SHAMS MEHMOOD MIRZA, J.---This is a suit filed under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) seeking recovery of Rs. 116,326,079.89 from defendants Nos.1 to 4 on account of a Running Finance (RF) facility granted to defendant No.1 and default by if of its payment obligations.
2. Brief facts of the case are that defendant No. 1 has been availing various finance facilities from the plaintiff bank. Lastly the said facilities including RF facility for Rs.110 Million were renewed vide plaintiff's Banking Arrangement Letter dated 02.04.2013 with expiry on 03.11.2013. The defendants in consideration for grant of RF facility executed the requisite finance documents including the personal guarantees and other mortgage documents as mentioned in the plaint. As the defendants failed to repay the amounts under the RF facility on its expiry, the plaintiff bank was constrained to file the present suit.
3. In pursuance of the summons issued by this Court, the defendants entered appearance and filed their joint application for leave to defend bearing PLA No.1 of 2015 (the PLA).
4. The defendants in this case were being represented by Sardar Riaz Kareem Advocate. On 07.03.2017 Mr. Zafar H. Jillani Advocate entered appearance on behalf of the defendants by stating that he has recently been engaged. He was allowed an adjournment to prepare his brief and the case was fixed for 27.03.2017. On the said date another request for adjournment was made on his behalf which was allowed and the case was adjourned to 29.03.2017. Today, Syed Riaz ul Hassan Gillani Advocate entered appearance by submitting his power of attorney and sought time to prepare his brief. This Court is not inclined to grant any further adjournment in this matter as in a short span of time the defendants have replaced two learned counsel. It appears to this Court that the defendants are simply buying time by engaging various counsel, which practice cannot be condoned. This Court shall, therefore, decide the case on the basis of the available record.
5. The perusal of the application for leave to defend shows that the defendants have taken the following material objections: (a)The suit has not been filed by a duly authorized person.
(b)The suit is bad for mis-joinder and non-joinder of cause of action as the plaintiff has only filed the present suit in respect of the RF facility and has shown its intention to file a suit with regard to the other facility before the banking court. The plaintiff is not entitled to split the cause of action.
(c)Letter of arrangement dated 02.04.2013 did not require the execution of the guarantees. The guarantees relied upon by the plaintiff are, therefore, a nullity.
(d)The instrument of the equitable mortgage is not in accordance with law.
(e)The statement of account has not been prepared in accordance with law.
(f)The bank has illegally charged markup amounting to Rs.11,726,182/-.
5. Learned counsel for the plaintiff bank submits that the suit claim is duly established from the documents available on record.
6. The suit has been instituted through the attorneys of the plaintiff bank and the powers of attorneys have also been appended with the plaint. It has repeatedly been held by this Court in a number of judgments that suit filed by Financial Institutions on the basis of power of attorney are valid. Section 9 of the Ordinance empowers three categories of persons to file a suit (a) the branch manager (b) an officer authorized by a power of attorney and (c) an officer who is otherwise authorized by a financial institution. From the reading of the provision, it is quite clear that an officer of a financial institution who holds a power of attorney in his favour need not append anything else other than the said power of attorney to demonstrate his authority to institute the suit under section 9 of the Ordinance. Had it not been so, section 9 of the Ordinance would have required production of further documents other than the power of attorney by the attorney holder to demonstrate the authorization of the person executing the power of attorney. Under section 9 of the Ordinance, an officer of the financial institution holding a power of attorney is the designated person to file suits on its behalf. This aspect of the matter has also been dealt with by learned Division Bench of this Court in a judgment reported as Ihsan ul Haq v. MCB Bank Limited 2016 CLC
874. The said judgment after taking into account the legislative history of the successive banking laws held that the suits filed by the Financial Institutions through officers holding power of attorneys are valid and that nothing more than the power of attorney is required to be appended with the suit. The suit of the plaintiff bank has, thus, competently been filed.
7. The present suit is in respect of RF facility which was filed ahead of the suit that the plaintiff intends to file. The objection regarding splitting of the claim, therefore, cannot be raised in this suit.
This objection being devoid of any merit is accordingly repelled.
8. The personal guarantee relied upon by the plaintiff bank is available on the record which is duly signed by defendants Nos.2 to 4. The defendants in their application for leave to defend have not denied their signatures on the said guarantee. In the borrower's fact sheet provided by the defendants on 09.10.2012 along with their request letter it was categorically admitted that defendants Nos.2 to 4 have provided their personal guarantees to the plaintiff bank. In the balance sheet of defendant No.1 for the year ended 30.06.2013, it was admitted that the running finance facility was secured against the personal guarantee of the directors of defendant No. 1 . In this view of the matter, the defendant's allegation that the arrangement letter dated 02.04.2013 did not contain any stipulation for the execution of personal guarantee of directors is not of much substance. As regards the objection on the mortgaged instrument, suffice it to state that this Court in present proceedings is only concerned with determination of the liability of the defendants under the finance facilities. Any objection on the underlying securities to the finance facilities can very well be taken at the time of execution proceedings.
9. The objection of the defendant on the statement of account has also no merit in it. The perusal of the statement of account shows that it has been prepared in accordance with the provisions of Banker's Book Evidence Act, 1891 and the ratio of the judgment reported as The Bank of Punjab v.
Messrs Khan Unique Developers 2016 CLD 29. In any event, the liability under the RF facility is admitted by defendant No.1 in its balance sheet prepared as at 30.06.2013. The defendants are, therefore, precluded from raising any dispute with regard to the liability which is otherwise admitted by them in their audited accounts.
10.It is, however, observed that the plaintiff bank has charged markup beyond the expiry period amounting to Rs.1,307,080.55 which is liable to be excluded from the suit claim. It is further observed that the plaintiff bank has charged and recovered markup amounting to Rs.3,208,623.08, which amount is also liable to be adjusted from the principal claim.
11.The defendants have thus failed to raise any defense on facts requiring recording of evidence.
The application for leave to defend filed by the defendants is accordingly dismissed. The suit filed by the plaintiff is decreed in its favour and against defendants Nos.1 to 4, jointly and severally, in the sum of Rs.111,810,376.26 together with the costs of funds as contemplated by section 3 of the Ordinance. Costs of the suit are also granted.