By this order, I intend to dispose off an application under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, filed on behalf of the defendant, wherein he prayed for grant of unconditional leave to appear and defend the suit.
Notice of the application was given to the plaintiff's bank, who submitted replication in rebuttal to the above application and denying the allegations leveled against them.
I have heard learned counsel for the parties.
Learned counsel of the defendant contended that the plaintiff bank failed to submit sanction letter dated 28.03.2005 of the financial facility with the plaint but produced the same alongwith replication as annexure "A-1". According to him, the payment schedule annexed with the plaint at Page No, 43 is blank, while repayment schedule letter annexed with the plaint at page 47 is without signature of the defendant. He argued that according to statement of account, only about Rs.
1,100,000/- is outstanding against the defendant, while in Para 9 of the plaint, the plaintiff claimed Rs. 4,796,646.74. Learned counsel for the defendant further argued that the defendant is entitled for the benefits as guaranteed by virtue of Constitutional Amendments, 2010, which provides and/or protect the right to fair trial, Article. 10-A of the Constitution, 1973 provides that' "For the determination of his civil rights and obligations or in any criminal charge against him a person shall be entitled to a fair trial and due process". He contended that the defendant has not committed any default, infact the defendant availed an amount of Rs. 5,000,000/- only as a principal and repaid amount of Rs. 5,534,301/- and the dispute of the rentals over the house mortgage finance facility is already been prejudiced before the Hon'ble High Court of Sindh at Karachi in the suit filed by the defendant. According to him, the suit against the defendant is not maintainable as the defendant has already filed a suit against the plaintiff bearing Suit No, B-65 of 2013, which is pending before the Hon'ble High Court of Sindh at Karachi and this Court having no jurisdiction in the present form, as the suit is liable to be transferred to original Banking jurisdiction of High Court of Sindh to avoid the conflict of judgments in view of the pending two suits between the same parties on the subject matter under Section 24, CPC as well as Section 5 sub-section (3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and there is no liability of the defendant to pay any amount to the plaintiff bank. He argued that the suit is not maintainable under Section 9 sub-section (1) of the Ordinance, 2001 as no default has been committed by the defendant in fulfilling of any obligations with regard to the finance provided by the plaintiff bank.
He further argued that the plaint is not verified on oath and flied by the incompetent person as required under Section 9 of the . Ordinance, 2001, the statement of accounts annexed with the plaint is not certified or. prepared as required under Section 2 sub-section (8) of the Bankers Books Evidence Act, 1891. Furthermore the entries mentioned in the statement of accounts are disputed as the amounts paid/deposited by the defendants are not reflected/mentioned in the statement of accounts. He argued that the suit is also not maintainable in absence of proper accounts, which is in violation of SBP's BPD's Circular Nos, 13 and 32 of 1984 and in negation of Section 25 of the Banking Companies Ordinance, 1962, as the rendition of accounts or decree of accounts is to be awarded under Order 20 Rules 16 and 17 of CPC. He added that the amount claimed by the Plaintiff Bank is not reflected under Musharika Agreement through alleged statement of accounts attached with the plaint and the present suit is filed without proper details of accounts as per Section 9(2) of the Ordinance, 2001 as well as Section 2(8) of the Bankers Books Evidence Act, 1881, hence the suit is liable to be dismissed. According to him, the suit is based on buy back system and the defendant disputed the markup price of Rs. 15,205,440/- against the disbursement of Rs. 5,000,000/- only, it is violation of the rules and prudential regulations of State Bank of Pakistan. In fact, the defendant has already been paid off the amount of Rs. 5,534,301/- in excess to the disbursement/principal amount. According to him, the defendant has availed the house mortgage finance facility for a period of 20 years, whereas the defendant has paid total amount of Rs. 5,534,301/- from the period of 5th May 2005 to March 2013. However the plaintiff bank increased the monthly installment without any justification or without any arrangement. In continuation of house mortgage the defendant paid the amount till March 2013 and on 20.12.2012, the defendant dispatched the letter, whereas submitted the method of calculation in the light of Hon'ble Supreme Court of Pakistan Judgment reported in (PLD 2000 SC 760).
He submitted that the bank's share in the total rent from the property for the first month has been mentioned as Rs. 42,603/- and the same was increased and current installment was Rs. 64,000/-, which means that the total rent of the home according to the participation amount would he 25% equals Rs. 16,000/-, 75% equals Rs. 48,000/-Total Rs. 64,000/-.
However, the bank has no right to charge such illegal exdggerate monthly rent, which is not only against the very spirit of the principles or doctrine of diminishing musharaka but also against the spirit of Islamic banking, which is laid down in the guidelines of. Islamic Shariah, hence the 'application for leave to defend the suit may be granted to the defendant unconditionally, In support of his arguments, the learned counsel for the defendant relied upon the case law reported in 2015 CLD 848 Sindh, PLD 2000 SO 760; 1995 MLD 1831 (1837), PLD 2014 SC 283, unreported judgment Re; National Bank of Pakistan Vs Saif Textile Mills PLD 1983 Peshawar 31, PLD 1983 Karachi 431, PLO 1989 Peshawar 191, 1994 MLD 1557, 2000 CLC 847, 2006 OLD 217, 2005 OLD 569, 2004 OLD 587, 2004 CLD 937, 2004 OLD 1388, 2005 OLD 581, 2012 OLD 1222, 2011 CLD 408 (S,B.) (426 to 429), 2007 OLD 188 (199 A&B) D.B., 2006 CLD 1587 (1589, A,B,&C) (D,B.), AIR 1941 Rangoon 344, 2012 CLD 1222 (D.B )
(Para-5 (1225-B), SBLR 2008 Sindh 1957 (D.B.) (1966-A), (1971-E, 1971-F), 200a OLD 905 (D.B.) (Pares 5, 6, 7, Page 907-A), 2014 OLD 696 (S.C.), PLD 1999 Kay 227, 2005 OLD 521, 2003 CLD 217, 2004 OLD 1657 (D.B.) 1659-A Para 5 2005 CLD 1067 (D.B) 1070-A, 1071-A-Para-4, 2004 OLD 752, 2004 CLD 260 (268- A, 270-G), 1995 CIO 973, PLD 1971 SC 650, PLD 1997 Kai 62 (D.B.), PLO 1999 Kar 260, 1994 CLC 2413, PLD 1991 Lahore 381, PLD 1969 Lahore 438 and PLD 1969 Lahore 438.
On the other hand, learned counsel of the plaintiff hank contended that each page or annexure 'A' of the plaint has been signed by the defendant and no clause about Islamic financing is mentioned in the agreement. According to her, suit is competent as per Financial Institutions (Recovery of Finances) Ordinance, 2001 and all the repayments made by the defendant are shown in statement of account and the defendant has not disputed any entry of statement of account and all entries are admitted by the defendant. She contended that the defendant has not complied with the mandatory provisions of Section 10(3), (4) & (5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 nor disclosed sufficient cause for their failure to comply with such requirements and no substantial issue of law and fact, which requires recording of evidence has been raised. She argued that the defendant has not denied the availing of finance facility and execution of documents in favour of the plaintiff bank. According to her, after having fully availed the benefits of the facility, the defendant cannot be allowed to raise frivolous objections regarding the agreed terms only in order to wriggle out of his liabilities towards the plaintiff under the finance agreement, therefore, the defendant's application is liable to be dismissed under Section 10 of the Ordinance, 2001. She contended that the Article 10-A of the Constitution does not mandate automatic grant of leave to defend as is erroneously implied by the defendant and right to fair trial certainly does not mean right to leave to defend in every case even if the defendant has not met the statutory requirements. The defendant's reliance on Article 10-A of the Constitution to evade the procedure as envisaged by the Ordinance, 2001 is based on malafide intention. She further contended that this Court cannot interpret the provisions of the ordinance in the exercise of-its banking jurisdiction and no stay in any constitutional petition or in any other banking suit has been granted by any superior Court of the country. According to her, the counterblast suit filed by the defendant before the Hon'ble High Court of Sindh at Karachi has no bearing on the instant suit and there is no order for the transfer of the suit and indeed the question of transfer dos not arise given that the instant suit does not fall within the pecuniary jurisdiction of the Hon'ble High Court of Sindh at Karachi. She contended that the defendant did not avail a diminishing musharaka facility from the plaintiff as according to the said agreement the relationship between the plaintiff and the defendant is not based on musharaka. She added that the plaint is in accordance with, the requirements of the Ordinance, 2001 and the statement of accounts attached with the plaint is in compliance of the provisions of Bankers Books Evidence Act.
Lastly she prayed for dismissal of application for leave to defend the suit filed by the defendant and the suit of the plaintiff bank may be decreed. In support of her arguments, she relied upon the case law reported in 2015 CLD 227 Sindh, 2011 CLD 976 (Karachi), 2007 CLD 217 Karachi, 2004 CLD 1741 Lahore, PLD 2001 Karachi 143 and PLD 2000 Karachi 246.
After hearing the arguments delivered by the learned counsels of both the parties, gone through the entire record of the case and material placed thereon as well as the case law relied upon on behalf of both the parties, it reveals that the plaintiff bank has failed to file the statement of accounts in accordance with Section 9(2) of the Ordinance, 2001, which is mandatory in nature. It is further transpires that the entries in the statement of account are not in a proper format and presented in a haphazard manner. In this regard, it has been, held in 2007 CLD 678 by the Hon'ble Apex Court that "If the certificate on the statement of accounts by the bank is not in accordance with the provision of S.2(8), Bankers' Books Evidence Act, 1891, such statement of accounts would not be considered 'certified copy' as contemplated by law and such copy of statement could not be considered as prima-facie evidence of the existence of entries in the statement of account by the Bank. Such copies of the statement of the bank would not be received as evidace of matters, transactions and accounts as required under 6.4 and on the basis of such statement of accounts, which was not the 'certified copy'.
"A certificate, which is to be given at the foot of the statement of account, so as to make it certified copy of the statement of account, must state the following facts:
(i) it is true copy of such entry;
(ii) Such entry is contained in one of the ordinary books of bank;
(iii) It was made in the usual and ordinary course of business:
(iv) Such book is still in the custody of the bank;
(v) It must be dated; and
(vi) Subscription by the principal accountant or manager of the bank with his name and official The requirement of filing of statement of accounts alongwith plaint is not a formality or technicality rather mandatory for plaintiff to support its plaint by a statement of account duly certified under the Bankers Books Evidence Act, 1891, plaint; would be incomplete and could not be become a basis of such suit without strict compliance with provision of Section 9(2) and non-filing thereof would amount to non providing, adequate, proper and reasonable opportunity of defence to customer. It is a settled principal of law that "non-filing of statement of accounts in accordance with Section 9(2) & (3) of the Ordinance, 2001, is mandatory in nature and its non-compliance account merited rejection of the plaint". Indeed plaintiff bank entitle t' claim lawful amount but cannot be allowed to recover the amount at its own wish on the basis of the conjecture and the defendants should not be squeezed and pushed in blind corner by a financial institution, The concept of leave to defend requires that defendant should come-up with a positive defence of a particular fact which has to be supported by certain documentary evidence to connivance the Court that there was sufficient ground for granting leave to defend. Plea raised by the plaintiffs counsel was that application for leave to defend was in breach of mandatory provision of Section 10(3), (4) and (5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, has found no force because facts mentioned in application for leave to defend and documents filed in support of the plaint do not substantiate plaintiffs claim, requires proper adjudication by way of evidence on factual as well as legal questions.
In support of his arguments learned counsel for the defendant relied upon the case law reported in 201 1 OLD 790 Karachi Re: (Mls Shaz Packages and 3 Others V/s Bank Alfalah Limited), in which their Lordship Mr. Justice M. Ather Saeed and Mr-Justice Muhammad Ali Mazhar Hon'ble Judges of our own Hon'ble High Court of Sindh, has been held that: ----S. 10--Leave to defend the suit--Banking Court--Responsibility--Documents to be appreciated--Banking Court dismissed leave to defend application filed by the defendants and decreed the suit in favour of bank--Plea raised by defendants was that besides raising various preliminary objections, they had also framed questions of law but Banking Court without appreciating the same dismissed leave to defend the suit application--Validity--While deciding leave to defend application, heavy responsibility rested upon Banking Court to appreciate not only the contents of plaint but also leave to defend application and replication, if any filed--In order to pass an speaking order with sound.. reasoning, it was necessary to look into facts of the case and also consider documents attached with plaint, leave to. defend application and replication--After going through entire pleadings of parties, it was obligatory upon Banking Court to decide question of law raised in leave, to defend application and not to dismiss or reject it in perfunctory and cursory manner--In banking suit it was a sole opportunity for defendants to apply for leave to defend and their entire future rested upon its decision, therefore, in all fairness defendants had legitimate right to be heard and all questions of law and facts raised in leave to defend application should be answered by Banking Court for the reason that on rejection of leave to defend, defendants were to go out of arena without any further opportunity to defend--Judgment and decree passed by Banking Court against defendants and order dismissing leave to defend application could not be sustained and the same was set aside--High Court remanded the case to Banking Court to decide leave to defend application afresh in accordance with law-Appeal was allowed accordingly".
Recently in the case of MIs The Elbow Room & Others Vs Muslim Commercial Bank Limited, Judgment dated 27.03.2014 was passed by His lordship Mr. Justice Zafar Ahmed Rajput in I.A. No, 49 of 2013, ( un-reported), holding therein that: "........we have observed that the statement of account filed by the respondent Bank with plaint in the suit, which appears at page 103 of the Instant appeal in a typed form on a white paper, being incomplete, slipshod, sketchy and unsubscribed by . the principal accountant or manager, does not fulfill the mandatory requirement of the provisions of Section 9(2) of the Ordinance, 2001 and Sections 2(8) and 4 of the Banker's Book Evidence Act, 1891 and therefore, the statement of account filed by the respondent bank does not qualify as a "statement of account" duly certified under the Banker's Books Evidence Act, 1891, as it does .not contain the details of entire transactions between the respondent Bank and appellants/ customer during finance limit period. It also does not bear any date and particulars with regard to the sanction and disbursement of the finance facility, payment of liabilities, date and period of charging markup. Besides, the Statement of Account is undated and has been subscribed by the Attorney of the respondent bank instead of being subscribed by the principal accountant or the manger of the respondent bank, as required under Section 2(8) of the Bankers' Books Evidence Act, 1891. We are of the view that it is. only the principal accountant or the manger of the financial institution who alone can certify the statement. Hence, a statement of account signed/subscribed by the Attorney of the bank cannot be treated as a duly certified within the meaning of Section 2(8) of the Bankers' Books Evidence Act, It is admitted position that the loan was granted to the defendant for the period of 20 years commencing from May 2005 to April 2025 and the defendant paid total amount of Rs. 5534,301/- from the period May 2005 to March 2013. Moreover, it reveals from the documents produced by the plaintiff with the plaint that the schedule 'B' regarding payment schedule at page 43 annexed with the plaint is blank but surprisingly the plaintiff bank obtained the signature of the defendant on the said blank paper (payment schedule), which is also create doubt in the prudent mind. in view of the fads and circumstances, it reveals that the defendant has raised bonafide defence for Which evidence is required in order to determine the actual outstanding liability against the defendant, if any, as there seems substantial questions of law and facts, which creates serious and bonafide dispute between the parties, hence the leave to defend is accepted. The case law relied upon by the learned counsel for the plaintiff is distinguishable and not applicable under the facts and circumstances of the present case.
After examining the plaint and written Statement/leave to defend application, 1 frame the following issues:--
1. Whether the defendant is liable to pay an amount of Rs. 4,796,646,74 alongwith cost of funds from the date of default till its realization?
2. Whether the plaintiff it entitled to increase the monthly rentals end KIBOR is applicable in consumer financing?
3. Whether the is entitled to charge markup on markup without written agreement?
4. Whether the plaintiff's are entitled to recover any amount from the defendant prior to the expiry of agreed period i,e, April 2025?
5. Whether this plaintiff bank has complied with the Provisions et. Section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, and Section 2(8) as well as Section 4 of Bankers Books Evidence Act, 1891, if not what is its effect?