MUHAMMAD JUNAID GHAFFAR, J.---This is a Suit for Recovery of Rs, 11,42,16,425.95 under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("F.I.O., 2001") and through listed application the Defendant seek Leave to Defend instant Suit.
2. Briefly, the facts as stated are that Defendant No,1 was initially a proprietorship concern and was availing various finance facilities and was converted into a private limited company on 16.04.2008 and as per arrangement the entire business of the proprietorship concern with assets and liabilities was taken over by Defendant No,1 whereas, all facilities and accounts were also transferred in the name of Defendant No,1 . In all there were (8) eight facilities which were transferred into the account of Defendant No,1 in 2008 which included Running Finance of Rs, 75 million, Term Finance of Rs, 8,136 million, Letter of Credit of Rs,40.00, Letter of Credit of Rs, 17 million, FATR/DA-DEL of Rs,33.00 million, Term Finance Car of Rs, 1.7 million, Terms Finance II Car Facility of Rs, 00.480 million and Letter of Guarantee facility of Rs,00.615 million and were sanctioned in the name of Defendant No,1 vide sanction letter dated 23.7.2008. It is further stated that pursuant to such facilities Defendant No,1 duly signed a Finance Agreement dated 23.07.2008 (available at Page 107) whereas, Defendants Nos,2 to 4 signed the Letter of Guarantees and mortgaged their properties and also signed personal guarantees, whereas, Defendant No,1 also created and executed hypothecation on all its current and fixed assets vide letter of hypothecation dated 18.8.2008 which is duly registered with Securities and Exchange Commission. All eight facilities expired in December 2008 and were renewed vide sanction letter dated 1.1.2009 at the request of Defendant No,1 and out of the eight facilities, Running Finance Facility was enhanced from Rs, 75 million to Rs, 85 million and Finance Against Trust Receipt/FATR/DA-DEL was reduced from Rs, 33 million to Rs,23 million vide sanction letter dated 3.6.2009. It is further case of the Plaintiff that from time to time these facilities were extended at the request of Defendant No,1 and as of today there are two facilities which are relevant for the present purposes i,e, Running Finance Facility of Rs,85.0 Million and FATR of Rs,23.0 Million, wherein, default has been committed.
3. Learned counsel for the Defendants has raised various objections in respect of all (8) eight facilities, including the Running Finance Facility as well as FATR and so also the maintainability of instant Suit.
However, since in the plaint the plaintiff has confined its claim to only two facilities as above, therefore, I have not considered the arguments in respect of the remaining, six facilities. According to the learned counsel, no proper documents were signed or even if they were signed, the documents were signed blank, whereas, they do not reflect clearly as to for what purposes such documents including Letter of Guarantee were obtained. The other objection is to the effect that no proper renewal documents were signed by the Defendant. Insofar as the Running Finance Facility is concerned, learned Counsel has contended that major portion of the same was in respect of the proprietorship concern which has been unlawfully transferred to the account of Defendant No,1, whereas, markup over markup has been charged. Per learned Counsel the account statement reflects that various payments were made by the Defendant No,1 and in fact excess payments have been made. Learned counsel has further contended that though an indemnity-cum- guarantee was obtained for an amount of Rs, 92.308 million shown as a debit balance in the account of sole proprietorship concern; but for that no corresponding accounts statement has been produced. Learned counsel has also raised an objection that the agreements produced by the Plaintiff are not proper agreements being contrary to the requirements of Article 17 of Qanun-e- Shahadat Order, 1984 as they are without attesting witnesses. Insofar as the competency of filing of Suit is concerned; according to the learned Counsel the Suit has been filed on the basis of a Power of Attorney, whereas, the person who has executed the Power of Attorney has not been authorized through any Board Resolution and therefore, instant Suit is incompetent. Learned Counsel has also raised an objection in respect of the accounts statement and has contended that they are not properly attested as required under the F.I.O., 2001 read with Bankers' Book Evidence Act, 1891 and therefore, the Defendants are entitled for Leave to Defend. Learned Counsel has further contended that through replication certain additional documents have been brought on record and for that the Defendant have not been provided any chance to rebut the same and therefore, leave must be granted. Per learned Counsel the Plaintiff has also failed to comply with the mandatory provision of section 9(2) and (3) of the F.I.O., 2001 and therefore, even if the Defendant do not fulfill the requirement of section 10 ibid, are even otherwise, entitled for grant of Leave to Defend. In support of his contention learned Counsel has relied upon PLD 1966 SC 684 (Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd.), 1992 SCMR 846 (The Central Bank of India Ltd. Lahore v. Messrs Taj-ud-Din Abdul Rauf and others), PLD 1971 SC 550 (Khan Iftikhar Hussain Khan v. Ghulam Nabi Corporation Limited, Lahore), 2006 SCMR 437 (Messrs A.M. Industrial Corporation Ltd. v. Aijaz Mehmood and others), 2009 SCMR 846 (Qaiser Javed Malik v. Pervaiz Hameed and 2 others), 2001 SCMR 1700 (Muhammad. Akhtar v. Mst. Manna and 3 others), 2011 CLD 790 (Messrs Shaz Packages and 3 others v. Messrs Bank Al-Falah Limited), PLD 1991 Lahore 381 (Government of Pakistan v. Premier Sugar Mills and others), 2004 CLD 1356 (Messrs Ittefaq Industries (Regd.) and 2 others v. Bank of Punjab), 2010 CLD 701 (United Bank Limited v. Pak. Leather Gras Limited and 3 others), 2012 CLD 957 (Messrs The BRANDS v. Rent Controller, Islamabad and 2 others), 2014 CLD 415 (Telecard Limited v. Pakistan Telecommunication Authority), PLD 2013 Sindh 406 (Haji Naimatullah v. Federation of Pakistan through Secretary Ministry of Defence and another), 1994 MLD 476 (Province of Punjab through Secretary to Government of the Punjab, Communication and Works Department and another), 1995 SCMR 1489 (Abdur Razzak and 8 others v. Shah Jehan and 5 others), 2002 PTD 388 (Commissioner of Income Tax, Karachi Messrs Civil Aviation Authority), 1995 SCMR 1505 (Anwarul Haq v. Federation of Pakistan through Secretary, Establishment Division, Islamabad and 13 others), PLD 2003 Supreme Court 215 (Saudi-Pak Industrial and Agricultural investment Company Pvt.Ltd. Islamabad v. Messrs Allied Bank of Pakistan and another), 1992 SCMR 19 (House Building Finance Corporation v. Shahinshah Humayun Cooperative House Building Society and others), 2005 CLD 444 (Mushtaq Ahmed Vohra v. Crescent Investment Bank Limited , 2009 CLD 460 (Qamaruzaaman Khan v. Industrial Development Bank of Pakistan and others), 2007 CLD 435 (United Bank Limited v. Messrs Usman Textiles and 6 others), 2012 CLD 961 (Bank of Punjab through Authorized Officer v. Messrs KNK Infrastructure (Pvt.) Ltd. through Chief Executive Officer and 2 others), 2015 CLD 1875 (Habib Bank Limited v. Judge Banking Court and others), 2001 CLD 1655 (Apollo Textile Mills Ltd. through Chief Executive and Director and 3 others v. Soneri Bank Limited through Manager/Principal Officer), 2011 CLD 408 (Soneri Bank Limited v. Classic Denim Mills (Pvt) Limited and 3 others), 2005 CLD 569 (Messrs United Dairies Farms (Pvt.) Limited and 4 others v. United Bank Limited), 2005 CLD 1421 (Nusrat Textile Mills Ltd and 8 others v. United Bank Ltd. through Attorney), 2006 CLD 1546 (Messrs Muzamil Brothers and another v. Saudi-Pak Commercial Bank Limited through Manager), 2007 CLD 188 (Messrs Liaqat Flour and General Mills through Partners and 3 others v. Messrs Muslim Commercial Bank Ltd.), 2009 CLD 1195 (Saudi Pak Commercial Bank Ltd. through Attorney v. Nazimuddin and another), 2006 CLD 734 (Al-Madina Electric Store, Daharki, through Proprietor v. Habib Bank Limited), 1996 SCMR 696 (Macdonald Layton and Company Pakistan Ltd. v. Uzin Export Import Foreign Trade Co. and others), 2003 SCMR 261 (Amir Bibi v. Muhammad Khurshid and others), PLD 2012 SC 211 (Ch. Muhammad Siddique and anther v. Mst. Faiz Mai and others), 1993 MLD 1287 (Izzat Khan and another v. Ramzan Khan and others), PLD 2003 Karachi 253 (Messrs Gerry's International (Pvt.) Ltd. v. Messrs Qatar Airways), PLD 2014 Sindh 224 (Muhammad Mustafa v. Syed Azfar Ali and 3 others), 2014 CLC 322 (Mrs. Shabeena Farhat v. Messrs Highway Housing project and 2 Other , 2013 CLC 535 (Syed Waqar Haider Zaidi v.
Mst. Alam Ara Begum), 2017 CLD 540 (Pakistan Kuwait Investment Company (Pvt.) Ltd. v. Messrs Three Star Hosiery Mills (Pvt.) Ltd. and 5 others), 2012 CLC 337 (Apollo Textile Mills Ltd and others v.
Soneri Bank Ltd.), 2011 CLD 790 (Messrs Shaz Packages and 3 others v. Messrs Bank Al-Fatah Limited), 2014 CLD 160 (Messrs Bank Al-Falah Limited v. The Presiding Officer and another), 2014 CLD 985 (Elbow Room and another v. MCB Bank Limited), 2012 CLD 1302 (Messrs Soneri Bank Limited v. Messrs Compass Trading Corporation (Pvt.) Ltd. and 3 others), 2001 CLC 1551 (Messrs Pakistan Industrial Credit and Investment Corporation Ltd. v. Sultan Ahmed and 3 others), 2004 CLD 587 (Messrs C.M. Textile Mills (Pvt.) Limited and 5 others v. Investment Corporation of Pakistan), 2005 CLD 569 (Messrs Dairies Farms (Pvt.) Limited and 4 others v. United Bank Limited), 2005 CLD 581 (Messrs Mohib Exports Ltd. and 4 others v. Trust Leasing Corporation Ltd.), 2005. CLD 1421 (Nusrat Textile Mills Ltd. and 8 others v. United Bank Ltd.), 2006 CLD 773 (Bank of Punjab v. Mrs. Mah Tallat Sultan and another), 2007 CLD 188 (Messrs Liaqat Flour and General Mills and 3 others v. Messrs Muslim Commercial Bank Ltd.), 2007 CLD 667 (Ghulam Nazak v. Zarai Taraqiati Bank of Pakistan and another), 2007 CLD 678 (NBP v. Messrs Mujahid Nawaz Cotton Ginners and 6 others), 2010 CLD 651 (Bankers Equity Limited and 5 others v. Messrs Bentonite Pakistan Limited and 7 others), 2011 CLD 408 (Soneri Bank Limited v. Classic Denim Mills (Pvt.) Ltd. and 3 others) and 2012 CLD 1222 (Messrs Warrior Chemical (Pvt.) and 5 others v. National Bank of Pakistan).
4. On the other hand, learned counsel for the Plaintiff bank has contended that out of the eight facilities six facilities have been fully adjusted and it is only in respect of Running Finance and FATR for which instant Suit has been filed. According to the learned Counsel, the availing of facilities have not been denied, whereas, all necessary documents including Letter of Guarantees, mortgaged deeds, letter of hypothecation have been signed and agreed upon and therefore, per learned Counsel entire facilities have been utilized whereas, no objection of whatsoever nature was ever raised by the Defendant which have now been agitated through instant Leave to Defend application. He has further submitted that accounts statement clearly reflects that they have been utilizing the facilities by issuing cheque(s) and even making deposits in the Running Finance Account, and therefore, they are estopped from raising any objections on any of the facility. Per learned Counsel no markup over markup has been charged, whereas, it is a case of Running Finance Facility and therefore, the objection raised is misconceived. According to the learned Counsel, the FATR facility was also availed and all documents clearly reflects the LC numbers, whereby, payments were made to foreign banks on behalf of the Defendant and therefore, all such objections are misconceived. Learned Counsel has referred to letter dated 25.4.2012, and has contended that this is an admission of making payment of Rs, 98 million and therefore, no case is made out by the Defendants. Per learned Counsel the objection regarding non-disbursement of the amount in the account is also misconceived, as it is a case of renewal and rescheduling, wherein, admittedly no fresh disbursements are made. Learned Counsel has also referred to the audited accounts of Defendant No,1 for the year 2008 - 2011 and has contended that the liability of the Plaintiff is clearly reflected in the accounts of Defendant No,
1. Insofar as maintainability of the Suit is concerned, learned counsel has contended that power of attorney duly executed is on record whereas, no Board Resolution is necessary in such cases and moreover, when the principal does not dispute the power of attorney a presumption of correctness is always attached to such power of attorney. Even otherwise, per learned counsel such defect is a curable defect and therefore, this objection is also misconceived. In support learned Counsel has relied upon 2012 CLD 337 (Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd.), 2014 CLD 1049 (Bank Al-Habib Ltd. v.
Angora Textile Ltd.), 2004 CLD 1334 (Haji Sagheer Ahmed v. United Bank Limited), PLD 1984 SC 12 (Ghulam Qadir v. Abdul Sattar), 2011 CLD 393 (Allied Bank Limited v. Muslim Cotton Mills (Pvt.) Ltd.), 2004 CLD 1376 (Muhammad Ramzan v. Agricultural Development Bank of Pakistan through Manager), 2002 CLD 381 (Mst. Anwar Begum v. Allied Bank of Pakistan Ltd.), 1998 CLC 1436 (National Bank of Pakistan v. Muhammad Tahir Paracha), 2005 CLD 1367 (Muhammad Ashraf v. Habib Bank Ltd.), PLD 1998 Karachi 302 (National Bank of Pakistan v. Punjab Building Products Ltd.), 2007 CLD 217 (Industrial Development Bank of Pakistan Karachi v. M/s Zamco Pvt. Limited and 10 others), 2005 CLD 1571 (Nazir Ahmed v. Habib Bank AG Zurich), 2011 CLD 267 (KASB Bank Limited v. Dewan Salmcin Fibre Limited), 1986 CLC 438 (Grindlays Bank v. Fancy Investment Ltd.).
5. I have heard both the learned counsel and perused the record. The facts have already been stated briefly hereinabove, whereas, the case of the Plaintiff is now only in respect of two facilities i,e, the facility of Running Finance of Rs, 85 million and the FATR facility i,e, Finance Against Trust Receipt of Rs 18 million. Though learned counsel for the Defendant has made extensive arguments in respect of each and every facility with minute details; however, time and again he was confronted as to execution of the documents and availing of the facility to which he could not specifically respond but gave an evasive reply and made references to the objection regarding authenticity and admissibility of the documents. It is to be appreciated that all documents are on record and they have been duly signed and executed. The first objection learned counsel has taken is in respect of some blank documentation. It is by now settled that in banking transaction(s), even if there are certain documents which are empty/blank or have not been properly filled, once the borrower avails the facility and does not dispute it while availing such facility, then subsequently on default, these objections are not to be appreciated. It has in fact become a common practice to raise such objections through leave to defend, whereas, when such facility is being advanced, the documents are signed without any objection to that effect. Furthermore Section 20 of the Negotiable Instrument Act, 1881, caters to it and provides a complete answer to such objection. A learned Division Bench of this Court in the case reported as Muhammad Imran v National Bank of Pakistan (2016 CLD 2093) has dealt with this situation in the following manner;
10. A plain reading of the above provisions of law reveals that where one person signs and delivers to another a paper stamped in accordance with law, either wholly blank or having written thereon an incomplete negotiable instrument, in order that it may be made, or completed into a negotiable instrument he thereby gives prima facie Authority to the person who receives that paper to make or complete it, as the case may be. Thus even for the sake of argument if it is presumed that the defendants had put their signatures on the blank documents, even then the defendants legitimately cannot challenge the legality and validity of the said documents in view of the provisions of section 20 ibid more so when, the defendants have admitted availing of finance facilities, disbursement thereof to them and non-adjustment thereof by them as discussed in the coming paragraph.
6. Insofar as the objection regarding power of attorney and non-production of Board Resolution is concerned, it is to be appreciated that this is a Suit under F.I.O., 2001 and section 9(1) of the Ordinance reads as under;
9. "Procedure of Banking Courts. (1) Where a customer or a financial institution commits a default in fulfillment of any obligation with regard to any finance, the financial institution or, as the case maybe, the customer, may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath, in the case of a financial institution by the Branch Manager or such other officer of the financial institution as may be duly authorized in this behalf by power of attorney or otherwise".
From perusal of the above, it could be seen, that the Financial institution on failure of a customer to fulfill any of its obligation with regard to any finance, may institute a Suit in the Banking Court by presenting a plaint which shall be verified on oath, by the branch manager or such other officer of the Financial Institution as may be duly authorized in this behalf b tower of attorney or otherwise. It may be observed that unlike the provisions of C.P.C. or the Banking Tribunal Ordinance 1984, ("1984 Ordinance") as well as the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), the provision of section 9 of F.I.O., 2001, is worded somewhat differently and is independent in so far as the institution of proceedings by way of filing of Suit is concerned.
Under FIO, 2001, Suit can be filed by authorized officer on the basis of a power of attorney duly executed in favour of such officer. On examination of the power of attorney available on record, I am of the opinion that it has been properly executed and fulfills the requirement of law viz section 9 ibid, whereas, the objection of the defendants counsel in this regard besides being hyper technical, is otherwise misconceived. The law clearly provides that a Financial Institution can file a Suit on the basis of a power of attorney which has been duly placed on record. In such circumstances, the general provision of law regarding production of a Board Resolution is not applicable. Moreover, the Principal has not come before the Court to cancel; or challenge the execution of power of attorney and filing of the. Suit. It may also be observed that while interpreting the contents of a power of attorney, the acts done by the attorney in furtherance to the main purpose for which the power of attorney has been issued, and which are for the benefit of the principal, the same are to be treated as protected and considered to be as valid irrespective of the fact that such authority or power was not specifically mentioned in such power of Attorney. If the acts performed by the attorney are detrimental or against the interest of principal, then the same has to be strictly constructed and in such exceptional cases exercise of such power by the attorney will not be considered as valid.
Reference in this regard can be made to a judgment of the Hon'ble Supreme Court in the case of Qadir Bakhsh and 10 others v. Kh. Nizam-ud-Din Khan, and 4 others, reported in 2001 SCMR 1091, wherein it was contended by one of the parties that since the power of attorney was only to manage the immoveable properties, and, therefore, the attorney was not competent to file suit or prefer appeal there against, as the power of attorney is to be construed strictly, whereas, the authority in question is to be found within the four corners of the instrument; either in express terms or by necessary implication. Such objection was repelled by the Hon'ble Supreme Court while interpreting the contents of the power of attorney and it was observed that the power of attorney vests full rights in the agent to perform the specified acts and to vest in him all the present and future property rights and interest of the principal including filing of suit or appeal in respect of the said property. Therefore, this objection is hereby repelled.
7. Insofar as the statement of accounts and its certification is concerned, on perusal thereof, it reflects that they have been properly attested as required under the F.1.0., 2001 read with section 2(8) of the Banker's Book Evidence Act, 1891 and therefore, this objection is also misconceived.
8. Insofar as the change from proprietorship concern to Defendant No,1 and transfer of liability is concerned, a request to that effect made by Defendant No,1 is already on record (Pg:47-letter dated 16.4.2008), and therefore, this objection is also not appropriate that suddenly a debit entry of Rs, 92.308 Million has appeared in Statement of Account of Defendant No,1 from nowhere. The facility was availed by the proprietorship concern, and once it was converted into a private limited company, request was made by Defendant No,1 that such facility shall continue with transfer of the liability in their account; therefore, subsequently, taking exception to such an entry is otherwise misconceived. Moreover, even if the contention is correct, then immediately, the earlier guarantees and mortgage documents should have been discharged in totality, and new documents would have been signed by the parties. This is not the case here. In fact in the request letter, a categorical statement has been made that all prior guarantees will continue as security against the finance facilities. In similar circumstances, a learned Single Judge of this Court in the case reported as National Bank of Pakistan v. Raja Traders (2016 CLD 1938) has repelled such argument and I am fully in agreement with such observation.
9. Insofar as the argument regarding charging of markup over markup and disbursement as well as repayments made by Defendant No,1 and so also making of excess payments is concerned, it is to be appreciated that this is a case of Running Finance Facility which is in fact a revolving credit, having a debit and credit entry in the account of a borrower. It is not in dispute that time and again the account has been operated in this manner and withdrawals as well as deposits have been made; but such deposits are in no manner the repayment of principal amount, but only in respect of the overdraft facility in the account. It can only be termed as repayment (in excess) if at any one point of time, the account balance is showing credit over and the above the finance facility availed. If it is in debit and which is the case here, then all such deposits and repayments are to be accounted in respect of payment of the facility and the outstanding mark-up. The total amount of credit shown in the account statement does not always mean that all such payments have been made in respect of the finance facility's principal amount. A learned Division Bench of this Court in the case of UIG (Private) Limited v. Bank Al-Falah Limited (2015 CLD 452), (incidentally authored by me) has dealt with this objection in the following manner;
10. Insofar as the first objection with regard to juggling or maneuvering of figures and disbursement in excess of Rs,15.0 Million and the repayments made by the appellants is concerned, in our humble view the same is not correct and is misconceived. It must be kept in mind that this is a case of Running Finance Facility and has its own peculiar mechanism unlike any other Finance Facility. In this type of facility, the borrower is allotted a cash limit, as agreed upon between the parties, whereafter the borrower is at liberty to withdraw the amount from the account as required by him and the Mark-up is charged when the amount is withdrawn from the limit on the utilized amount.
The amount of Markup is then calculated on a daily basis, allowing the borrower to make payments towards the utilized principal as well, thereby reducing the mark-up burden. The borrower withdraws the amount at his own sweat will from time to time and is liable to pay the agreed markup on the amount which he has withdrawn from the amount disbursed or credited by the Bank. The borrower also makes deposits in the same account and such deposits are credited in the said account and accordingly the amount of markup is charged on the outstanding amount.
This is in fact a revolving credit, having a debit and credit entry in the statement of account as and when the same is operated, either by withdrawal or deposit. In the instant matter it is simpliciter, operating an account in which the Bank has credited an amount of Rs, 15.0 Million at the disposal of the appellants and nothing else. The more the appellant withdraws, the higher the mark-up would be. On a careful examination of the statement of account, it is reflected that on various dates, the appellants have withdrawn money, either through cash or payees account cheques, and similarly have made deposits, either in cash or through crossed cheques. This operation of account is spread over a period of almost 2 years starting from 13.06.2007 to 17.06.2009. Therefore, the amounts reflected in Para 10 of the Plaint are a total aggregate of the withdrawals, as well as the deposits by the appellants and is not in fact the total principal amount reimbursed at one point of time. The manner it has been stated in Para 10 of the plaint is in fact to fulfill the requirement of the 2001 Ordinance and the appellants contention is this regard is not based on any sound reasoning.
On further perusal of the record and specially the statement of account, it is noticed that at no point of time, the total withdrawal from the said account ever exceeded Rs,15 million. In view of such position the objection raised by the learned Counsel for appellants with regard to juggling and or maneuvering of figures and the claim of any excess payment or repayment of the principal amount is misconceived and is hereby repelled.
11. In view of hereinabove facts and circumstances of this case, I am of the view that the Defendants have failed to make out a case for leave to defend and accordingly, the listed application is hereby dismissed. On examination of the Statement of Account and break up C filed on behalf of the Plaintiff it reflects that insofar as the Running Finance Account is concerned, quarterly mark-up has been regularly debited in the said account, and therefore, the outstanding amount shown as on 31.01.2013 already includes mark-up. Accordingly, the Suit is decreed in respect of default of Running Finance facility for an amount of Rs,84,962.279.06 which includes mark-up charged till 31.12.2011 (expiry of agreement), and thereafter for cost of fund as per State Bank of Pakistan's notified rates from 1.1.2012 till realization of the decretal amount. In respect of FATR it is decreed for an amount of Rs,12,007,972.00 as principal, and for mark-up of Rs, 2,298,208.36 again up to 31.12.2011 (expiry of agreement), and thereafter for cost of fund as per State Bank of Pakistan's notified rates from 1.1.2012 till realization of the decretal amount. The Suit is further decreed for sale of hypothecated and mortgaged assets as prayed.