2014 PLP 1354 (CLD)

NADEEM AKHTAR, J.

This Suit has been filed by the plaintiff under section 9 of the Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001 ('the Ordinance'), praying for a decree against the defendants jointly and severally in the sum of Rs.63,181,728.00; a decree for the attachment and sale of all the present and future plant, machinery, equipment and the immovable property belonging to defendant No.1; and, cost of funds till realization of the decreed amount. Defendant No.1 has been sued as the principal borrower, and defendant No.2 has been sued as the guarantor of defendant No.1. According to the plaintiff, the defendants are its customers in relation to the finance advanced to them by the plaintiff, which is the subject matter of this Suit.

2. By a consolidated order passed on 30-10-2013, the application for leave to defend filed by the defendants, the application filed by them for condoning the delay in filing the same, and the application filed by them for rejection of the plaint, were dismissed. As the learned counsel for the defendants had raised an objection regarding the authenticity of the statement of account filed by the plaintiff, the learned counsel for the plaintiff was put on notice to satisfy the Court on the next date of hearing as to whether or not any relief can be granted on the basis of the statement of account filed and relied upon by the plaintiff. Learned counsel for the defendants was also put on notice to satisfy the Court on the next date of hearing as to whether his objection can be entertained/examined or not after the dismissal of the defendants' application for leave to defend. Both the learned counsel made their respective submissions at length on 12-11-2013, whereafter the matter was reserved for judgment.

3. Mr. Jaffar Raze, the learned counsel for the defendants, submitted that, in order to prove the alleged liability of the defendants, the plaintiff was obliged to file a statement of account along with plaint as prescribed under section 9 of the Ordinance. He further submitted that there are serious defects in the plaintiffs' statement of account, as the same is not compliant of section 9 ibid. He contended that subsection (2) of section 9 ibid provides that, where a Suit is filed under the Ordinance by a financial institution, the plaint shall be supported by a statement of account duly certified under the Bankers' Books Evidence Act, 1891 ('the Act of 1891'). He further contended that in section 2(8) of the Act of 1891, 'certified copy' is defined as a copy of an entry in the books of a bank together with a certificate written at the foot of such copy, duly subscribed by the 'Principal Accountant' or 'Manager' of the bank with his name and official title. He pointed out that the statement of account filed by the plaintiff is certified by its 'Senior Officer', who is neither the principal accountant nor the manager of the plaintiff, and as such does not fall within the definition of the persons authorized under section 2(8) ibid to certify a statement of account. The learned counsel submitted that since the plaintiff has not complied with the mandatory requirement of section 9(2) ibid, the Suit is liable to be dismissed on this ground alone. It was urged that, even after dismissal of the defendants' application for leave to defend, the Court, before passing the decree, is still duty-bound to ensure as to whether the Suit is maintainable or not and, if it is found that the Suit is not maintainable, the same should be dismissed.

4. It was also submitted by the learned counsel for the defendants that, without prejudice to his above objection, the plaintiff's statement of account does not reflect the true accounts as the plaintiff has charged markup over markup. In support of this submission and the objection relating to the statement of account, the learned counsel cited and relied upon the cases of (1) Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931, (2) Messrs Liaquat Flour and General Mills through Partners and 3 others v. Messrs Muslim Commercial Bank Ltd. 2007 CLD 188 (3) National Bank of Pakistan through Manager v. Messrs Mujahid Nawaz Cotton Ginners through Partners and 6 others, 2007 CLD 678 (4) Bankers Equity Limited and 5 others v. Messrs Bentonite Pakistan Limited through Chief Executive and 7 others 2010 CLD 651, (5) Messrs Soneri Bank Limited v. Messrs Compass Trading Corporation (Pvt.) Limited through Director/Chief Executive and 3 others, 2012 CLD 1302, and (6) Pakistan Kuwait Investment Company (Pvt.) Limited through Authorized Representative v. Messrs Active Apparels International and 6 others 2012 CLD 1036.

5. Mrs. Samia Faiz Durrani, learned counsel for the plaintiff, vehemently denied the assertion that the plaintiff has not complied with the mandatory requirement of section 9(2) ibid, or that the Suit is liable to be dismissed on such ground. She submitted that the title 'Senior Officer' comes within the ambit of 'Principal Accountant' defined in section 2(8) of the Act of 1891. The learned counsel pointed out that, in their application for leave to defend, the defendants had admitted the entire amount of finance availed by them from the plaintiff. She argued that such admission on the part of the defendants is sufficient for passing a decree against them. In the end, it was urged that since the application for leave to defend has been dismissed, a decree be passed forthwith in favour of the plaintiff against the defendants under subsection (11) of section 10 of the Ordinance.

6. In support of her submissions, the learned counsel for the plaintiff cited and relied upon the cases of (1) Equity Participation Fund v. Messrs Abbrasive Products Co. Limited and 4 others, 2012 CLD 971, (2) Habib Metropolitan Bank Ltd. v. Mian Abdul Jabbar and another, 2013 CLD 88, (3) National Bank of Pakistan v. Messrs Apollo Textile Mills Limited and 4 others, 2012 CLD 189, (4) Silk Bank Limited v. Messrs Dewan Sugar Mills Limited, 2011 CLD 436, (5) Habib Bank Limited through Authorized Attorney v. Haidri Homes through Partners and 3 others, 2012 CLD 2016, and (6) Mrs. Jawahar Afzal v. Messrs United Bank Limited, 2003 CLD 119.

7. I have heard the learned counsel for the parties at length, and have also examined the law cited by them at the bar as well as the material available on record. Regarding the defendants' objection that the plaintiff has charged markup over markup, I am of the considered view that at this stage the defendants have no right to raise any such objection that was raised by them in their application for leave to defend, as their said application has already been dismissed. Even otherwise, not a single entry or illustration was pointed out by the defendants in their application for leave to defend, or at the time of the final hearing, to show any incorrect or illegal debit entry in the statement of account filed and relied upon by the plaintiff, or any discrepancy therein, or any such amount that was allegedly charged by the plaintiff as markup over markup. Such omission on the part of the defendants is significant and has a direct impact on the objection raised by them regarding the authenticity and admissibility of the plaintiff's statement of account on the ground that the same is not in accordance with section 2(8) of the Act of 1891 and section 9(2) of the Ordinance. It is well-settled that a statement of account carries presumption of truth by virtue of section 4 of the Act of 1891 when the entries therein are not rebutted with cogent reasons. In this context, I would like to refer to the cases of Sh. Abdul Sattar Lasi v. Federation of Pakistan through Secretary, Ministry of Law, Justice and Parliamentary Affairs, Islamabad and 6 others, 2006 CLC 18 (Division Bench); Messrs International Traders and others v. Union Bank Limited, 2003 CLD 1464, (Division Bench); Messrs United Steel Corporation, Moman Pura, Darughawala, G.T. Road, Lahore and 4 others v. Muslim Commercial Bank Limited, 1999 YLR 2071 (Division Bench); Grindlays Bank Limited v. Messrs Cheap John, 1992 CLC 1108 and United Bank Ltd., v. Messrs Sartaj Industries through Qaisar Iqbal, Managing Partner and 6 others, PLD 1990 Lahore

99. Similar view was taken very recently by an Hon'ble Division Bench of the Lahore High Court in the case of Habib Bank Limited supra, relied upon by the learned counsel for the plaintiff, wherein it was held that since no entry of the statement of account had been challenged and no rebuttal of the statement of account was on record, the statement of account prepared and maintained by the financial institution was correct and the Suit was maintainable.

8. Dealing specifically with the objection of the learned counsel for the defendants that the statement of account filed by the plaintiff is certified by its Senior Officer, who is neither the principal accountant nor is the manager of the plaintiff, and as such does not fall within the definition of the persons authorized under section 2(8) ibid to certify a statement of account, I may refer to the case of Muhammad Akmal and 9 others v. Messrs Grindlays Bank Ltd. and another, 1987 CLC 2353. In the cited case, an objection was raised that the name of the Manager of the respondent-bank was not mentioned in the statement of account as required under section 2(8) of the Act of 1891. The objection was rejected by an Hon'ble Division Bench of the Lahore High Court by holding that since the Manager of the respondent-bank himself appeared in the witness-box and proved the said document, mere omission of his full name would not lessen the authenticity of the contents of the statement of account and would not relegate it to such a position as it should be ignored from consideration. It was further held that there was no evidence that the outstanding debt had been discharged by the appellant/customer. In the instant case also, the Senior Officer of the plaintiff, who has verified the plaint and has certified the statement of account, appeared in the witness-box, and proved the statement of account by producing it in his evidence. Such situation arose as the Suit was listed for final disposal and the plaintiff's witness/Senior Officer had filed his affidavit- in-ex parte proof when the defendants did not file their application for leave to defend the Suit within the prescribed period of limitation.

9. It may be observed that every financial institution has a principal accountant and managers, but it is not necessary that the said titles or designations are allocated to such officers or are mentioned with their names. Moreover, there is no legal bar if a senior officer, who, in the opinion of the financial institution, is qualified and is capable of handling and supervising the accounts, is assigned the task, charge and responsibility of a principal accountant or manager. It is not the case of the defendants that the officer who has certified the statement of account is not a senior officer, or that the statement of account does not bear any certification. On the contrary, it is an admitted position that the said officer is the Senior Officer and attorney of the plaintiff, and the power of attorney executed in his favour by the plaintiff is on record. In any organization, a Senior Officer is certainly deemed to be senior than a manager, or at least equivalent to him.

10. The case of Messrs Soneri Bank Limited supra relied upon by the learned counsel for the defendants, is not applicable to the instant case as the plaintiff financial institution in the cited case did not specify the names or titles of the signatories who had certified the statement of account. Whereas in the instant case, the name and title of the signatory who has certified the statement of account on behalf of the plaintiff, is admittedly mentioned therein. Likewise, the case of Pak Kuwait Investment Company (Pvt.) Limited supra, relied upon by the learned counsel for the defendants, is also not applicable to the instant case, as in the cited case the plaintiff financial institution had maintained discreet silence as to the employment status and/or position held by the person at the time of filing of the Suit, who had certified the statement of account. The cases reported as 2003 CLD 931, 2007 CLD 188 and 2010 CLD 651 supra, relied upon by the learned counsel for the defendants, are not relevant in the facts and circumstances of this case, as statements of account were not filed along with the plaint in the said cases by the plaintiffs/financial institutions, and in one of the said cases, the same was filed subsequently.

11. It is my considered opinion that the statement of account filed by the plaintiff cannot be discarded and the plaintiff cannot be non-suited only for the reason that instead of the titles 'Principal Accountant' or 'Manager', the title 'Senior Manager' is mentioned with the name of the plaintiff's officer who has certified the statement of account, especially when the statement of account does contain a certification at the foot. In view of the above discussion, the objection raised by the defendants is hereby rejected, and it is held that the statement of account filed by the plaintiff fulfills the requirements of section 2(8) of the Act of 1891 and section 9(2) of the Ordinance.

12. The plaintiff has claimed that defendant No.1 executed an 'Agreement for Finance on the Basis of Markup on Price Term Finance' dated 30-6-2010, whereby they availed a facility of Rs.50,000,000.00 from the plaintiff with three months KIBOR plus 4% for a period of 60 months commencing from 4-2-2010 and, undertook to repay an amount of Rs.81,030,200.00 to the plaintiff as per the repayment schedule attached to the said agreement. In order to secure the repayment of the said amount to the plaintiff, defendant No.1 executed a promissory note dated 30-6-2010 in the sum of Rs.81,030,200.00, and delivered the same to the plaintiff. In order to further secure the repayment of the promised amount, defendant No.2 executed his personal continuing guarantee dated 30-6-2010, guaranteeing payment of the said amount of Rs.81,030,200.00 to the plaintiff on behalf of defendant No.1. It is important to note that the defendants have not denied the execution of the finance agreement, and in their application for leave to defend, it was categorically admitted by them that the finance facility of Rs.50,000,000.00 was availed by them from the plaintiff. It is also important to note that it was not claimed by the defendants, either in their application for leave to defend or at the time of final hearing, that any repayments were made by them. In the case of Smooth Pharmaceuticals (Pvt.) and others v. Bank of Khyber, 2005 CLD 120, the Suit was decreed against the defendant, as it did not deny its liability in its application for leave to defend the Suit. It was held by the Hon'ble Supreme Court that non-disputing of liability by the defendant would be sufficient to draw conclusion that decree had been passed on admissible documents.

13. The plaintiff has alleged that the defendants failed in fulfilling their obligation, as the principal amount and the markup thereon have not been paid by them as per the terms and conditions of the finance agreement. In compliance of subsection (3) of section 9 of the Ordinance, the plaintiff has disclosed in paragraph-9 of the plaint details of the instalments of the principal amount payable by the defendants, with due dates; and, the markup payable by them, with due dates. It has been specifically stated by the plaintiff that no amount has been paid at all by the defendants either towards the outstanding principal amount or on account of the outstanding markup. According to the above statement of account disclosed in paragraph 9 of the plaint, which is verified on oath, the defendants are liable to pay to the plaintiff a sum of Rs.63,181,728.00, including the entire principal amount of Rs.50,000,000.00 and Rs.13,181,728.00 towards markup. I have noticed that the above disclosure in the plaint by the plaintiff in terms of section 9(3) of the Ordinance, does not contain any amount on account of liquidated damages, penalties or any other penal charges. The statement of account filed along with the plaint reflects exactly the same position. Therefore, the entries appearing in the statement of account and the claim made in this Suit fully corroborate each other.

14. In view of the above, and also as the defendants have not denied the execution of the finance agreement and the availing of finance facility and have not alleged any repayment, the claim of the plaintiff must succeed. Subsection (11) of section 10 of the Ordinance provides that where the application for leave to defend is rejected, or where the defendant fails to fulfil the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant. The Banking Court can exercise jurisdiction under subsection (1) or under subsection (11) of section 10 ibid and pass a decree thereunder in favour of the plaintiff, only when summons in the prescribed form are issued and served on the defendant as provided in subsection (5) of section 9 of the Ordinance ; the plaint is compliant of the mandatory requirements of Subsection (3) of section 9 of the Ordinance; the allegations of fact in the plaint disclose a subsisting cause of action against the defendant ; the Suit is maintainable by all standards; and, the plaintiff is able to show that he is entitled to the relief prayed for against the defendant. If any one of the above conditions precedent for a competent Suit are lacking, the plaintiff shall not be entitled to a decree either under subsection (1) or under subsection (11) of section 10 of the Ordinance. Since none, of the above conditions precedent is lacking in this Suit and the defendants' application for leave to defend has been dismissed, the plaintiff is entitled forthwith to a judgment and decree in its favour against the defendants under section 10(11) ibid.

15. Resultantly, the Suit is hereby decreed with costs jointly and severally against the defendants in the sum of Rs.63,181,728.00 (Rupees sixty three million one hundred eighty one thousand seven hundred and twenty eight only), with cost of funds thereon at the rate prescribed by the State Bank of Pakistan, from the date of default till realization of the entire decreed amount. No decree can be passed for the sale of all the present and future plant, machinery, equipment and the immovable property belonging to defendant No.1, as prayed for by the plaintiff, as the same are not hypothecated or mortgaged with the plaintiff. However, the plaintiff will be at liberty to enforce its rights in respect thereof as the decree holder in accordance with law. KMZ/I-2/Sindh Suit decreed.