' This suit under the Banking Companies (Recovery of Loans) Ordinance, 1979 for recovery of Rs, 12,14,736 has been instituted by United Bank Ltd., the plaintiff against M/s. Sartaj Industries, Faisalabad and six others, the defendants. The facts as set up in the plaint briefly stated are that the plaintiff-Bank with its Head Office at Karachi has also a Branch at Samundri Road, Faisalabad.
Defendant No,1 is a registered partnership carrying on business inter alia of manufacturing agricultural implements and machinery at Faisalabad with defendants Nos. 2 to 7 as its partners.
Defendants Nos. 2 and 4 to 7 have also been sued as mortgagors. Defendant No,6 having died, his legal representatives have been arrayed as defendants Nos. 6-a to 6-c.
2. Defendant No,1 opened, maintained and operated an account with the plaintiff-Bank initially with latter's Dijkot Road Branch, Faisalabad and availed of some financial facilities during the period its account remained with the aforesaid Branch of the plaintiff. Defendant No,1 through defendants Nos. 2 to 7 also requested the plaintiff-Bank for grant of Cash Credit facility with a limit of Rs,6,00,000. The said request was acceded to by the plaintiff. The Cash Credit loan facility availed of by defendant No,1 carried interest @ 4% above the bank rate with a minimum of 13% per annum with quarterly rests. It was allowed against hypothecation of agricultural implements, machinery etc. And collateral mortgage of the property owned by defendants Nos. 2 and 4 to 7. Defendant No,1 acting through defendants Nos. 2 to 7 also executed various documents as detailed in para. 8 of the plaint for securing re-payment of the loan in question. In para. 9 of the plaint, details of the mortgaged property have been given.
3. Later, however, on the request of defendant No,1 the said cash credit limit account of the defendant was transferred to the plaintiff's Samundri Road Branch and a formal sanction advice of the same amount limit was sanctioned inter alia stipulating that the limit earlier sanctioned from the Dijkot Road stood cancelled.
4. According to the further averments in the plaint, defendant No,1 after availing of the loan facility did not liquidate the loan liability as was agreed to. However, the defendants acknowledged their liability towards the plaintiff at Rs,4,52,610 as on 30-6-1981 through debit confirmation slip with an assurance that the liability will be cleared at the earliest. After a lapse of some further period when the re-payment was not made, the plaintiff approached the defendants whereupon sums of Rs,1,000, 5,000, 5,000, 5,000, 10,000 and Rs,5,000 were respectively deposited on 24-3-1984, 7-7- 1984, 31-7-1984, 25-9-1984, 2-10-1984 and 21-11-1984. The outstanding amount as on 21-11-1984 was again allegedly acknowledged by the defendants at Rs, 7,26,609.
5. The plaintiff has also asserted that per statement of account, enclosed with the plaint the amount recoverable as on 31-8-1987 stood at Rs, 12,14,736 which having not been liquidated despite repeated requests of the plaintiff, the plaintiff was left with no alternative except to file the present suit.
6. In response to the summonses issued to the defendants, in Form-4 of Appendix-B of Code of Civil Procedure, the defendants jointly filed a petition for leave to appear and defend the suit viz. PLA No,8/B of 1988. This petition has been resisted by the Bank.
7. The learned counsel for the defendants raised the following contentions in support of the aforementioned petition for leave to appear and defend the suit.
(i) that the confirmation slips dated 31-12-1980 and 30-6-1981 purporting to be under signatures of Qaisar Iqbal, defendant No,2 are forged and defendant No,2 has denied his signatures thereon. The said defendant also denied his signatures on confiramtion slip dated 21-11-1984. In the context of the above assertion, the learned counsel submitted that in case the aforementioned documents are taken out of consideration, the suit of the plaintiff filed on 17-9-1987 is barred by time;
(ii) that the suit is also barred by time when the statement of account is looked at closely, in that the defendants having denied the deposits made w.e.f, 24-3-1984 the suit filed on 17-9-1987 is beyond three years from the last admitted deposit.
(iii) that the mortgage deed relied upon as security for loan does not relate to the loan in dispute which had been availed of from the Samundri Road Branch, whereas according to the recitals in the mortgage deed, the mortagagee is United Bank Ltd., Dijkot Road Branch.
(iv) that the penal interest has been wrongly claimed in the statement of account because the mortgage deed does not relate to this loan.
(v) that the pronote was got signed while it was blank and the entries therein have been subsequently filled in to suit the case of the Bank.
' On the basis of the above contentions, the learned counsel for the defendants submitted that the defendants have become entitled to the grant of unconditional leave for defending the suit.
8. On the contrary, the learned counsel for the plaintiff contended:-- ' First that the mortgage deed in question being a continuing charge document for Cash Credit facility continues to be the security for the loan from Samundri Road Branch as well especially when the request for transfer of the Cash Credit limit account from Dijkot Road Branch to the Samundri Road Branch was made by the defendants themselves.
' Secondly that the grant of Cash Credit facility was by the United Bank Limited as an entity and the actual availing of loan from one branch or the other will not absolve the loanee from its liability more so when the plaintiff Bank's Head Office is referred to as mortgagee in the mortgage deed itself.
' In the light of the above two submissions, it was urged that the loan being on the basis of a mortgage the suit is within time, the limitation applicable being 12 years as provided for by Article 132 of Schedule-I to the Limitation Act.
' The learned counsel also submitted that the above contention is without prejudice to the case of the plaintiff that all the confirmation slips are genuine and signed by the defendants and so is the position regarding all the deposits made by the defendants.
' Thirdly that the Promissory Note was not got signed when blank. It was urged that otherwise also the allegation is of no consequence in view of section 20 of the Negotiable Instruments Act, 1881. In support of his above contention, the learned counsel relied upon The National Commercial Bank Ltd. Karachi v. Muhammad Younas Butt ( 1980 CLC 90 ), Messrs Atlas Travels Ltd. v. President, Bazm- e-Salat and another (PLD 1986 Karachi 464).
' Fourthly that the alleged fraud committed by the plaintif Bank and by the officials of the Bank is without any details on the basis of which the allegation has been levelled. Learned counsel contended that such vague allegations of fraud which are not in accord with the requirements of Order VI, Rule 4, C.P.C., merit no consideration at all.
'Fifthly that the penal interest has rightly been added in the statement of account as it is recoverable by virtue of clause 6(i) of the mortgage deed, and ' Lastly that there being no denial of the availing of loan facility of cash credit, the defendants have not been able to make out any case for the grant of leave to defend the suit.
9. During the arguments, the learned counsel for the plaintiff was asked as to whether the penal interest charged is in accord with the stipulation in the mortgage deed which prescribes the rate of such interest as 2% per annum and ' not 2% per annum with quarterly rests. The learned counsel had stated that he was not sure in that regard and took time to seek instructions and if need be to file a correct statement with rate of penal interest as agreed to. On 1842-1988, the learned counsel for plaintiff submitted that according to the correct calculations, the statement of account has been prepared but then the learned counsel for the defendants objected to the placing of the said statement on record, the same being not certified in accordance with the Bankers' Books Evidence Act. He also then stated that certain arrangements for amicable settlement of the dispute have been made and therefore, the case may be adjourned. However, a correct statement of account duly certified under Bankers'
Books Evidence Act was placed on record by the plaintiff on 2-7-1989. The defendants, also in the meanwhile filed an application (C.M.No, 98-B of 1989) under Order VII, Rule 10 and section 151, C.P.C., for return of the plaint alleging that the amount recoverable by calculating the sum as per account sheet annexed with the application comes to Rs, 8,29,360 and being less than Rs, 10,00,000 is triable by the Special Court Banking. This application has duly been replied by the plaintiff and the assertions made therein have been controverted.
10. Before dealing with the main case, it appears appropriate that the aforementioned application of the defendants (C.M.No, 98/B of 1989) be decided. The basis of this application is a statement of account prepared by the defendants which has been annexed with the application and shows that the amount recoverable from the defendants by the plaintiff is Rs, 8,29,360. It was submitted that the abovementioned amount being less than Rs, 10 lacs, this suit is not maintainable before this Court and therefore the plaint should be returned for presentment to the proper Court.
11. The learned counsel for the plaintiff on the other hand pointed out that in the statement of account annexed with the application, there is neither any mention of penal interest which is chargeable under a valid agreement subsisting between the parties nor even any interest has been shown charged to the defendants w.e.f, 16-12-1979 to 14-6-1980. It was also submitted by the learned counsel for the plaintiff that there is no averment in the above connection in the application itself either.
12. I find that the above contention of the learned counsel for the plaintiff is correct. The statement of account shows the charge of normal interest on annual basis whereas according to the relevant clause 6(i) in the mortgage deed as also according to the promissory note the interest is chargeable with quarterly rests. Again there is no mention of the penal interest as having been debited to the account of the defendants in the statement of account furnished by the defendants which under an agreement is payable by defendants to the plaintiff as is evident from the same clause of the mortgage deed viz. Clause 6(i). The obvious that follows from the above discussion is that no premises having been laid to establish that the recoverable amount is less than Rs, 10 lacs, the application filed by the defendants has no merit. It is accordingly dismissed.
13. Now taking up the petition for leave to appear and to defend the suit, it may be observed that the three points that emerge for determination from the contentions raised on behalf of the defendants may be summarised as below:--
(i) that the suit is barred by time;
(ii) that the penal interest has been claimed illegally there being no contract therefor between the parties, and
(iii) that the promissory note was got signed when it was blank and therefore, not enforceable.
' The aforementioned three contentions are dealt with hereunder seriatum:--
14. The first contention is based on the following three factors:--
(a) That the confirmation slips dated 31-12-1980, 30-6-1980 and 21-11-1984 are forged and do not bear the signatures of Qaisar lqbal defendant No,2. If these confirmation slips are taken out of the field, the suit filed on 17-9-1987 is beyond three years from the alleged date of execution of the promissory note viz. 16-12-1979.
(b) That the defendants having denied the deposits allegedly made by them w.e.f, 24-3-1984, the suit filed on 17-9-1987 is again out of time prescribed by law; and
(c) That the mortgage deed being in favour of the Dijkot Road Branch of the plaintiff as mortgagee, the same is not available for loan advanced by the Samundri Road branch of the plaintiff.
15. I am afraid, the above contentions have no force. Even if the first two submission are for the present taken as validly based which I will presently discuss is not so, the suit will be within time and cannot be held to be barred by limitation prescribed by law. The execution of the mortgage deed dated 29-12-1976 which has been duly registered before the Sub-Registrar on the same date has not been denied. The only objection raised on behalf of the defendants is that the mortgage deed is not available for the enforcement of the loan demanded through the suit in hand. This argument of the learned counsel for the defendants appears to be not well founded. The loan had been advanced by United Bank Ltd. As a juristic entity which has come into existence through its incorporation under the relevant laws. If a juristic entity carries on its business at a number of places and a particular business is dealt with and documents are executed in favour of that juristic entity, then in the absence of a specific clause to the effect that the document is enforceable by a particular branch alone, the same will be available for enforcement by that entity through another branch when the transaction viz. The loan in the case in hand had, on the request of the loanee/mortgagor, been transferred and sanctioned from another branch than the one from which it originally emanated. It is worth notice that it has not been asserted by the defendants that the transfer of the cash credit loan facility from the Dijkot Road Branch to the Samundri Road Branch was not on the request of the defendants themselves. A letter from the defendants to that effect has also been produced and placed on record by the plaintiff when this controversy was raised and despite availability of opportunity, the defendants did not choose to deny the correctness of the said letter. Now the defendants after having sought the transfer of the cash credit loan facility from one branch of the plaintiff to the other cannot be allowed to set up a defence that the loan in question is different than the one originally sanctioned. This would amount to giving a premium on the own doing of the defendants. I have therefore, no hesitation in holding that the defendants shall stand precluded by virtue of the letter aforementioned from raising a plea to defeat the claim of the plaintiff on the above basis.
16. Yet another aspect of the matter is that the mortgage deed in question has not been executed as such in favour of the Dijkot Road Branch but in fact it had been executed in favour of the United Bank Ltd., with its registered office at Karachi and therefore, will be enforceable against the defendants notwithstanding the transfer of the cash credit advance in question from one branch of the plaintiff-Bank to the other.
17. The further important point in this respect which repels the contention of the learned counsel for the defendants is that by virtue of clause (15) of the mortgage deed, the mortgage remains operative as a continuing security for all money indebtness and liabilities of the mortgagors at any time outstanding or subsisting at the time of demand made thereunder. That being so, no denial having been made by the defendants about the availing of the loan, the liability and indebtness subsists and the mortgage in question being a continuing security will be available for enforcement of the claim of the plaintiff.
18. As already mentioned above, the mortgage deed was executed and registered by the defendants in favour of the plaintiff on 29-12-1976 and therefore, the limitation will be governed by Article 132 of the First Schedule to the Limitation Act. The suit having been filed on 17-9-1987 is well within 12 years and therefore, not barred by limitation.
19. In view of the above finding, the matter regarding the alleged forging of confirmation slips and the non-deposit of the amounts by the defendants w.e.f, 24-3-1984 onwards only remains academic only. Nevertheless I have no hesitation in holding that the said two contentions also do not have force. It is well settled that in case, forgery has to be set up as a plea, the particulars thereof have to be set up succinctly as provided by Order VI, Rule 4, C.P.C. In the case in hand, the defendants if they wanted to avail of the plea of forged nature of the confirmation slips, of necessity, had to give details as to who forged them and in what circumstances the forgery had been committed. The only allegation is that these do not bear signatures of defendant No, 2 namely Qaisar lqbal. Although the signatures on the confirmation slips dated 31-12-1980 and 30-6- 1981 on the foot thereof have been attempted in a different style yet it is clear even to a naked eye comparison that the signatures on the confirmation slip dated 31-12-1980 at the top thereof after encircling the date portion and on the revenue stamps on the slip dated 21-11-1984 are exactly similar to the signatures of defendant No,2 on the petition for leave to appear and defend the suit as also on the affidavit annexed therewith. In the above view of the matter it is clear that even on the factual plane, the contention as at (a) above cannot be given any effect.
20. As regards the contention (b) above, I suffice by observing that neither a corporate body like a scheduled bank can afford to make deposits on behalf of a loanee from its own account nor could that be done by officers/employees of the plaintiff bank especially when the deposits total to a considerable sum of Rs,31,000. The statement of account annexed with the plaint which has been certified under the Bankers' Books Evidence Act, shows these deposits as having been made by the defendants and thus presumption of correctness has to be attached thereto when the entries have not in any manner whatsoever been rebutted by the defendants. The aforesaid deposits shall have to be therefore taken as having been made by the defendants on the dates on which these are shown to have been made in the books of accounts of the plaintiff Bank.
21. Another important aspect of the matter which may be pertinently mentioned here is that it has been asserted on behalf of the defendants that the promissory note was blank at the time of execution thereof. That being so, the plaintiff could have just filled in a date suiting to it in the said promissory note and there would have been no occasion for the making of the confirmation slips or deposits through forged means as alleged by the defendants; This factor also lends support to the claim of the plaintiff that the confirmation slips were executed by defendant No,2 on behalf of defendant No,1 and that the deposits had also been made by the defendants themselves on the dates on which these have been shown in the statement of accounts.
22. From the above discussion it becomes crystal clear that the contentions of the defendants as to the suit of the plaintiff being barred by time have no force and these are accordingly repelled.
23. The second contention about incorrect claim of penal interest need not detain me for long. A bare perusal of clause 6(i) of the mortgage deed will show that the defendants had agreed to the payment of penal interest chargeable from the date of default in payment as agreed to and the said interest was to remain chargeable till actual payment and adjustment of the entire amount due. Not only penal interest has been agreed to in general terms but the rate of such charge of penal interest has also been specified as 2% per annum. The amended statement of account having been filed by charging the penal interest at the rate of 2% per annum without any rests and the claim of the plaintiff having been accordingly reduced, there remains no avenue for making this point as one for trial as no triable issue in this regard remains in the field. The second contention therefore, fails.
24. Adverting now to the only other contention of the defendants left to be dealt with, it may be observed that merely because the promissory note in question was not completely filled in when executed would neither detract from the validity thereof nor would the same be rendered unenforceable in law. Section 20 of the Negotiable Instruments Act 1881 as amended upto date reads as under:-- "Section 20.--(1) Where one person signs and delivers to another a paper stamped in accordance with the law relating to stamp duty chargeable on negotiable instruments, 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 fade authority to the person who receives that paper to make or complete it, as the case may be, into a negotiable instrument for the amount, if any, specified therein, or, where no amount is specified, for any amount, not exceeding, in either case, the amount covered by the stamp.
(2) The person so signing shall, subject to the provisions of subsection (3), be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course, for the amount specified in the instrument or filled up therein: Provided that no person other than a holder in due course shall receive from the person so signing the paper anything in excess of the amount intended by him to be paid thereunder.
(3) In order that any such instrument may on completion be enforceable against any person who became a party thereto before such completion it must be filled up within a reasonable time and strictly in accordance with the authority given: ' Provided that if any such instrument after completion is negotiated to a holder in due course it shall be valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given."
'A bare perusal of the aforementioned provision leaves no manner of doubt that a negotiable instrument which a promissory note also is, though incohate if properly stamped does not lose its validity and enforceability merely because it was not wholly or partially filled in at the time of execution and delivery thereof. The section in fact envisages that a stamped incohate negotiable instrument duly executed can be delivered wholly blank or in an incomplete form giving a choice to the person to whom the said instrument is delivered to fill in the same so as to make it complete as a negotiable instrument for the amount if any specified and if not so specified for any amount not exceeding the amount covered by the stamp affixed on the instrument. The embargo on such power of the person to whom any instrument of the nature as cited above has been delivered as may be spelt out from subsection (3) of section 20 ibid only is that it should be filled in within a reasonable time and strictly in accordance with the authority given.
25. Applying the above provision to the case in hand, it may be observed that the promissory note in question even if delivered in an incomplete form is still a valid and enforceable negotiable instrument, it being the admitted and J established position that it is duly stamped and not only that, the signatures of the defendants have not only been appended on the promissory note but also on the stamps affixed thereon. The signatures on the promissory note and the stamps, it may further be observed, have not been denied by the defendants. The amount claimed in the promissory note viz. Rs, 6,00,000 is also not denied as the amount of the loan facility availed of. The entries in the promissory note which might have been filled in subsequently have neither been disputed nor it could be done as the lowest rate of interest that could be charged and the rests at which the same had to be calculated are exactly the same as given in clauses (u) and (v) of the registered mortgage deed afore-mentioned. The only other thing left to be examined in connection with the validity of the promissory note is whether the instrument has been completed within reasonable time. According to the statement of account, the cash credit facility was availed of by the defendants from the Samundri Road Branch of the plaintiff within the period commencing 16- 12-1979 and ending 23-12-1979. The promissory note is dated 16-12-1979 and thus no question arises as to the unreasonability of the time within which the promissory note had been completed.
Judged on the principles laid down in PLD 1986 Karachi 464 as to the reasonability of the time, the promissory note could be completed by the plaintiff up to 22-12-1982 or even thereafter upto 5-7- 1984 as there had been acknowledgement of the liability by the defendants by making deposits in the account, this being again the admitted position that deposits prior to 24-3-1984 were made by the defendants and the last such deposit entry being of 6th July, 1981.
26. The bona fides of the plaintiff in completing the promissory note which had been admittedly delivered to the plaintiff by the defendants duly stamped and executed, may be completely blank or partially filled in, thus stands established beyond any shadow of doubt. The third contention of the learned counsel for the defendants also, therefore, has no merit.
27. The result of the above discussion is that the defendants have not been able to disclose even a prima facie defence to the suit which could give rise to triable issues and thus they are not entitled to the grant of leave to defend the suit. The petition for leave to appear and defend the suit is accordingly dismissed.
28. The petition for leave to appear and defend the suit having been dismissed, the contents of the plaint shall be deemed to be admitted and the plaintiff entitled to a decree. Resultantly, a preliminary decree with costs is hereby passed in favour of the plaintiff and against the defendants for recovery of Rs,10,39,135 with their joint and several liability. The amount of decree is less than the amount claimed in the suit as an amended statement of account has been filed as regards claim of the plaintiff.
29. The plaintiff will also be entitled to interest at the rate of 14% per annum from the date of institution of the suit till realization of the total decretal amount. The defendants are given five months' time to make payment of the decretal amount, failing which the plaintiff may apply for passing of final decree.
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