P L D 1999 Lahore 450 (PLP)

The plaintiff bank tiled a suit for recovery of Rs.499,869,

866. Notice was issued to the defendant who has been served. The defendant entered appearance firstly through Mr. Ali Sibtain Fazli, Advocate and thereafter, through Mr. Umer Atta Bandial, Advocate and moved an application under section 10 of the Banking Companies (Recovery of Loans, Advances, Credit and Finances) Act, 1997 for leave to defend. The plaintiff filed reply thereto and has contested the same on facts as well as on legal plane.

2. Learned counsel for the plaintiff has raised a preliminary objection to the effect that the application has been moved by the Purchase Manager of the Defendant company, who was not authorised or competent to file the same. It was argued with reference to section 32 of the Companies Ordinance. 1984 (hereinafter to be referred as "Ordinance 1984") but a company -is a body corporate while section 31(11 of the Ordinance. 1994 deal, with the eftect of Memorandum and Articles of Association by the company and its members. It was added that according to Article 64 of Memorandum and Articles of Association of the defendant company the control of the company vested in the Board of Directors, who according to Articles 58 and 59 were to elect one of them as Chairman of the Board and appoint one of them or from outside as Chief Executive of the company. It was argued that according to Article 62 the control of the company-vested in the Board and as per Article 65 Directors were competent to confer or delegate to Chief Executive or the Chairman any of their powers upon the terms and conditions with such restriction as they deem fit. It was added that it was clear from the provisions of Ordinance, 1984 and Memorandum and Articles of Association referred to that there was no concept of sub-delegation of powers to any Officer of the company: It w,s argued that the application moved by the said Purchase Manager was, therefore, not maintainable in law. In this behalf reference is made to Messrs Muhammad Sadiq Muhammad 1lmar and another v. The Australasia Bank Ltd. PLD 1966 SC 684; Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabs Corporation Ltd.. Lahore PLD 1971 SC 550; Abubakar Saley Mayet v. Abho: Laboratories and another 1987 CLC 367 and Sm. Hemlata Saha v. Stadmed UPrtvate Ltd. and others AIR 1965 Cal.

436. It was argued that it was not a case covered by Order III, Rule 1, C.P.C. iii view of the provisions of Ordinance, 1984. It was added that the defendant has to show that the application was moved competently. In this behalf reference was made to Government of Pakistan v. Premier Sugar Mills and others PLD 1991 Lah. 381. 3.On the other hand, Mr.Umer Atta Bandial, Advocate for the defendant argued that non- signing or signing of plaint, or application by an unauthorised person was merely an irregularity and not illegality. The same was curable and rectifiable. In this behalf reliance was placed on Shadoo Muhammad Khan v. Ganmoon and 2 others 1989 MLD 4624, Messrs Aziz Flour Mills and 2 others v. The Industrial Development Bank of Pakistan 1990 CLC 1473; Zamindara Cooperative Society Ltd., Okara v. National Bank of Pakistan and 5 others 1982 CLC 1276; Shafiq Metal Works and 5 others v. The Bank of Bahawalpur Ltd. Gujranwala PLD 1973 Note 33 at p.41 (Lahore) and Ismail and another v. Msl Razia Begum and 3 others 1981 SCMR

687. Ltd. (Ihsanul Haq Chaudhry, J) It was argued that the object behind the legal formalities was to safeguard the interest of the justice and mere technicalities should not be allowed to defeat the ends of justice. In this behalf reference was made to Jameel Ahmad v. Late Saifuddin through Legal Representative 199 % SCMR 260; Noorullah Amin v: Muhammad Hashim 1992 SCMR 1744; Abdid Jabbar Khan v. Ismail through his Legal Heirs 1998 CLC 1050 and Hadi Bakhsh v. Additional Distric: Judge 1998 CLC 61C

4. Learned counsel for the plaintiff while summing up the arguments submitted with reference to Rule 1, of Order III, C.P.C. is not of any legal consequences in view of the provisions of Ordinance, 1984. 5. 1 have given my anxious consideration to the arguments and gone through the record. The application under section 10 of Act of 1997 moved on behalf of the defendant is signed by Mr. Hamood-ur-Rehman, Purchase Manager, who is neither competent to move such application under the provisions of Ordinance, 1984 nor under the Articles and Memorandum of Association of the defendant company nor C.P.C. Learned counsel for the plaintiff has rightly referred to the case of Khan Iftikhar Hussain Khan of Mamdot (supra) where the suit filed on the basis of resolution was held not to be properly instituted because the meeting of the Directors was not duly convened. The relevant portion of the judgment reads as under:- "In the case of H.M. Ebrahim Sait v. South India Industrials Ltd. (1) 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 Jud a was perfectly justified in dismiss in the suit on this ground " The present case is even on weaker footings than the precedent case because in this case there is neither any resolution of the company nor power of attorney in favour of Mr Hamood-ur-Rehman authorising him to defend the suit' A company cannot orally authorise another person to sign any application or plaint. Learned counsel for the plaintiff has rightly referred to the case of lg Abubakar Saley Mavet (supra). The compliance of the provisions of Ordinance, 1984, Article and Memorandum of Association as well as C.P.C. was mandatory. In this behalf reference can also be made to Sm.. Hemlata Saha~ (supra) and Government of Pakistan (supra). The argument that it is a case of signing of application by a person not authorised or a formal defect as argued by the learned counsel for the defendant is without any merit. It is a patently illegality, which rendered the application incompetent, therefore, the cases relied Iby the learned counsel the defendant are not relevant. If such petitions were entertained then the Court proceedings would loose all sanctity. 6.Now coming to the argument that the alleged defect is rectifiable. Firstly the argument is without merit because this suit was instituted on 18-81998 while the application was filed on 21-9-1998 but till today there is not even an effort to vest Mr. Hamood-ur-Rehman with the necessary powers, may be for the reasons that the Articles and Memorandum of Association do not cater for such authorization. Moreover, any authorization after due date and expiry of the limitation would not render the application valid from the day it was presented.IE In this behalf learned counsel for the plaintiff has rightly referred to the case of Zamindara Cooperative Society, Ltd., Okara (surpa). 7.The upshot of this discussion is that the application under section 10 of Act of 1997 is dismissed as not maintainable. The result is that the suit for F recovery Rs.499,869,866 as on 30-6-1998 with future mark up plus services charges/expenses payable to or incurred by the plaintiff till the final realization of the decretal amount is decreed with costs. Q.M.H./M.A.K./B-66/L Suit decreed