' SHAMS MEHMOOD MIRZA, J.---This suit is filed under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) seeking recovery of Rs,93,601,326.01 from the defendants on account of various finance facilities granted to defendant No,1 and default by it of its payment obligations.
2. Brief facts of the case are that defendant No,1 was availing Running Finance (RF) facility and Letter of Guarantee (LG) facility in the year 2002. The said facilities continued to be renewed in subsequent years. Lastly, the said facilities were renewed through sanction letter dated 21.02.2007 with RF facility for Rs,30 Million and Bank Guarantee facility for Rs,214 Million. Pursuant to the grant of the said facilities, defendant No,1 executed various finance documents as mentioned in the plaint including personal guarantees by the other defendants. Defendant No,3 also executed a corporate guarantee on 30.11.2002 guaranteeing present and future repayment on behalf of defendant No,
1. It is stated that the defendants stopped making payments from June 2008. It is further stated that the plaintiff issued various bank guarantees for and on behalf of defendant No,1 and continued making payments under the said guarantees by debiting the amount there of in a forced demand finance account. As the defendants committed default in their payment obligation, the plaintiff bank was constrained to file the present suit.
3. In pursuance of the summons issued by this Court, defendants entered appearance by filing a joint application for leave to defend bearing PLA No,161-B of 2012 (the PLA).
4. Learned counsel for the defendants made the following submissions in support of the grounds of the application for leave to defend: a. The amounts of the finance facilities were secured against a foreign currency deposit by creating bank's lien on it, but the plaintiff bank has failed to account for the amounts contained in the said deposit. b. The finance documents are not in consonance with the statement of account. c. The claim of the plaintiff bank under the bank facility is time barred. In this regard the expiry periods of various bank guarantees were referred. d. The statement of running finance account shows that on 11.08.2008 the account was transferred to SAM Department of the plaintiff. That the statement of account of SAM Department, is not available with the record.
5. Learned counsel for the plaintiff, on the other hand, submitted that the application for leave to defend filed by the defendants was hopelessly time barred and that the suit claim is duly substantiated by the documents available on the record. It is further submitted that the suit filed by the plaintiff was in the nature of a mortgage suit and, therefore, the plea raised by the defendants with regard to the claim being time barred is of no substance.
6. Arguments heard and record perused.
7. The allegation that the application for leave to defend filed by the defendants is time barred has no substance. It is clear that summer vacations had commenced when the time for filing the application for leave to defend lapsed. The application for leave to defend was filed immediately after opening of the Court on 03.09.2012. It, therefore, cannot be said that the application for leave to defend was time barred.
8. In regard to the foreign currency deposit, it was stated that the said deposit was placed under the lien of the plaintiff bank by Beenish. Khan through letter dated 17.11.2003 for securing the repayments of the RF facility. Defendant No,1, however, subsequently approached the plaintiff bank through letter dated 02.04.2005 with the request for release of the said lien and substituting it with mortgage of land measuring 10 Kanal situated in Kot Lakhpat, Lahore belonging to defendant No,2.
The offer so made was accepted by the plaintiff bank through its sanction advice dated 07.07.2005 and the foreign currency deposit was released as security. The statement of account of the said deposit along with other related documents are appended by the plaintiff bank with its replication.
The said fact is further substantiated by offer letter dated 21.02.2007 through which the finance facilities were lastly availed by defendant No,1 . The said offer letter clearly shows that the foreign currency deposit was not included therein and instead the security package clearly reflected the mortgage of 10 Kanal of land belonging to defendant No,2. Reliance on the aforementioned documents was objected to by the learned counsel for the defendants on the ground that the documents appended with the replication cannot be looked at by this Court. This submission has absolutely no merits or valid basis. In terms of section 9(2) of the Ordinance, a plaintiff is required to append the statement of account and all other relevant documents relating to the grant of finance. Section 9 of the Ordinance, therefore, by its terms only requires such documents to be appended with the plaint that were executed at the time of the grant of finance. These documents would include the finance agreement, demand promissory note, guarantee, instruments of securities etc. The documents a plaintiff must append with the plaint, however, need not be exhaustively laid down. Suffice it to state that the scope of replication under the Ordinance is limited to entitle a plaintiff to bring on record material in order to answer any new ground set up by the defendants. It was necessary as in a pretrial stage the Court is simply determining whether any valid defence exists to allow the trial of the suit to proceed. In a judgment reported as The Bank of Punjab v. Khan Unique 2016 CLD 29, an issue arose with regard to the statement of current account which was appended by the plaintiff with the replication and was objected to by the defendants.
This Court held as follows: ' A defendant who neither appends the statement of current account with his application for leave to defend nor pleads sufficient reasons and circumstances for its absence and also does not file an application under section 6 of the Act cannot object to the filing of his statement of current account with the replication filed by the plaintiff. In such an eventuality, the statement of current account appended with the replication can be looked at by a Court as it is not a liability creating document. It may also be pointed out that in the series of banking recovery laws promulgated from time to time, the Ordinance is the only legislation where the filing of reply to the application for leave in the shape of replication is provided. The object of course is to provide the plaintiff with an opportunity to rebut the averments contained in- the application for leave to defend filed by a defendant and if need be, to file documents to support such rebuttal. This is not to say that a plaintiff bank can append any type of document with the replication more particularly the primary documents which create liability and which under the terms of the Ordinance are required to be appended with the plaint. However; where a defendant is obliged to append a document with its application for leave to defend the suit for rebuttal of the liability and does not do so, the plaintiff bank can append the said document with its replication.
It is, therefore, clear that the Court can look at the documents appended with the replication more so when they are relied upon by the plaintiff to answer the case set up by the defendants and are not part of the documents required to accompany the plaint.
9. In regard to the allegation that the claims under certain bank guarantees were time barred, it would be advantageous to state the particulars of the bank guarantees which were encashed. i. LG No,124 of 2005 was issued on 29.06.2005 (page 931 of the plaint) against mobilization advance, which was valid up to 28.06.2006. Subsequently the said guarantee was extended up to 31.03.2007 and 30.06.2007 vide two addendum dated 22.05.2006 and 2.1.03.2007. The said guarantee was encashed on 31.05.2007 (page 932 of the plaint) on which date the liability was debited in forced demand finance account (page 926 of the plaint). The margin amount of Rs,8,629,672/- was adjusted on 25.06.2007 and the liability was transferred to SAM Department on 11.08.2008 as is apparent from the statement of account available at page 926 of the plaint. The statement of account of SAM Department is available at page 928 of plaint. Ii. LG No,125 of 2005 was issued on 29.06.2005 (page 931 of the plaint) against performance guarantee, which was valid up to 28.06.2007. Subsequently the said guarantee was extended up to 28.09.2007 through addendum dated 16.06.2007. The said guarantee was encashed on 19.12.2007 (page 932 of the plaint) on which date the liability was debited in forced demand finance account (page 927 of the plaint). The margin amount of Rs,6,629,223/- was adjusted on 19.12.2007 and the liability was transferred to SAM Department on 11.08.2008 as is apparent from the statement of account available at page 927 of the plaint. The statement of account of SAM Department is available at page 928 of plaint. Iii. LG No,197 of 2005 was issued on 29.09.2005 (page 931 of the plaint) in favour of Capital Development Authority, Islamabad, which was revalidated up to 31.03.2007. The said guarantee was recalled through letter dated 28.02.2007. However, according to the learned counsel a stay order was granted by the civil court as a result whereof the encashment was delayed. Finally the plaintiff bank made the payment of the guarantee on 16.09.2009 (page 932 of the plaint). The liability thereof was debited in forced demand finance account on 17.09.2009 (page 926 of the plaint). The margin amount of Rs,11,265,625/- was reversed on 18.01.2006 (Rs,3,262,350/-), on 16.08.2006 (Rs,1,063,000) and on 17.09.2009 (Rs,6,940,275/-). The liability was transferred to SAM Department on 11.08.2008 as is apparent from the statement of account available at page 926 of the plaint. The statement of account of SAM Department is available at page 928 of plaint.
The suit was instituted by the plaintiff bank on 25.05.2012. The perusal of the plaint shows that the prayer made in the suit was, inter alia, for sale of the mortgaged properties for the recovery of the suit amount, which clearly makes it a suit for-enforcement of mortgage. The limitation period for such a suit is 12 years in terms of Article 132 of Limitation Act, 1908 and the said period of limitation starts to run from the date when the money sued became due. Reference in this regard may be made to judgments reported as National Bank of Pakistan v. Messrs Sh. Sardar Muhammad and Bros. And others 1987 MLD 109, Union Bank of Middle East Ltd. v. M.Y. Malik Co. And others 1993 MLD 211, Messrs United Bank Ltd. v. Messrs Iftikhar and Company and others PLD 1990 Lahore 111 and Muslim Commercial Bank Limited v. Messrs Malik Company and others 2002 CLD 606. The mortgage instruments executed by the defendants are available on the record which show that the present suit was filed within the limitation period provided for in Article 132 of the Limitation Act, 1908. Defendants. Nos.2 to 9 also executed their personal guarantees which were lastly executed on 21.02.2007 securing an amount of Rs,305 Million. Perusal of the said personal guarantees show that the defendants had undertaken to pay all the sums due and payable in respect of the liabilities of defendant No,1 within two days from the demand raised by the plaintiff bank. A learned Division Bench of this Court while dealing with the limitation period for instituting a suit against guarantors in a judgment reported as Tariq Shahbaz Chaudhary and others v. Bank of Punjab and others 2004 CLD 207 held as follows: ' It is also settled principle of law that limitation in respect of guarantee would start from the date of cause of action when demand is made or suit is filed as the law laid down by the Karachi High Court in Messrs United Bank Limited's case PLD 1968 Karachi 468.
' The filing of the suit itself constitutes a demand for payment against the guarantors. Even on this score, the suit against the defendants is not barred by limitation.
10. The documents available on the record have nexus with the statements of accounts. The security documents executed by the defendants are in consonance with and pursuant to the offer letters issued by the plaintiff bank from time to time. The defendants have clearly admitted availing the finance facilities in the application for leave to defend. The defense raised by the defendants, which was pressed at the time of arguments by their learned counsel, has no substance and merit as has been shown above. The claim of mark up, however, is not made out from the statement of account annexed with the plaint.
11. The defendants have failed to raise any dispute on facts requiring evidence for its resolution.
Their application for leave to defend is accordingly dismissed. The suit of the plaintiff bank is decreed in its favour and against the defendants, jointly and severally, in the sum of Rs,82,157,518.39 together with costs of funds in terms of section 3 of the Ordinance. Costs of the suit are also granted.