SAEED-UR-REHMAN FARRUKH, J.- This first appeal by the plaintiff-bank is. Directed against the judgment dated 4.12.1996 passed by Banking Tribunal-I, Lahore whereby its suit for recovery of Rs.
1,51,73,188/- against the respondents was dismissed as pre mature.
Respondent No. 1 is the sole proprietor of respondent No. 2 firm and rest of the respondents have been arrayed as defendants in the suit in their capacity as mortgagors/guarantors.
Show-Cause notices were issued by the learned Tribunal in terms of section 6(2) of Banking Tribunals Ordinance, 1984 to which reply was filed by defendants Nos. 1 to 3, 6 to 11 raising number of pleas, inter alia, that the suit was pre mature, and that they were not liable to pay the suit amount, lt was contended that defendants Nos. 1 and 2 had exported locally manufactured machinery through the plaintiff-bank and the foreign remittances were to be received by the respondents to the tune of US $ 2,09,785/- which amount got stuck up as the foreign bank i.e. BCCI (Hong Kong), chosen by the appellant for collection of the said amount, went into liquidation According to them the appellant bank had already lodged a claim for the suit amount with, the liquidator which was to be settled by the sale of the assets of the said bank The plea taken was that during the pendency of the said claim they could not be proceeded against for recovery of any amount. This plea prevailed with the learned Banking Tribunal and, as mentioned above, the suit was dismissed as "pre-mahue". Hence this appeal.
2. lt is contended by the learned counsel for the appellant that the learned Banking Tribunal had erred in non-suiting the appellant on a consideration, which was not tenable in law. According to him the respondents could not evade the liability to pay the suit amount on the pretext that some unascertained amount was likely to be recovered by the appellant in-futuro as a result of settlement of its claim by the Liquidator of B.C.C.1. (Hong Kong), lt is also argued, without prejudice to the above contention, that apart from the foreign bills allegedly purchased by the appellant bank from respondents Nos. 1 and 2, relatable to the above said claim pending with the liquidator, the amount disbursed to respondents Nos 1 and 2 under F.A.P.E. facility was recoverable as such and the bank was justified to seek a decree for the said amount, against respondents Nos. 1 and 2 and their guarantors, for the said amount
3. We have heard the learned counsel for the parties and gone through the bulky record of the case with their assistance. The learned Banking Tribunal has, in our view, failed to discharge its statutory duty of deciding the lis, at least, to the extent of the amount allegedly disbursed to respondents Nos. 1 and 2 under EXPE facility, for the reasons mentioned hereinafter.
4. lt is argued on behalf of the appellant that the learned Tribunal was under legal duty to decree the suit of the appellant as prayed for, qua the entire amount claimed therein, in terms of Section 6(4) of the Ordinance. Section 6 of Banking Tribunals Ordinance, 1984 reads as under: "6 Procedure of Banking Tribunal. (1) Where a customer commits default in fulfilling any obligation to a Banking Company, the Banking Company may file against such customer with Banking Tribunal a plaint which shall be verified on oath by the Branch Manager or an Officer of the rank of Assistant Vice-President or Assistant Manager or such other officer, as the Board of Directors of the Banking Company may authorise in this behalf.
(2) On a plaint being filed with the Banking Tribunal in accordance with the provisions of sub- section (1), the Banking Tribunal shall issue notice requiring the defendant to show-case, within ten days of the service of such notice, as to why decree as prayed for in the plaint should not be passed against him.
(3) The notice under sub-section (2) shall be served on the defendant in accordance with the procedure for service of notice laid down in sub-section (3) of section 4 of the Banking Companies (Recovery of Loans) Ordinance, 1979 (XIX of 1979).
(4) Upon the defendant failing to file a reply within the time given in the show-case notice under sub-section (2) or upon rejection by the Banking Tribunal of the plea taken by him in the reply, the Banking Tribunal shall pass a decree in favour of the Banking Company as prayed for in the plaint.
(5) in the event of the Banking Tribunal passing a decree against the defendant failing to give a reply to show-case notice within the period specified in subsection (2), the Tribunal may, on the application of the defendant filed within thirty days of the passing of the decree, set aside the same and permit the defendant to file his reply under that sub-section provided it is satisfied that there was sufficient case for the defendant not having filed the reply within the specified period.
(6) All suits filed in the Banking Tribunal shall be disposed of within ninety days of the filing of the plaint and, in case the proceedings continue beyond the said period, the defendant shall be asked to furnish a bank guarantee acceptable to the Banking Tribunal to the extent of the claim in suit and, on failure of the defendant to furnish such bank guarantee within a period of fifteen days. The Banking Tribunal shall pass a decree in favour of the Banking Company as prayed for in the plaint: Provided that, where the claim of the Banking Company is based on default of the defendant in payment of agreed installments, the bank guarantee shall be to the extent of the amount of installments in default: Provided further that, in case the proceedings continue beyond a further period of one hundred and twenty days, the defendant shall deposit with the Banking Tribunal in cash the amount claimed in the plaint and, on failure of the defendant to make such deposit within fifteen days, the Banking Tribunal shall pass a decree in favour of the Banking Company as prayed for in the plaint.
(7) Any amount deposited by the defendant with the Banking Tribunal under sub-section (6) may be withdrawn by the Banking Company upon an undertaking to refund the same to the Banking Tribunal if so ordered at any time.
(8) Where the claim filed before the Banking Tribunal is for the enforcement of a mortgage of immovable property, "decree" shall mean final decree for foreclosure, sale or redemption, as the case may be, as provided in Order XXXIV of the First Schedule to the Code of Civil Procedure, 1908 (V of 1908)".
Pre-requisite for filing a suit under section 6 ibid is the existence of an unfulfilled obligation on the part of the customer towards the bank. Term "obligation" has been defined in Black's Law Dictionary as under:- "Law or duty binding party to perform their agreement- -that which constitutes a legal or moral duty and which renders a person liable to coercion and punishment for neglecting it". lt is thus clear that the learned Banking Tribunal is not required by law to accept the ipso dixit of a plaintiff qua its suit for any amount it may choose to claim from the defendant, lt is, on the other hand, under a legal duty to first ascertain as to whether, according to the record of the case before it, amount claimed in the suit could legally be so claimed, failing which the suit, as a whole, or to the extent of the amount held to be not recoverable as such must be dismissed. For instance in suit for recovery of amount on finance based facility, the plaintiff may ask for award of interest/penal interest; claim for amount sought may be patently time-barred; or suit on the face of record may be hit by res judicata, in these and many other situations there may be a legal bar to maintain a suit, lt cannot be said that the Banking Tribunal is so helpless as to be forced to grant a decree to a suitor on the averments of the plaint, ipso facto.
We accordingly repel the contention of the learned counsel for the appellant that its suit should have been decreed by Hie Banking Tribunal for the amount of Rs. 1,51,73,188/-, as prayed for the factum of pendency of its claim for the amount of foreign' bills with B.C.C.1. (Hong Kong) was to be ignored rather than being made the basis of dismissal of the suit. Our reasons follow in the succeeding paragraphs of this judgment.
5. in the instant case, the appellant bank, on its own showing, has presented the foreign bills said to be purchased from respondents Nos. 1 and.2 for US $ 2,09,785/- to BCCI (Hong Kong) for collection.
There is a copy of Fax message by the appellant to BCCI (Hong Kong) requesting it to dealt with its claim for the above amount (pages 605 of trial Court file). lt is not the case of the appellant that the said claim had been rejected by the Liquidator of B.C.C.1.
(Hong Kong) and thus the Foreign Bills said to be purchased by the appellant from respondents Nos. 1 and 2 stood dishonoured, forcing it to sue them in the capacity as drawers.
6. Under section 30 of Negotiable Instruments Act, 1881, till such time there was refusal on the part of the second drawee-B.C.C.I. (Hong Kong) to honour the so-called foreign bills, the alleged drawers-respondents Nos. 1 and 2 could not be legally compelled to compensate the first drawee- appellant bank by paying the amounts of these bills. Since the alleged claim for these was pending settlement with the liquidator of the said foreign bank, the learned Banking Tribunal was justified to dismiss the suit to that extent, as "pre-mature".
7. The question that now arises for consideration is as to whether remand the case to the Banking Tribunal for decision on merits, in the light of the above finding or to decide the matter finally here, in appeal on merits qua the claim of the appellant minus the alleged foreign bills amount. We are, in the circumstances of the case not persuaded to remand the case in view of the law laid down by Supreme Court of Pakistan in Pramatha Nath Chowdhury's case (PLD 1965 S.C. 434). Following passage from the report at page 442 may be quoted with advantage:- "It remains now to examine one other argument advanced on behalf of the appellant, namely, that in any event the learned Judges should not have decided the case themselves but should have remanded the case to the proper Court for determination ot the question as to whether there was a valid tenancy in this case. We are unable to accept this contention A remand should not be lightly ordered if the evidence on the record is sufficient for the appellate Court to decide the question itself. There can be no bar to the Court doing so. Having examined the reasons given by the learned Judges of the High Court for deciding this question we are unable to say that the evidence was not so sufficient. There was adequate evidence on the record upon which the decision of the learned Judges in the High Court could have been based. We see no reason, therefore, to interfere only on this ground", (underlining is ours).
" Respectfully following the above dictum, we proceed to decide the case on merits, as the entire material in the form of pleadings of the parties and the documents, in support thereof, is available on record, lt is to be seen as to whether after excluding the claim for the amount relatable to foreign bills (L.A.F.B. Facility), mentioned above, any amount was disbursed to respondents Nos. 1 and 2 under any other scheme/facility.
8. There is an agreement for financing facility dated 25.4.1985 (page 463) with a limit of Rs.
1602811/-, perusal of the statement of account, relied upon by the plaintiff Bank, shows that following amounts were disbursed to respondents Nos. 1 and 2 under L.A.P.C. facility:
1. 9.2.1985 Rs.3,00,000/-
2. 5.3.1985 Rs.7,00,000/-
3. 6.6.1985 Rs.4,50,000/-
4. 28.10.1985 Rs.4,00,000/- Total: Rs.18,50.000/- The initial L.A.P.C. facility was converted into F.A.P.E. facility on 1.4.1985 vide financing agreement dated 25.4.1985 (page 453 of trial Court file). This facility was to come to an end on 24.6.1986 and in terms of the agreement respondents Nos. 1 and 2 were required to pay buy back price in lumpsum as Rs.21,06,973/-.
Apart- from above, mark up at the agreed rate of 3% amounting to Rs.3,70,000/- for one year and for a further cushion period of 210 days amounting to Rs. 2,15,833/- Was also to be paid by respondents Nos. 1 and 2. The total, outstanding liability of respondents Nos. 1 and 2 thus comes to Rs. 24,35,833/-.
9. The appellant bank, has also placed reliance on two financing agreements:
(i) agreement dated 2.7 1906 (page 461) executed by the parties whereunder respondents Nos. 1 and 2 were to be allowed financial facility of Rs.80,80,434/- for a period ending on 30.6.1987 and in terms thereof respondents Nos. 1 and 2 were required to pay back Rs.9,697 Millions.
(ii) Agreement (fated 22.9.1987 (page 465 according to which respondents Nos. 1 and 2 were to avail of facility of Rs.98,35,660/-, This facility was to come to ariend on 21.9.1988 and in terms thereof respondents Nos. 1 and 2 were required to pay the buy back price of Rs/i 1.803 Millions on or before 2 1,9. l98. lt is claimed that though respondents Nos. 1 and 2 had availed of the above-noted two financial facilities as well, but they have defaulted to clear their dues, arising thereunder.
10. From the perusal of the record, it transpires that there is no sanction advice available for creation of these financial facilities. Significantly, the statement of account tiled by the appellant does not show any disbursement, whatsoever, under these two agreements which have to be treated as void, being without consideration. The supporting material of these agreements i.e. D.P.C. Notes etc. (pages 483, 485, 487 and 489) also suffer from the same fatal select and cannot be looked into for holding that respondents Nos. 1 and 2 had incurred any financial liability thereunder. We hold accordingly.
11. However, this not the end of the matter. Learned Banking Tribunal, in para 7 of the impugned judgment has mentioned that the appellant bank in its letter dated 1.4.1986 claimed a sum of Rs.
41,64,323/- from the respondents, while they in their application (before the Tribunal), dated 25.9.1996 conceded that they owe a sum of Rs. 39,24,310/-. We have carefully perused the record of the case but could not locate letter dated 1.4.1986. However, the application dated 25.5.1996 is available at. page 747 and we find that, indeed, the respondents have admitted their liability to the extent of Rs.39,24,310/-.
12. Though, as discussed above, from the remaining material on the record, the claim of the appellant is established to the tune of Rs.24,35,833/-, yet in view of the unequivocal admission of the respondents vide their application dated 25.5.1996, submitted before the learned Tribunal, we are constrained to hold that respondents Nos. 1 and 2 are liable to pay Rs.39,24,310/- to the appellant bank.
13. For what has been stated above, this appeal is accepted and after setting aside the impugned judgment of learned Banking Tribunal, a decree for a sum of Rs 39,24,310/- is passed in favour of the appellant, against the respondents, jointly and severally. The appellant is also entitled to the costs throughout.
Before parting with the judgment we make it clear that after the settlement of its claim by B.C C I.
(Hong Kong), the appellant-Bank may sue the respondents, for any sum, it may consider to be recoverable from them, after adjusting the claim amount, if any. in that eventuality, the respondents would be entitled to take all pleas of law and facts available to them, inter alia, to the effect that the present decretal amount, as awarded on the basis of their admission, was the actual/total amount due from them. They would also be within their rights to institute an independent suit against the appellant-Bank and to ask for refund of the amount, if any, recovered by the appellant-Bank from the B.C.C.1. (Hong Kong), claiming it to be their property, in case or the other or both the suits are instituted, the same shall be decided by the trial Court on merits, in accordance with law.