Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Limited (hereinafter called the plaintiff) on 12-9-1996 has filed the present suit for the recovery of Rs,51,812,333 alongwith liquidated damages, mark-up, costs and other expenses before the then Banking Tribunal, Lahore (since defunct) against defendant No 1, being the principal-debtor, wherein defendants No,2 to 4 have been sued in the capacity of Director/guarantors, signatories of all 'the documentations and also, reportedly, the real beneficiaries of the finance. It has been stated in the plaint that the plaintiff on the request and guarantee of defendants Nos.2 to 4 allowed two financial facilities, one of Rs,30 million and the second finance facility was to the tune of Rs,15 million, the terms and conditions of which were accepted by the said defendants and in furtherance thereof they entered into separate finance agreements on the basis of mark-up, dated 26-12-1995 and 11-1-1996. According to the plaintiff, consequent to the sanctioning of the finance facilities and the execution of the aforestated finance agreements defendant No,1 also executed demand promissory notes of Rs,33,254,795 and Rs,16,627,397 apart from two separate undertakings, executed by defendants Nos.2 to 4 all in favour of the plaintiff. Additionally, in consideration and acknowledgement to secure the said finance facilities defendant No,1 provided a security by pledge of shares, detailed in Annexure II of the agreement of financing, pledge agreements, dated 26-12-1995 and 11-1-1996, were also executed by the defendants and the said pledged shares were deposited by the B.R.R. Security Vault, who are still holding over the custody of the said shares on behalf of the plaintiff. In the above back-drop the plaintiff has contended in the plaint that the defendants availed the said financial facilities, but later on failed to adhere to the terms and conditions of the sanction letter and also failed to deposit any amount towards the adjustment of their liability in respect of the aforesaid financial facilities, thus, they became defaulters with the result that a sum of Rs,51,812,333 fell due against all the defendants in the following manner:--
(a) Facility of Rs,30 million Repurchase Price Rs,33,254,795 Liquidated damages as penalty for delayed paymentRs,1,372,987 Total Rs,34,627,782
(b) Facility of Rs,15 million Repurchase Price Rs,16,627,397 Liquidated damages as penalty for delayed paymentRs,557,154 Total Rs,17,184,551 The case of the plaintiff is that despite the fact that the aforesaid sum fell due, yet the defendants failed to repay the said amount despite various efforts and demands made by the plaintiff from time to time, thus the defendants committed default, which necessitated the filing of the present suit, on 12-9-1996, under the provisions of Banking Tribunals Ordinance, 1984 (since repealed).
2. In response to the show-cause notice issued by the then Banking Tribunal, Lahore, under section 6(2) of the Banking, Tribunals Ordinance, 1984, since repealed, the defendants, on 10-10-1996, filed reply to the aforesaid show-cause notice, wherein it was contended that the Tribunal has no jurisdiction to entertain the claim; that the suit is bad for misjoinder of causes of action; that the the suit is insufficiently stamped; that the alleged agreements and documents are invalid, inadmissible and of no legal value that defendants Nos.2 to 4 have unlawfully been impleaded as defendants; that the plaint has neither been signed nor filed by the duly authorized person and the plaint is not supported by any statement of accounts. On merits, it was submitted that the mark- up agreement, dated 26-12-1995, contains clear interpolations thereby changing the due date of repayment of facility extended to defendant No,
1. In view of the said averments, it was prayed in the reply that the suit of the plaintiff be dismissed as being incompetent and outside the jurisdiction of the learned Tribunal.
3 During the pendency of the suit before the then Banking Tribunal, Banking Companies (Recovery of Loans, Advances. Credits and Finances) Act, 1997, was promulgated whereby the Banking Courts were established and the Banking Tribunals Ordinance, 1984 was repealed. According to section 7(6) of Act XV of 1997, all proceedings pending before any Banking Tribunal under the Banking Tribunals Ordinance, 1984, stood transferred or deemed to be transferred to the Banking Court, therefore, per force of aforesaid provision of law the present suit was transferred to this Court and the same was numbered as C.O.S. No,45 of 1998. After the transfer of the suit to this Court, pursuant to the issuance of notice to all the defendants by this Court through the publication in the newspaper, i,e, Daily Nawa-i-Waqt, defendant No,1 was represented, whereas defendants Nos.2 to 4 were proceeded ex parte by this Court vide order, dated 9-6-1999. It appears from the record that in the meantime defendant No,1, which was public limited company, was ordered to be wound up by the learned Company Judge and official liquidator namely, Malik Muhammad Hussain, Advocate, was appointed. Since that time onwards, defendant No,1 is represented through the said learned official liquidator. It is discernible from the record that uptil now defendants Nos.2 to 4 did not file any application seeking setting aside of ex parte 2002] Saudi-Pak Industrial & Agricultural Investment Co. 1175 (Pvt.) Ltd. v. Mohib Textile Mills Ltd.
(Mian Hamid Farooq, J) order, dated 9-6-1999, which still holds the field. Needless to mention that with the transfer of the suit to this Court the reply to the show-cause notice, dated 10-10-1996. Filed by the defendants, was, under the law, treated as an application for the grant of leave to defend the suit on behalf of defendant No,1 only. On 30-8-2001, Financial Institutions (Recovery of Finances)
Ordinance, 2001 (XLVI of 2001) was promulgated and per force of section 29 of Ordinance XLVI of 2001, repealed Act XV of 1997. However, according to section 7(6) of the latest Ordinance all the proceedings pending in any Banking Court, including suit for recovery, shall stand transferred and deemed to be transferred and heard by the Banking Court established under the latest Ordinance, thus, the present suit, which was pending before the Banking Court, constituted under Act XV of 1997, after the promulgation of the latest Ordinance, and per force of section 7(6) of the said Ordinance deemed to be transferred and pending before this Court established under section 5 of the latest Ordinance. In the above perspective the application for the grant of leave to defend the suit, filed by the defendants, before coming into force of Financial Institutions (Recovery of Finances) Ordinance, 2001, was deemed to be pending, therefore, when the case came up for hearing for the first time on 8-10-2001, this Court per force of section 10(12) of the said Ordinance of 2001, allowed a period of 21 days to the defendants for filing the amended petition for leave to defend the suit in accordance with this Ordinance. Defendant No,1 purportedly filed an amended application, which was numbered as P.L.A. No,127/B of 2001, whereas the other defendants neither filed any application seeking setting aside of ex parte order, dated 9-6-1999, nor instituted any amended application for leave to defend the suit despite the fact that the period, statutorily fixed, was allowed to the defendants. Although defendant No,1 filed the aforenoted P.L.A. Styled as the amended application for the grant of leave to defend the suit under the new Ordinance, yet the perusal whereof and the comparison, of the contents of both the applications manifests that the same is verbatim copy of previously instituted application, inasmuch as the objections regarding the jurisdiction of the Banking Tribunal, which were taken in the erstwhile application, were also reiterated in the latest application. Now the admitted position is that ex parte order, dated 9-6- 1999, has attained finality against defendants Nos.2 to 4 as they have neither filed any amended application nor are being represented since 9-6-1999 and the only leave application (P.L.A. No, 127- B of 2001), which is pending adjudication is on behalf of defendant No,1.
4. While arguing the application for leave to defend the suit, the learned official liquidator, while reiterating the contents of the application in hand, has contended that the suit is bad for misjoinder of causes of action as different transactions have been amalgamated in one suit whereas separate suits for distinct causes of action should have been filed; the plaint is insufficiently stamped, thus, the same is liable to be rejected; the plaint has neither been signed nor filed by duly authorized person; that the statement of accounts is incorrect and that the plaintiff is not entitled to claim liquidated damages as the same is not permissible under the law.
Conversely the learned counsel for the plaintiff has opposed the grant of leave to defend the suit to defendant No,1 urging that as a matter of fact no serious and bona fide dispute has been disclosed, defendant No,1 has not denied the execution of the documents, whereas, in fact, the availment of the financial facilities have been admitted by the said defendant and that as defendant No,1 failed to adhere to the mandatory provisions of section 10(2) of Ordinance No,XLVI of 2001, thereby failing to submit the amended application for leave to defend the suit, therefore, the application in hand is liable to be rejected summarily.
5. In the above back-drop, now the pivotal question, which has arisen for determination by this Court is as to whether the latest application (P.L.A. No, 127-B of 2001), which is a true copy of the earlier application, filed by the defendants and was treated as an application for leave to defend the suit for the purposes of Act XV of 1997, is a sufficient compliance of the provisions of section 10(12) of Ordinance XLVI of 2001, and as to whether despite allowing a period of 21 days to file the amended leave application, defendant No,1 has complied with the provisions of section 10(12) of Ordinance, if not as to whether the said application is liable to be rejected summarily. Perusal of section 10(12) of Ordinance XLVI of 2001, manifests that where an application for leave to defend has been filed before coming into force of aforenoted Ordinance, the defendants would be allowed a period of 21 days for filing an amended application for leave to defend in accordance with the provisions of this Ordinance. It would be advantageous to reproduce the aforenoted provisions of law, which is as follows:- "10(12). Where an application for leave to defend has been filed before the coming into force of this Ordinance, the defendant shall be allowed a period of twenty-one days from the date of coming into force of this Ordinance, or from the date of first hearing thereafter, whichever is later for filing an amended application for leave to defend in accordance with the provisions of this Ordinance."
(Underlining is mine).
From the perusal of the above, it is evident that the words "an amended application for leave to defend" and "in accordance with the provisions of this Ordinance" are of great significance. It flows from the above that when an application for leave to defend is already pending at the time of enforcement of latest Ordinance of 2001 then the defendants shall be allowed a period of 21 days and are required through the filing of an amended petition, thereby sufficiently complying with the provisions of subsections (3), (4) and (5) of section 10 of Ordinance XLVI of 2001. These provisions of law provide that the application for leave to defend shall be in the form of a written statement, containing summary of substantial questions of law and facts and also specifying, certain particulars to be furnished by the defendants regarding the finances, i,e, finances availed, amount paid by the defendants and that such an application must be accompanied by all the documents in support of substantial questions of law and facts raised by the defendants. If the aforenoted provisions of law are placed in juxtaposition with the contents of an application, filed by the defendants, seeking leave to defend the suit (P.L.A. No, 127-B of 2001), the only irresistible conclusion, which can be drawn is that defendant No,1 did not comply with the aforesaid provisions of law and had just copied the contents of the show-cause notice submitted before the Banking Tribunal. I am of the considered view that defendant No,1 has comprehensively failed to file an amended application within the parameters of section 10(12) and they have not complied with the requirements of section 10(3) (4) and (5) of Ordinance XLVI of 2001, thus, the defendants failed to file an amended application in accordance with the provisions of this Ordinance, therefore, the presumption would be that no application under section 10(12) is IA deemed to be pending.
6. Now the next question which will arise for determination is as to whether the provisions of section 10(12) are mandatory or directory. The basic principle for the interpretation of statutes is that when a provision of law is couched with the penal consequences then the said provision of law would be considered as a mandatory provision of law and where no penal consequences entail to the non- compliance of a provision of law, in that case the said provisions of law would be taken as directory. Applying the said yardstick, now if any of the provisions of this Ordinance provide a penal consequence for the non-compliance of the provisions of section 10(12) of the Ordinance, then the said provisions would be considered as mandatory provision of law otherwise the same will be treated as directory. To solve this question one has to go to subsection (6) of section 10 of the latest Ordinance, which is reproduced below:-- "10(6). An application for leave to defend does not comply with the requirements of subsections (3),
(4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement."
' Undoubtedly it has been provided in section 10(6) of latest Ordinance (ibid) that when an application for the grant of leave which does not comply with the requirements of subsections (3),
(4) and (5) of section 10 the same shall be rejected unless the defendant ables to show sufficient cause for his inability to comply with any such requirement. In this case, admittedly, defendants Nos.2 to 4 (against whom an ex parte order, dated 9-6-1999. Still stands) have not filed any amended application for leave to defend, did not comply with the requirements of subsections (3),
(4) and (5) of section 10 of Ordinance, 2001, and also failed to disclose any cause what to talk of sufficient cause for their inability to comply with any such requirements. On the other hand, defendant No,1 although has purportedly filed an application, yet as mentioned above, it cannot be deemed to be an amended application for leave to defend the suit, as the same is photostat of the previously instituted application and furthermore it does not comply with the requirements of subsections (3). (4) and (5) of section 10.
7. Having gone through section 10(12) and section 10(6) (ibid), I am of the considered view that the former provision of law is mandatory in nature, as the non-compliance of the said provision of law entails the penal consequences as provided under section 10(6) of Ordinance, 2001. In the present case despite the grant of period of 21 days, which is statutorily fixed, the defendants failed to file the amended application thereby failing to comply with the requirements of section 10(3), (4) and (5), therefore, as per the provisions of section 10(6) of the Ordinance. 2001 the application for leave to defend is liable to be rejected, which I hereby do, and thereafter, per force of section 10(11) of Ordinance, 2001, this Court is obliged to pass judgment and decree in favour of the plaintiff and against the defendants.
8. Notwithstanding the fact that although now there is no application for leave to defend the suit, which has been rejected. As discussed above, and after the dismissal of the said application, this Court is not obliged to consider the contents of the leave application, yet in the present case I am proceeding to deal with and decide the contentions raised by the learned counsel for the defendant No,1. As regards the first contention raised by the learned counsel regarding the misjoinder of causes of action in one suit suffice it to say that Order II, rule 3, C.P.C. Is a complete answer to that which empowers a plaintiff to combine several causes of action against the defendants when these causes involve joint interest. In the present case two financial facilities were granted in favour of defendant No,1 by the plaintiff the parties are the same and the interest is joint, therefore, I am of the view that these causes of action can be amalgamated in one suit and there is no illegality committed by the plaintiff in filing one suit thereby combining two causes of action in one suit. I am fortified in my views by a judgment reported as The Directorate of Industries and Mineral Development Government of the Punjab through Director, Lahore and 3 others v.
Messrs Masood Auto Stores through Masood Ahmad Malik, Partner, Lahore PLD 1991 Lah. 174 whereby a learned Division Bench of this Court decided the said proposition of law and held that the plaintiff having several causes of action against the same defendant jointly is entitled to amalgamate them in one suit. In view of this, the contention of the learned counsel has no force and is hereby repelled.
9. Pursuant to the objection of the learned counsel viz. That the plaint is insufficiently stamped, I have examined the original record and find that the plaintiff has paid a sum of Rs,34,000 (being the maximum court-fee payable at the relevant point of time) on the plaint. According to section 17 of Court Fees Act, 1870, where a suit embraces two or more distinct subjects, the plaint or memorandum of appeal shall be chargeable with the aggregate amount of the fees to which the plaints or memorandum of appeal in suits embracing separately each of such subjects would be liable. Section 17 of the Court Fees Act, 1870, is reproduced below:-- "17. Multifarious suits.- --Where a suit embraces two or more distinct subjects, the plaint or memorandum of appeal shall be chargeable with the aggregate amount of the fees to which the plaints or memorandum of appeal in suits embracing separately each of such subjects would be liable under this Act.
Nothing in the former part of this section shall be deemed to affect the power conferred by the Code of Civil Procedure section 9."
It has been held in the case of Directorate of Industries and Mineral Development (supra), that the provisions of section 17 applies to suits which embraces two or more distinct causes of action and when a suit is filed combining multifarious causes of action, then each claim on the basis of causes of action is to be valued separately and requisite court-fee is to be paid on it. In this case, as the plaintiff has paid the maximum court-fee, therefore, it cannot be argued that the plaint is insufficiently stamped. The said contention is devoid of any force.
10. So far as the objection regarding the filing of the suit by unauthorized person is concerned, upon the examination of the record I find that the plaint has been signed and verified on oath by Muhammad Rashid Zahir on behalf of the plaintiff, who has been authorized by a Board Resolution, passed by the plaintiff in its meeting, dated 11-2-1992, through which said Muhammad Rashid Zahir is appointed as General Attorney thereby authorizing him to sign/execute any document and to institute, conduct and prosecute any suit in any Court of law and also to sign, execute plaints, petitions etc. I further find a general 'power of attorney dated 11-2-1992, on record executed by the plaintiff in favour of aforesaid Muhammad Rashid Zahir wherein certain powers have been conferred upon the said attorney. Muhammad Rashid Zahir has signed the plaint acting as attorney, therefore, the contention of the learned counsel of defendant No,1 that the suit filed/signed by an unauthorized person has no force, as the suit has been filed by a duly authorized person and the plaint has been signed by a person competent to sign under the general power of attorney and under the Board resolution, as mentioned above.
11. In view of the objection raised by the learned counsel I have examined the two statements of accounts, which are at pages 175 and 177 of the record and are certified in accordance with law.
Furthermore, in the said two statements of accounts, the plaintiff has not charged any mark-up and has demanded only the repurchase price in both the facilities, which is inconsonance with the repurchase price, as mentioned in the finance agreements. It appears that the objection regarding incorrect statements of accounts has been taken only for the sake of objection, whereas in fact there is no substance in it. However. I find from the statement of accounts that the plaintiff has charged certain amounts as liquidated damages for late payment, which for the reasons to be recorded in the succeeding paras. I am not inclined to grant to the plaintiff, therefore, now only the repurchase price in accordance with the mark-up agreement is to be charged from the defendants, to which defendant No,1 should not take any exception.
12. I find from the record that the plaintiff has claimed a sum of Rs, 13,72,987 and Rs, 5,57,154 (total amounting to Rs, 19,30,141) as liquidated damages. It is now settled-law that in such-like cases the plaintiff is not entitled to claim liquidated damages as per the principle laid down in Allied Bank of Pakistan Ltd., Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 wherein it has been held that the plaintiff is not entitled to recover the amount of liquidated damages, thus, the said amount had to be deducted from the suit amount and after deducting the said amount, the suit amount is reduced to Rs,49,87,72,192.
13. In view of the above discussion and reasons, the defendants have comprehensively failed to raise substantial questions of law and facts to be tried by this Court in respect of which evidence needs to be recorded, apart from the fact that the application in hand (P.L.A. No, 127/B of 2001) had already been rejected (para.7) as the defendants failed to file an amended application for leave to defend, as discussed in the preceding paras., thus, the present application (P.L.A.No,127/B of 2001), filed on behalf of defendant No, 1, is hereby dismissed on the said counts.
14. With the dismissal of the said application for leave to defend the suit, under the law, the allegations made in the plaint shall be deemed to be admitted. The plaintiff has produced photo copies of all the documents on the basis of which it had filed the present suit, execution whereof has not specifically been denied by the defendants in the application for leave to defend the suit meaning thereby that the execution of all the documents is deemed to be admitted by the defendants. Moreover, in the statement of accounts the plaintiff has claimed nothing, but the repurchase price that too in accordance with the two agreements for finances, furthermore, the said statements are duly verified/ certified under the Banker's Books Evidence Act, 1891, to which the presumption of correctness is attached. Additionally, there is no rebuttal of the aforementioned documents on record.
15. For the foregoing reasons and findings, after deducting a sum of Rs, 19,30,141, charged as liquidated damages, from the suit amount of Rs, 51,812,333 a decree for the recovery of Rs, 498,72,192 with costs is passed in favour of the plaintiff and against all the defendants jointly and severally. The plaintiff shall also been entitled for the costs of funds to be determined under section 3(2) of Ordinance No,XLVI of 2001.