SYED ARSHAD ALI, J:-. Impugned herein is the judgment and decree of the learned Judge Banking Court- I, Peshawar dated 10.3.2015, whereby the suit of the appellant for recovery of Rs;1,403,999/ against the Respondents/Defendants was dismissed.
2. Brief but the essential facts of the case are that the appellant-plaintiff had instituted a suit for recovery of Rs.1, 403,999/- against the Respondent/Defendant. It is averred in the plaint that the Respondent No.1 had applied for financial assistance in shape of running finance of Rs. 2 million from the plaintiff-bank.
The plaintiff-bank considered the request of defendants/Respondents and allowed and disbursed the running finance facility to the defendants for a sum of Rs.one million vide sanction letter No.COP/CYP- 179 dated 15.6.2005. The said finance facility was secured through execution of demand promissory note, letter of hypothecation and personal guarantee of the Respondents/Defendants. It is further claimed in the plaint that against Rupees one million which was sanctioned and disbursed to the Respondents/Defendants, not a single penny was re-paid by the Defendants and as such an amount of Rs.1,403,999/- was outstanding against them. On being summoned, the Respondents/Defendants appeared before the learned Banking Court and submitted an application for grant of leave to defend the suit. In the said application, the Respondents did not controvert the amount claimed in the plaint, however, have stated that the appellant- bank had executed an Insurance Agreement with an Insurance Company and obtained the Insurance Policy for a sum of Rs.2 million in the name of appellant-bank as beneficiary and the stock of tea/hypothecated goods were ensured against the fire, lighting etc through the said insurance policy. The entire Insurance premium was paid by the respondents, however, when the hypothecated stock/goods caught fire, despite the fact that incident was communicated to the appellant-bank, the latter did not take concrete steps for lodging insurance claim before the Insurance Tribunal against the rejection of its claim by the Insurance Company. Keeping in view the aforesaid plea of Respondents, the learned Judge Banking Court vide order dated 18.1.2010 granted to the Respondents un-conditional leave to defend the suit on the following issues:-
1. Whether the plaintiff has a cause of action?
2. Whether the statement of account has not verified in accordance with law?
3. Whether the plaintif f is bound to claim insurance on behalf of defendant No.1 and to adjust the same towards the outstanding liability of defendant No.1?
4. Whether the plaintif f is entitled to the decree, as prayed for?
5. Relief.
3. The learned Judge Banking Court provided an opportunity to both the parties to produce their respective evidence. In support of its claim, the appellant produced Muhammad Idrees Sethi, the then Chief Manager of the appellant-bank and closed its evidence. Against that Shahzad Arif, the Respondent appeared as his own witness and closed his evidence. The learned Judge Banking Court after hearing the parties dismissed the suit through the impugned judgment and decree dated 10.3.2015.
4. The learned counsel appearing on behalf of the appellant has argued that the impugned findings of the learned Judge Banking court are erroneous and contrary to the record of the case. He went on arguing that the suit was filed on the basis of a finance agreement through which an amount of Rupees one million was disbursed to the respondents and the respondents have not controverted the availing the finance facility, therefore, the said issue could not be tagged with the claim of Respondents allegedly arising out of an insurance policy, which was altogether a distinct agreement. He has further argued that the claim of Respondents was forwarded to the Insurance Company, which was rejected, therefore, they were not under any legal or contractual obligation to have filed the claim before the Insurance Tribunal. He has placed reliance on Muhammad Naeem Bhatti and others Vs. United Bank Limited and 2 others (2005 CLD 643), Messrs Evergreen Press and 3 others Vs. Bank of Punjab (2004 CLD 239), Riaz Ahmad (Rana Riaz Anjum) and another Vs. The Bank of Punjab (2016 CLD 596).
5. Against that, learned counsel appearing on behalf of Respondents has argued that due to inaction of the appellant-bank, the Respondents had sustained huge losses. He next argued that on the direction of the appellant-bank hypothecated stock was insured with the Insurance Company and the beneficiary of the policy was the appellant-bank, therefore, the Respondents on their own could not lodge a claim before the Insurance Tribunal against the rejection of the claim by the Insurance Company and the claim filed by the Respondents before the Insurance Tribunal was declined by the Tribunal on the ground that there was no privy of agreement between Insurance Company and the Respondents, Hence as a consequence therefor, the primary agreement i.e. finance facility was frustrated by the inaction of the respondents, whereby the appellant-bank had failed to perform its contractual obligation i.e. filing of insurance claim before the Tribunal, therefore, the appellant-bank is not entitled to the suit amount.
6. Arguments heard and record of the case was perused with the valuable assista nce of the learned counsels for the parties.
7. The fact that an amount of Rupees one million was availed and disbursed to the Respondents has not been denied by them, neither in the application for leave to defend nor in his solitary evidence. Similarly the fact that it was the requirement/ policy of the appellant-bank that the hypothecated stock would be insured against fire etc, and the beneficiary of the policy was the appellant-bank itself is also an admitted fact. Amongst the finance agreements, we have before us the sanction advised Ex.PW 1/2 and Ex.PW 1/3, the finance agreement Ex.PW /4 promissory notes Ex.PW 1/5 mortgaged deed Ex.PW 1/9 and letter of hypothecation Ex.PW 1/6. Clause-V of the letter of hypothecation deals with the Insurance of Hypothecated stock which reads as under:- We shall at all times during the continuance of this security and for so long as any money shall remain due and owing to you by virtue of the said agreement insure and keep insured the hypothecated goods as aforesaid to the full extent of their value against fire, theft and such other risks as you may require from time to time with insurance Company as may be approved by you and in your name and shall duly and punctually pay the premia payable in1 respect thereof at least one week before the same shall become due or payable and shall handover to you the policy or policies of insurance and receipts for premia paid in respect thereof I/we agree not to raise at any time any dispute as to the amount of the insurable interest. If default be made in payment of such premia or in keeping the hypothecated goods so insured then and in such event it shall be lawful but not obligatory upon you to pay such premia and to keep the hypothecated goods so insured and all costs, charges and expenses incurred by you for the purpose shall be charged to and paid by me/us together with an addition of 20% there to as liquidated damages as if the same were part of the amount due to you under the said agreement.
8. Apart from the above, no other financ e document was placed on record regulating the liability of each party regarding the insurance of the stock and further rights and obligation of the party arising out of the said insured stock. Similarly , according to the Insurance Policy , the beneficiary of the policy is the appellant-bank, however, there is no other instrument on the record regulating the right and liabilities of the appellant and Respondents regarding the insurance of the stock and institution of insurance claim. The fact that there was a fire in the godown of the respondents is an admitted fact and in this regard various correspondence between the appellant, Respondents and the Insurance Company have been placed and exhibited on record. From the available record we have to see whether the Appellant had taken a reasonable and probable care by pursuing the claim arising out of the alleged burning of insured tock and weather by the negligence of the appellant the Respondents have suffered any loss ? Through Ex.PW 1/X-5, the appellant- bank had forwarded the claim of the Respondents to the Insurance Company. On the said claim, the Insurance Company had deputed its approved Surveyor to evaluate the loss suffered by the respondents due to fire. The said claim was pursued by the appellant with the Insurance Company by writing different letters Ex.PW 1/X-7, Ex.PW 1/X-9. However, insurance claim of the respondents was turned down by the Insurance Company vide letter dated 13.01.2006 Ex.PW 1/X-8 on the following two grounds:-
1. There was no evidence of any burnt stock and or residue at the site of reported fire.
2. The stock were stored in a "cabin" instead of the Ist Class constructed Godown as stated on the Policy.
9. Respondents could not place on record any document or other evidence establishing the mercantile practice that the appellant-bank was either under any contractual obligation or legal duty to have further pursued the insurance claim before the Insurance Tribunal after the aforesaid report of the surveyor. If it is assumed that the appellant had any responsibility to have further chased the claim before the Insurance Tribunal and had neglected by not filing the insurance claim before the Insurance Tribunal, even then we are afraid that mere non-filing of the claim before the Insurance Tribunal would not be presumed that the appellant will be disentitled to claim the recovery of the amount against the Respondents arising out of the finance agreement, unless the Respondent could establish before the Banking court the actual loss sustained by them by non-filing of the claim before the Insurance Tribunal by the appellant-bank. In this regard, except the solitary statement of respondents that 98 bags of Tea amounting to Rs.13,22,30/- were burnt to ashes no other evidence is available on record to establish that indeed at the time of fire such quantity of tea was available in the godown and the Respondents had taken sufficient care to avoid the fire. Against that, it is evident from Ex.PW 1/X-8 that the Surveyor had reported that there was no evidence of burnt stock at the reported site. The Respondents could not disprove the afore said survey report of the approved surveyor by producing a positive evidence in this regard. Therefore, it can be safely held that the Respondents had failed to produce any evidence of loss caused to them due to inaction of the appellant-bank. Hence, the findings of the learned Banking Court that the appellant had not taken enough steps for recovery of insurance amount and consequently dismissal of the suit of the plaintiff is not warranted under the law.
10. Moving on to the amount to which the plaintif f is entitled against its total claim of Rs 1,403,999/- in the suit.
The learned trial court has rendered no findings on the amount availed by the respondents and the amount outstanding against the Respondents. The perusal of the record shows that the amount claimed in the plaint has not been disputed by the respondents, therefore, it will be a futile exercise to remand the case to the learned trial court which was instituted on 12.2.2008 for determination of the actual amount due against the Respondent. According to the finance agreement the principle amount disbursed to the Respondent was Rupees one million and its buyback price was fixed/agreed as 1.2 million payable by 31.5.2006. It is also evident from the record that the Respondents did not pay a single penny towards the aforesaid amount, much less the Respondents, as per statutory requirement of section10 sub-section-4 of the Financial Institutions (Recovery of Finances) Ordinance 2001 have not mentioned in their application for leave to defend, the particulars regarding amount of loan obtained by them and the amount outstanding against them. The statement of account shows that an amount of Rs.1,403,999/- is outstanding against the respondents which include the mark-up of Rs.403765. The statement of account further reveals that markup was debited into account of the respondents after the expiry period of agreement i.e. 31.5.2006, which otherwise appears to be illegal as the bank has no authority to claim mark up beyond the expiry of the finance agreement, therefore, the appellant is only entitled to the buyback price i.e. 1.2 million and the cost of funds as provided u/s 3 of the Financial Institutions (Recovery of Finances) Ordinance 2001.
In view of the above, we allow this appeal, set aside the impugned judgment and decree dated 10-03-1- 2015 and grant a decree to the Appellant for an amount of Rupees 1.2 Million against the Respondent along with cost of funds. The parties will bear their own cost.