IRFAN SAADAT KHAN, J. This First Appeal (1st Appeal) has been filed against the judgment dated 11.04.2012 passed, in Suit No.274/2002 (New Suit No.418/2004) filed by the present Respondent No.1 against the present Appellant (which at that time was Saudi Pak Commercial Bank Ltd.) wherein it was found that the bank has incorrectly adjusted the amount of Respondent. No.1 lying in the shape of US$ 125000 in his Saving Account No.0021296-315 and were liable to refund the same along with a sum of US$ 22780 towards profit w.e.f. 03.10.1997 till the date of filing of the suit and further profit as prescribed by the bank from time to time till final realization of the amount. The bank was also directed to return the property documents of the mortgaged property bearing Survey Nos.401, 402, 403 and 404. Naclass No.308, Deh Joreji, admeasuring 16 acres, situated within the limits of district East Karachi. The bank was also directed to deposit the said property documents with the Nazir of the Court within one week's time from the date of the decree. The Respondent No.1 was also allowed cost of the suit.
2. Briefly stated the facts of the case are that the Respondent No.1 was the Managing Director as well as mortgager and guarantor of Ahmed Foods Industries (Pvt.) Ltd., (hereinafter referred to as Ahmed Foods). The appellant bank through a sanctioned advice dated 21.12.1996 granted Ahmed Foods three finance facilities:
(1) Running Finance for Rs.5 million
(2) Running Finance for Rs.7.5 million
(3) Letter of Credit for Rs.10 million.
It was the claim of the bank that Ahmed Foods fully availed these three facilities granted by the bank. The above mentioned property owned by the Respondent No.1 was mortgaged with the bank in respect of the finances. The Respondent No.1 also executed a letter of lien dated 26.12.1996 in respect of US$ 125000 deposited in his Foreign Currency Account. It is claimed that the Respondent No.1 had authorized and empowered the bank to earmark a sum of US$ 125000 from his personal saving account and in the event of default by Ahmed Foods, the Appellant bank may adjust the amount without further reference to him. It was the claim of the bank that on the request of Ahmed Foods, vide their letter dated 07.4.1997 and 12.7.1997, they authorized the bank to liquidate the collateral and to adjust the Running Finance facility No.1 and thereafter the bank, by withdrawing US$ 125000 from the personal saving account of the Respondent No.1, appropriated the same towards partial adjustment of the running finance facility of Ahmed Foods. It was also averred that the encashment of the said US$ 125000 was duly reported to the State Bank of Pakistan, (SBP) as per the legal requirement since Ahmed Foods have failed to clear their liability towards the bank.
3. It may be noted that the bank had previously also filed a Suit bearing No.186/1999 for recovery of an outstanding amount of Rs.9725238/- in Banking Court No.1 against Ahmed Foods and four others, including the Respondent No.1 (defendant No.2) who was defendant No.2 in the said suit.
The matter proceeded before the Banking Court, which vide order dated 22.6.2000 dismissed the leave to defend application of the Defendants Nos.1, 3 to 5 only in the said suit and decreed the same in favour of the Bank vide, order dated 23.9.2000 in the sum of Rs.5133845/-. However since the leave to defend of the Respondent No.1 was allowed vide order dated 06.6.2000, the matter then proceeded after framing of the issues. Thereafter, Ahmed Foods settled its matter with the bank, who filed an application for withdrawal of suit upon which the Respondent No.1 gave his no objection and the suit was disposed of as withdrawn vide order dated 15.11.2001.
4. The present matter however pertains to adjustment of US$ 125000 by the bank from the personal account of the present Respondent No.1 in respect of which, he filed Suit No.274/2002 (New Suit No.418/2004) against the bank on the ground that as to under what law and authority the said amount of US$ 125000, which belongs to him, has been adjusted by the Bank. In this suit the appellant filed leave to defend application which however was granted by the learned Judge vide order dated 11.04.2005 whereas the Order VII, Rule application filed by the appellant was dismissed.
The matter proceeded before the learned Banking Court No.1 which, vide judgment dated 11.4.2012, decreed the suit in favour of the Respondent No.1, as mentioned above, which has been impugned in the instant 1st Appeal.
5. Mr. Moulvi Iqbal Haider, Advocate has appeared on behalf of the Appellant and stated that the order of the learned Judge is not in accordance with law as according to him the suit was time barred and the learned Judge has not taken cognizance of this fact therefore his order is not maintainable and is liable to be set aside. Learned counsel in support thereof read out provisions of Section 3 of the Limitation Act, 1908 and also placed reliance on the following decisions given in the cases of: i. Hakim Muhammad Buta and others v. Habib Ahmed and others (PLD 1985 SC 153) ii. Ghulam Muhammad and others v. Malik Abdul Qadir Khan (PLD 1983 SC 68) iii. Khairati and 4 others v. Aleem-ud-Din and another (PLD 1983 SC 69) iv. Almas Ahmed Fiaz v. Secretary Government of the Punjab (2006 SCMR 783)
6. While arguing on merits Mr. Haider stated that it was the Respondent No.1 who wrote as many as three letters dated 05.4.1997, 07.4.1997 and 08.4.1997, in the capacity of the then Managing Director and guarantor of Ahmed Foods to adjust: the outstanding amounts and to settle the liabilities of Ahmed Foods. According to him the Respondent No.1 thereafter turnaround and filed the suit by claiming that the appellant was not justified in adjusting the amount of Ahmed Foods from his personal account. He stated that though the Respondent No.1 has directed the bank for stop payment but that would not change the circumstances of the matter as the bank, as per the instructions of the Respondent No.1 already given to them has adjusted the outstanding amounts of Ahmed Foods from his account. He stated that there is no denial to the fact that Ahmed Foods availed the finance facilities and then defaulted in payment of the outstanding amounts to the bank and therefore, the appellant bank was justified in adjusting the amount from account of the present. Respondent No.1 being mortgager, guarantor and the then Managing Director of the company as per his own instructions.
7. The learned counsel also objected to the letter dated 7.4.1997, relied upon by the Banking Court, that the said letter bears fake and forged signatures of the Respondent No. 1. He stated that the learned Judge while passing the order has totally ignored the letters of 07.4.1997 and 12.07.1997 written by Respondent No.1 to the bank. He further stated that the Respondent No.1 even made a complaint to the SBP, through a letter written in 1999, however no adverse observation was made by the SBP against the appellant in respect of adjustment of amounts, which according to him proved that the adjustment made by the bank was in accordance with law and as per the directions/instructions of the Respondent No.1 himself. He stated that it is interesting to note that no appeal was filed against the observations of the SBP by the Respondent No. 1.
8. He next stated that all the points, which were agitated by the Respondent No.1 in the Suit No.274/2002 were already taken care of in Suit No.186/1999, which was a disposed of matter, hence the decision in that suit was binding on the learned Judge on the principle of resjudicata, which was totally ignored by him.
9. He submitted that in view of these facts since the order of the learned Judge suffers from a number of anomalies, irregularities and illegalities, hence, the same may be set aside and as a result thereof the decree dated 03.5.2012 may also be set aside by upholding the action of the appellant bank in adjusting US$ 125000 from the Respondent No.1 account in accordance with law.
10. Mr. Shabbir Ahmed Shaikh, Advocate has appeared on behalf of the Respondent No.1 and stated that the facts of the present case are different from the facts pertaining to Suit No.186/1999. He dislodged the submissions of Mr. Haider that the principle of resjudicata is applicable to the present case. He stated that in the Suit No.186/1999 the leave to defend applications filed by all the defendants in the said suit were dismissed except that of the Respondent No.1, who was defendant.
No.2 in the said suit but the issue of incorrect adjustment of US$ 125000 remained undecided in the Suit No.186/1999, therefore, the Respondent No.1 was left with no option but to file an independent suit. He however admitted that the amount of US$ 125000, was adjusted by the bank even before the filing of the Suit No.186/1999. It is also an admitted position that after the withdrawal of Suit No.186/1999 by the bank they informed the Respondent No.1 to collect the documents of the mortgaged property from them vide letter dated 29.11.2001. Hence according to him it could not be said that the facts of that suit were akin to the facts of the present matter and the same is hit by the principle of res judicata.
11. He next stated that the Suit No.186/1999 was disposed of when Ahmed Foods settled their matter with the bank who subsequently withdrew the same unconditionally, which clearly denotes that the matter was patched up between Ahmed Foods and the liability of the bank stood settled. As per the learned counsel this clearly means that there was no outstanding liability against the present Respondent No.1 otherwise had there been any liability of the bank against the present Respondent No.1 the bank would not have withdrawn the suit unconditionally as not pressed. According to Mr. Shaikh, this clearly establishes that the bank do not owe any money against the Respondent No. 1.
According to him the bank illegally adjusted US$ 125000 from the personal account of the present Respondent No.1, he therefore filed the Suit No.27472002 (new Suit No.418/2004), which was decreed in his favour. Hence, according to him the principle of resjudicata is not applicable to the present suit.
12. Learned counsel further stated that the bank has no authority under the law to withdraw or to adjust US$ 125000 from the personal account of Respondent No.1 in case of default of Ahmed Foods, though it could be said that the Respondent. No.1 was a mortgagor and guarantor of Ahmed Foods but when the defaulted amount of Ahmed Foods stood paid to them through export remittance there was no justification available with the appellant/bank to further adjust the amount from the personal account of the Respondent No. 1. He read out some portions of the order of the learned Single Judge to point out that the liability of the bank when stood cleared through the export proceeds received by the bank the adjustment of amount of US$ 125000 from the account of Respondent No.1 was wholly illegal and uncalled for. He stated that even the bank official, who was examined as witness, has confirmed that the adjustment of the amount from the Respondent No.1 account was not done in a proper manner and when necessary documents were called to be produced as evidence the bank official did not produce the same.
13. Learned counsel next stated that ample opportunity was provided to the bank official to produce bank advice, bank voucher with regard to adjustment of the amount but the same was not produced. Learned counsel further stated that the stance of the bank that when Ahmed Foods defaulted in respect of payment of the amount it was adjusted from the account of the Respondent No.1 being its mortgagor and guarantor belies from the fact that the running finance facility granted to Ahmed Foods was adjusted from the export proceeds of Ahmed Foods.
According to him perusal of Ex. D/30 would show that the amount of export proceeds was received from Ahmed Foods International by Ahmed Foods Industries upon which withholding tax and service charges were deducted, which amount was subsequently adjusted against the liabilities of Ahmed Foods. Mr. Shaikh also invited our attention to the cross-examination of the bank official in this regard.
14. Mr. Shaikh, further submitted that the issue raised by the learned counsel for the appellant that the suit was time barred is not correct as this issue was not dilated upon by the learned Single Judge and the issue with regard to adjustment of US$ 125000 remained undecided, hence the decisions relied upon by the Mr. Haider are distinguishable from the facts obtaining in the instant matter.
15. Mr. Shaikh stated that the learned Single Judge through an elaborate and detailed judgment has rightly come to the conclusion that the bank was not justified in adjusting US$ 125000 from the personal bank account of the Respondent No. 1. He therefore, has prayed that this appeal is bereft of any merit; hence the same may be dismissed by imposing cost upon the bank/appellant.
16. We have heard both the learned counsel at considerable length and have also perused the record and the decisions relied upon by the learned counsel appearing for the Appellant.
From the arguments of Mr. Haider there appears three main points in the instant matter, which needs deliberation on our part.
Point Number No. 1.
That the suit bearing No.274/2002 (New Suit No.418/2004) was time barred.
Point Number No.2.
That since the decision on the issue involved in the instant suit has already been dilated upon and decided in the Suit No.186/1999, therefore the parameters of res judicata are squarely applicable to the present matter and hence, the matter may be decided in favour of the Appellant.
Point Number No. 3.
That under the facts and circumstances of the matter the Appellant/bank was justified in adjusting the amount of Ahmed Foods from the account of the Respondent No.1 being its the then Managing Director, mortgagor and guarantor when he has given his undertaking through various letters that in case of default by Ahmed Foods the outstanding amount may be deducted from his account.
We will take up and decide each point separately.
17. As far as the aspect of limitation is concerned, we do not agree with the submissions made by the learned counsel for the Appellant, that the amount was adjusted in the year 1997 whereas the suit was filed by the Respondent No.1 against the bank in 2002. It is a matter of record that leave to defend application filed by the Respondent No.1, as Defendant No.2 in the Suit No.186/1999, was granted on 06.06.2000 by the learned Judge by categorically observing that the issue with regard to adjustment of US$ 125000 "was too intricate to understand" and thereafter directed the parties "to prove by evidence whether the amount of US$ 125000 was taken or once by the Plaintiff and had shown credit into the account of Defendant No.1". It is also a matter of record that the issues were framed on 23.8.2000 in Suit No.186/1999 but those were not decided since the matter was patched up between Ahmed Foods and the bank and thereafter the said suit was unconditionally withdrawn by the bank on 15.11.2001, which shows that the issues framed in the suit with regard to adjustment of amount of US$ 125000 were never decided in the above referred suit. The Suit bearing No.274/2002 (New number 418/2004) was filed by the Respondent No.1 for incorrect adjustment of US$ 125000/- on 22.4.2002. Hence in our view it could not be pleaded that the suit filed by the Respondent No.1 was time barred as the respondent No.1 was constantly pursuing the matter with-regard to adjustment of US$ 125000/-firstly in Suit No.186/1999, as defendant No.2, and after its withdrawal by way of filing his own suit. We therefore, reject the contention of the counsel for the appellant in this regard. The decisions relied upon by him on this aspect are also found to be distinguishable.
18. As regard the issue of res judicata is concerned, here again we tend to disagree with the contention raised by the learned counsel for the appellant as in the Suit No.186/1999 the issues with regard to adjustment of US$ 125000 from the account of the Respondent No.1 were neither taken up nor decided but, as stated above, the said suit was withdrawn by the bank when the matter was patched up between the bank and Ahmed Foods and thereafter the matter was disposed of by the banking Judge without dilating/ touching upon the issues framed in the said suit with regard to the adjustment of US$ 125000, hence in our view it could not be said and pleaded that the suit filed by the Respondent No.1 was hit by the principle of res judicata. We further disagree with the contention of Mr. Haider that the issue of res judicata was not dilated upon by the learned Judge, whereas the judgment reveals that the issue on resjudicata was duly framed by the learned Judge, as issue No.9, and decision thereupon was given by the learned Judge available on typed pages 20-21 of the judgment. Hence this objection of Mr. Haider is found to be without any force hence rejected.
19. We will now take and decide the main and core controversy between the parties as noted in point No.3 supra.
It is an admitted position that the Respondent No.1, vide undertaking dated 26.12.1996, has authorized the bank to earmark or set apart a sum of US$ 125000/- from his foreign currency account as security against finance/advance of Ahmed Foods, which would remain charged till finance, together with the markup, was fully paid by them. The respondent No.1 also undertook not to withdraw the amount until the whole liability of Ahmed Foods is cleared and in case of default the said amount of US$ 125000/- was to be appropriated towards the amount of Ahmed Foods, without reference to him. It has been averred that Respondent No.1 came to know about the adjustment of US$ 125000/-when he demanded his bank statement from the bank, which showed adjustment of the amount from his personal bank account (amount adjusted on 03.10.1997, vide advice No. ADV/70/97).
20. It may be noted that when Respondent No.1 enquired from the bank about adjustment of the amount he was informed that the same was done on the basis of a cheque issued by him, which as per the Respondent No.1 was stolen on 09.01.1997 and instructions for stop payment was already given by him to the bank. No intimation is available that whether the bank acknowledged the receipt of letter of the Respondent No.1. As per the Respondent No.1 he protested through letter dated 06.11.1997 about the adjustment of the amount and the bank replied to him vide letter dated 10.12.1997 that the said amount was adjusted towards the outstanding liability of Ahmed Foods, since Respondent No.1 was the mortgagor and guarantor of Ahmed Foods. The bank also informed the Respondent No.1 that the said adjustment was made after due intimation and permission from SBP. The adjustment advice also shows that the amount was adjusted through advice No. ADV/70/97, accompanied with bank's debit advice dated 03.10.1997, which shows a deduction of service charges and withholding tax as well. It has neither been explained by the learned counsel for the appellant nor the Respondent No.1 that if an amount, being outstanding liability of Ahmed Foods, has been adjusted through export remittance, as the bank's debit advice shows deduction of service charges and withholding tax also, then as to how the liability of Ahmed Foods was cleared from the personal account of the Respondent No.1 and if the amount of Ahmed Foods was adjusted from the personal account of the Respondent No.1 then as to where the export proceeds of Ahmed Foods received through Ahmed Food International (Pvt.) Ltd. was adjusted. No clarification in this respect is available and even the judgment of the learned Judge appears to be silent on this aspect. In our view there cannot be two adjustments of Ahmed Foods which aspect needs clarification as the respondent No.1 himself has claimed that the amount was doubly adjusted and this aspect obviously need clarification on the part of the bank which had remained unexplained. It is also noted that the bank's advice with regard to adjustment of amount from the personal account of Respondent No.1 appears to be vague, which needs probe.
21. So far as the argument of learned counsel for the respondent No.1 that he has sent a letter for stop payment to the bank, which was duly replied by the bank, is found to be without force as he has already given permission to the bank for adjustment of the liability of Ahmed Foods from his accounts hence his subsequent instruction to the bank for stop payment would be of no legal effect, since he has already undertaken, vide authorization dated 26.12.1996, permitting adjustment of the liability of Ahmed Foods from his account to the bank.
22. It may further be noted that it has always been the stance of Respondent No.1 that when the liability of Ahmed Foods was adjusted against the export proceeds, since the bank's advice shows withholding of tax and levy of service charges also, there was no justification with the bank to adjust the liability of Ahmed Foods from his personal account, whereas the contention of the bank had been that no double adjustment has been made and the amount of US$ 125000/- has been adjusted from the account of Respondent No.1, since he was the mortgagor and guarantor of Ahmed Foods and on his undertaking that in case of default of. Ahmed Foods the outstanding amount may be debited from his account. It may be noted that Respondent No.1 has nowhere stated that Ahmed Foods did not have any liability towards the bank.
23. In response to the complaint made by the Respondent No.1 dated 08.10.1999 to the SBP, the SBP duly informed him that in view of his letters dated 05.04.1997, 07.04.1997 and 08.04.1997 he himself has authorized the bank for liquidation of his foreign currency deposit by way of adjustment of the finance facility of Ahmed Foods. It may be noted that no appeal, revision or representation admittedly was filed by the Respondent No.1 in respect of the reply given by the SBP on his complaint.
24. The Respondent No.1 in his cross-examination, dated 16.08.2005, has categorically admitted that he was the surety as well as mortgagor of Ahmed Foods and has also submitted his personal guarantee in this regard. He has also admitted that additional guarantees/ sureties by way of lien in the sum of US$ 125000/- was also given to him in favour of the bank, with the authority to the bank to adjust the said lien in case of default of Ahmed Foods. He has also admitted that at the time of grant of running facility he was the Managing Director of Ahmed Foods. He has also admitted that Ahmed Foods committed default in clearing the liabilities of the bank and due intimation in this regard was given by the bank for such default and has also duly informed him that US$ 125000/- was withdrawn from his account in the year 1997. From these facts it is apparent that the bank adjusted the same through letter of lien issued by the Respondent No.1. The Respondent No.1 has also admitted that in the suit for recovery filed by the bank against Ahmed Foods bearing Suit No.186/1999 he was one of the defendants and was granted leave to defend in that suit but the matter was not decided on the issues framed in that suit, as it was unconditionally withdrawn by the bank as the matter was patched up between Ahmed Foods and the bank, when Ahmed Foods, as per the bank, had cleared their entire liability.
25. The perusal of the judgment reveals that the learned Judge framed as many as eleven (11) issues. It is strange to note that while deciding issues Nos.1 and 2 the learned Judge has simply reproduced the contents of the affidavit-in-evidence filed by the plaintiff in the said suit and thereafter observed "Hence the above two issues are decided in the affirmative". It appears that the learned Judge has decided the said two issues only on the basis of affidavit-in-evidence without giving his own findings and recording his own reasons before deciding the first two issues in affirmative. Decision on issues Nos.3, 5 to 8 being factual admitted position was given accordingly, since these did not require any deliberation decision on the part of the learned Judge.
So far as the decision on other issues Nos. 4, 9 and 10 are concerned here again the learned Judge has either reproduced the facts of the case, extracts from depositions, cross-examinations or the contents of the letters furnished during the course of the arguments, however, in our view, the judgment to some extent lacks the independent decision on the issues. In our view, though the learned Judge was justified in reproducing the contents of the affidavit-in-evidence, cross- examinations, other depositions, contents of the letters etc. and other various documents produced before him but his judgment should also carry the reasons for deciding the issues, which aspect, in our view, is lacking in the instant matter. Though the judgment is quite elaborate in nature but the same, as stated above, mainly contains reproductions and the aspect of giving reasonings for the eleven (11) issues framed in the instant matter appears to be wanting.
26. We, therefore, in view of the above facts, are of the considered view that the matter has not been properly adjudicated upon by the learned Judge and needs proper decision on the issues so farmed in the suit. We, therefore, under the circumstances and in the interest of justice remand this case to the Banking Court with directions to give independent reasonings and decision on the issues framed in the instant matter, except issues Nos. 3, 5 to 8 being factual and admitted issues on the part of both plaintiff and the defendant in the suit. Since this is quite and old matter, we expect that the same would be decided within a period of three months from the date of receipt of this order, after providing opportunity of hearing to both the parties. With these directions this 1st appeal, along with all the listed/pending application(s), stands disposed of, with no order as to costs.