S. ZAWWAR HUSSAIN JAFRI, J.--- This appeal is directed against the judgment and decree dated 22.12.1999 and 23.12.1999 respectively passed by the learned Judge Banking Court-I, Sukkur Division, Sukkur decreeing the suit No. 858/1997, re-Muslim Commercial Bank Ltd. v. Haft Muhammad Mirza filed by the respondent-bank against the above-named appellant for the recovery of 3,13,972/- with cost alongwith future mark-up from the date of institution of the suit till realization plus mark- up for the period of 210 days, the appellant being aggrieved with the above judgment and decree has filed this appeal with a prayer for the said judgment and decree be set aside and the suit of the respondent/bank be dismissed with costs.
2. The facts as depicted in the suit filed by the Bank are that the defendant/appellant had applied for financial facility of Rs.2,00,000/- from them which was allowed for development of agricultural land. This facility was to be adjusted by the defendant/appellant in three equal instalments till 1.9.1991 along with mark-up. Consequently the appellant/defendant had mortgaged his agricultural land as security measuring about 46-18 acres, situated in Deh Sami Taluka Sobhodero, District Khairpur. It was further urged in the suit that defendant/appellant had failed and neglected to pay outstanding liability of Rs.3,13,972/- within time therefore, the plaintiff/respondent filed recovery Suit No. 858/1997 in the Banking Court-I, Sukkur Division on 20th November, 1997. The Banking Court issued notice to the appellant/defendant and ultimately an application u/O 37, Rule 3, CPC was filed which was granted by the Trial Court on 4.2.1999 and the appellant was directed to file written statement on the next date of hearing, as the appellant failed to file the said written statement on 24.2.1999, his defence was struck of on 14.6.1999. It is further observed by the Trial Court that since the claim of bank/respondent herein was held to be based on documentary evidence including certified true copy of the statement of accounts and the plaint which was verified on oath therefor the learned Trial Court allowed the suit and judgment and decree was passed as stated above.
3. In view of the judgment and decree passed by the learned Trial Court the appellant has challenged the said judgment and decree in this appeal on numerous grounds. The main ground urged by the learned counsel that that due to the agricultural crises his loan was written of by the Federal Government and such instructions were issued as a policy matter and the Muslim Commercial Bank Ltd., Main Branch had issued a circular in respect of the amount of such loans by clarify agricultural loans such details have been incorporated in the letter appearing Control No. 300207, dated 6.4.1993 from head office of respondent addressed to Muslim Commercial Bank Branch along with loans in respect of written of loans. Both documents are on the record. The documents suggest that loan was written of in March, 1993. The learned counsel further urged that this position was suppressed in the suit filed by the respondent/plaintiff. The learned counsel further contended that Section 8 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 a specific provision of recovery of within of loan is provided and thereafter as per Section 9, a separate procedure of Banking Court is also laid down in the said Act for filing the suit and recovery of the amount of any written of loans. The learned counsel further cites the case-law of Dumez Borie v. International Forwarders Ltd. Reported in NLR 1983 U.C. 184 and in case of Punjab Livestock Dairy and Poultry Development Board v. Shaikh Muhammad Younus (1980 CLC 1932) and learned counsel further relies upon the case of Khan Iftikhar Hussain of Mamdot v. M/s. Ghulam Nabi Corporation Ltd., Lahore reported in PLD 1971 SC 258 and in the case of National Bank of Pakistan and others v. National Battery Industries and others (1994. CLC 2133).
4. As the learned counsel for respondent/bank as well as attorney of the respondent were not present on the date of regular hearing although several calls were made for their appearance but none responded and ultimately after verifying the whole material and the R&P available in the appeal.
5. We have arrived at the conclusion that the suit filed by the bank was incompetent unless the attorney was so authorised by resolution passed by the Companies Board of Directors as provided under Section 8(2) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances)
Act, 1997, clearly provides that no suit under sub-section (1) of Section 8 shall be filed unless the Board of Directors, banking company is incorporated within Pakistan, has approved the filing of the suit. It will be advantageous to reproduce Sections 8 and 9 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997.
S.8 Suit for recovery of written of loans, etc. (1) Subject to sub-section (2), and notwithstanding anything contained in the Limitation Act, 1908 (Act No. IX of 1908), or any other law, a banking company may, within three years from the date of coming into force of this Act, file a suit for the recovery of any amount written of, release or adjusted under any agreement, contract, or consent, including a compromise or withdrawal of any suit or legal proceedings or adjustment of a decree between a banking company and a borrower or customer on any date on after the first day of- January, 1990 and before the coming into force of this Act, if it can establish that the amount was written of, released or adjusted for political reasons or considerations other than bona fide business considerations other than bona fide business consideration.
(2) No suit under sub-section (1) shall be filed unless the Board of Directors, if the banking company is incorporated within Pakistan, or the Chief Executive (by whatever name called or designated) of the banking company in Pakistan, if the Banking Company is incorporated beyond Pakistan, has approved the filing of the suit.
Procedure of Banking Courts. (1) Where a borrower or a customer or a banking company commits a default in fulfilling any obligation with regard to any loan or finance the banking company or, as the case may be, the borrower or customer, may institute a suit in the Banking Court by presenting a plaint duly supported by a statement of account which shall be verified on oath in the case of a banking company by the Branch Manager or such other officer as the Board of Directors of a banking company may authorize in this behalf. Copies of the plaint shall also be filed along therewith in sufficient numbers so that there is one copy for each defendant and one extra copy.
We have gone through the cited case of Dumez Borie v. International Forwarders Ltd. (NLR 1983 UC 184) wherein it has been held as under:- "The argument of Mr. Rahimtoola was that Mr. Terras being the principal Officer of the Dumez Company was entitled to sign the plaint on behalf of that company in terms of Order 29, Rule 1, C.P.C. There is no doubt that the suit purports to have been brought on behalf of a partnership firm by one of the partners, namely. Societe Dumez which is a corporation. But the plain reading of the provisions of Order 29, Rule 1 and Order 30, Rule 1, CPC clearly makes out a distinction between signing and verification of pleadings on behalf a firm and a corporation respectively, and the authority to bring a suit on behalf, of them. The provisions of Order 29, Rule 1, CPC deal only with the subscription and verification of pleadings in suits by and against the corporations. In other words, the rule merely authorised the persons mentioned therein to sign and verify pleadings on behalf of a corporation. The rule does not authorise, such person to "institute" suits on behalf of the corporation. Substantial question in issue herein is whether Mr. Terras was authorised by Societe Dumez to institute the present suit. Therefore, merely because the person signing the plaint was principal Officer of the company is not sufficient to establish that he had authority to bring the suit on behalf of the company. Learned counsel had, therefore, to fall back upon the power-of- attorney. As pointed out above it is doubtful in view of the language in which the powers were couched that the attorney had authority to institute a suit before the Courts of law. Be that as it may, it seems to be settled that even a constituted Attorney must have express authority from the Board of Directors of the company to institute a suit. The reason for the rule appears to be that in case of companies the initiative to institute an action at law must proceed from the company or the authority under the Articles of Association in whom the management of the company vests."
The authority reported as Punjab Livestock and Poultry Development Board v. Shaikh Muhammad Younus (1980 CLC 1 932), wherein it has been observed as under:- "It is evident from the above-referred provisions of law that the appellant Board is a body Corporate under the aforesaid Provincial Statute consisting of Board of Directors including a Managing Director as the Chief Executive of the Board and can sue or be sued in its name. The Administration and Management of the affairs of the Board exclusively vested in the Board of Directors."
PLD 1971 SC 550 based in the case of H.M. Ebrahim salt v. South India Industries Ltd. (AIR 1938 Mad.
962) it has been held as under:- "In the case of H.M. Ebrahim salt v. South India Industrials Ltd. It was held that in law a meeting of directors is not duly convened unless due notice has been given to all the directors. On the facts of the present case, I am satisfied that due notice of the meeting was not given to the deceased appellant and, therefore, the resolution passed in the meeting of 28th September, 1951, cannot be said to be a valid one. In my opinion, no valid authority was conferred on Mr. Khurshid Mahmood and, therefore. He was not competent to institute the suit. I would, therefore, hold that the learned Trial Judge was perfectly justified in dismissing the suit on this ground.
6. As per record available in the Court file the loan was written of in the year, March., 1993 and the suit was filed in September, 1997 beyond the prescribed period as provided under Section 8 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997. No sanction was obtained from the "Board of Directors" and no, suit under clause (1) of Section 8 of such Act, 1997, was competent by the plaintiff/respondent.
7. While determining the competency of the person filing the suit, all that was to be seen by the competent Court to see whether such person was duly authorised in this behalf as provided under Section 8(2) of the Act. We are of the view that plaintiff/Bank has failed to prove that suit was initiated in the said Court through duly authorised person. In our view Syed Abdullah Talat attorney was not competent to file the suit against the appellant and the Trial Court without examining the competency of the attorney decided the suit by passing the judgment and decree. The Trial Court has not examined the legal position in respect of time-barred claim, and competency.Of the plaintiff to file such suit without authority from the. Board of Directors therefore on these two counts the judgment and decree have been passed without lawful authority.
Above are the reasons of our short order dated 8.8.2001.