3' to the Plaint], Letter of Hypothecation for Plant and Machinery dated 21.12.2009 [Annexure `E/4' to the Plaint], Charge Registration Mortgage Certificate dated 22.12.2009 [Annexure `E/5' to the Plaint]. Demand Promissory Note dated 13.06.2007 [Annexure 'E/6' to the Plaint] and Demand Promissory Note dated 18.12.2009 [Annexure 'E/7' to the Plaint]. Duly Certified Statement of Accounts [Annexure 'F' to 'F/8' to the Plaint]. Break-up-Summaries [Annexure 'F/9' to the Plaint].
Legal Notice dated 09.01.2012 [Annexure 'G' to the Plaint]. Courier Receipt [Annexure `G/1' to the Plaint] and Delivery Report [Annexure 'G 2' to the Plaint], were alse annexed with the plaint. All the annexed documents ex-facie support the claim of the Plaintiff as put forward and involved in the suit in hand.
12.On filing of the above suit 'process' under section 9(5) of. F.I.O., 2001, was issued to the Defendant through all requisite modes. Copies of Courier Receipts, Registered Post A/D and Publication in Newspapers i.e. Daily 'The News' English and Daily 'Jang' Karachi both dated 06.01.2014 are also available on record. Besides, the Bailiff has also returned the process as duly served upon the Defendant.
13. Per diary of Addl. Registrar [0.S.), Leave-to-Defend Application bearing C.M.A. No.1701 of 2014, has been filed on 10.02.2014 i.e. after expiry of statutory period of 30 days. In the Leave-to-Defend Application [C.M.A. No.1701 of 2014], the averments and assertions made by the Plaintiff institution have been denied. Defendant, nevertheless while, realizing subsequently, that the Leave-to-Defend Application No.1701 of 2014 filed on 10.02.2014, is time barred, preferred to file on 05.03.2014, another application for condonation of delay under sections 10(2), 12 and 24(1) of F.I.O., 2001 in the above suit.
14. The Plaintiff, upon service, in response to Leave-to-Defend Application [C.M.A. No.1701 of 2014], not only filed REPLICATION UNDER SECTION 10(7) OF F.I.O., 2001 but also filed a detailed COUNTER- AFFIDAVIT in answer to the application for condonation of delay, [C.M.A. No.2828 of 2014], in filing of Leave-to-Defend Application [C.M.A. No.1701 of 2014], wherein, all the adverse allegations levelled by Defendant were vehemently and specifically denied. Per stand of the Plaintiff's Institution, the Leave-to-Defend Application [C.M.A. No.1701 of 2012], filed by Defendant as being time barred is liable to be dismissed. In the Leave-to-Defend Application [C.M.A. No.1701 of 2014], filed on behalf of Defendant, inter alia some questions were also raised, which according to Defendant's version beside being substantial questions of law and facts, can only be answered after recording of evidence. The questions raised by Defendant which, per Defendant's stand, needs recording of evidence are as follows:- A. Whether the amount claimed by the Plaintiff is due?
B. Whether plant and machinery were imported by the Defendant on the misrepresentation of the Plaintiff that the LTF-EOP Scheme was subsisting, and on the misrepresentation that finance for retiring such letters of credit would be extended to the Defendant under the LTF-EOP Scheme? If so, whether the Defendant is entitled to be put in the position in which it would have been if the representation of the Plaintiff had been true? If so, what would such position be?
C. .................
D. Whether the terms and conditions set by the Plaintiff under Finance Agreement dated 18.12.2009 for repayment of Finance Facility-II were contrary to the LTFF Scheme i.e., MFD Circular No.7 of 2007 and SMEFD Circular No.16 of 2009 issued by the SBP? If so, on what terms is the Finance Facility-II to be repaid?
E. Whether the rescheduling of Finance Facility-II vide the Addendum to Finance Agreement dated 11.5.2012, is void because it is in violation of MFD Circular No.7 of 2007 and because it purports to reschedule finance that was never due for repayment on that date?
F. Whether the Defendant qualified for the facility given by the SEP pursuant to SMEFD Circular No.11 of 2009 and to what extent? If the Defendant qualified, what is the effect of the Plaintiffs refusal to give such facility to the Defendant?
G. Whether. Finance Facility-III for Rs.9,375,000 was a fresh disbursement to the Defendant? If not, whether any markup can be claimed by the Plaintiff thereon?
H. Whether Finance Facility-III which is the Finance Agreement dated 11.5,2012 [Annexure D/1 to the plaint] is void because it is in violation of MFD Circular No.7 of 2007 and because it purports to reschedule finance that was never due for repayment on that date?
I. Whether the charge of markup by the Plaintiff' for rescheduling Finance Facility-I and Finance Facility-II is unlawful in view of the law laid down by this Hon'ble Court in the case of Habib Bank Ltd. v. Qayyum Spinning Mills, reported at 2001 M LD 1351'?
Whether the charge of overdue markup by the Plaintiff is a penalty? If so, to what effect?
K. Whether after the introduction of Article 10-A in the Constitution of the Islamic Republic of Pakistan, 1973, a refusal to grant leave in the facts of the cases would be violative of the fundamental right of the Defendant, its shareholders?
15. In the Replication filed by Plaintiff's Institution under section 10(7) of F.I.O., 2001, the above so- called substantial questions of law and facts were denied while, replying the same under the heading `Reply to the Questions or Law and Facts' as follows:- "a. That question 'A' raised by the Defendant is misconceived and misleading. It is respectfully submitted that the Defendant has failed to pay the admitted outstanding amount due to the Plaintiff as mentioned in the plaint. The Plaintiff has filed this suit for recovery of its outstanding amount in accordance with law. b. That the question of 'B' raised by the Defendant is misconceived and misleading. It is respectfully submitted that the Plaintiff extended the Finance Facility No.1 to the Defendant in accordance with Finance Agreement dated June 13, 2007, which was subsequently modified in terms of First Addendum to Finance Agreement dated July 17, 2007. The Defendant was fully aware of the status of the LTFF EOP Scheme at all relevant times. The allegation of any mis-representation on the part of Plaintiff, is vexatious. The Defendant has failed to fulfill its obligations for repayments in accordance with agreed terms and the Plaintiff has no other option but to file this suit. The contents of paragraph 4(i) of the plaint are reiterated for the sake of brevity and any assertions contrary to the above are denied. c. That the question 'D' raised by the Defendant is misconceived and misleading in terms of the Finance Agreement related to the Scheme and admittedly failed to repay the installments when the same became due in accordance with the LTFF Scheme. d. The question `E' raised by the Defendant is misconceived. It is respectfully submitted that the addendum dated May 11, 2012 was executed at the request of the Defendant and there is nothing contrary to MDF Circular 7 of 2007 in the said, addendum, The Defendant is estopped from questions the validity of the addendum signed at Defendant's own request. e. That the question 'F' raised by the Defendant is misconceived and irrelevant. The primary condition of eligibility. under the LTF-EOP Scheme was that the machinery must be new. The Defendant's machinery suffered damage during the rains and the Defendant's claim losses from its insurers and abandoned its request for seeking refinancing under LTF-EOP Scheme. f. That the questions 'G' and 'H' raised by the Defendant in respect of Finance Facility No.3 are misleading and misconceived. The Defendant failed to make payment of Facility II refinanced by State Bank of Pakistan, recovered the amount from Plaintiff's account. The Defendant requested another facility to fund the aforesaid repayments. It is respectfully submitted that the Plaintiff has clearly explained the details of Finance Facility No.3 in paragraph 4(ii) and (iii) of the plaint. It is specifically denied that the Finance Facility dated May 11, 2012 is a void document in violation of any Circular. The contents of paragraph 4(ii) and (iii) are reiterated for the sake of brevity and any assertions contrary to the above are denied. g. That the questions 'I' and T raised by the Defendant are misleading and misconceived. It is specifically denied that the Plaintiff charged any amount of Mark-up in violation of any law. It is respectfully submitted that the Plaintiff has charged the Mark-up in accordance with agreed terms and it is specifically denied that any amount of penalty was charged by the Plaintiff. h. That the question 'K' raised by the Defendant is misleading and misconceived. It is respectfully submitted that the provisions provided in the Ordinance. 2001, provides a fair trial and equitable procedure and therefore fulfills the requirements of Article 10-A of the Constitution. It is respectfully submitted that the Hon'ble Court has to see whether the Defendant has raised any substantial questions of law and fact and if the Court reaches the conclusion that such questions have been raised which require recording of evidence then the Court will grant leave otherwise, the leave to defend application will be dismissed. It is specifically denied that insertion of Article 10-A in the Constitution of Islamic Republic of Pakistan will any way affect the proceedings pending before this Hon'ble Court under the provisions of Ordinance, 2001. It is further submitted that this amendment will have no effect to the proceedings of this suit. The Defendant has miserably failed to raise any question that requires recording of evidence. Therefore the application is not maintainable and liable to be dismissed with cost and any assertions contrary to the above are denied.
16. On 21.10.2015, when C.M.A. No.28114 of 2014 [under section 10(2), 12 and 24(1) of F.I.O., 2001 and C.M.A. No.1701 of 2014 [under section 10 of F.I.O., 2001], came-up before the Court then the following order was passed: "21-10-2015 Mr. Waqar Ahmed, Advocate for Plaintiff.
Mr. Adnan I. Chaudhry, Advocate for Defendant.
1) By means of this Application under sections 10(2), 12 and 24(1) of F.I.O., 2001, the defendant is seeking condonation of delay if any in filing of the leave to defend application bearing C.M.A.
No.1701/2014. Learned counsel for the plaintiff today made a categorical statement that if learned counsel for defendant proceed with his leave to defend application today, then he will have no objection to the grant of this application.
19. The plaintiff, as contended by Mr. Adnan Iqbal Chaudhry, had in response, learned counsel for the defendant shown his willingness to proceed with his leave to defend application today. Under circumstances, the application bearing C.M.A. No.2828/2014 [wrongly mentioned by the office as C.M.A. No.28114/2014] is. granted. Learned counsel for defendant argued the case for one hour, however, due to other cases, this case is adjourned to 26.10.2015 for further arguments of the learned counsel for defendant.
Sd/- Judge"
17.Due to change in roster, subsequently, the above suit, under the administrative order of Hon'ble Chief Justice passed on 12.02.2016, was ordered to be fixed as per roster. On 02.05.2017, accordingly when the above matter came-up before the Court' for hearing of Defendant's Leave-to-Defend Application [C.M.A. No.1701 of 2014], then I heard Mr. Adnan Iqbal Choudhry, learned counsel for the Defendant who while, reserving the right of rebuttal, concluded his arguments on Leave-to-Defend.
Thereafter, on 11.05.2017, Mr. Waqar Ahmed, learned counsel for the Plaintiff argued the case partly.
Finally, on 23.05.2017, both the learned counsel for the parties concluded their arguments and order/judgment was then reserved.
18.Mr. Adnan Iqbal Choudhry, learned counsel for the Defendant at the very outset while, referring to BPD Circular No.14 of 2004 dated 18.5.2004 submitted that under the said circular, State Bank of Pakistan [in short SBP], had introduced a kind of facility for "Long Term Finance of Export Oriented Projects" [in short `LTF-EOP Scheme'], actually meant for facilitating import of plant and machinery by the textile sector at concessional rates of markup. The said LTF-EOP Scheme, per Mr. Adnan Iqbal Chaudhry, was in pursuance of the Trade Policy of the Federal Government and was aimed to assist textile exporters in the national interest. Per learned counsel, under the LTF-EOP Scheme, as introduced by State Bank of Pakistan, only the eligible borrowers/customers were entitled to avail finance from Financial Institutions, re-payable in a period of 7 years and 6 months. The 'concessionary rate' of markup under the said Scheme was 7.9% per annum. The repayment of the principal amount under the said scheme was to commence after 1 year 6 months from the date of disbursement. According to Mr. Adnan, since. Defendant was to set-up to manufacture and exports socks, as such, to achieve the said purpose. Defendant shown its desire to import plant and machinery for its factory, as it was, eligible for finance under the LTF-EOP Scheme also represented/ensured the Defendant, the provision of Finance Facility under the said LTF-EOP Scheme.
19. The Plaintiff, as requested by Defendant sanctioned a finance of Rs.120,000,000/- i.e. Finance Facility-I. The Finance Agreement-I, dated 13.6.2007, admittedly, is/was pursuant to BPD Circular No.14 of 2004 dated 18th May, 2004 read with SMED Circular No.15 of 2006, as is evident from 'clause B' Finance Agreement of 13.06.2007 [Annexurp 'B/1' to the Plaint]. Under the Finance Agreement-I, the plaintiff, according to Mr. Adnan, thus had committed to provide Rs. 120,000.000/- to the defendant under the LTF-EOP Scheme at the rate of 7.9% per annum. The rate of 7.9% was reduced to 6.9% as is evident from SMED Circular No.15 of 2006 dated July 14, 2006. The facility thus availed by Defendant was payable by the Defendant in 7 years and 6 months. Moreover, the repayment of the principal amount, was to commence after a grace period of 1 year and six months from the date of disbursement. The 'repayment schedule' annexed to the Finance Agreement. I, as urged by Mr. Adnan Iqbal Chaudhry, was only notional in nature. As being based on the plaintiffs aforesaid representation. and commitments, the defendant, proceeded to place purchase orders abroad for importing plant and machinery and also availed letters of credit facility for the payment of the plant and machinery. The 'Purchase Price' and 'Marked-up Price' under Finance Agreement dated 13th June, 2007, was fixed at Rs.120,000,000/- and Rs.242,286,849/- respectively. Being relevant Clause 17(t) of Finance Agreement dated 13.6.2007, is reproduced hereinbelow:-
(i) In the event that the LTF-EOP Scheme ceases to exist and/or the SBP does not reimburse Pak Oman for further disbursements and SBP asks for the full prepayment from Pak Oman, the Customer shall within fifteen days of written notice from Pak Oman pre-pay the entire outstanding amount of the Facility to Pak Oman, for onward payment by. Pak Oman to the SBP. It will, however, be Pak Oman's discretion (without any obligation on the part of Pak Oman) to continue the term facility with the Customer on an alternate agreed rate under a different facility agreement.
[Underlining is mine].
20. The letters of credit, Mr. Adnan argued, were established by Habib Bank Limited [in short HBL], on the basis of credit extended to Defendant by the Plaintiff as Plaintiff being not a commercial bank, was unable to establish letters of credit itself. Such arrangement between the Plaintiff/HBL and the Defendant is quite evident from the Plaintiff's undertaking dated 11.7.2007 given to HBL [Annexure 'C' to the Leave-to-Defend Application]. The undertaking dated 113.2017, it is needless to say, was amended from time to lime. The first Letter of Credit [in short L/C], was opened on 16.7.2007 for Euros 1,108,800 and the second Letter-of-Credit [in short L/C], was opened on 17.7.2007 for USD 44,500. The afore mentioned Letters of Credit also find mentioned in the plaintiff's undertaking dated 11.7.2007 and letter dated 24.8.2007 [Annexure E-2 to Leave-to-Defend Application]. The shipment of part of the plant and machinery, Mr. Adnan argued, was made by the respective sellers to the defendant on or about 13.9.2007 and 15.10.2007 respectively. The Plaintiff's Letter dated 24.08.2007 [Annexure '1-2' to Leave-to-Defend Application] and referred to by Mr. Adnan I.
Chaudhry reads as follows: PAK OMAN INVESTMENT COMPANY LIMITED 24 August, 2007 Mr. Ishtiaq Ali Joint Director SME and Microfinance Department State Bank of Pakistan I. I. Chundrigar Road, Karachi Dear Mr. Ali RE: Data regarding L.Cs established under the LTF-EOP Scheme With reference to your letter dated 20 August, 2007 having reference number SME&MFD/LTF- EOP/X/2007-2205 on the captioned subject. Accordingly the desired information is as follows: Details of LCs Sr.
No.Name of the company/ projectNumber and date of opening of LCType of LCFCY Equivalent PKR (in million)LC maturing onShipment date of LC 1 2 3 4 5 6 7 1.Comfort Knitwear (Pvt.) Ltd.ILC1242003 95707 10.08.07Sight USS847.500 51.32 21.01.08 31.12.07 2. Din Textile Mills Ltd.IBKLC/07/986 124.05.07Sight Euro 145,152 12.048 11.08.07 28.07.07 3.Renfro Crescent (Pvt.)
Ltd.ILC07860002655071 16.07.07SightEuro 1,108,800 94.03 21.11.07 28.09.07 4.Renfro Crescent (Pvt.) Ltd.1LC078600025 98071 17.7.07Sight 5544.500 2.684 30.09.07 15.09.07 5.Al-Abid Silk Mills Ltd.Credit approved, LC Not yet established LCs established by various commercial banks, however credit extended by Pak Oman Investment Company under LTF-EOP Scheme.
Yours sincerely Sd/ Sd/- Muhammad Shahbaz Jameel Jamal Nasir8 EVP and Head-Credit and Marketing SVP and CFO
21. In November, 2007, Plaintiff informed the Defendant about its inability to provide finance under the LTF-EOP Scheme, as the same was discontinued by SBP w.e.f. 01.7.2007. In this regard, the Plaintiff also provided some copies of letters exchanged between Plaintiff and SBP. According to Mr. Adnan, uptill the first 2 shipments of plant and machinery, plaintiff led the defendant to believe that finance facility be made available under the LTF-EOP Scheme to the Defendant. In this regard, reference was also made to Annexure-`E/I' to the Leave-to-Defend Application [C.M.A. No.1701 of 2014]. Annexure 'E/I', written by Plaintiff to State Bank of Pakistan and as referred to by Mr. Adnan, learned counsel for Defendant, is also reproduced hereinbelow: "August 22, 2007 Mr. Qasim Nawaz Director SME and Micro Finance Department State Bank of Pakistan Karachi.
Dear Sir, Long Term Finance for Export Oriented Projects (LTF-EOP) for Renfro Crescent (Pvt.) Limited Pak Oman Investment Company Limited (POICL) is a Development Financial Institution (DFI) formed by a joint venture between the Government of Pakistan and the Sultanate of Oman. POICL is a Participating Financial Institution (PFI) for the existing LTF-EOP Scheme of the State Bank of Pakistan (SBP). Renfro Crescent (Pvt.) Limited (RCPL) is a joint venture between the famous Crescent Group of Pakistan and Renfro Corporation of USA. Renfro Corporation is a Global Leader in the marketing and manufacturing of socks. Similarly, RCPL is a vertically integrated socks manufacturing company that manufactures high quality Dyed and White Socks for export to North American and European markets.
You would appreciate that formation of such ventures depicts confidence of US Investors to take exposure in long term projects in Pakistan and would not only result in increased FDI but would also result in technology transfer, market access, employment generation and improved export performance. This project is particularly important as the buyers of this Company are one of the principal sponsors where they have guaranteed 100% off-take of product. The export from this company is expected to increase further as they are in the midst of expansion for which LC's have been established through HBL on the 16th and 17th of July, 2017, and shall be retired using LTF-EOP facilities from POICL.
You would agree with the fact that investments in joint venture projects like these are made after considering financial aspects including various options and related costs. RCPL has entered the third stage of its expansion plan for which they have secured credit approval for financing of PKR 120 million through Pak Oman Investment Company Limited (POICL) under the SBP's Scheme of LTF-EOP. It was under the said scheme that RCPL proceeded to open LC's for the import of Plant and Machinery. We would like to apprise you that since RCPL undertook the feasibility of the project based on the financing rate offered through the SBP's existing LTF-EOP scheme, this recent development would hinder the cost assumptions and therefore the feasibility of the project on the whole thus having a negative affect on RCPL's financial outlook. [Underlining is mine].
The original terms of the LTF-EOP Scheme under which approval for financing was obtained are as follows:
1. The full amount of financing would be refinanced to the PFI by the State Bank of Pakistan.
2. The funds would be provided to Pak Oman Investment Company Limited @ 5 %.
3. POIC would be able to charge the client a maximum of 2% on the aforementioned funds.
According to the draft of LTFF sent out by the State Bank, SBP shall refinance 70% of the total funding to the PFI and the rate of service charge at which SBP will provide the refinancing has been linked to the weighted average yields of the last two auctioned PIB's. These terms are varying considerably from the original under which approval was obtained and the rate of service charge by the SBP is considerably higher thus severely hampering the feasibility of the project for RCPL.
In light of the above we request the following:
1. We solicit SBP approval, as a special case, for keeping the terms and conditions of the LTF-EOP scheme unchanged for RCPL for this particular transaction.
2. We have given a letter of comfort for a 180 days LC to be opened and are awaiting receipt of the documents. As such, we request renewal of our limits for 2007-08 for this facility extended to RCPL on a special case basis, on the original terms of the SBP's LTF-EOP Scheme. [Underlining is mine].
Looking forward to your continued support.. Yours Sincerely, Sd/- Muhammad Shahbaz Jameel EVP and Head Credit and Marketing Direct Line: 563-0970
22. Per Mr. Adnan Iqbal Chaudhry, the Letters of Credit, referred to hereinabove, were opened and pursuant thereto plant and machinery were imported by the defendant on the presumption that the LTF-EOP Scheme was not only subsisting but finance for retiring of such letters of credit, was also to be extended to the defendant under the LTF-EOP Scheme. To understand in better way, the stand taken by Defendant the State Bank of Pakistan's Letter No.MFD/LTF-EOP/X/2007-2550 dated September, 29, 2007 [Annexure 'E-4' to Leave-to-Defend Application], being relevant is also reproduced hereinbelow:- "STATE BANK OF PAKISTAN MICROFINANCE DEPARTMENT No.MFD/LTF-EOP/X/2007-2550September. 29, 2007 The Managing Director Pak Oman Investment Company Ltd.
Head Office, Ist Floor, Tower A, FTC, Shahra-e-Faisal, Karachi Dear Sir, Scheme for Long Term Financing for the Export Oriented Projects (LTF-EOP)
Please refer to your letter dated August 24, 2007 in terms of which your company has furnished information regarding LCs established under the captioned Scheme. As per said information your company has reported 04 cases where LCs amounting to Rs.166.082 million were set up on or before 301h June 2007 but refinance could not been claimed/released by the offices of SBP-BSC
(Bank) due to non-availability of limit for the year 2007-08 under the LTF-EOP Scheme.
2. In this connection we are pleased to inform you that your company can avail refinancing facility under LTF-EOP Scheme to the extent of Rs.160.082 million against the retirement of those LCs (pertaining to transitionary cases) which have been reported to us vide your above referred letter, if otherwise, in order and in accordance with the provisions of the Scheme. You are therefore, advised to furnish us break up of above amount that your company intends to draw from various offices of SBPBSC (Bank) to enable us to proceed further besides intimating to us the last date for retirement of each LC as per the terms of the same, where such date has not been provided for.
3. Please note that no new limits for 2007-08 have been sanctioned as LTF-EOP Scheme stands abolished as of 30-06-2007 (a new Scheme styled Long Term Financing Facility is under finalization). Any LC that your company has established for the purpose on or before 1st July, 2007 shall not, therefore, be entertained for re-imbursement against the amount mentioned in Para 2 above which have been allowed to the cases as specifically mentioned in the attached list. [Underlining is mine].
Yours faithfully, Sd/- (Ishtiaq Ali)
Joint Director Encl: As above.'
23. In the above said scenario and keeping in view of placing of purchase orders for plant and machinery and the opening of some Letters of Credit by HBL. Defendant, remained with no choice but to accept finance from the Plaintiff on the condition mutually agreed between the parties.
The defendant, nevertheless, is entitled to claim and be put in the position in which it would have been if, the Plaintiffs representation vis-a-vis. LTF-EOP Scheme had become true. In this regard, reference was made to the Defendant's letter of December 7, 2007 which reads as follows:- December 7, 2007 Mr. Shahbaz Jamil EVP Credit and Marketing Pak Oman Investment Company Ltd. (POICL) Karachi.
Subject: Long Term Finance of Rs. 120 million Dear Sir, Please refer to your sanction letter dated May 10, 2007 that was duly accepted and returned to your bank wherein we had been offered a Long term facility (LTF-EOP) of PKR 120 million at SBP rate + 2% p.a. for a tenor of 7.5 years (1.5 years Grace)
As you are aware Pak Oman intended to avail the financing of such loan from SBP that is not yet approved by SBP owing to the reason that LC was opened after June 30, 2007. As this condition was not known to us nor informed by any Institution our LCs opened after the said period and therefore SBP did not finance the same and POICL financed from their own sources. Due to this non-approval by SBP burden of the same is being shifted from POICL to Renfro Crescent Limited
(RCL) a KIBOR + margin although we have opened the LC based on POICL approval for financing at SBP rate + 2%.
Considering the high burden on RCL, that was never anticipated before neither by POICL nor RCL, we request that our case be considered on special basis and we be offered the Long term financing with similar tenor at a concessional rate not to exceed KIBO + 1 %. This would still allow POICL to earn the margin on financing and reduce partial burden of RCL. [Underlining is mine].
We look forward to receive a positive response on the same at your earliest.
Yours Faithfully Usman Shafi (Executive Manager)
CC: Ms. Saira Shergill, AVP and Team Leader (Syndications), Credit and Marketing, Pak-Oman Investment Company Limited.
24.Mr. Adnan Iqbal Chaudhry, learned counsel for Defendant next argued that if, Defendant is put to the position to which it would have been, then, the Finance Facility-I for Rs. 120.000.000/- could not have fallen due for repayment till 2016. Moreover, 'Mark-up' thereon would not have exceeded from 6.9% per annum. In view of the aforesaid scenario, Mr. Adnan Iqbal Chaudhry, argued that Rescheduling Agreement dated 11.5.2012 [Third Addendum to Finance Agreement], has thus become redundant and un-enforceable under law.
25.Besides, Mr. Adnan Iqbal Chaudhry argued that vide MFD Circular No.7 of 2007 dated 31.12.2007, SBP had also introduced 'Long Term Financing Facility for Plant and Machinery" [in short LTFF Scheme'], objectively, for facilitating the import of plant and machinery' by the exporters. The LTFF Scheme, nevertheless, per learned counsel, was less favourable as compared to-the LTF-EOP Scheme. Under the LTFF Scheme, an eligible customer/borrower was entitled to avail finance repayable in 5 years at a rate of markup of 9% per annum, and the repayment of the principal amount under the LTFF was to commence after 1 year of the date of disbursement. Under such scheme, 70% of the needed finance was to be funded by the SBP and the remaining 30% was to be funded by the financial institutions. It is significant to note that vide SMEFD Circular No.16 of 2009 issued by the SBP on 31.10.2009, the rate of markup under the LTFF Scheme for 5 years facility was enhanced to 9.70%. This rate of 9.70% was again increased to 10.4% vide SMEFD Circular No.6 of 2010 issued by the SBP on 31.3.2010.
26.Mr. Adman Iqbal Chaudhry, while, admitting that Finance Agreement dated 18.12.2009 for Finance Facility-II [Annexure `C/1' to the Plaint] is/was pursuant to the LTFF Scheme, however, submitted that the terms of the LTFF Scheme is to prevail over the Finance Agreement dated 18.12.2009. Per learned counsel, upon disbursement of the Finance Facility, the repayment schedule to said agreement thus be deemed and treated as modified by the LTFF Scheme though such scheme is earlier in time. Per Mr. Adman Iqbal Chaudhry, the amount availed by Defendant thus had to be repaid in 5 years. No-doubt, the amount of Rs.50.000.000/-, was disbursed on 9.3.2010, but prescribed rate of markup under the LTFF Scheme is to 9.70% on the date of disbursement, i.e. 09.03.2010.
24.The Plaintiff, despite of the above position, however, confined the tenure of repayment to 2 years and applied a higher rate of mark-up @ 10.40%. This position, per Mr. Adnan, is quite clear from the statement of account i.e. regarding Finance Facility-II [Annexure 'F/6' to the plaint]. Per Mr. Adnan I. Chaudhry, such act of the Plaintiff is not only in breach of the Finance Agreement dated 18.12.2009, but also in violation of MFD Circular No.7 of 2007 as well as SMEFD Circular No.16 of 2009 issued by the SBP. For in view of such unlawful acts, the Defendant's ability to service Finance Facility-II, was squeezed. Further, the Finance Facility-II, under the aforesaid scenario was not to become due for repayment till 2015. According to Defendant's stand, default vis-a-vis. Finance Facility-II, in fact, is a engineered default.
28.As far as, Rescheduling of Finance Facility-II vide the Addendum to Finance Agreement dated 11.5.2012 [Annexure 'C/2' to the Plaint], is concerned, the same according to Mr, Adnan Iqbal Chaudhry, is void, as the same has been done in violation of MFD Circular No.7 of 2007. Further, the amount as rescheduled was never due for repayment at the time when Finance Facility-II, was re- scheduled vide Addendum to Finance Agreement dated 11.05.2012. Moreover, as per SMEFD Circular No.16 of 2009 dated 26.6.2009, SBP while, modifying the said LTFF, the same was extended/made applied to those Letters of Credit, which having been established prior to the said Scheme or were retired after 30.6.2007. Mr. Adnan Iqbal Chaudhry, next argued that as per Annexure `E-2' to Leave- to-Defend Application, two Letters of Credit that were Financed by the Plaintiff under 'Finance Facility-I' also fall within the scope of SMEFD Circular No.16 of 2009. The Defendant thus with a view to mitigate its damages allegedly been caused through mis-representation, requested the Plaintiff for extending the concession given by the SBP, but the Plaintiff, with a mala fide intention had flatly refused the Defendant's request.
29.Mr. Adnan Iqbal Chaudhry, learned counsel for the Defendant, while advancing his arguments, further contended that under Finance Facility-III of Rs.9,375,000/- no 'fresh disbursement' has been made. Per learned counsel, in fact it was a rescheduling of Finance II whereby, Finance Facility-III, was created by bifurcating the outstanding amount under Finance Agreement dated 18.12.2009 [Annexure 'C/1' to the Plaint], availed by Defendant under the LTFF Scheme. One portion of Facility-II which was relating to the funds of SBP admittedly was rescheduled under the Addendum to Finance Agreement dated 11.5.2012 [Annexure 'C/2' to the Plaint] while, the other portion of the said Facility-II relating to the Plaintiff's fund was also rescheduled under Finance Agreement dated 11.5.2012 [Annexure 'D/1' to the Plaint] as Finance Facility-III. Per Mr. Adnan's contention, the Finance Facility-III, under Finance Agreement dated 11.5.2012 [Annexure 'C/2' to the Plaint], is avoid as Finance Facility-III, so created, is not only in violation of MFD Circular No.7 of 2007 but it is also for the amount which as alleged was then not duty r)r repayment. The charge of 'Mark-up' even on account of rescheduling of Finance Facility-I and Finance Facility-II by the Plaintiff is unlawful, as there was no fresh disbursement. In this regard, reliance was placed on the case of Habib Bank Ltd. v. Qayyum Spinning Mills [2001 M LD 1351].
30.Mr. Adnan Iqbal Chaudhry, learned counsel for the Defendant, lastly argued that the question of default, under the given circumstances does not arise, as Finance Facility-I and Finance Facility- II, were to be serviced in line with the aforementioned Circulars of the SBP. Moreover, no amount, as alleged by the Plaintiff, was then due and payable under the Finance Facility-I and II. Not only this, the Finance Facility-III is not a separate facility, but in fact it was a part of Finance Facility-II. For and in view of the above. Mr. Adnan Iqbal Chaudhry urged for grant of un-conditional Leave to Defend the suit, as the Defendant, according to his stand, has succeeded in raising substantial questions of law and fact which in the Defendant's opinion needs recording of evidence.
31.In contra, Mr. Waqar Ahmed, learned counsel for the plaintiff while controverting the stand taken and pleas raised by Defendant forcefully submitted that the Application for Leave to Defend [C.M.A. No.1701 of 2014], as framed is not in accordance with the 'mandatory provisions' of Ordinance, 2001 [Ordinance XLVI of 2001], as such, the same is liable to be rejected. Per Mr. Waqar Ahmed, the Defendant has badly failed to raise any substantial question of fact and law, which can require recording of evidence. The Leave-to-Defend Application [C.M.A. No.1701 of 2014], on the face of it, is not only in negation of the provisions of subsections (3) and (4) of section 10 of Ordinance, 2001 [Ordinance XLVI of 2001], but also it does not fulfill the 'Mandatory Requirements' of law. Per learned counsel for the Plaintiff, on this score alone, the Leave-to-Defend Application [C.M.A. No.1701 of 2014], is liable to be rejected under section 10(6) of F.I.O., 2001 with cost, otherwise, the plaintiff shall be seriously prejudiced.
32. Mr. Waqar Ahmed, learned counsel for Plaintiff next argued that since, the Defendant has admitted the execution of documents, as such, under the settled principle of law the documents annexed with plaint need not to be proved. Per Mr. Waqar Ahmed, on this ground as well.
Defendant is not entitled for grant of any leave to defend the suit. Further, denials on the part of Defendant are not only evasive but also without any foundation. The rescheduling of facility[ies] admittedly made after execution of documents by Defendant voluntarily, cannot be questioned/challenged on the strength of SBP's Circulars, as rescheduling of facility[ies] is not only permissible under section 2(e) of F.I.O., 2001, but it is also obligatory on the customer/Defendant not only to perform its' undertakings, but also to fulfill the promise[s] made as being duty under F.I.O., 2001.
33. No doubt under the provisions of F.I.O., 2001, a Defendant is required to raise substantial questions of law and facts for obtaining leave to defend the suit. And until and unless such substantial questions are raised, a Defendant merely on the touchstone of Article 10-A of Constitution of Islamic Republic of Pakistan, 1973, is not entitled for grant of Leave-to-Defend the suit: The provisions of Ordinance, 2001, itselves provide a mechanism of 'fair trial' and 'equitable procedure' which in no event can be said as less fair. Even otherwise, on the strength of Article 10-A, the provisions of F.I.O., 2001, could not be assailed as being in contravention or otherwise, against the spirit of Article 10-A of Constitution of Islamic Republic of Pakistan, 1973. The insertion of Article 10-A in the Constitution of Islamic Republic of Pakistan, 1973, itself would not affect the proceedings initiated under 2001.
34. Per Plaintiffs stand, the Leave-to-Defend Application [C.M.A. No.1701 of 2014], in the case in hand, is also barred by time. The Defendant as urged has failed to explain five days' delay in filing Leave- to-Defend Application sufficiently. Besides, the Defendant's Leave-to-Defend Application did not comply with the provisions of section 10(3), (4) and (5) of F.I.O., 2001. For and in view of the above, it was urged that Leave-to-Defend Application is liable to be rejected under section 10(6) of F.I.O., 2001.
35. Heard.
36. The contention of Mr. Adnan Iqbal Chaudhry that the plant and machinery were imported on the basis of some alleged mis-representation on the part of plaintiff. According to Mr. Adnan, on account of such misrepresentation the Defendant herein remained under impression that the LTT- EOP Scheme, is not only subsisting but the requisite finance for retiring of letters of credit, be also extended to the Defendant under LTF-EOP Scheme. Mr. Waqar Ahmed, learned counsel for the plaintiff in 'contra', vehemently repelled/controverted such stand taken by the defendant. The plaintiff, it was submitted, in actual fact, did extend the Finance Facility No.1 to the Defendant in accordance with Finance Agreement of June 3, 2007, which Finance Agreement was admittedly modified later-on in terms of Addendum to the Finance Agreement dated July 17, 2007. Per Mr. Waqar's contention, the question of misrepresentation under the aforesaid scenario, does not arise.
Moreover, at the relevant time, the Defendant was fully aware of the scope and status of the LTF- EOP Scheme and SBP's Circulars. But, Defendant despite such knowledge, besides, giving his consent, executed various documents including Finance Agreements/Addenda pertaining to rescheduling of the Finance Facility[ies] voluntarily. No document, financial or security, contains any protest on the part of Defendant. In view of this position, the Defendant, at this belated stage, cannot resile/wriggle out of his promises/commitments.
37.As far as, the question as to whether the 'terms' and 'conditions' set under Finance Agreement dated 18.12.2009, for repayment of Finance-II, were contrary to the SBP's Circular i.e. MFD Circular No.7 of 2007 and SMEFD Circular No.16 of 2009 issued by the State Bank of Pakistan [In short SBP] is concerned, the same stand, under the given circumstances of the case in hand, is not only mis- conceived, but also mis-leading. The Defendant, it is needless to say, had availed the benefit of LTFF Scheme, but in return had failed to pay the installments when they became due. All the 'terms' and 'conditions', mutually and voluntarily set by the parties under Finance Agreement of 18.12.2009, at this fag end of the proceedings cannot be questioned as being either contrary to the LTFF Scheme or otherwise, against the spirit of SBP's Circulars. Under law, one cannot be permitted to approbate and reprobate. Moreover, SBP's Circulars cannot over-ride the provision of F.I.O., 2001 which permits Rescheduling etc. under section 2(e) of F.I.O., 2001.
38. Likewise, the question as to whether the rescheduling of Finance Facility-II vide Addendum to Finance Agreement dated 11.05.2012, is void in view of MFD No.7 of 2007, is concerned, the same besides being mis-conceived is afterthought. It is worth to note that Addendum dated May 11 of 2012, was 'signed' and 'executed' voluntarily' pursuant to Defendant's request. On the face of record, there is nothing, as contrary to MFD Circular No.7 of 2007, in the said Addendum of May 11, 2012. After signing and executing the said Addendum of May 11, 2012, by Defendants out of his 'freewill' and 'wish', now the same, in my view, cannot be alleged, as violative to SBP's circulars including MFD Circular No.7 of 2007. Moreover, pursuant to the execution of documents, the Defendant benefited himself/acted upon the rescheduling of finance facilities including Finance Facility-II. Apart from the above, the Defendant has neither denied the execution of document nor the availment of Finance Facilities.
39.Regarding the question, us to whether Defendant, was qualified to avail the facility from SBP, pursuant to SMEFD Circular No. 11 of 2009, it is worth to mention herein, that the primary eligibility condition under the LTF-EOP Scheme, was a new machinery. In the case in hand, since, the Defendant's machinery had suffered damages during rain, as such, Defendant in his own wisdom opted to claim losses from its insurers. And abandoned, its request resultantly, for re-financing under LTF-EOP Scheme. For and in view of this reason, Defendant did not succeed to avail Financial Facility[ies], under SMEFD Circular No.11 of 2009. For abolishing of SBP's LTF-EOP Scheme for the years 2007-2008, on 30.6.2007, the Plaintiff could not be held responsible. Moreover, the Defendant never sought any relief of his grievance against SBP vis-a-vis abolishing of SBP's LTF-EOP Scheme.
40. As far as, the question (G), which is to the effect as to whether Finance Facility-III for Rs.9,375,000/-, was a 'fresh disbursement' to Defendant. If not, whether any 'mark-up', can be claimed thereon, and question (H), which is to the effect as to whether Re-scheduling of Finance Facility - III, under Finance Agreement of 11.5.2012 [Annexure 'D/7' to the plaint], is void in view of MFD Circular No.7 of 2007 and was any amount for repayment was then due are concerned, the same beside misconceived are mis-leading. It is worth mentioning that due to Defendant's failure to make payment of Facility - II [Re-financed by State Bank of Pakistan], SBP, was constrained to recover the payable amount from plaintiff's account. As far as, Finance Facility-III concerned, the same has clearly been explained in Paras (ii) and (iii) of the plaint. In view of such clear explanation, it cannot be said and/or otherwise, alleged that Finance Agreement dated May 11, 2012, in any way is void document. SBP's Circulars, as being subordinate legislature, in no event, over- ride the provision of F.I.O., 2001, which permits Re-structuring/Re-scheduling of Finance Facility[ies] in terms of section 2(e) of F.I.O., 2001.
45(sic.) With regard to questions 'T' and 'F', Mr. Waqar Ahmed argued that 'no mark-up', as alleged, has been charged by the plaintiff Institution, in violation of Finance Agreements and Addenda thereto. Defendant, in the case in hand, no doubt, has failed to pin-point any entry in the 'certified statement of accounts' as being wrong and contrary A to law. The general, vague and evasive allegations, leveled by Defendant merit no consideration. Under law, evasive denials are no denials. Reliance can be placed on the case of Ghulam Rasool through Legal, Heirs and others v.
Mohammad Hussain and others [PLD 2011 SC 119] wherein, it was observed as under:- "6. ...rather made an evasive denial in their written statement expressing their lack of knowledge in this regard, which is no denial as per the provisions of Order VIII, Rules 3, 4 and C.P.C., rather such a denial may be constructed as an admission on their part. [Underlining is mine].
46. With regard to the plea of 'fair trial' and 'due process', as mandated under Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973, it is needless to say that Article 10-A, no doubt, ensures `fair trial' and 'due process' but in accordance with law/statute under which proceedings initiated and are dealt with. For example, in the Banking matters, Leave to Defend the suit, needs to be obtained under the provisions of section 10 of F.I.O., 2001 [Ordinance No.XLVI of 2001]. And until and unless, such Leave to Defend the suit upon raising substantial questions of law and facts is obtained, a Defendant cannot defend the suit. The Defendant if, fails to fulfill the 'mandatory requirements' as provided under section 10 of F.I.O., 2001, or otherwise, no Leave to Defend Application is filed within the 'statutory period of 30 days', then the Banking Court may pass a decree under section 10(1) of F.I.O., 2001. Merely on the plea of 'fair trial' and 'due process', the 'mandatory provisions' of F.I.O., 2001, cannot be bypassed or otherwise, rendered redundant and/or ineffective. Article 10-A. is to be read and seen in juxtaposition of Article 4 of the Constitution of Islamic Republic of Pakistan 1973. Articles 4 and 10-A of the Constitution of Islamic Republic of Pakistan, 1973, for convenience purpose are reproduced herein below respectively: "4. Right of individuals to be dealt with in accordance with law, etc.---(1) To enjoy the protection of law and to be treated in accordance with law is the inalienable right of every citizen, wherever he may be and of every other person for the time being within Pakistan.
(2) In particular-
(a) no action detrimental to the life, liberty, body, reputation or property of any person shall be taken except in accordance with law;
(b) no person shall be prevented from or be hindered in doing that which is not prohibited by law; and
(c) no person shall be compelled to do that which the law does not require him to do.
10A. Right to fair trial.---For the determination of his civil rights and obligations or in any criminal charge against him a person shall be entitles to a fair trial and due process.
47. Moreover, if, for want of NECESSARY/MANDATORY REQUIREMENTS, the Leave to Defend of a Defendant is rejected or in absence of LEAVE TO DEFEND APPLICATION, the Banking Suit is decreed, then too the aggrieved person would be at liberty to seek redressal of his grievance, if any, in accordance with available provisions of law including section 22 of F.I.O., 2001. A Defendant could not, however, be permitted in such like a situation to urge the non-affording of a 'FAIR TRIAL' and 'DUE PROCESS' on the touchstone of Article 10-A of the Constitution of Islamic Republic of Pakistan.
1973, inter alia when the 'pleas raised by a Defendant are not found 'satisfactory' and 'convincing'.
On the aspect of 'FAIR TRIAL' and 'DUE PROCESS', reliance can be placed on the case of Shabbir Ahmed v. Kiran Khursheed and 8 others [2012 CLC 12361, the relevant observations read as follows:- "Article 10-A, morphs Article 4 into a more robust fundamental right, covering both substantive and procedural due process. While substantive due process provides a check on legislation and ensures the protection of freedoms guaranteed to a person under the Constitution, procedural due process, which concerns me here, provides that 'each person shall be accorded certain 'process' if they are deprived of life, liberty or property---The question then focuses on the nature of the 'process' that is 'due'. The government always has the obligation of providing a neutral decision maker one who is not inherently biased against the individual or who has personal interest in the outcome". Due process is now available to every person as a fundamental right and underscores procedural fairness and propriety in determining his civil or criminal rights. The procedure adopted in determining the rights of the parties must at every step pass the test of fairness and procedural propriety and at all times must honour the law and the settled legal principles. Article 10-A is not limited to a judicial trial in its strict sense but requires fairness from any forum which determines the rights of a person." [Emphasis and underlining are mine].
48. Moreover, in the case in hand the Defendants' pleas are not only vague but also evasive and apparently aimed to prolong the 'swift disposal' of the recovery proceedings filed by the Plaintiff.
The Defendant herein besides, admitting, rescheduling of Finance[ies]. availing of amounts thereunder, have also admitted the documents appended with plaint. Moreover, in the Contract Act, there exists nothing, which prohibits parties from 'varying' and/or 'altering' the terms of 'original contract' mutually by executing a new contract' upon new 'terms' and 'conditions'. The `novation/substitution' of the 'old contract' by a new one for the purpose of rescheduling, restructuring and renewal of facility[ies] under law of F.I.O., 2001, is quite permissible. In the case in hand, all the financial/security documents including 'Finance Agreements' and 'Addenda' thereto, have gone unchallenged. Moreover, all the Finance Agreement[s] and Addendum[s], in the case in hand, have already been acted upon. In this regard, reference can be made to Articles 113 and 114 of Qanun-e-Shahadat Order, 1984. The same, for ready reference, are reproduced respectively herein below:- "113. Facts admitted need not be proved: No fact need be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing, or which before the hearing, they agree to admit by any writing under their hands, or which by any rule or pleading in force at the time they are deemed to have admitted by their pleadings: Provided that the Court may in its discretion, require the facts admitted to be proved otherwise than by such admissions.
[Underlining is mine].
114. ESTOPPEL. When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth or that thing."
49. Manifestly, the Leave to Defend Application bearing C.M.A. No.1701/2014, filed by the Defendant does not fulfill the 'mandatory requirements' of subsections (3), (4) and (5) of section 10 of F.I.O., 2001 (Ordinance No.XLVI of 2001], as such, on this score, as well, the Leave-to-Defend Application [C.M.A. No.1701/2014], is liable to be rejected under subsection (6) of section 10 of F.I.O., 2001. In the Banking suit, parties thereto, have no option to make general allegations/assertions on the aspect of accounts as law/F.I.O., 2001, binds parties to the suit to be absolute and specific on accounts.
The Banking suit, normally is a suit on accounts, as such, it is obligatory upon both the parties to definitively plead and specifically state their respective accounts. Reliance in this regard can be placed on the case of Appollo Textile Mills Ltd. v. Soneri Bank Ltd. [PLD 2012 SC 268] wherein, it was observed as follows:- "1". Non impleadment under subsections (3) and (4) of section 10 and section 9(3) ibid of accounts in terms of the said provisions, entails legal consequences under subsections (1), (6) and (11) of section 10 of the Ordinance, 2001. These provisions read us under:- "10. Leave to defend---(1) In any case in which the summons has been served on the defendant as provided for in subsection {3) of section 9, the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court as hereinafter provided to defend the same; and, in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff on the basis thereof or such other material as the Banking Court may require in the interest of justice.
10(6)---All 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.
10(11)---Where the application for leave to defend is rejected or where a defendant fail to fulfil the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant."
18. The Financial Institutions. (Recovery of Finances) Ordinance, 2001 i.e. is a special law. It provides a special procedure for the banking suits. The provisions of the Ordinance, 2001 under section 4 thereof override all other laws. The provisions contained in the said Sections require strict compliance. Non-compliance therewith attract as above referred, consequences of rejection of leave petition along with decree etc. etc. [Underlining is mine] Applying all the settled and well known principles to determine the mandatory construction of a provision of law, the said provisions cannot but be held to be mandatory. This Court in the case of Wiaz Muhammad v. Fazal Raqib' (PLD 1974 SC 134) held that.-- "It is true that no universal rule can be laid down for the construction of statutes as to whether mandatory enactments shall be considered directory only or obligatory with an implied multification for disobedience. It is the duty of the Courts to try to get at the real intention of the legislature, by carefully attending to the whole scope of the statute to be construed. As a general rule however, a statue is understood to be directory when it contains matter merely of direction, but not when those directions are followed up by an express provision that, in default of following them, the facts shall be null and void. To put it differently, if the Act is directory, its disobedience does not entail any invalidity, if the Act is mandatory disobedience entails serious legal consequences amounting to the invalidity of the act done in disobedience to the provision".
[Underlining is mine].
50. Per Mr. Adnan Iqbal Choudhry, `Mark-up' on the outstanding amounts if, the same are got re- structured/re-scheduled, even at the request of a customer, cannot be charged as there is no fresh disbursement. This contention of Mr. Adnan Iqbal Choudhry, learned counsel for Defendant, in my view, besides incorrect, is without any merit. Needless to say, in Restructuring/Re-scheduling, amount already availed is not 'disbursed afresh'. In Re-structuring/Re-scheduling, the amount outstanding in the statement of account is only brought forward in the 'certified statement of accounts'. Regarding this aspect of the matter reliance is placed on the case of Habib Bank Ltd. v.
Taj Textile Mills Ltd. through Chief Executive and 5 others [2009 CLD 11431 wherein, it was observed as follows- "7. ...when liability of the borrower 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 11-12-2002, 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 30-9-2001, through which the restructuring has been made as this was/is and 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 Evidence Act."
[Underlining is mine].
51. In the case in hand, the Re-scheduling Agreements and Addenda thereto, have also been acted upon and some amounts outstanding have also been paid. If, the Defendant's case was otherwise, then why documents therefore were executed and acted upon. Moreover, `REPAYMENT SCHEDULE' is not a notional document, rather it is inseparable part of the Rescheduling. On this aspect of the matter, reliance can be placed on the case of Muhammad Arshad and another v. Citibank N.A., Lahore [2006 SCM R 1347], wherein the apex Court, in somewhat identical situation held/observed as follows:- "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 installments 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 last sight of that the main object to get the renewal 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 renders 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 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 said documents." [Underlining is mine].
52. Financial Institutions (Recovery of Finances) Ordinance, 2001 [XLVI of 2001], as being a special law binds a customer inter alia to perform its undertakings and fulfill its promises made. Moreover, the provisions of F.I.O., 2001, in terms of section 4 override all other laws. This being the position, the 'provisions' contained in F.I.O., 2001 require strict compliance. With regard to SBP's Circulars, it is suffice to say, the same as being product of a 'sub-ordinate legislature, in no manner, over-ride the provisions of F.I.O., 2001 which is a special law. Customers under F.I.O., 2001, are duly bound to fulfill their obligations and duties imposed thereunder. Being relevant subsection (3) of section 2 of F.I.O., 2001 is reproduced herein-below:- "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 change 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)............
53.From clause (e) of section 2 of F.I.O., 2001 [Ordinance No.XLVI of 2001], it is quite clear that a Bank's customer besides under the provisions of F.I.O., 2001 is not only 'obliged' but also 'duty bound' to perform/fulfill its undertakings/promises regarding repayment of a finance or the payment of other amounts relating to a finance. In the case in hand, Defendant has admitted the execution of 'Finance Agreements'/Addenda thereto and all other documents annexed with plaint. The Defendant's objections, in fact, are aimed to somehow prolong the 'swift disposal' of recovery proceedings in the case in hand. All the documents of 'finance facility[ies] including 'Finance 'Agreements'/Addenda are not only genuine/absolutely valid but also fully binding upon the parties. At this stage, it is further to say, Defendant cannot be allowed to wriggle out of its commitments and duties.
54.Without pin-pointing any defect in filing of suit Mr. Adnan, however, argued that the Plaintiff's suit besides not maintainable under law is liable to be dismissed. Contrary to this, Mr. Waqar Ahmed argued that in fact, it is Defendant's Leave-to-Defend Application [C.M.A. No.1701 of 2014], which is not in conformity with the provisions of section 10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 [XLVI of 2001]. Defendant herein, it is worth mentioning, has failed and/or avoided to plead the requisite accounts and that too without any plausible cause to show his inability in doing so. Both the parties in terms of sections 9 and 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 [XLVI of 2001], have no option but to definitively plead and specifically state their respective 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 F.I.O., 2001. The same being relevant are reproduced respectively hereinbelow:
9. Procedure of Banking Courts.- (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. [Underlining is mine].
(7)
(8)
(9)
(10)
(11). . .
(12). . .
55. Despite the above, Defendant in the case in hand, however, has failed to put forward a specific and definite response to the Plaintiff Bank's accounts which under subsection [4] of F.I.O., 2001, is compulsory. The Financial Institutions (Recovery of Finances) Ordinance, 2001 [XLVI of 2001], as being a special law provides special procedure. It is significant to note that section 4 of F.I.O., 2001 overrides the provisions of all other laws, for the time being in force and if found inconsistent.
Defendant herein, however, has failed to fulfill the 'mandatory requirements', of section 10(3) and
(4) of F.I.O., 2001, therefore, for such 'non-compliance' the Leave-to-Defend Application [C.M.A.
No.1701 of 2014], filed by the Defendant, is liable to be rejected in view of the dictum laid down in the case of Apollo Textile Ltd. v. Soneri Bank Ltd. [2012 CLD 3221. 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 tire 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].
56. Per Plaintiff's stand, Defendant herein has committed default in discharge of its/his commitments, performance of duties. For and in view of such 'default', a sum of Rs. 162,344,199/- has become due and payable as on 30th November, 2013, in respect of the Finance Facility[iesl, granted to and availed by 'Defendant. The 'break-up summary' of the Finance Facilities prior re- scheduling is as follows:- Maximum Limit of Finance Facility - I:Rs.120,000,000/- Finance Facility - I - A Date(s) of Disbursement: September 29, 2007 Date(s) of Default: September 29, 2011 Date(s) of Rescheduling: April 17, 2012
(a) Amount of Finance availed by the Defendants: Rs. 2,714,500/-
(b) Amount repaid by the Defendant: Rs. 2,412,481/- i) Principal Rs. 1,017,936/- ii) Mark-up Rs. 1,394,545/-
(c) Amount payable (as of April 17, 2012): Rs. 1,921,243/- i) Principal Rs. 1,696,562/- ii) Mark-up (overdue + accrued) Rs. 224,681/-
(d) Total amount payable 1,921,243/- Finance Facility - I - B Date(s) of Disbursement: October 29, 2007 Date(s) of Default: October 29, 2011 Date(s) of Rescheduling: April 17, 2012
(a) Amount of Finance availed by the Defendants: Rs. 48,752,000/-
(b) Amount repaid by the Defendant: Rs. 43,640,553/- Principal Rs. 18,282,000/- Mark-up Rs. 25,358,553/-
(e) Amount payable (as of April 17, 2012): Rs. 33,961,344/- i) Principal Rs. 30,470,000/- ii) Mark-up (overdue + accrued) Rs. 3,491,344/-
(d) Total amount payable Rs. 33,961,344/- Finance Facility - I - C Date(s) of Disbursement: November 20, 2007 Date(s) of Default: August 20, 2011 Date(s) of Rescheduling: April 17, 2012
(a) Amount of Finance availed by the Defendants: Rs. 49,896,000/-
(b) Amount repaid by the Defendant: Rs. 41,751,270/- Principal Rs. 16,632,000/- Mark-up Rs. 25,119,270/-
(c) Amount payable (as of April, 17, 2012): Rs. 38,118,951/- i) Principal Rs. 33,264,000/- ii) Mark-up (overdue + accrued) Rs. 4,854,951/-
(d) Total amount payable Rs. 38,118,951/- Finance Facility - I - D Date(s) of Disbursement: April 17, 2008 Date(s) of Default: October 17, 2011 Date(s) of Rescheduling: April 17, 2012
(a) Amount of Finance availed by the Defendants: Rs.3,896,986/-
(b) Amount repaid by the Defendant: Rs.3,012,728/- Principal Rs.1,136,595/- Mark-up Rs.1,876,1,33/-
(c) Amount payable (as of April 17, 2012): Rs.3,084,170/- Principal Rs.2,760, 301/- Mark-up (overdue + accrued) Rs. 323,869/-
(d) Total amount payable Rs. 3,084,170/- Finance Facility - I - E Date(s) of Disbursement: July 28, 2008 Date(s) of Default: October 28, 2011 Date(s) or Rescheduling: April 17, 2012
(a) Amount of Finance availed by the Defendants:Rs. 14,740,604/-
(b) Amount repaid by the Defendant: Rs. 10,530,402/- Principal Rs. 3,685,151/- Mark-up Rs. 6,845,251/-
(c) Amount payable (as of April 17, 2012): Rs.12,425,763/- Principal Rs.11,055,453/- Mark-up (overdue + accrued) Rs. 1,370,310/-
(d) Total amount payable Rs.12,425,763/-
57. Upon restructuring of Finance Facility-I, all trenches 'Finance Facility-l-A' to 'Finance Facility-I- E', were merged in terms of 3rd Addendum to Finance Agreement dated May, 2012. The 'Break-up' of 'Summary of Finance Facility-I' upon Rescheduling reads as follows:- Rescheduled Finance Facility-I Principal amount of Rescheduled Finance Facility-I:Rs.79,246,317/- Date of Rescheduling: April 17, 2012 Date of Default: September 30, 2012
(a) Amount of Finance availed by the DefendantRs.79,246,317/-
(b) Amount repaid by the DefendantRs.2,410,422/- i. Principal Rs.-0- ii. Mark-up Rs.2,410,422/-
(c) Amount Overdue (as of November 30, 2013) Rs. 23,482,990/- i. Principal Rs.-0- ii. Mark-up Rs. 23,482,990/-
(d) Accelerated outstanding amountRs. 79,246,317/-
(e) Accrued Mark-up upto November 30, 2013Rs. 1,683,973/-
(f) Total amount payable Rs. 104,413,280 Finance Facility - II Maximum Limit of Finance Facility-II:Rs.50,000,000/- Date(s) of Disbursement: March 9, 2010 Date(s) of Default: September 9, 2011 Date(s) of Rescheduling: April 17, 2012
(a) Amount of Finance availed by the DefendantRs.50,000,000/-
(b) Amount repaid by the DefendantRs.9,937,658/- i. Principal Rs.3,125,000/- ii. Mark-up Rs.6,812,658/-
(c) Amount payable (as of April 17, 2012) Rs.50,718,904/- i. Principal Rs.46,875,000/- ii. Mark-up Rs .3 , 843, 904/- Total amount payable Rs.50,718,904/-
58. The above 'Finance Facility-II', was also 'Rescheduled' and the 'Break-up Summary' thereof is give as follows: Rescheduled Finance Facility-II Principal amount of Rescheduled Finance Facility-II:Rs.37,500,000/- Date of Disbursement: April 17, 2012 Date of Default: September 30, 2012
(a) Amount of Finance availed by the Defendant Rs.37,500,000/-
(b) Amount repaid by the DefendantRs.887,112/- i. Principal Rs.-0- ii. Mark-up Rs.887,112/-
(c) Amount overdue (as of November 30, 2013) Rs.8,406,108/- i. Principal Rs.-0- ii. Mark-up Rs.8,406,108/-
(d) Accelerated outstanding amountRs. 37,500,000/-
(e) Accrued Mark-up upto November 30, 2013 Rs. 886,850/-
(f) Total amount payable Rs. 46,792,958/-
59. Like-wise, the break-up summary of Finance Facility-III, reads as follows:- Rescheduled Finance Facility-III Effective Date of conversion into Term Finance:April 17, 2012
(a) Amount of Finance availed by the Defendant Rs.9,375,000/-
(b) Amount repaid by the DefendantRs 285,103/- i. Principal Rs.-0- ii. Mark-up Rs.285,103/-
(c) Amount overdue (as of November 30, 2013)Rs.1,563,744/- i. Principal Rs.-0- Ii. Mark-up Rs.1,563,744/-
(d) Accelerated outstanding amountRs. 9,375,000/-
(e) Accrued Mark-up upto.
November 30, 2013Rs.199,217/-
(f) Total amount payable Rs.11,137,961/- The total outstanding amount in respect of Finance Facility-I, Finance Facility-II and Finance Facility-III payable by Defendant to the Plaintiff Bank comes to Rs. 162,344,199/- [i.e. Rs. 104,413,280 + Rs.46,792,958/- + Rs. 11,137,961/-], for recovery of which the above suit under section 9 of F.I.O., 2001 has been filed by the Plaintiff against the Defendant on 30.01.2014 with prayers reproduced hereinabove.
60.In Banking suit/Banking transaction no 'Mark-up' can be charged by the Bank/Financial Institution beyond the life of Finance Agreement. In the case in hand, it is, however, significant to note that Defendant has failed to pin-point any entry/entries in the certified statement of accounts as being wrong and incorrect. In such like situation when no entry in the statement of account is challenged then, it be presumed that accounts prepared and maintained by the Bank are correct. The certified statement of account[s] duly certified under section 4 of Bankers' Books Evidence Act, 1891 [Act XVII of 1891] if, gone unchallenged then, the various debits/credits entries mentioned therein, be deemed as true/genuine and admissible. In the case in hand, no debit entry has been challenged specifically, as such, in view of absence of any opposition, the amount due and payable as per statement of accounts/summary of 'Break-ups' with plaint [Annexure 'F' to 'F-9' to the plaint] be presumed as 'true' and 'correct'. In this regard, reliance can be placed on the cases off-
[a] UBL v. Messrs Sartaj Industries through Qaiser Iqbal, Managing Partners and 6 others [PLD 1990 Lahore 991. "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] Askari Commercial Bank Ltd. v. Hilal Corporation [Pvt.] Ltd. and 6 others [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].
62.As seen in the case in hand, the Plaintiff has not only annexed certified statement of accounts in sufficient details but has also given the Break-ups summary of the accounts in the body of the plaint as required under section 9 of F.1.0., 2001. The Defendant contrary to this, however, has failed to rebut any of the entries made therein or otherwise, mention its' accounts specifically. The certified statement of accounts' appended with plaint, thus be presumed as correct and admissible.
63.Manifestly, no challenge has been made of the due amounts under the various Finance Facilities pleaded in the plaint. Moreover, none of the documents including Finance Agreements/Addenda thereto has been denied. All the financial/security documents including the Finance Agreements/Addenda thereto, as well as, the availment of finance facilities has been admitted by the Defendant. The challenge of Re-scheduling of Finance Facilities and that too at the request of Defendant, now on the basis of SBP's Circulars is not only misconceived but also without any wisdom as re-scheduling of the finance facilities has already been acted upon. Needless to say, admitted facts, under Article 113 of Qanun-e-Shahadat Order, 1984, need not to be proved.
64.It is also worth to mention that in Re-structuring/Re-scheduling the outstanding amounts are not only admitted but also acknowledged by a customer. Moreover, in Re-structuring/Re- scheduling, no fresh disbursement is involved as it is distinct and different from fresh finance where disbursement is must and necessary. Re-structuring/Rescheduling, in actual fact, is an accommodation and latitude which is extended by financial institution to customer. In Rescheduling, no frish disbursement is made, rather the outstanding amount is brought forward in the certified statement of accounts.
65. For all the above, while, rejecting the Defendant's Leave-to-Defend Application [C.M.A.No.1701 of 2014], inter alia for want of raising substantial questions of fact and law, the Plaintiffs suit is hereby, decreed against the Defendant in the sum of Rs. 162,344,199/- as on 30.11.2013 along with cost of fund thereon w.e.f. 01.12.2013 till realization of the decretal amount. Besides, a restraining order in terms of prayer clause (b), a Final Decree for sale of the hypothecated assets/goods per clauses
(c) and (d) is also passed.
Plaintiffs suit stands 'decreed' in the above terms along with cost of the suit.