' SYED JAMSHED ALI, J.---The judgment and decree dated 21-10-1998 of the learned Chairman, Modarba Tribunal Punjab, Lahore, have been assailed in this appeal which arises out of the following circumstances.
2. The First Elite Capital Modarba, respondent herein, filed a suit against the eight appellants and three others namely Shams Shafi, Umar Shafi and Rizwan Shafi (defendants No,6, 7 and 10 in the suit) for recovery of an amount of Rs.92,13,446 with the averments that appellant No,1 i.e., the Rainbow Packages Limited obtained a Modarba finance facility from the plaintiff to the tune of Rs.50,00,000 to enable it to purchase raw material and on 6-4-1992 an agreement was executed between appellant No,1 and the respondent. It was further averred that to secure the liability in terms of Modarba agreement, appellant No,1 executed a demand promissory note as well as other documents. The company, however, defaulted to discharge its liability under the aforesaid agreement and on 26-12-1996 requested for the rollover of the facility, also gave a repayment schedule and promised to start making payments from December, 1996 to liquidate the entire liability by December, 1997 but no payment was ever made by appellant No,
1. The suit amount of Rs.92,13,446 included outstanding sale price of the goods and the profit (Rs.77,67,644), Muqadam charges (Rs.21,785), Insurance expenses (Rs.6,487) and late payment charges (Rs.4,70,530).
Appellants Nos.2 to 8 were impleaded to the suit on the ground that they were the "real beneficiaries".
3. The appellants filed an application for leave to appear and defend while a separate application was filed by defendants Nos.6, 7 and 10 in the suit. The said defendants were, however, deleted on the statement of the appellant's counsel vide order dated 13-10-1998 of the learned Banking Court.
The case of the appellant-company was that almost the entire liability had been liquidated and as far as the balance outstanding against the company is concerned, it was prepared to settle accounts with the plaintiff. The documents executed by the appellant-company were not disputed.
The learned Banking Court was of the view that since the appellant-company was a juristic person, it cannot function of its own and that all the transactions regarding the company had been dealt with by the co-defendants in the suit i.e. The appellants Nos.2 to 8. Therefore, the suit filed by the respondent was decreed for an amount of Rs.92, 13,446 alongwith the cost and mark-up till realization of the decretal amount. The decree-sheet shows defendants Nos.6, 7 and 10 as having been deleted.
4. The learned counsel for the appellants contends that while the ,finance agreement between appellant No,1 and the respondent was executed on 6-4-1992, the suit was filed on 30-7-1997, which was clearly barred by time. This question was not raised in the application for leave to appear and defend but according to him this being a question of law could be raised at any stage of the proceedings. Reliance was placed on Dulo v. Muhammad Nathu and another AIR 1926 Lahore
451. Hulas Narain Singh v. Mian Din Muhammad and others. AIR 1944 Privy Council 24 and Khalid Qureshi and 5 others v. United Bank Limited I.I. Chundrigar Road, Karachi 2001 SCM R 103. He, however, to be fair to him, did not dispute that legal position about question of limitation being a mixed question of law and fact was, however, different. He next submits that the suit was filed by the Crescent Modaraba Management Company on behalf of the respondent and, therefore, was not competently instituted. He next contends that the appellant-company was the borrower, appellants Nos.2 to 8 did not even stand surety, the company had a distinct legal entity and therefore, appellants Nos.2 to 8 could not be burdened with the liability of the company. Reliance was placed on Ikram Bus Service and others v. Board of Revenue etc. PLD 1963 SC 564; Nishan v.
Muhammad Mansha and others 1993 CLC 1222. It is next maintained that except a bare averment that appellants Nos.2 to 8 were the "real beneficiaries", no factual foundation was laid in the suit as to how any benefit, if any, was derived by the appellants Nos.2 to 8 in their personal capacity. In any case such a question could not have been summarily answered without recording evidence.
He submits that the expression "real beneficiary" has been included in the definition of a "customer" in section 2(d) of the Banking Companies (Recovery of Loans and Advances Credits Finances Act (XV), 1997, while the instant suit was filed under the Modaraba Companies Modaraba (Floatation and Control), Ordinance (No, XXXI), of 1980 and, therefore, definition of the "Customer" given in Act No, XV of 1997 could not be imported in Ordinance (No,XXXI), 1980 under which the suit was filed.
5. On the other hand, the learned counsel for the respondent decree-holder submits that the suit was within time on account of a number of acknowledgments of appellant No,
1. It was a mixed question of law and fact and an objection not having been taken in the application for leave to appear and defend, it cannot be considered at this stage. As far as the competency of the suit is concerned, he relied on section 12 of Ordinance No,XXXI of 1980 and the averment in para.1 of the plaint i.e. That the plaintiff was Modaraba floated under Ordinance No,XXXI of 1980 and managed by the Crescent Modaraba Management Company. Thus, the plea has no merit. No objection either was raised as to the competency of the suit filed through the Crescent Management Company. As far as the last contention of the learned counsel for the appellants is concerned, he maintains that appellants Nos.2 to 8 as shareholders and Directors of the Company,. i.e. Appellant No,1, were the beneficiaries of the transaction and, therefore, suit against all the appellants was rightly decreed.
6. The submissions made by the learned counsel for the parties have been considered. The case of appellants Nos.2 to 8 stands on a different footing than the case of appellant No,1 as far as the question of limitation is concerned. The finance agreement was executed on 6-4-1992 and the demand promissory note was executed by appellant No,1 on 7-5-1992 while the suit was filed on 30-7-1997. However, the respondent had pleaded acknowledgments by appellant No,1 in the plaint on 22-12-1992, (para.6-a) 15-7-1993, (para.6-b), 22-9-1993 (para.6-c) 12-12-1993 (para.6-d), 17-10- 1995 (para.6-e), 29-10-1995 (para.6-f), 26-12-1996 (para.6-g) and 28-11-1996 (para.7). Thus, in case of appellant No,1, it was a mixed question of law and fact. Not only the plea of limitation was not raised but also that appellant No,1 had not disputed these acknowledgments. Therefore, the plea of limitation cannot be entertained at this stage as far as appellant No,1 is concerned. However, as far as appellants Nos.2 to 8 are concerned, there is no averment in the plaint that they had ever acknowledged the liability. Thus, to their extent only it could be said that it was a pure question of law. And, even if the facts alleged in the plaint were accepted in their entirety, the suit against appellants Nos.2 to 8 was, prima facie, barred by time.
7. As far as filing of the suit through the Crescent Modaraba Management Company is concerned, para.1 of the plaint clearly stated that it was the management company and according to para.2 of the plaint, the suit was being filed by a duly authorized person. These averments were not questioned in the application for leave to appear and defend. Section 12 of Ordinance No,XXXI of 1980 authorizing filing of the suit through the management company was perfectly in order.
8. As far as the liability of appellants Nos.2 to 8 is concerned, the only averment was that they were the "real beneficiaries", all the documents including finance agreement being relied upon by the plaintiff were, according to the plaint, executed by the appellant No,1, i.e. Company. Appellants Nos.2 to 8 neither stood surety or indemnifier nor in any other manner had undertaken to discharge the liability of the company. Merely because they were the share-holders and Directors of the Company, prima facie, it could not be said that they had derived any personal benefit or were the "real beneficiaries". There is merit in the contention of the learned counsel that appellant No,1 is a juristic person and is distinct from its share-holders and directors. It may also be noted that according to the learned counsel for the appellant, appellant No,1 is a public limited company for which the liability of the share-holders is limited. In any case this question could not be summarily answered merely on the, reasoning of the learned trial Court that the company being a juristic person cannot act of its own and all the transactions regarding defendant No,1 had been carried out by co-defendants in the suit. There is nothing on the record to sustain these findings because no evidence was recorded. Another question to be considered was whether the definition of "customer" as given in section 2(d) of Act No,XV of 1997 could at all be imported in Ordinance No,XXXI of 1980. This aspect was not at all considered by the learned trial Court. I have also noticed that alongwith appellants Nos.2 to 8, three others were also impleaded to the suit (defendants Nos.6, 7 and 10) as "real beneficiaries". However the learned counsel for the plaintiff, on 13-10-1998, made a statement before the learned Banking Court to delete defendants Nos.6, 7 and 10 from the suit on the ground they were unnecessary party and an order was accordingly passed. The record does not bear out that the case of defendants Nos.6, 7 and 10 and appellants Nos.2 to 8 was distinguishable. Thus, by seeking deletion of the said defendants, the plaintiff-Bank itself eroded the credibility of its averment as to the liability of the co-defendants in the suit as the "real beneficiaries".
9. For what has been stated above, as far as appellant No,1 is concerned, this appeal is dismissed while it is allowed to the extent of appellants Nos.2 to 8. The application for grant of leave to appear and defend to the extent of appellants Nos.2 to 8 is allowed, the impugned judgment and decree only to the extent of the said appellants No,2 to 8 are set aside and the case is remanded to the learned Banking Court for trial of the suit in accordance with law. No order as to costs.