2019 PLP 1254 (CLD)

ASIM HAFEEZ, J.

Appellant has impugned judgment and decree dated 02.02.2017 ("decree") by the learned Judge Banking Court-III, Multan, whereby petition for leave to defend the suit, filed by the appellant, was dismissed, being devoid of any question of law and fact and resultantly suit was decreed accordingly.

2. Briefly, the facts necessary for adjudication of lis are that respondent No.1 bank filed suit for recovery of Rs.2,100,000/- against the appellant and the respondents Nos.2 and 3, claiming grant of finance facility by way of issuance of letter of Guarantee in favour of Messrs F.F (Marketing Division) Lahore Trade Centre for Rs.3,000,000/- at the request of respondent No.2, being sole proprietor of respondent No.3, i.e. Asif Trading Company. Respondents Nos.2 and 3 filed separate petition for leave to defend the suit, which was dismissed and suit was decreed through judgment and decree dated 24.03.2004. The appellant was proceeded ex parte, who thereafter submitted application to set aside ex parte decree, which was dismissed by the learned Judge Banking Court vide order dated 20.06.2005. Order dated 20.06.2005 was challenged through filing of F.A.O. No.157/2005; which appeal was accepted, consequently ex parte decree was set aside and opportunity was allowed to the appellant to file petition for leave to defend. Petition for leave to defend was filed, which was dismissed and judgment and decree dated 02.02.2017 issued. Hence instant appeal.

3. The claim of respondent bank, against the appellant, is confined to the extent of appellant's property, statedly mortgaged with it through deed of collateral mortgage dated 11.05.2002. The mortgage deed was allegedly executed by the respondent No.2, purportedly acting as an attorney of the appellant in terms of registered general power of attorney dated 25.04.2002 - document forming nucleus of the real dispute. It was alleged that appellant also signed/executed irrevocable general power of attorney, favouring respondent No.1 bank, dated 14.05.2002.

4. Learned counsel opened submissions with denial of execution of general power of attorney dated 25.04.2002 in favour of the respondent No. 2 and irrevocable power of attorney dated 14.05.2002, in favour of the respondent No.1 bank. It was not disputed that no promissory note, finance agreement or personal guarantee was executed by the appellant. It is contended that dispute raised cannot be resolved summarily but through recording of evidence, after grant of leave to defend.

5. Conversely, learned counsel for the respondent/bank supported the judgment and decree dated 02.02.2017. Learned counsel emphasized that despite knowledge of the documents, validity and execution whereof were denied; no proceedings were initiated for seeking cancellation thereof since June 2004. Further, learned counsel alleged collusion between respondent No.2 and appellant.

6. Arguments heard. And available record perused.

7. A perusal of the judgment impugned would show that petition for leave to defend was dismissed primarily on three grounds, firstly the failure of the appellant to move to proper forum for seeking cancellation of alleged disputed documents, secondly, opinion formed upon finding similarity of signatures - comparison done in view of Article 84 of the Qanun-e-Shahadat Order 1984 - of the appellant on the disputed documents with the signatures on the identity card and petition for leave to defend and thirdly, that the appellant had not filed any application for seeking comparison of signatures. The learned Judge Banking Court has dealt with other objections as well, which need no discussion as the counsel appearing had confined their arguments to the extent of the grounds stated.

8. The finding of the learned Judge Banking Court regarding alleged failure of the appellant to move to proper forum for seeking cancellation of documents is erroneous and illegal, when examined in the context of the provisions of the Financial Institutions (Recovery of Finances) Ordinance 2001 ("the Ordinance 2001"). The respondent bank by treating the appellant as "Customer" had filed suit and sought mortgage decree on the basis of collateral mortgage deed dated 11.05.2002, which was allegedly executed pursuant to general power of attorney, purportedly executed by the appellant in favour of the respondent No.2. The respondent bank had attributed execution of irrevocable general power of attorney dated 14.05.2002 by the appellant. The appellant had filed petition for leave to defend the suit, wherein objections qua the validity, legitimacy and veracity of the documents was raised, which inter alia also included the general power of attorney dated 25.04.2002. Notwithstanding the fact that each of the document was executed separately but all form an integral part of one wholesome transaction, i.e. mortgage charge of the bank over the property in question. In terms of subsection (4) of section 7 of the Ordinance 2001 the Judge Banking Court has exclusive jurisdiction to adjudicate upon the claim that whether a valid mortgage charge has been created on the basis of the documents sued and relied upon by the bank. Since the appellant - treated as customer - has allegedly executed the general power of attorney dated 25.04.2002 in favour of the respondent No.2, on the basis whereof the same executed collateral mortgage deed dated 11.05.2002, therefore, the learned Judge Banking Court has the jurisdiction to adjudicate upon and determine the question of genuineness of all the documents, legality and enforceability thereof - which are not mutually exclusive but form an integral part of one transaction - in view of the objections raised in the petition seeking leave to defend. If the reason given by the learned Judge Banking Court is accepted it would imply that each and every document had to be challenged separately before various forums, which per se defeats the purpose and objective of creating an exclusive jurisdiction. The appellant has been pursuing the matter since 2004, upon gaining knowledge of ex parte decree. The learned Judge Banking Court has not appreciated that the question of validity of alleged general power of attorney is a relevant fact and assumes significance in the context of fact-in-issue, relating to the execution and enforceability of deed of collateral mortgage. The judgment impugned to the extent of first finding is bad in law.

9. We have observed that the learned Judge Banking Court has proceeded to compare the signatures of the appellants on disputed documents with identity card and petition for leave to defend. No doubt course was available to the court under Article 84 of Qanun-e-Shahadat Order 1984 but the comparison of signatures could be made with original documents, evidently reflected from the record that the originals documents, disputed by the appellant, were neither produced nor ordered to be produced. A reference is made to judgment reported as "Rana Manoon Rasheed v. Kokab Noorani Okarvi and 4 others" (PLD 1999 Kar. 257).

10. The appellant cannot be non-suited merely for the reason that no effort was made to seek comparison of the signatures from the hand-writing expert, which exercise if at all intended, has to be undertaken once leave to defend is allowed, only then an interlocutory application can be filed. Even otherwise, it is within the discretion of the learned Judge Banking Court to seek verification of signatures by procuring report of handwriting expert for opinion upon grant of leave to defend, if it considered that substantial question of law and fact has been raised. Reference is made to judgment by August Supreme Court of Pakistan reported as "Mst. Akhtar Begum v. Muslim Commercial Bank Ltd." (2001 SCMR 264). No doubt that presumption of truth is attached to the power of attorney in terms of Article 95 of Qanun-e-Shahadat Order 1984, which is rebuttable provided an opportunity is allowed to rebut the same. On the face of it, the respondent No.2 is the beneficiary of the financing and therefore assumes greater responsibility to prove the validity of the document, which discharge of onus would require the appellant to rebut the presumption attached to the documents, which are registered. All this can be achieved upon grant of leave to defend.

11. That sequel of execution of documents itself makes out a case for grant of leave to defend. Alleged power-of-attorney was executed on 25.04.2002, application for grant of finance facility was submitted on 30.04.2002, sanction advice was issued on 08.05.2002, which does not make any reference to third party mortgage. Irrevocable General Power-of-Attorney was allegedly executed by appellant on 14.05.2002, if it is so, why personal guarantee was not procured from the appellant. And if at all revocable General Power-of-Attorney was executed on 14.05.2002 why the need arose to seek execution of a collateral mortgage deed dated 11.05.2002 by the respondent No.2, when the appellant had allegedly executed an irrevocable power of attorney. It goes without saying that notwithstanding comparison of signatures, there are multiple issues which were not considered or adjudicated upon while deciding the petition for leave to defend.

12. The entire controversy has to be examined in the context of section 10(9) of the Ordinance, 2001, which is reproduced as under: "[(9)] Subject to section 11, the Banking Court shall grant the defendant leave to defend the suit if on consideration of the contents of the plaint, the application for leave to defend and the reply thereto it is of the view that substantial questions of law or fact have been raised in respect of which evidence needs to be recorded".

13. Upon perusal of section 10(9)-ibid, it is evident that the legislature has qualified the eligibility of questions of law and fact by enunciating that all those questions of law and fact which require evidence would entitle a defendant to grant of leave to defend. In view of the facts and circumstances of the case, the appellant has made out a case for grant of leave to defend, in wake of questions of law and facts raised.

14. In the circumstances, the impugned judgment and decree dated 02.02.2017 against the appellant is set-aside, the petition for leave to defend filed by the appellant is allowed, by way of grant of unconditional leave to appear and defend. The learned Judge Banking Court-III, Multan is directed to treat the petition for leave to appear and defend as written statement, frame issues and direct the parties to lead evidence and decide the suit/matter on merits, preferably within a period of 90 days from date of this judgment.

15. The observations made are tentative and shall not prejudice the case/defence of any party and nor shall influence the Banking Court.

16. No order as to the costs. MH/A-77/L Leave granted.