1. This is a suit under section 9 of the Banking Companies Act, 1997 which has been filed, inter alia, for the recovery of Rs.10.553 million, settlement of accounts as well as damages in the sum of Rs.1,000 million against the defendants jointly and/or severally. Certain other reliefs by way of declaration and injunction are also sought.
2. Briefly the plaintiff's case is that a Consortium was formed in between defendants Nos.1 to 6 which was led by defendant No.6 whereby the said defendants provided to the plaintiff certain financial accommodation on the basis of mark-up which is evidenced through the respective agreements between the plaintiff and the defendants Nos.1 to 6 and have been filed as Annexures A/1 to A/5 to the plaint. In all an amount of Rs.58,312,500 was disbursed by defendants Nos.1 to 6 to the plaintiff by virtue of such investment agreements and it is the plaintiffs case that a sum of Rs.75,530,948 has in fact been repaid to the defendants Nos.1 to 6 by the plaintiff as on the date of the Suit. Upon the announcement of the Incentive Scheme for bad loans and sick industries by the State Bank of Pakistan (defendant No.7) vide B.P.R.D. Circular 19 of 1997 dated 5-6-1997, the plaintiff approached the defendants Nos.1 to 7 for liquidation of its liabilities in terms of said Scheme whereupon some correspondence ensued in between the parties. The net result of this is that so far the defendant No.7 alongwith the other defendants have failed/refused to give the benefit of the Incentive Scheme to the Plaintiff and also the legal notice served upon defendant No.7 by the plaintiff remains unanswered. It is also the plaintiff's case that if the benefits under the Scheme were accorded to the plaintiff then an over payment of Rs.10.553 million has been made by it.
3. Accordingly, a decree in this amount of Rs.10.553 million is prayed for as well as for accounts between the Plaintiff and the defendants Nos.1 to 6 as regards the finance provided to the plaintiff by the said defendants. So also it is prayed that the plaintiff's name as well as that of its sponsors and directors be deleted from the list of defaulters issued by the State Bank of Pakistan.
4. In the Written Statement filed by defendant No.7 it has challenged the maintainability of the suit on the ground that no cause of action has been disclosed against the said defendant and also to the ground that the declaratory reliefs prayed for by the plaintiff are barred under section 42 of the Specific Relief Act. On merits the issuance of the Incentive Scheme is not denied, however, it is denied that the plaintiffs case falls within the Scheme. It is also denied that any complaint was ever filed with defendant No.7 by the plaintiff as regards the non-implementation of the Scheme by defendants Nos.1 to 6. Consequently it is prayed that the suit be dismissed against the defendant No.7 with costs.
5. In the joint written statement filed by defendants Nos.1 to 6, it has been maintained by way of preliminary objection, that as the suit is essentially of the recovery of Rs.10.553 million on account of non-implementation of the Scheme by the defendants, the claim of Rs.1,000 million by way of damages is fictitious as damages could never be a part of any loan and consequently same could not be adjudicated by this Court under the Banking Companies Recoveries of Loans Act of 1997. It is also averred that the suit is premature as the entire controversies raised therein concern the agreement between the parties as to the amount which the Plaintiff has to pay by virtue of such Incentive Scheme which is under consideration by the State Bank.
6. On merits it is pleaded inter alia that an amount of Rs.167.305 million was disbursed by the answering defendants to the plaintiff out of which Rs.85.511 million only has been repaid by the plaintiff. As per the defendants even after calculating the benefits under the Scheme a sum of Rs.41,472,206 is payable to defendant No.6 whereas other sums are due to the other defendants (defendants Nos.2 to 5). It is also pointed out by the defendant No.2 to 6 that in fact the Scheme is not at all applicable to the plaintiff company. It is further denied that the defendants Nos.1 to 6 have either over-charged the plaintiff in circumstances extraneous to the agreement between the parties so as to unlawfully and malafidely claim the amounts which are owed by the plaintiff to the answering defendants. Finally it is prayed that the suit be dismissed as against the answering defendants with costs.
7. On the pleadings of the parties the following issues were settled by this Court on 22-12-1997:--
(1) Whether the suit is maintainable in its recent form against the defendant No.7?
(2) Whether the Plaintiff is entitled to benefits of the State Bank of Pakistan Incentive Scheme?
(3) Whether the plaintiff has made any over-payment to the defendants Nos.1 to 6 and is entitled to refund thereof? If so, to what extent.
(4) Whether the plaintiff has suffered any losses and is entitled to any damages? If so, to what extent.
(5) To what relief is the plaintiff entitled?
8. The plaintiff examined P.W. Muhammad Aurangzeb at Exh.5 who produced the investment agreements between the plaintiff and defendants Nos.1 to 6 at Exhs.5/1 to Exh.5/5. He also produced six statements pertaining to defendants Nos.1 to 6 showing details of the payment to the said defendants by the plaintiff at Exhs.5/6 to 5/11 Thereafter, the plaintiff closed its side. The defendants examined D.W. Shan Ameen Ullah at Exh.6 and then closed their side.
9. Mr. Salim Saleem Ansari, learned counsel for the plaintiff, on the basis of the pleadings and the evidence on the record has argued that it has been established that an amount of Rs.58,312 million was disbursed. to the plaintiff by the defendants Nos.1 to 6 in furtherance of the agreements Exhs.5/1 to 5/5 and as per the statements produced as Exhs.5/6 to 5/11 an amount of Rs.75.531 million has been repaid on account of said loan. Consequently as per learned counsel an amount of Rs.18.069 million has been paid in excess to defendant No.6. The five members of the Consortium (defendants Nos.1 to 5 are to be paid Rupees 1.721 million, 0.42 million, 1.173 million 1.954 million and 2.710 million respectively by Defendant No.6 out of the said account of Rs.18.069 million and consequently a balance of amount 10.533 million is to be refunded by defendant No.6 to the plaintiff. Learned counsel further submitted that the Incentive Scheme was binding upon the members of the Consortium as well as the State Bank of Pakistan. In this regard a legal notice was also sent to State Bank of Pakistan but no response was ever received to the legal notice whereas other Consortium members have denied that the Plaintiff could avail of the Scheme. Learned Counsel has argued that as far as damages are concerned the rule of Res Ipsa Loquitor should be applied and in this regard relied upon State v. Nisar Ahmed Khuro PLD 1998 Kar. 86, Nisar Ahmed and another v. Uroos Fatima and another 1996 M LD 1913, Pakistan Steel Mills Corporation Ltd. and another v. Malik Abdul Habib and another 1993 SCM R 848. Learned counsel has submitted that the circular of the State Bank of Pakistan is binding upon the Consortium Members and the Defendants contention, that the scheme does not apply to the plaintiff, is without merit and in support of this contention, he has relied upon Hashwani Hotels Ltd v. Federation of Pakistan PLD 1997 SC 315 learned counsel, therefore, prays that the suit be decreed with costs as prayed.
10. Mr. Shakeel Lari learned Counsel for defendants Nos.1 to 6 has submitted that in the first place the Plaintiff has to be a defaulter in order to avail all the benefits of the Scheme and consequently as the Plaintiff is not such a defaulter the same does not apply to it. In this connection he has referred to Exh.5/12 and the cross-examination of P.W.1 in which he has admitted that the plaintiff is not a defaulter. He has also referred to Exh.5/12 which is a letter addressed to the plaintiff from defendant No.6 regarding the rescheduling of the plaintiff's loan which has been accepted by the plaintiff. He has also referred to a letter addressed by the National Bank of Pakistan (defendant No.5) to the plaintiff (Exh.5/13) regarding the statement of outstanding dues as per the Scheme alongwith Annexures. Learned counsel says that no reply was ever received by the State Bank of Pakistan to such letter and this has been admitted by the plaintiff's witness under cross-examination. Finally, learned counsel has referred to Exh.No.5/14 which is a letter addressed by Muslim Commercial Bank (defendant No.3) to the plaintiff whereby it has been informed that as its loan had been rescheduled therefore, the case would not fall within the Incentive Scheme. He has further argued that the Scheme does not apply to Banks in the private sector and consequently since the defendants Nos.1, 2, 3, and 6 have been privatised the plaintiff could not avail of the Scheme as against the said defendants. Learned counsel submits that as the Scheme could not be availed of by the plaintiff, consequently there can be no question of damage.
11. Learned counsel for defendant No.7 (State Bank of Pakistan) has submitted that the legal notice allegedly sent to State Bank has not been produced by the plaintiff. In this connection he has referred to the cross-examination of the plaintiff's witness whereby he has admitted that in fact no relief has been sought against the State Bank. Learned counsel has also supported the arguments of Mr. Shakeel Lan.
12. I have heard all the learned counsel as well as gone through the record and my conclusions are as follows:-- (1)As regard the first issue whether the suit is maintainable against defendant No.7, it would be seen that no relief has been sought against it. So also the legal notice regarding the non- implementation of the Scheme has not been produced by the plaintiff and it has also not been admitted by the plaintiff witness under cross-examination that the relief has been sought against the State Bank of Pakistan. However, merely for this reason, it cannot be said that the Suit is not maintainable against the State Bank of Pakistan. In my view as the Scheme has been floated by the State Bank its presence is necessary before this Court failing which the issue whether the Scheme applies to the Company or not cannot effectively be adjudicated. Consequently, issue No.1 is answered in the positive.
13. (2)As regards Issue No.2 viz. whether the plaintiff is entitled to the benefits of the Incentive Scheme it would be seen that the Scheme sets forth a one time opportunity for defaulters for paying their dues as per its terms and conditions. In this respect it would be advantageous to produce the essential features of the Scheme, which though, not produced in the evidence has been filed alongwith the plaint as Annexure B. The essential features of the Scheme are as under--
(4) ........................................................
(a) All defaulters can make a full and final settlement of their outstanding liabilities owing to a nationalised commercial bank DFIs as under:
(i) 7 years and above Principal + 5% of Principal Amount
(ii) Principal + 20% of Principal amount less than 7 years.
(iii) Principal + 40% of Principal Amount less than 3 years. Or 75% of accrued mark-up whichever is less.
(b) For applying the slabs mentioned above the period will be reckoned backward as from June 6, 1997.
(c) A party may approach the bank/DFI concerned or in the case of Consortium loan, to the lead bank/DFI within a period of one month of the issuance of this circular under intimation to other participating banks/DFIs and reach an agreement to pay the above amounts on the above basis in full and final settlement of his overdue obligations.
14. (d)If a bank or D.F.I. fails to accept the settlement on the above basis, the party concerned may submit a complaint in writing to the Complaint Cell of the State Bank of Pakistan which is neaded by: Mr. Khalid Mahmud Salem, Executive Director, State Bank of Pakistan, Central Directorate, I.I.
15. Chundrigar Road, Karacni (Phone 247871) Fax: 245306)
(e) The above incentives will be available to all cases of default including those of sick units.
16. Consequently, in my opinion, in order to avail all the benefits of the Incentives Scheme, the plaintiff is to demonstrate that it was a defaulter for 365 days on 5-6-1997 when the Scheme was introduced. In this connection, it would be seen that as per admission of the plaintiff's witness under cross-examination, on 5-8-1995 as per defendant No.6's letter (Exh.5/12) the plaintiff's request for rescheduling of the loans in question had been accepted. The said witness also admitted that the Account Statements Exhs.5/6 to 5/11 do not contain nay column showing the dates of default in making repayments. So also he has admitted that the plaintiff is not a defaulter.
17. The admission made by the plaintiff's witness are borne out on the Statement of Accounts. Exhs.5/6 to 5/11 whereby the last payment was made in December, 1996 by the plaintiff to the defendants Nos.1 to 6. Consequently, in my opinion, the plaintiff cannot be termed as a defaulter and hence it cannot fall under the incentives Scheme. Issue No.2 is, therefore, answered in the negative.
3. Issue No.3, whether the Plaintiff had made any over-payment to the defendants Nos.1 to 6 and is entitled to refund thereof depends upon issue No.2. Since it is the plaintiff's case that if benefits of the Incentives Scheme were given to it, plaintiff would be entitled to a refund a Rs.10.553 million and as my conclusion is that the plaintiff is not entitled to the benefit of the Incentives Scheme, this issue is also answered in negative.
4. Issue No.4 regarding damages is based on the same premise as issue No.2. As issue No.2 is answered in the negative, therefore, in my opinion, where the benefit of the Incentive Scheme cannot be availed by the plaintiff there can be no question of damages.
18. As I have come to the conclusion that the benefits of the Incentives Scheme could not be availed by the plaintiff, the suit is dismissed with no order as to costs.