2025 PLP 1344 (CLD)

ZAFAR AHMED RAJPUT, J.

This First Appeal, under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("Ordinance of 2001") is directed against the judgment and decree dated 02.05.2017 and 11.05.2017, respectively, whereby the Banking Court No. II at Karachi ("Trial Court") decreed Suit No.76 of 2013 (old No. 299/2013) in favour of the Respondent/plaintiff-Bank.

2. Briefly stated facts of the case are that the Respondent filed the aforesaid Suit for recovery of Rs. 7,146,606-05, alleging therein that the Appellants,' defendants availed the finance facility under purchase of property on Diminishing Musharika Basis amounting to Rs.5,200,000/- on monthly installments of Rs.74,639/- for a period of 14 years, vide Banking Arrangement Letter, dated 05.07.2007 by executing Diminishing Musharika Agreement in favour of the Respondent. In order to secure the finance facility, the Appellant No.1 mortgaged her immovable property bearing Flat No. G. Ground Floor, admeasuring 1170 square feet, situated in Shakeel Homes, Plot No.4-D, Black-2, PECHS, Karachi, by executing Memorandum of Deposit of Title Deeds, and thereby she deposited title documents of the said property and executed General Power of Attorney in favour of Respondent. The Appellants utilized the said facility but failed to repay the outstanding dues, with the result a sum of Rs.7,146,606-05, became due against them. Consequently, the Respondent filed the suit in the Banking Court to recover said amount from the Appellants.

3. Having received the case file through distribution, the learned Trial Court admitted the suit and issued notices to the appellants through all modes. In response to the publication, the Appellants appeared along with their advocate and filed an application under section 10 of the Ordinance of 2001, which was dismissed by the Trial Court for non-prosecution vide order, dated 07.03.2017.

4. Learned counsel for the Appellants has mainly contended that the Respondent's suit was not maintainable in law as the Respondent failed to annex the Statement of Accounts; that the learned Trial Court has failed to appreciate that the Statement of Accounts attached to the plaint does not disclose true picture of the accounts, and the same is not in accordance with section 2(8) of the Bankers' Books Evidence Act, 1891 ("Act of 1891") and section 9(2) of the Ordinance of 2001; hence, no presumption can be attached under section 4 of the Act of 1891; that the Trial Court has failed to appreciate that the suit was filed by unauthorized person(s) having no valid authority to file the same.

5. On the other hand, learned counsel for the Respondent has maintained that the Statement of Accounts is duly certified as per the Act of 1891 and the suit was filed by the duly authorized representative of the Respondent Bank; that the Appellants failed to pursue their application for leave to defend, consequently, the same was dismissed for non-prosecution; that the judgment and decree passed by the Trail Court are liable to be maintained.

6. Heard. Record perused.

7. It may be observed that section 9(2) of the Ordinance of 2001 provides that the plaint shall be supported by a Statement of Account which shall be duly certified under the Act of 1891. The term "Statement of Account" has been defined in "Encyclopedia of Banking of Finance" by Glemn G. Maunn, F. L. Garcia and Charles J. 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 customer to verify, the Bank's record with his own. If difference occurs, they can then be investigated when the customer reports back through the reconcilement blank usually enclosed with the statement".

8. It has already been deliberated and held by this Court in the case of Elbow Room and another v. MCB Bank Limited (2014 CLD 985), as under:- ... "The Legislature has used the word "supported" as employed in section 9(2) of Ordinance, 2001; which means that if the suit is not supported by the Statement of Account, it would not be competent. The word "support" read in the mandatory perspective of the word "shall" makes the plaint filed by a financial institution, totally dependent upon duly certified statement of account on the "support" of which a plaint may stand and sustain as per section 9(1) and (2) of Ordinance, 2001. In the case of Apollo Textile Mills Ltd. v. Soneri Bank Limited (2012 CLD 337) the Honourable Supreme Court of Pakistan has observed that: "The rationale of the schematic discipline of Ordinance of 2001 is evident. A banking suit is normally a suit on Accounts which are duly ledgered and maintained compulsorily in the books of Accounts in terms of the laws, rules and banking practice. As such instead of leaving it to the opinion of the parties to make general assertions on Accounts, the Ordinance binds both the sides to be absolutely specific on accounts. The parties to a suit have been obligated equally to definitively plead and to specifically state their respective accounts". Therefore, the statement of account is a basic document that is filed by a financial institution in discharge of its mandatory duty under section 9 (2) of Ordinance, 2001. If such statement of account is not filed along with the plaint, a customer will obviously remain totally unaware of the amount advanced, mark-up charged and the mode of calculation of account, nature of default and the actual amount of Bank's claim against the 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 enable the customer to seek and obtain leave to defend the suit.

8. It follows from the bare perusal of the provision of section 2(8) of the Banker's Books Evidence Act, 1891 that a certificate, which is to be given at the foot of the copy of statement of account, so as to make it certified copy of the statement of accounts, must state the following facts:- (i) it is true copy of the such entry, (ii) such entry is contained in one of the ordinary's books of bank, (iii) it was made in the usual and ordinary course of business, (iv) such book is still in the custody of the bank, (v) it must be dated; and (vi) subscribed by the principal accountant or manager of the bank with his name and official title.

9. In the case in hand, we have observed that the Statement of Account filed by the Respondent-Bank with plaint in the suit, being incomplete and unsubscribed by the principal accountant or manager, does not fulfill the mandatory requirement' of the provisions of section 9(2) of the Ordinance of 2001 and sections 2(8) and 4 of the Act of 1891; therefore, the same does not qualify as a "Statement of Account" duly certified under the Act of 1891, as it does not contain the details of entire transactions between the respondent Bank and appellants/customer during finance limit period. Besides, it is undated and has been subscribed allegedly by an attorney of the Respondent-Bank instead of being subscribed by its principal accountant or the manager, as required under section 2(8) of the Act of 1891, and contrary to the claim of Respondent-Bank, it shows the balance "0.00" on 17th September, 2008 and on subsequent dates up to 30th September, 2012. We are of the view that it is only the principal accountant or the manager of the financial institution who alone can certify the statement. Hence, a Statement of Account signed/subscribed by the Attorney of the bank cannot be treated as a duly certified copy within the meaning of section 2(8) of the Act of 1891. It has been held in the case of United Bank Limited v. M/s Ilyas Enterprises through Proprietor Mr. Ilyas Malik and 2 others (2004 CLD 1338) that where the certification of the gateman of accounts is found not to be in accordance with the definition of "certified copy". under section 2(8) of the Act, 1891, such statement of accounts are not to be treated as certified copies of the entries of the books of account. It has also been held in the case of M/s C.M. Textile Mills (Pvt.) Limited through Chairman v. Investment Corporation of Pakistan (2004 CLD 587) that the document which is merely a certificate of balance cannot be treated or defined as statement of account and that in the absence of statement of account showing all the debits, credits, and dates thereof as entered by the Banking Company in the ledgers and books of accounts from the disbursement of loan amount till the date of the suit, no presumption of truth or correctness can be attached to the such certificate of balance and the same is not admissible in evidence and has no evidentiary value.

10. It appears that the learned Trial Court has ignored the mandatory provisions of section 9(2) of the Ordinance of 2001 and sections 2(8) and 4 of the Act of 1891 while decreeing the suit of the Respondent and has wrongly treated the Break-up of Account as Statement of Account which does not contain the requisite information and detail as required under proper statement of account, hence, the impugned judgment/decree passed by the Trial Court is not sustainable in law.

11. For the foregoing reasons, we held as under:- (i) the Judgment and Decree dated 02.05.2017 and 11.05.2017. respectively, and Order dated 07.03.2017, passed on application for leave to defend the suit are hereby set aside; (ii) the case is remanded to the Banking Court No. II, Karachi to decide the application of the appellants for leave to defend and the suit afresh in accordance with the law; (iii) the respondent shall be at liberty to file proper statement of account in terms of Section 9(2) of the Ordinance of 2001 and Sections 2(8) and 4 of the Act of 1891, and in such case, the appellants may raise/file such objections thereon as they may deem fit.

12. The appeal is allowed in aforesaid terms with no order as to costs. MQ/S-35/Sindh Appeal allowed.