JUDGMENT MUHAMMAD SAIR ALI, J.- Through this appeal, the appellants have called in question judgment and decree dated 5.9.2002 passed by the learned Judge Banking Court-IT, Lahore against the appellants for recovery of Rs.92,40,679/- alongwith costs of the suit and of funds in Suit No. 152/1997 of the respondent i. e. Investment Corporation of Pakistan.
2. The respondent corporation (ICP) alleging default by the appellants in fulfilling their obligations under Agreement of Finance dated 5.8.1992, filed suit for recovery under Section 9 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (now repealed). ICP pleaded in the paint that the Agreement of Finance as executed with appellant No.1 M/s C.M. Textile Mills (Pvt.) Limited was for the purchase of locally manufactured machinery (LLM) through financing of the sale price of Rs.2,06,40,000/- with repayable marked-up purchase price at Rs.2,83,85,938/-; secured through the necessary documents and securities. And that the appellant No 1 only availed finance of Rs. 83,64,725 against a repayable purchase price of Rs.92,40,679/-. In Paras Nos. 11 and 13 of the plaint, the suit amount of Rs.92,40,679/- was claimed as of 31.12.1996 by the respondent plaintiff against the appellant-defendants on the basis of and as per the annexed Statement of Account.
3. On 4.11.1997, the suit was decreed by the learned Judge Banking Court-II, Lahore for failure of the appellants to seek leave to defend the suit. Appellants' application under Section 12 of the late 1997 Act was also rejected through order dated 15.11.1997. R.F.A. No. 340/1997 of the appellants against the above decree was accepted by an Hon'ble Division Bench of this Court. The decree was set aside and on remand the appellants were permitted to file their application for leave to defend the suit.
4. On 9.10.2000 the appellants filed their application for leave before the learned Banking Court.
Upon repeal of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and promulgation of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the amended leave petition was filed by the appellants under Section 10(12) of the Ordinance of 2001.
The respondent-corporation filed its reply on 4.3.2002. Additional grounds to the PLA were also allowed to be filed per order dated 26.7.2002.
5. Through judgment and decree dated 5.9.2002 the learned Judge Banking Court-II, Lahore dismissed, appellants' leave application as well as additional grounds. The suit was decreed for Rs.92,40,679/- alongwith costs of the suit and the costs of the funds in favour of ICP. Hence the present appeal by the appellants.
6. To support the appeal, the learned counsel for the appellants contended that the learned Judge Banking Court failed to consider and appreciate:-
(a) the effect of non-disbursement of the agreed sale price by ICP leading to the closure of the project of the appellants and the consequent suit of the appellants against ICP to recover damages and pendency of this suit alongwith ICP's suit before the same Court;
(b) the effect of absence of territorial jurisdiction in Courts at Lahore in view of the agreed jurisdictional Clause 8.11 of the Finance Agreement dated 5.8.1992 providing that "the Courts of Karachi shall have exclusive jurisdiction over differences and disputes arising under the Agreement". And the effect of law laid down by the Hon'ble Supreme Court Of Pakistan in the case of "Pir Sabir Shah v. Shah Muhammad" (PLD 1994 SC 66), obliging the Courts to consider the question of jurisdiction even if not raised by the parties. And that this question could only be raised by the appellants after grant of leave by the Court;
(c) the effect of the Clause 8.11 of the Finance Agreement qua agreement between the parties as to the exclusive jurisdiction of Karachi Courts and within whose territory the agreement and the documents of finance were made and other parts of cause(s) of action arose. Wherefor as per the judgment of an Hon'ble Division Bench of this Court in the case of "Tahir Tariq Textile Mills (Pvt.)
Limited v. NDFC" (2003 PCTLR (Lah) 996) as well as by the Hon'ble Supreme Court of Pakistan in the case of "Qadir Motors v. National Motors Limited" (1992 SCMR 1174), the suit could only be filed by ICP at Karachi and the learned Judge Banking Court II, Lahore should have returned the plaint for filing the same in the Court of competent jurisdiction;
(d) the effect of non credit and non adjustment of the payments made by the appellants in the purported statement of Account filed with the plaint which being incorrect and wrong could not become basis of the impugned decree;
(e) the effect of failure of the respondent corporation to file a statement of account to support the plaint making the plaint rejectable; and
(f) the effect of photocopies of the documents filed by ICP without the originals.
7. The learned counsel for the respondent corporation however supported the impugned judgment and decree by stating that the documents had been admitted by the'appellants and amount disbursed had not been denied by them. And that the appellants had failed to show any payment of the outstanding amount although subsequent to leave application they did file an application to bring on record certain pay orders/deposit slips etc. Claiming payments. Further that the appellants had not raised any objection in the leave petition or even in the present appeal to challenge territorial jurisdiction of the Banking Court of Lahore and had themselves filed the suit for damages before the same Court and even otherwise they could not object to the territorial jurisdiction of the Lahore Court because of their on location and disbursement of finance.
8. Hearing the learned counsel for the parties, we examined the record of the suit file. Scrutiny of the suit file has led us to the conclusion that the impugned judgment and decree dated 5.9.2002 resulted from non-examination of the documents filed by IGP with its plaint as well as the provisions of the applicable law.
9. Before deciding the suit, it is the duty of the Court to consider and examine the plaint as well as the documents relied and sued upon by the plaintiff forming basis of the pleadings. A decree cannot be passed by a Court in routine or in a cursory manner just because a defendant fails to file a written statement or a defendant, in suit under Order XXXVII, CPC or the suits by a Banking Company, fails to file an application for leave to defend or is unable to raise a triable issue and his application for leave is rejected.
9. It is plaintiff's burden to set out and formulate a plaint complaint with mandatory requirements of the law. To succeed in the suit, he has to prove its claim as raised and pleaded in the plaint. If the suit has been developed on documents, the plaintiff will be entitled to the relief only on showing the cause(s) of action to arise from the documents sued upon. The requirement of exact adherence to the legal demands is more stringent for the plaintiff invoking jurisdiction of a special Court created under a special law when the conditions and pre-requisites for resort to such jurisdiction have been specifically and expressly prescribed in the special law. The Court in such matters cannot presume plaintiff's assertions and pleadings to be correct. The Court has to apply the terms of the special law as also the requirements of proof. The Courts are to follow the word of law than to follow the words of a plaint even in absence of a contest from a defendant.
10. We have been guided by the principals for administration of justice pronounced by the Hon'ble Supreme Court of Pakistan while interpreting the provisions of the Banking Companies (Recovery of Loans) Ordinance (XIX of 1979) in the case of "Haji AH Khan & Company Vs. Allied Bank of Pakistan Limited" (PLD 1995 Supreme Court 362) that:- "....... The effect of refusal of the Court to grant leave or failure on the defendant to comply with the condition of the leave, will be the same i.e. The defendant shall not be entitled to defend the suit on any ground and the Court would pass a decree in favour of the plaintiff. However, this does not necessarily mean that the Court is not required to apply its mind to the facts and the documents before it. Every Court is required to apply its mind before passing any order or judgment notwithstanding the factum that no person has appeared before it to oppose such an order or that the person who wanted to oppose was not allowed to oppose because he failed to fulfill the requirements of law."
Mr. Justice Fazal Karim, as he then was, agreeing with the above observations added a further note of opinion that:- "The consequence of the absence of leave is that "the allegations in the plaint shall be deemed to be admitted" and the party shall be entitled to a decree in terms of clauses (a), (b) and (c) of sub- Rule (2) of Rule 2. Does it mean that the. Court must pass a decree although the allegations of fact in the plaint do not entitle him to it. Suppose, that the allegation of fact in the plaint show that the plaintiff has no cause of action for the suit; or that the suit has not been instituted timeously and is barred by time, in neither of these cases, will the plaintiff be entitled to a decree; nor will the Court be bound to pass one. As was observed in "Ramkarandas Radhavalabh v. Bhagwandas Dwarkadas" (AIR 1965 SC 1144) "if this were not so, the words 'allegations in the plaint shall be deemed to be admitted' in sub-rule (2) of Rule 2 would have been unnecessary", it is, in my judgment, in this sense that it has been said that the Court has a discretion. To quote the Earl of Selborne LC from an old case, Gibbings v. Strong (1884) 26 Ch. D. 66, 69) which case turned on a similar provision:- "This means that the Court is to exercise some judgment in the case: it does not necessarily follow the prayer, but gives the plaintiff the relief to which, on the allegations in his statement of claim, he appears to be entitled."
An Hon'ble Division Bench of this Court held in the case of "United Bank Limited v. Ch. Ghulam Hussain" (1998 CLC 816) that:- "It 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, it 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 of 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, it cannot be said that the Banking Tribunal is so helpless as to be forced to grant a decree to a suit or on the averments of the plaint, ipso facto."
12. Adverting to the present case, the suit was filed by ICP (the respondent) under Section 9 of the then Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 before the Banking Court created under Section 4 ibid. The exclusive jurisdiction of a Banking Court could only be invoked by a Banking Company upon a customer's default under Section 9 through a suit "by presenting a plaint duly supported by a statement of account" verified on oath by the Branch Manager or an Officer Authorized in this behalf by the Board of Directors of the Banking Company.
Upon such institution special procedure for proceeding with the suit was set into motion in terms of Sections 9 to 15 of the Act.
As the suit could only be filed by a Banking Company through the plaint duly supported bv a verified statement of account, the respondent ICP asserted in Paras 11 and 13 of the plaint as under:-
11. "That after final adjustments and calculations, a sum of Rs.9240679/- as on 31.12.1996 is now due and outstanding against the defendants. A duly certified copy of the defendants Statement of Account is annexed to this plaint as Annexure-N."
AND
13. "That the plaintiff on the basis of statement of account, documents mentioned in the plaint and other documents as well, is entitled to recover the suit amount together with mark-up, costs, charges, commissions, service charges, liquidated damages and other incidental expenses........ "
13. ICP as plaintiff thus raised claim of Rs.92,40,679/- against the appellants purported in terms of the statement of Account annexed with the plaint as Annexure-N (page 153 of the suit file). This is one page document containing only the following entries:- LLM Financing Total Principal 8,364,725 8,364,725 Mark-up 726,671 726,671 Excise duty 62,736 62,726 Pro. On. Fee 6,301 6,301 Commitment Charges. 80,246 80,246 Total outstandings 9,240,679 9,240,679
14. The suit was formulated, developed and structured on the above document which shows entries of the claimed debit balances purportedly on account of the principal, mark-up, excise duty, monitoring fee and commitment charges totaling to Rs.92,40,679/-. The plaint claimed this document to be a Statement of Account. We are afraid this document can at maximum be called respondent's Certificate of Balances, it cannot be termed or defined as a statement of Account which is required to show each and every entry as pertaining in the ledger or account book of a Banking Company.
As per settled "Banking Practices", every amount/sum advanced or paid to a customer or sum expended/incurred for and on behalf of a customer by a Banking Company is entered as 'debit' in the ledger of the bank. Simultaneously the money received from or on behalf of customer is entered as a customer's "credit". The net result so arrived at is shown in the ledger as a credit or debit balance. On the basis of these entries in- the ledger a Statement of Account truly, faithfully and duly reflecting date were entries is prepared by the bank for each account for all practical purposes. Such Statement of Account bearing true and complete, account profile is required to be regularly conveyed to the customers informing them of their Account position and obligations towards the bank or vice versa. Such "Statement of Account" containing true copies of entries in the books of a bank, when certified as per Section 2 of the Bankers' Books Evidence Act, 1891, attains the status of prima facie evidence of the existence of such entries in the bankers' books per Section 4 ibid. The Statement of Account so certified becomes admissible in evidence of the matters, transactions and accounts therein recorded like the original entry unless otherwise disputed.
In Encyclopaedia of Banking and Finance, Ninth Edition revised and expanded by Glemn G. Munn, F.L. Garcia and Charles J. Woelfel. Bankers Publishing Company, Statement of Account has been defined as under;- "A continuous daily posted record showing in detail all debits and credits and balance as of the close of the period, usually one month. The statement of account is rendered by a Commercial Bank, Broker, or other business to its customers. These accounts give dates and descriptions and permit the customers to verify the Bank's record with his on. If differences occur, they can then be investigated when the customer reports back through the reconcilement blank usually enclosed with the statement."
15. The learned counsel for ICP when confronted had no explanation as to why ICP had not filed a "Statement of Account", it was also admitted that Annexure-N did not show transactional entries, debit and credit entries, rate of mark-up, rate of excise duty, rate of commitment charges, the dates of disbursement, or the dates of the liabilities allegedly incurred by the appellants. He also admitted that it did not contain any entries qua payments claimed to have been made by the appellants who with their application had placed on record photocopies of the pay orders/drafts/deposit slips etc. To claim some payments.
16. In absence of a Statement of Account showing all debits and credits and dates thereof as entered by ICP in the ledgers and books of accounts from the disbursement to the date of the suit, no presumption of admissibility in terms of Bankers' Books Evidence Act (XVIH of 1891) can be given to the abovesaid Certificate of Balances (Annex-N).
17. The above-stated Certificate or Schedule of Balances, though contains certification or verification close to the prescribed certification under Banker' Books Evidence Act, yet such Certificate or Schedule can in no way be true and faithful copy of the entries of Books of Accounts maintained in the "usual and ordinary course of business" by a bank in terms of the Bankers' Books Evidences Act (Section 2(8) referred). No presumption of truth or correctness can be attached to the above-stated Schedule or Certificate of Balances to be admissible in evidence and to become basis of a suit or a decree.
18. In the case of "IDBP v. Al-Mansoor Limited and 6 others" (PLD 1989 Pesh. 191), a learned Division Bench of Peshawar High Court was pleased to hold that:- "No proper and regular statement of account was produced by the plaintiff/appellant showing the respective entries regarding the exchange rates and the rates of conversion of the foreign currency into Pakistani one and the payments already made by the defendants/respondents from time to time." "in the instant case, the plaintiff appellant has failed to produce the certified copies from their books on which they relied, in compliance with the mandatory provisions of Order VII, Rule 14 and Order XIII, Rule 1, CPC or at the the of filing of list of witnesses under Order XVI, Rule 1, CPC. The certificate issued by the Manager of the plaintiff/appellant Bank does not fall within the provisions of Section 4 of the Bankers' Books Evidence Act, 1891 and no presumption can be legally attached to it."
19. It is note worthy that the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was replaced on 30.8.2001 by the Financial Institutions (Recovery of Finances)
Ordinance, 2001. Under Section 7(6) of the Ordinance all proceedings in any Banking Court constituted under the Act of 1997 stood transferred to and were deemed to have been transferred, heard and disposed of by the Banking Court having jurisdiction under the Ordinance of 2001. ICP's suit was thus heard, dealt with and decided through the impugned judgment and decree dated 5.9.2002 by the Banking' Court under the Ordinance of 2001. The provisions of sub-sections (1) and
(2) of Section 9 of the 2001 Ordinance contain provisions almost the same as those in sub-section
(1) of Section 9 of the repealed Act of 1997. The suit under Section 9(1) & (2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 is also to be filed through a plaint supported by a statement of Account duly certified under the Banker's Books Evidence Act (XVIH of 1891) and the documents relating to the grant of finance. The basic condition of institution of a suit is thus the same in both the Statutes. The plaint has to be supported by a Statement of Account, in COS No. 44/2002 titled "Bankers Equity Ltd. v. Bentonite Pakistan Ltd." (Reported as 2003 PCTLR (Lah) 884), identical question as in the present case was decided by one of us (Muhammad Sair Ali, J.) as under:- ".... Sub-section (2) of Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 makes it mandatory for a Banking institution to support its plaint in a suit against the customer by a Statement of Account duly certified under the Bankers' Books Evidence Act, 1891 and also by all other relevant documents relating to grant of Finance. Without such a 'statement of Account' filed alongwith the plaint, a customer will obviously remain totally unaware of the amount advanced, mark-up charged and the basis, break-up, premise, mode of calculation of account, nature of default and the actual amount of Bank's claim against the defendant- customer. He will thus be unable to frame his defence within the limited period prescribed by law, to show reasonable, serious and plausible grounds of contest to be able to seek and obtain leave to defend the suit.
Absence of filing the requisite Statements of Account alongwith the plaint, will essentially amount to absence of providing adequate, proper and reasonable opportunity of defence to the defending customer. Being thus unable to file a proper leave petition within thirty days under Section 10(2) of the Ordinance of 2001 or within twenty-one days under Section 10(12) ibid, such a customer may or may not later be able to amend his leave petition. His defence shall thus be rendered illusory, hence denied. Upon the compliance by a Banking Company with the provisions of Section 9(2) of the Ordinance of 2001 depends the right of defence of a defendant in the summary suits as visualized under the Ordinance, wherefore, the filing of duly certified Statements of Accounts by a Banking Company alongwith its plaint, cannot be taken to be a mere formality or a technicality.
This provision can only be held to be mandatory. Without strict compliance wherewith, the plaint is incomplete , and cannot become basis of a suit under this law.
Another word employed in sub-section (2) of Section 9 ibid, requires deeper consideration as this word has a direct bearing and impact on the essential mandate contained in this provision of law.
This sub-section provides that "plaint shall be supported by a Statement of Account" duly certified under the Bankers' Books Evidence Act, 1891 and all other relevant documents relating to the grant of finance.
In my opinion, the word 'support' read in the mandatory perspective of word 'shall', makes the plaint filed by a Banking institution, as totally dependent upon duly certified Statement of Account; on the 'support' of which can a plaint stand and sustain as per Section 9(1) and (2) ibid. Plaint is subservient to and dependent upon the support of the statement of Account for its life, sustainability, security and maintenance. Without support of statement of account (and documents) a plaint by itself cannot be presumed to stand independently. No building can be raised, constructed or created without the support of a foundation, columns and walls. Likewise, as per provisions of law, a plaint cannot be structured, constructed, built, or raised without the foundation of a duly certified statement of Account and the requisite documents, in fact, the three i.e. Plaint, statement of account and the documents, though distinct, do not enjoy independence of existence in terms of sub-section (2) of Section 9 ibid. They are inseparable, indivisible and interdependent. Under sub-sections (1) and (2) of Section ibid, no suit in the Banking Court can be instituted by a Banking Company through a plaint without the requisite Statement of Account and the documents."
20. Discussing the meanings of the term 'support' as in various Treatise and Dictionaries, it was also held in the above case that:- "In View of the above meaning, definition and nature of term 'support', sub-sections (1) and (2) of Section 9 of the Ordinance, 2001, can safely and logically be interpreted by holding that suit of a Banking Company cannot hold, endure, sustain, stand and be instituted without life support and foundation of a duly certified statement of account and the said documents for the plaint, wherefor, noncompliance with express provisions of law bars a suit through a plaint unsupported by a statement of account duly certified under Banker's Books Evidence Act, 1891 and the documents relating to grant of finance."
"I am reinforced in my above opinion by the difference of phraseology used in provisions contained in sub-sections (1) and (2) of Section 9 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001 and the provisions of Rules 14 and 17 of Order VII of CPC. Said Rules 14 and 17 relate to, production of documents in the Court upon presentation of a plaint "
"The words "to produce documents along with the plaint" used in CPC connote meanings different from the words "plaint shall be supported by a statement of accounts...." under Section 9 of the Ordinance. The distinction thereto is obvious. CPC allows a ~ plaint independent of production of documents as consequence of non-filing thereto is inadmissibility of documents in evidence if leave of the Court is not obtained for subsequent production of the same. Contrarily, legislators chose not to use the word "produced" in Section 9 of the Ordinance but used the word "plaint shall be supported with a statement of Account". This clearly conveys the intent of the legislators that suit cannot be initiated through a plaint which is not so supported by a statement of accounts and documents of finanance "
21. The impugned judgment and decree passed by the learned Judge Banking Court-II, Lahore shows that the learned Judge was not even conscious of this mandatory requirement. He neither considered nor adverted to the above discussed fatal deficiency in the suit filed by the respondent.
He mechanically proceeded to pass the impugned decree which could not have been based upon a legally inadmissible document i.e. The Certificate of Balances. The respondent ICP failed to comply with the mandatory provisions of law by filing a suit through a plaint unsupported by a statement of Account.
22. A serious question as to the effect of non-filing of the statement of account alongwith the plaint in terms of Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 or Section 9 of the repealed Act of 1997 is thus involved in the suit, in view of the observations made by us herein above, we could have ourselves determined the consequence of initiation of the suit by ICP through a plaint unsupported by the statement of account. However, a question of absence of territorial jurisdiction in the Courts at Lahore has been raised by the learned counsel for the appellants wherefor we deem it appropriate to leave all the issues arising in the suit to be determined by the learned Judge Banking Court.
23. For the reasons above discussed:-
(i) The judgment and decree dated 5.912002 is set aside;
(ii) Application for leave to defend the suit filed by the appellants is accepted and the appellants are granted unconditional leave to appear and defend the suit; (i.e) The case is remitted back to the learned Judge Banking Court, Lahore for proceeding in accordance with the law; and
(iv) The appellants may file their written statement before the learned Judge Banking Court who shall allow opportunity for filing the same to the appellants.
24. The appeal is accepted in above terms with no order as to costs.