1. ' Plaintiff a Modaraba Company leased the machinery and equipment's detailed in the First Schedule to the lease agreements, dated 31-8-1995 and 27-10-1995 for a period of 5 years at the quarterly rental of Rs,18,30,949 and Rs,3,75,800 respectively for each lease to the defendant No, 1 . In consideration for the acknowledgment of liability and as security for the repayment of the amounts under the lease agreements, the defendant No,1 executed promissory notes, dated 31-8- 1995 and 26-10-1995, whereas, defendants Nos.2 and 3 executed personal guarantee, dated 31-8- 1995 and 26-10-1995 guaranteeing the repayment the obligations of the defendant No,1 supplementary lease agreements were also executed on 22-4-1997 and 15-1-1998 followed by execution of demand promissory notes and personal guarantees by defendants Nos.2 and 3. The defendant failed to make the payment of lease rental under both lease agreements. The plaintiff terminated lease agreement and filed the suit with following prayer:-- "(a) To pass a decree in the sum of Rs,53,128,216 (Rupees fifty-three million one hundred and twenty-eight thousand two hundred and sixteen) with mark-up at the rate of 20% per annum on a pro rata basis from the date of filing of the suit till the recovery of the entire decretal amount.
(b) To direct the defendant No,1 to deliver forthwith all the assets subject to the two Lease Agreements, as described in the Schedules of the said two Lease Agreements and upon failure of the defendant No,1 to do so, to direct the Nazir of the High Court to recover the. Said assets from the defendant No,1 or any of the persons having possession of the same.
(c) To restrain the defendant No,1 from making any further use of the assets leased under the LA-1 and the LA-2 from the date of filing of this suit.
(d) Costs of the suit.
(e) Any other relief that this Honourable Court deems fit and proper in the circumstances of this case."
2. ' The defendants were served with the summons, they have filed the application under section 10 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act No,XV of 1997 (hereinafter referred to as the Act, 1997). In their verbose application, they have taken legal as well as factual pleas in support of the leave to defend the suit, whereby they have tried to make out a case of serious and bona fide dispute, which is the condition precedent for the grant of leave to defend the suit. It has been pleaded that Modaraba is not a company and also not a banking company, as such, the suit under section 9 of the Act cannot be filed. The suit itself is premature, the defendant No,1 being a sick industrial unit is entitled for a fresh restructuring of the facilities. The documents annexed and relied are hit by the provisions of Articles 17(2) and 79 of the Qanoon-e- Shahadat, as well. As Stamp Act. The statement of accounts cannot be looked into in view of section 2(8) of the Bankers' Books Evidence Act. The defendants Nos.2 and 3 have admitted the guarantees in the sum of Rs,25.250 millions and Rs,4.750 millions executed by them but pleaded that they cannot be burdened with amount exceeding the guaranteed amount. The entitlement of the plaintiff to claim liquidated damages. Central Excise Duty, termination charges and any other amount, which is not permissible under the law was denied. They pleaded that non-performance of the contract was not intentional but a systematic coercive measures taken by the Government and its agencies against the defendants, making it impossible for the defendants to perform the contract. They further claimed rescheduling by State Bank of. Pakistan Coordination Committee and Banks Presidents Committee to restructure the obligations.
3. ' Counter-affidavit in rebuttal of the defendants' assertions was filed. In rejoinder, the defendants reiterated the same facts.
4. ' I have heard the learned counsel for the parties. The counsel for the defendants has canvassed before me that the plaintiff is not a banking company nor the company itself, as such, the suit cannot be filed under the Act, 1997 or under banking jurisdiction. To support his contentions, he referred the case of Mandviwalla Mauser Plastic Industries Limited, P.E.C.H.S., Karachi and 4 others v.
5. Federation of Pakistan through Secretary Finance. Ministry of Finance, Islamabad and 3 others 1997 SCM R 521, wherein the leave was granted to examine the following points:--
(i) Whether a "Modaraba Company" defined by clause (c) of subsection (1) of section 2 of the Ordinance of 1980 can be covered by the words "a company specified in the Schedule, appearing in sub-clause (iii) of clause (a) of section 2 of the Ordinance of 1984?
(ii) Whether the Federal Government was competent to incorporate in the Schedule below Ordinance of 1984 the First Prudential Modaraba, the Second Prudential Modaraba and the Third Prudential Modaraba?
(iii) Whether the word "company" mentioned in sub-clause (iii) of clause (a) of section 2 of the Ordinance of 1984 was intended by the Legislature to be understood and interpreted in light of the preamble to said Ordinance and was to be influenced by the earlier sub-clauses of clause (a) of section 2 of the Ordinance of 1984?
6. In my view, the contentions raised by the defendant's counsel is devoid of any force. The leave was granted with reference to the provision of clause (a), section 2 of the Ordinance, 1984, whereas, the definition of "a banking company" under the Act of 1997 is wide enough and includes "Modaraba" or "Modaraba Management Company" as banking company as defined in section 2-A of the Act, which reads as follows:-- "(a) Banking Company" means-- (i) any company whether incorporated within or beyond Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan and includes a Government savings Bank;
(ii) a Modaraba or Modaraba management company, leasing company, investment bank, financing company, unit trust or mutual fund of any kind and credit or investment institution, corporation or company, whether industrial, agricultural or development; and
(iii) any company authorized by law to carry on any similar business specified in the Schedule to this Act; and"
7. It is pertinent to mention here that definition of "bank" in section 2-A of Ordinance, 1984 was different and the same may be reproduced as under:--
(a) "bank" has the same meaning as in the Banks (Nationalization) Act, 1974 (XIX of 1974), and includes:--
(i) a scheduled bank as defined in the State Bank of Pakistan Act, 1956 (XXXIII of 1956),
(ii) the Pakistan Industrial Credit and Investment Corporation, the Investment Corporation of Pakistan, the National Development Finance Corporation, the Bankers Equity Limited and the National Investment Trust:
(iii) a Government Saving Bank to which the Government Saving Bank Act, 1873 (V of 1973) applies; and
(iv) such other company, institution or body. As the Federal Government may, by notification in the official Gazette, declare to be a bank for the purposes of this Ordinance;
(b) "Code" means the Code of Criminal Procedure, 1898 (Act V of 1898).
8. ' In my view, the Legislature has widen the definition of a banking company under the Act of 1997 and has brought all the institutions dealing with finances and advances including the Modaraba Company; to a single forum for adjudication of the dispute between the banking company, consumer and borrower.
9. The contention that plaintiff Modaraba is not a company is also devoid of any force. Under section 12 of Modaraba Companies and Modaraba (Floatation. And Control) Ordinance, 1980, Modaraba is a legal person with right to sue and to be sued in its name through the Modaraba company, subsection (1) of section 12 of the Ordinance, 1980, reads as follows:-- "Modaraba to be a legal person.--- ' It has also been contended by Mr. Saalim Salam Ansari that the Banking Court has no jurisdiction in the matter that the special forum, i,e, Tribunal has been constituted. Under section 24 of the Ordinance, with jurisdiction under section 25 to adjudicate a claim by a Modaraba company against any other party with whom it has entered into business transaction relating to Modaraba fund and the jurisdiction of any Court is barred under subsection (3) of section 25.
10. ' The counsel for the plaintiff contended that the Modaraba company having been defined as a Banking company has been given right to opt the. Right to seek a remedy before a Court that may be available to it under the law by which the company have been established.
11. ' It has been contended by him that the Modaraba being "banking company" has a right to invoke the jurisdiction of a banking company under subsection (4) of section 7 as the "leasing agreement" falls within the definition of finances as defined in clause (e) of section 2..
12. In my view, Act of 1997 being special enactment being subsequent one supersedes the provisions of earlier special enactment and the plaintiff has the option either to file the suit for recovery under subsection (1) of section 9 of the Act. In addition to the right available to them under subsection (1)
(a) of section 25 of the Ordinance, reproduced as under:-- "25. Powers of a Tribunal.- (1) A Tribunal shall--
(a) in the exercise of its civil jurisdiction, have in respect of a claim filed by a holder of Modaraba Certificates against the Modaraba company or by a Modaraba company against any other party with whom it has entered to business transactions relating to Modaraba Fund, or in respect of an application by the Registrar for the winding up of a Modaraba company, all the powers vested in a Civil Court under the Code of Civil Procedure, 1908 (Act V of 1908)."
13. ' It has also been contended by the learned counsel for the defendants that the defendants are entitled for the rescheduling of the factory being sick unit.
14. ' The plaintiffs counsel conceded that the renewal is permissible under the agreement, provided the defendants have adhered to the terms and conditions which have not been fulfilled, as such, at this stage, they cannot claim the rescheduling or restructuring.
15. In my view, no serious and bona fide dispute has been raised on behalf of the defendants for the grant of leave to defend as the availing of the facility, execution of the documents and the liability have not been disputed. The term "serious" and "bona fide" with reference to section 10 was examined by the Division Bench of this Court in Agro foster (Pvt.) Ltd. And 2 others v. Judge, Banking Court No,5, Karachi PLD 1999 Karachi 398, the following observations are reproduced with advantage:-- "Adverting to the instant case, it is noted that only condition as per section 10 of the Act for granting leave to defend the suit is that the nature of the dispute be serious and bona fide. The word 'serious' in the Oxford English Dictionary has been defined to mean: important, grave, consequences giving cause for concern, worthy of consideration etc. And the 'bona fide' means: good faith, freedom from intent to deceive, guarantees of good faith credentials. Combined effect of these two words is if the dispute, ex facie, 0 appears to be genuine, arising out from good faith and free from mala fide Banking Court shall grant leave to defend the suit.
16. ' Once the case is found fit for granting leave no condition of furnishing security can be attached, as it would tantamount to reading more than what actually the Legislature has mentioned in said section. Any other construction which contradicts the letters of a statute and permits substitution of views other than expounded by Legislature, shall, as a rule, be avoided. Neither the principle of aforesaid maxim, is applicable to this case nor the plea of substantial. Justice to both the parties would apply. The Legislature in its wisdom has not thought it proper to put any condition for seeking leave to defend the suit, except mentioned earlier.
17. In the instant case, the availing of the facility, execution of documents, liability to pay have not been disputed, as such, I am of the view that the defendants have failed to make out a case for leave to defend, therefore, the application is dismissed.
18. ' This brings me to the question of determination of the liability. The defendants Nos.2 and 3 have executed the guarantee in the sum of Rs,25,250,000 and Rs,4,750,000, as such their liability cannot exceed the said amounts against two guarantees. The relevant portion of letter of guarantee, whereby the liability has come to be fixed on the defendants 2 and 3, read as under:- "(1) We, the undersigned jointly and severally guarantee to pay to FGM on demand all amounts nor or at any time due or arising from the said transaction(s) and remaining unpaid, but with the limitation that out total liability hereunder shall not exceed Rs,25,250,000 (Rupees twenty-five million two hundred fifty thousand only) together with financial loss, if any as may be suffered by FGM, and all costs, expenses and charges.
(2) We, the undersigned jointly and severally guarantee to pay to FGM on demand all amounts now or at any time due or arising from the said transaction(s) and remaining unpaid, but with the limitation that our total liability hereunder shall not exceed Rs,4,750,000 (Rupees four million seven hundred fifty thousand only) together with financial loss, if any as may be suffered by FGM, and all costs, expenses and charges."
19. The plain reading of above extract indicates that the ultimate limit of the liability of the defendants Nos.2 and 3 were of the amount specified herein. The liability of the guarantors is limited to the amount of the' guarantees.
20. ' In Mian Munir Ahmed v. United Bank Limited and 3 others PLD 1998 Kar. 278, the following observations are reproduced with advantage:- "A plain reading of the above extract, which forms the opening words of the letter of guarantee, should indicate that the ultimate limit of liability of the appellant-guarantor was a sum of Rs,40 million. The learned counsel for the respondent-bank has, however, urged before us that such figure relates only to the principal amount and not to the accruing interest and other charges on the loan, which was guaranteed. The objection does not seem to be supported on the phraseology of the relevant provision. The limit of the guarantee, as will readily be seen, is spelled out twice over, first positively and then in negative language, with, apparently, clear internment. More than this we would not like to say on the subject."
21. ' I have examined the statement of account as on 31-1-2000, which is certified in terms of Bankers'
22. Books of Evidence Act, wherein the outstanding amount has been shown in the sum of Rs,4,55,39,692, which is inclusive of terminal charges, salvage value and delayed payment charges as well as Excise Duty. I am of the view that the plaintiff is not entitled to terminal charges/liquidated damages. They have claimed the leased. Machinery and equipment's. They can't claim salvage charges as well. The basis of salvage charges has not been given. The terminal charges cannot be granted for the reasons that the same is liquidated damages.
23. ' The counsel for the plaintiff has submitted the summary of the accounts. The total outstanding leases rental up to 30-4-2000 comes to Rs,3,77,72,000 in respect of both lease agreements, the plaintiffs are entitled for the same. They have also paid the Excise Duty in the sum of Rs,2,67,890.
24. The total outstanding against the plaintiff comes to Rs,3,80,39,890 (outstanding Rental and Excise Duties).
25. ' The plaintiffs have with them the security amounts from the defendants in respect of both lease agreements, in the sum of Rs,17,37,250. The defendants are entitled for the ejectment of the security amount with the plaintiff after adjusting the security amount a sum of Rs,3,63,02,640 is due and payable by the defendants.
26. ' Therefore, the suit of the plaintiffs is decreed against the defendant No,1 in the sum of Rs,3,63,02,640 with mark up at 2% above the rate of State Bank of Pakistan from 1-5-2000 till payment.
27. ' So far as the liability of the defendants Nos.2 and 3 is concerned, they are obliged to pay the guarantee amount and their liability are limited to the amount of guarantee in the sum of Rs,3,00,00,000. In my view, therefore, the defendants Nos.2 and 3 would also be jointly and severally liable to pay the decretal amount mentioned hereinabove subject to the limitation that they would not be obliged to pay anything to the plaintiff over and above of the amount of Rs,3,00,00,000 of the decree.
3. The plaintiffs are also entitled for the return of the lease assets.
28. ' The suit of the plaintiff is hereby decreed as stated above with proportionate costs.