QAISER RASHID KHAN, J.---Through the appeal in hand, the appellants have called in question the judgment and decree dated 18.7.2009 of the learned Judge Banking Court-I, Peshawar , whereby the recovery suit of the respondent-Bank was decreed against the appellants/defendants, with costs of funds and costs of the suit.
2. Brief facts of the case are that Messrs Habib Bank Ltd, PAF Branch, Peshaw ar through its Manager filed a money suit against Haq Nawaz and others for the recovery of Rs.6,297,413/- together with Rs.1,259482/- as 20% liquidated damages on the ground that the bank advanced a finance facility of Rs.6 million to the defendants running a partnership firm by the name of "Paragon Pharma, vide sanction advice dated 19.4.2007 against the execution of various security and charge documents besides mortgage of immovable properties but the appellants/defendants failed to repay the outstanding amount despite repeated demands which necessitated the filing of the recovery suit before the learned Banking Court.
3. Out of seven defendants, arrayed in the suit, only defendants Nos. 1 to 4 contested the suit by filing leave to defend application. The learned Judge Banking Court-I, Peshawar , after hearing the arguments of the learned counsel for the parties on the application for leave to defend, held that the defendants have not been able to raise any substantial question of law or facts warranting recording of evidence in the matter and consequently by rejecting the application in question, decreed the suit of the Bank vide judgment and decree dated 18.7.2009.
Hence, the instant appeal.
4. During the course of brief submissions made before us, the learned counsel for the appellants has referred to the very first entry reflected in the statem ent of account which according to him goes unaccounted for in the plaint as there is no, supporting documents in the form of previous sanction advice to justify such entry . He further contended that when the said entry was disputed by the appellants in the leave to defend application which forms the basis of the subsequent entries in the statement of account, then the learned Judge Banking Court should have attended to this aspect of the case but the same was not considered by the learned Banking Court. He thus contended that by dismissing the application for leave to defend, the learned trial court has failed to thrash out the controversy involved between the parties.
5. On the contrary , the learned counsel for the respondent/Bank contends that the relationship of the bank and the customer existed between the parties prior to the sanction of Rs.6 million in favour of the appellants and that the last sanction advice was merely a continuation of the earlier sanction advice and more so that the Sanction Advice was duly acknowledged by the Managing Partner of the appellants/firm and that the statement of account shows various debit and credit entries supporting the running finance facility .
6. Arguments heard and the available record, perused.
7. As spelt out from the record, the appellants/defendants opened an account with the respondent/bank under the name and style of a partnership firm, namely "Paragon Pharma" and availed of finance facilities from the bank from time to time as evident from the mortgage deeds executed in this behalf in the years 2004, 2005 and 2006. In line with such business relationship, lastly a request for running finance facility of Rs.6 million was made to the respondent/bank which was duly sanctioned on 19.4.2007 with its expiry date as 1.10.2007 and accordingly fresh charge documents i.e. agreement for financing on mark-up basis dated 26.4.2010, demand promissory note and a letter of hypothecation of the even date were executed, coupled with letters of guarantees by the defendants.
Since the business relationship between the appellants and the respondent/ban k dates back to the year 2004 which went on uninterrupted till the last Sanction Advice dated 19.4.2007, thus the statement of account submitted with the plaint shows the balance amount of Rs.3,926,076.88 by way of Brought Forward Entry , whereafter a series of debit and credit entries have been reflected in the said statement of account showing substantial withdrawals and corresponding deposits in the same till the respondents defaulted in the liquidation of bank's dues outstanding against them. The respondent/bank has brought on record two statements of account, one for an amount of Rs.5,999,192.34 being the outstanding principal amount and the second for an amount of Rs.298,221.78 on account of outstanding mark-up amount. Both the statements of account have been duly certified as per Section 4 of the Bankers' Books Evidence Act 1891.
A primary objection of the appellants against the respondent/bank is in respect of the Brought Forward Entry of Rs.3,926,076.88 which according to the appellants goes unaccounted for so far as the documents annexed with the plaint are concerned. However , the said objection of the appellants is laid to rest in view of the mortgage deeds of 2004, 2005 and 2006 which show the continuous business relations between the parties and during such business relations, the credit facilities are renewed and in certain cases, enhanced at the option of the parties.
Moreover , during such continuous business relations, the credit facilities availe d of by the borrower are not practically fully liquidated but in the event of renewal or enhancement, as the case may be, it is safely switched over to the other period when a fresh Sanction Advice is issued specifying various terms and conditions. In line with such business relations, here too, a figure of Rs.3,926,076.88 was brought forward followed by withdrawals and deposits of several substantial amounts duly reflected in the statement of account. In this case, the Sanction Advice dated 19.4.2007 was duly acknowledged by the Managing Partner of the appellant-firm. As such it is not available to the appellants to question the same very entries in the statement of account of which they were beneficiaries.
Moreover , in the application for leave to defend, there is also an acknowledgement on the part of the appellants regarding the receipt of Rs.6,296,547.00 and the corresponding deposit of Rs.10.483 million which shows that the statement of account was free from ambiguity . In their leave to defend application, the appellants have not complied with the mandatory requirements of Subsections (3) and (4) of section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, which are reproduced below:- 4'(3). The application for leave to defend shall be in the form of a written statement, and shall contain a summary of the substantial questions of law as well as fact in respect of which, in the opinion of the defendant, evidence needs to be recorded.
(4). In the case of a suit for recovery instituted by a financial institution the application for leave to defend shall also specifically state the following:
(a) The amount of finance availed by the defendant from the financial institution; the amounts paid by the defendant to the financial institution and the dates of payments;
(b) The amount of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit;
(c) The amounts of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit;
(d) The amount if any which the defendant disputes as payable to the financial institution and facts in support thereof.
Explanation:- For the purpose of clause (b) any payment made to a financial institu tion by a customer in respect of a finance shall be appropriated first against other amounts relating to the finance and the balance, if any against the principal amount of the finance."
Thus in such event, section 6 of the Ordinance ibid states in clear terms that "an application for leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement." More so, the appellants on the one hand admitted in their application for leave to defend the receipt of amount of Rs.6296547/- but simultaneously state to have paid Rs.10.483 million to the respondent/bank and also assert that the said figures appear in the statement of account. Such admission on behalf of the appellants in their leave to defend application is in line with the assertion of the respondent/bank who too, stand by their statement of Account duly certified under Section 4 of the -Bankers' Books Evidence Act, 1891 which show an amount of Rs.5,999,192.34 as outstanding principal amount and Rs.298,221.78 as outstanding mark-up amount and that is how the respondent/bank had filed a suit for an amount of Rs.6,297,413/- (the sum total of principal and mark-up amounts) being the amount outstanding against the appellants/defendants. Where the finance agreement, demand promissory note, letter of hypothecation and personal guarantees have been executed by the appellants/defendants in favour of the respondent/bank coupled with collateral mortgage deed to secure the finance facility and where the appellants committed default in liquidating their liabilities, then the respondent/bank was well within its right to file a recovery suit against them which was rightly decreed by the learned Banking Court through the judgment and decree dated 18.7.2009.
8. Accordingly , we understand that the learned Judge Banking Court-I, Peshawar , for his own reasons has rightly attended to the contentions of the parties and thereby declined to grant leave to defend the suit to the appellants while decreeing the suit of the respondent/bank. We do not find any illegality in the impugned findings of the learned B Judge Banking Court-I, Peshawar , so as to call for any interference in the same through the present appeal.
9. Resultantly , this appeal being meritless stands dismissed, with costs.