ABID AZIZ SHEIKH, J. This is a suit for recovery of Rs.210,223,494.60 with cost and cost of funds under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance) against the defendants.
2. Brief facts are that as per averments of the plaint, the defendant No. 1 opened/maintained its current account with the plaintiff bank since 08.04.2014. Subsequently defendant No.1 approached the plaintiff bank for grant of various finance facilities for its business activities. Upon request of defendant No. 1, the plaintiff bank has sanctioned facility of opening of sight documentary letter of credit (LC) for Rs.100 Million for the import of raw material through its facility letter dated 10.04.2014 along with sublimit of FIM for the retirement of import documents under LC. Subsequently further facility for opening of LC for US $790,597 equivalent to PKR 80 Million with sublimit of FIM of Rs.80 Million was approved vide facility offer letter dated 16.06.2014. Later the said facilities were revised/enhanced through facility offer letter dated 11.07.2014 for LCs of Rs.200 Million for import of raw material along with sublimit of FIM for Rs.200 Million for retirement of import documents under LCs, which were sanctioned through facility offer letter dated 11.07.2014. It is claimed that in order to secure the said finance facilities, various charge documents were executed by defendant No.1 and defendants Nos.2 to 5 stood as guarantors to the said finance facilities by executing their personal guarantees in favour of the plaintiff bank. The plaintiff bank claimed that defendants have failed in repaying the amount mentioned in Para 18 of the plaint, hence this suit. In response to the notice, defendants entered appearance and filed their joint application for leave to defend the suit (PLA No.78 of 2015) (PLA).
3. Learned counsel for the applicants/defendants while arguing the PLA submits that suit has been tiled by an unauthorized person. He explained that power of attorney dated 13.05.2015 has been executed in favour of one Muhammad Faisal Jilani, however, it is not explained that who has executed the said power of attorney in his favour as neither any Board Resolution has been appended nor the same has been referred to in the power of attorney. He has placed reliance on "Hassan Ali & Co. Cotton (Pvt.) Ltd. v. Trading Corporation of Pakistan (Pvt.) Ltd and another"
(2017 CLD 2283) and "PICIC Commercial Bank Limited v. Spectrum Fisheries Limited" (2006 CLD 440). Learned counsel further submits that as per Para No.14 of the plaint, it is admitted position on the record that FIM Facility was created against the pledged stock of Rs.236.146 Million, however, pledge stock has neither been returned nor released to the defendants, therefore, unless pledge stock is released, the decree cannot be passed in favour of the defendants. He next argued that as per Para No.8 of the plaint, fresh LC for Rs.80.00 Million was established which was subsequently merged in another LC and total LC amount claimed is Rs.200.00 Million. Submits that LC of Rs.80.00 Million was never created and not backed by any document including agreement and, therefore, the same can neither be charged nor could be merged in the subsequent LCs. He next contended that Statement 'of Account (appended at Page No.251 of the suit) is not a computer generated statement but the same is excel screen print out on white page and neither any number of account has been mentioned on the said page nor there is any separate markup statement, therefore, same is not a Statement of Account in terms of section 9(2) of the Ordinance and section 2(8) of the Bankers' Books Evidence Act, 1891 (Act). He also submits that in Para No.12 of the plaint, the amount of US $ 801,000 has been claimed against the LC dated 25.07.2014 (TF1420600024), whereas according to the sale contract and other relevant documents at Pages Nos.222, 223, 224 and 219 of the plaint, the actual amount is US $ 201,000, hence, excess amount has been claimed against the said LC. He further submits that against the LC dated 23.05.2014 (TF1414300059), US $86,728 has been claimed and in the chart mentioned at Page No.6 of the plaint, FIM has been created against the amount of Rs.7,272,359 for the said LC, whereas actually no FIM was created against the said LC amount, as no stock report of the said LC is available, whereas in respect of other LCs, where FIM has been created, stock reports have also been created and appended with the plaint. Further submits that six ICs bearing Nos.00069, 00093, 00008, 00002, 00001 and 00050 are not backed by any sale contract, whereas LC Nos.00069 and 00059 in addition are not backed by any import document. He submits that the defendants have 'denied these LCs in ground "1" of PLA. He has placed reliance on the judgments, passed in R.F.A. No.335/2011 dated 03.05.2017 and R.F.A. No.1251/2014 dated 28.01.2020 to submit that if import LC documents are not appended with the plaint and same have been denied by the defendant, this makes out a fit case for leave to defend. Finally argues that markup of Rs.18.763 million has been claimed in the Statement of Accounts (at Page No.215 of the plaint), however, no separate markup statement of account has been annexed and markup is also not backed by any finance document. He submits that this amount also includes the amount of Rs.3.729 Million charged as interest, which cannot be claimed being penal charges.
4. Learned counsel for the plaintiff bank in response submits that Board of Directors in its meeting held on 25.02.2015 through Board. Resolution authorized President and CEO of the Bank to delegate powers on behalf of the bank in favour of any Executive/Officer and further resolved that the attorney holders are also authorized to further delegate the power vested upon them by any two.
He explained that the President and CEO delegated the power to Mr. Jawed Akhlaq and Mr. Ather Ali Khan through powers of attorney dated 13.03.2015 who being competent authority signed power of attorney of Mr. Muhammad Faisal Jilani, has filed this suit. He submits that the suit being filed by authorized attorney, the objections are misconceived. He next argued that the defendants lifted the pledge stock and plaintiff has already filed criminal complaint against them for multiple incidents and the matter is still pending before learned Banking Court (Offences in respect of Banks), Lahore.
He next argued that not only the LCs were duly opened along with FIM, rather these are also supported by finance documents. He submits that the current account statement has been filed in which each and every corresponding credit entry is reflected and the statement of account of FIM is actually the extract of said entries and duly certified in terms of section 9(2) of the Ordinance and section 2(8) of the Act. He submits that claim of US $801,000 instead of US $201,000 in Para 12 of the plaint is only a typographical error and the bank has not claimed any excess amount. He submits that the amount of markup is duly supported by record, however the markup amount already received may be adjusted against suit amount.
5. I have heard learned counsel for the parties and perused the record with their able assistance.
The claim of the defendants that suit has not been filed by authorized attorney of the plaintiff bank is not supported by record. The suit has been filed through one Muhammad Faisal Jilani whose power of attorney dated 13.05.2015 is available on record. Learned counsel for the plaintiff bank has also explained that the persons who have signed the said power of attorney (Mr. Jawed Akhlaq and Mr. Ather Ali Khan) are not only duly authorized by the President/CEO of the plaintiff bank but also by the Resolution dated 25.02.2015. In view of above, this objection is turned down.
6. The next argument of learned counsel for the defendants is that FIM facility was created against pledge stock of Rs.236.146 Million, however, pledge stock was neither returned nor released to the defendants, therefore, unless pledge stock is released, the decree cannot be passed. This issue has already been discussed by this Court in National Bank of Pakistan v. Ali Akbar Spinning Mills Limited and others (C.O.S. No.126 of 2011) where while relying upon various judgments of august Supreme Court as well as by this Court, it was held that availability or otherwise of the pledge stock is a question that can be determined in execution proceedings at the time when collateral security be required to be accounted for and brought to sale Therefore it alone does not furnish a ground of defence to the defendants for grant of leave.
Relevant finding of this Court in judgment referred supra is reproduced as under:- "Learned counsel for the defendants submitted that pledged stocks were in the custody of the plaintiff bank and therefore, the plaintiff bank cannot seek recovery from defendant No.1 unless it is in the position to return the pledged stock This aspect has already been exhaustively dealt with by a judgment reported as Habib Bank Limited v. Orient Rice Mills and others (2004 CLD 1289) wherein it was held that "section 176 of the Contract Act empowers the plaint-Bank to file its suit without selling the pledged rice and to treat the pledge as a collateral security only. Clearly this option has been exercised by the plaintiff-Bank The matter relating to any short fall in the pledged stock of rice and the responsibility therefore can be determined in execution proceedings at the time the collateral security is required to be accounted for and brought to sale. The rights and obligations of the plaintiff-Bank as pledge and those of the defendant-Company under sections 151 and 152 of the Contract Act, which were referred to by the learned counsel for the defendant- Company, can also be determined at the time of realization of the collateral security."
Furthermore, in Messrs Muhammad Siddique Muhammad Umar v. The Australasia Bank Limited (PLD 1966 Sc 684), it was held that loss of pledged goods does not absolve the debtor from his liability and that a debtor can only claim an adjustment once the sale of the pledged goods is actually held. Along similar lines is the judgment reported as Siddique Wollen Mills and others v.
Allied Bank of Pakistan (2003 CLD 1033), wherein the Hon'ble Supreme Court held that in a suit filed by the bank only the liability of the debtor has to be adjudicated and the dispute regarding pledged goods does not constitute a bona fide dispute. This position has recently been reinforced and accepted by a learned Division Bench of this Court in a judgment passed in R.F.A. No.274 of 2010 titled Messrs Ibrahim Oil Mills and others v. MCB Bank Limited. It is, thus, clear that availability or otherwise of the pledged stock is a question that can very well be determined in the execution proceedings and that it does not furnish any ground of defense to the defendants for grant of leave to defend the suit. This objection even otherwise has no merit as the entire Principal amount of cash finance (Pledge) facility has been adjusted by the defendants and the plaintiff is only claiming markup thereunder".
The above view was also express by this Court in following judgments.
In Messrs Crystal Enterprises v. Platinum Commercial Bank Ltd (2002 CLD 868) held that "Learned counsel for the appellant next argued that the respondent-bank is under law required to account for the imported goods in its custody. This dray be so. However, this is a matter, which can only arise in the execution proceedings, when the collateral security is realised in such proceedings through sale of the same".
In Faisal Bank v. Zamindara Rice Mills (2007 CLD 1164) it was held that "merely because the pledged goods are lost or the pledge is unable to return the same does not in every eventuality confer upon the pledger a right to an equitable set off nor is always a complete defence to a suit for recovery of the debt secured by said pledge. Liability of the pledge in such eventuality is circumscribed by sections 151 and 152 of the Contract Act".
In Messrs Khalid Oil Mills v. Muslim Commercial Bank Ltd (2005 CLD 1565) it was held by the Division Bench of this Court that "the only ground vehemently urged by the learned counsel is to the effect that stock of the appellants pledged with the respondent-bank lying in the godown was stolen/misappropriated at the instant of the Manager of the respondent-Bank. On a court question, it is conceded that a criminal case has been registered qua the said occurrence wherein the appellants have been nominated as accused and they are on bail. This plea with reference to the institution of criminal case cannot be advantageously used by the appellants with reference to the recovery of the amount in question through the suit of the respondent-Bank".
7. The above legal position has also been candidly conceded by learned counsel for the plaintiff bank, who submits that matter relating to short fall in the pledge stocks will be determined in execution proceedings when the collateral securities are required to be sold.
8. The next contention of the defendants is that fresh LC of Rs.80 Million was established, which was merged into LC amount of Rs.200 Million but actually no LC of Rs.80 Million was created and same is also not backed by documents. In this regard, documents show that initially LC of Rs.100 Million was approved through finance offer letter dated 10.04.2014 and subsequently in pursuance to request letter dated 03.06.2014 by the defendant No.1, further facility of Rs.80 Million was approved vide facility letter dated 16.06.2014. Therefore, it cannot be said that the LC amount of Rs.80 Million was neither created nor backed by any document. It is also a matter of record that amount of facility of Rs.200 Million was increased/enhanced through facility offer letter dated 11.07.2014.
9. The next contention of the defendants is that amount of US $801,000 has been claimed against the LC dated 25.07.2014 (TF1420600024), whereas according to the sale contract and other relevant documents, the actual amount is US $210,000, hence excess amount has been claimed against the said LC. In response, the learned counsel for the plaintiff explained that this is only a typographical error in amounts mentioned in the plaint and the actual amount is US $ 210,000 and the bank has not claimed any excess amount under the said LC. This stance is supported by record as the FIM amount claimed is PKR 18.378 Million equivalent to US $178,000 approximate) against aforesaid LC, which is coherent with the agreements, commercial invoices, bill of lading, proforma invoice and proves that amount claimed is not US $801,000 against the said LC and same is merely a typographical error in the plaint.
10. The next contention of the defendants is that against LC dated 23.05.2014 (IF 1414300059) amount of US $86,728 has been claimed and the FIM has been created against the amount of Rs.7,272,359/- for the said LC whereas no actual FIM was created as no stock report of the said LC is available whereas in other respective LCs where FIM has been created, stock reports have been prepared and appended with the plaint. In this regard, it is relevant to note that FIM facility of Rs.7,272,359/- was created on 14.07.2014 and the relevant documents including agreement, commercial invoice, bill of lading, proforma invoice in order to avail the said FIM facility are appended with the plaint. The amount also reflects in the FIM statement and current account statement of the defendant. It is also explained by plaintiff learned counsel that the stock reports are from August 2014 to April 2015, showing available stock whereas the stock of FIM under question was created in year 2014 and according to the plaintiff bank, the defendants lifted the stock prior to the said stock report and the matter is now pending in criminal complaint before learned Banking Court.
11. Learned counsel for the defendants also argued that 06 LCs bearing Nos.00069, 00093, 00008, 00002, 00001 and 00050 are not backed by any sale contract whereas LC No.00069 and 00059 are also not backed by any import document. Though no such specific ground was taken in the PLA by defendants, however, record shows that LCs mentioned above are supported by documents including proforma invoices, commercial invoices and bill of lading and the amounts are also reflected in the FIM statement and the current account statement.
12. The next argument of learned counsel for the defendants that statement of account of FIM is not a computer generated statement but same is excel print but, therefore, the same is not statement of account certified under section 9(2) of the Ordinance and section 2(8) of the Act, suffice it to note that the said statement is extract of FIM amounts debited and duly credited in current account statement. The said statement is duly certified in terms of section 9(2) of the Ordinance and section 8(2) of the Act and further loan numbers are duly mentioned against each FIM transaction in the said statement. The debit amounts mentioned in the FIM statements are reflected in the computer generated duly certified current account, statement of defendant No.1, which is neither under challenge nor denied by the defendants.
13. The honourable Supreme Court and this Court repeatedly held that statement of account submitted by bank duly stamped and initialed by the concerned official of the bank and also carried a note stating "certified and verified on oath that all the entries contained in the statement of account are true copies of the entries contained in, ordinary books of the bank maintained and prepared in ordinary course of business and said books are still in custody of the bank" meets the requirement of law and section 2(8) of the Bankers' Books Evidence Act, 1891. In this regard reliance is placed on Muhammad Saleem Khan v. MCB Bank Limited (2020 CLD 737), Trust Investment Bank Limited v. The Bank of Punjab (2021 CLD 1430), IGI Investment Bank Limited through Attorney v. Messrs Admore Gas (Pvt.) Ltd. and another (2014 CLD 1354), NIB Bank Limited v.
Highnoon Textile Ltd. and 3 others (2014 CLD 763) and Messrs Soneri Bank Limited through Attorneys v. Messrs Elite Publishers Limited and 3 others (2011 CLD 755). This Court also held that Limited Company is required by law to maintain its own account, there to deny and controvert statement of account filed by bank, the company is required to file its own account. Reliance is placed on Baba Fareed Ghee Industries (Pvt.) Limited through Chief Executive and 3 others v.
National Bank of Pakistan (2002 CLD 669), Messrs Mach Knitters (Pvt.) Limited and 3 others v.
Allied Bank of Pakistan Limited through Manager (2004 CLD 535). In this case, not only statements of account of plaintiff bank are duly verified as required under section 2(8) of the Act and section 9(2) of the Ordinance but no counter statement has been filed by the defendant No.1 (company) to controvert the same, hence mere bald allegations against statement of accounts of bank, without backing of law and documentary proof have no basis.
14. One of the arguments of learned counsel for the defendants is that markup amount of Rs. 18.763 Million has been claimed in the FIM statement of account, however, no separate markup has been annexed with the plaint and same is not backed by any finance document and further this amount includes amount of Rs.3.729 Million charged as interest, which cannot be claimed. In this regard, the finance agreement dated 11.07.2014 shows that the markup is mentioned in Schedule II of the said finance agreement, which is KIBOR plus 3, (as also explained by learned counsel for the plaintiff bank) and therefore, the total markup amount till 31.03.2015 comes to Rs.13,762,545.68.
Further the current account statement of the defendant company shows that from 20.05.2014 till 11.12.2014, the penal interest amount of Rs.3,737,805/- has been charged from time to time. The said penal interest has no backing of law and further learned counsel for the plaintiff bank, on instructions submits that this amount may be excluded. Therefore, after excluding the aforesaid penal interest amount of Rs.3,737,805/-, the outstanding markup comes to Rs.10,076,516.21.
15. In view of above, after excluding the interest amount, the plaintiff bank is entitled for recovery of an amount of Rs. 201,536,442.21 (principal Rs. 191,459,926/- and markup Rs.10,076,516.21). It is relevant to note that the markup has been charged on the basis of finance agreement only till its expiry on 31.03.2015, therefore, the plaintiff bank shall be entitled for cost of fund after the aforesaid date i.e. from 01.4.2015 treating it as a date of default.
16. In view of above discussion, the plaintiff's claim in the suit is substantiated by agreements/statement of account as well as finance documents. The defendants have not been able to raise any substantial question of law or fact requiring recording of evidence for its resolution, consequently the PLA is dismissed and the suit of the plaintiff bank is decreed against the defendants jointly and severally for an amount of Rs.201,536,442.21 (principal Rs. 191,459,926/- and markup Rs. 10,076,516.21) along with cost of suit and cost of fund as contemplated by section 3 of the Ordinance. Decree sheet be prepared accordingly. The decretal amount will liable to be recovered through sale of charged assets as prayed for.
17. The decree is now converted into execution proceedings under section 19 of the Ordinance. The decree holder will submit Fard Taleeqa/list of assets of the judgment debtors forthwith.