2015 PLP 236 (CLD)

M. SOHAIL IQBAL BHATTI, J.

Through this appeal, the appellants have challenged the judgment and decree dated 1-11-2008 passed by Judge Banking Court No.IV, Lahore (hereinafter referred to as "Banking Court") to the tune of Rs:94,52,886/05.

2. The facts of the case are that respondent/plaintiff bank filed a suit for recovery of Rs:94,52,886/05 with costs and cost of funds against the appellants/defendants. In the plaint filed by the respondent/plaintiff bank, it was averred that appellant namely Sheikh Muhammad Jameel being a sole proprietor of Messrs G.A. Steel Re-rolling Mills while availing a running finance facility made a request to respondent/plaintiff bank for grant of another finance facility to be advanced to Messrs Lasani Builders (appellant No.1) through letter dated 9-1-2001; subsequently the appellant made another request for enhancement of the finance facility which had not yet been disbursed; the competent authority approved a running finance facility of Rs:8.500 (Million) through sanction letter dated 1-8-2001 (it is not out of place to mention here that the sanction letter specifically provides that the approval is effective from 23-2-2001). The appellant/defendant No.2 accepted the terms and conditions mentioned in the sanction letter and executed all the requisite charge and security documents.

3. While the case of the appellant was in the process of approval, the appellant/defendant No.2 requested for partial availing of the finance and deposited original title documents and also created an equitable mortgage over the property which was provided as a collateral for the finance facility in respect of which the appellant/defendant No.2 had applied and the same was under process. The request of the appellant/defendant No.2 was acceded to and consequently the appellant/defendant No.2 withdrew three different amounts through cheques from the account in anticipation of approval of finance; which was subsequently approved through sanction letter dated 1-8-2001. It was further averred in the plaint that appellant/defendant No.2 executed all the charge/security documents in favour of the respondent/plaintiff bank.

4. The appellants/defendants filed a separate suit titled "Messrs Lasani Builders v. Bolan Bank Limited etc." (Suit No.12 of 2002) praying for a declaratory decree to the effect that outstanding amount of Rs:86,47,397/42 shown as an outstanding amount in account No.1668-3 against the appellants/defendants be declared as void, as the outstanding entry was a result of fraud and collusion. The prayer was also made that respondent (Bolan Bank Limited) be directed to return the property documents which are mentioned in schedule-II of the Memorandum of Deposit of Title Deeds. At the same time, another suit titled "Messrs G.A. Steel Re-rolling Mills v. Bolan Bank Limited." (Suit No.13 of 2002) was also filed and a decree for redemption the mortgaged property was sought. All the three suits were contested by the respective defendants. The Banking Court granted leave to defend the suit in all three above mentioned suits through order dated 10-9-2002 and thereafter consolidated all the above mentioned suits and framed following consolidated issues:-- Issues:-- (1) Whether the plaintiff bank is entitled to recover Rs:94,52,886 from the defendant (Messrs Lasani Builders and others)? OPP (2) Whether the suit has been filed by unauthorized person? OPP (3) Whether the suit is incompetent? OPD (4) Whether the plaintiff's suit was brought as counter blast of the complaint lodged by the defendants in FIA and also the suit in this Court? if so effects? OPD (5) Whether the plaintiff had obtained signatures of Sh. Jameel Ahmad-defendant on three Blank cheques. Two Promissory Notes, two Agreements for Financing, two Letters of Hypothecation and one Memorandum of Deposit of Title Deeds appended with the plaint respectively at pages 23, 25, 27, 29, 31, 33 and 60? OPD (6) Whether the defendants (Messrs Lasani Builders did not avail the finance facility of Rs:86,47,392.42 in account No.1668-3 maintaining with the plaintiff bank? OPD (7) Whether the properties mentioned in the Memorandum of Deposit of Title Deeds were not duly mortgaged by Sh. Jameel Ahmad-defendant (situated at Ghazi Road and Sarwar Road, Cantt, Lahore? Onus on defendants (Lasani Builders). (8) Whether the Statement of Account filed by the plaintiff bank is fake and forged document? OPD (Lasani Builders). (9) Whether the defendants (Messrs Lasani Builders and others) are entitled for return of the Title Documents? OPD (10) Whether the suit of the defendants (Lasani Builders) is property valued for the purpose of Court Fee and jurisdiction? OPP-Bank (11) Whether the defendants (Messrs Lasani Builders) are entitled to the relief claimed for? OPD (12) Whether the defendant (G.A. Steel Relolling Mills) has no cause of action against the plaintiff and has come with unclean hands? Effect? OPP (13) Whether the suit property of defendant (G.A. Re-rolling Mills) stood mortgaged in favour of the plaintiff-bank as security against amount of Finance? Onus on plaintiff. (14) Whether the suit of G.A. Steel Re-rolling Mills is competent and maintainable? OPP (15) Whether the defendant (G.A. Steel Re-rolling Mills) is entitled to the decree as prayed for in the plaint? OPP (16) Relief.

5. The "Banking Court" after adducing of evidence of both the parties and giving its elaborate findings on all the issues, decreed the suit for recovery filed by the respondent/plaintiff bank amounting to Rs.94,52,886/05 against the appellants/defendants jointly and severally with costs and cost of funds from the date of default i.e. 1-1-2002 till final realization of the decretal amount. The suits filed by Messrs G.A. Steel Re-rolling Mills and Messrs Lasani Builders were dismissed with costs.

6. The learned counsel for the appellants while advancing arguments in support of his appeal submitted that the impugned judgment and decree is contrary to law and facts of the case. It is further argued that the "Banking Court" has committed error while not attending to the objection i.e. non-existence of finance. It has been further argued that no formal sanction letter regarding sanction of finance facility was in the field in favour of Messrs Lasani Builders when the amount of Rs.8.500 (Million) was allowed to be disbursed by the appellants/defendants. It has been further argued that amount of Rs.2.500 (Million), Rs.3.500 (Million) and Rs.4.000 (Million) which were withdrawn from the account on 23-2-2001 and 3-7-2001 were not in corroboration with any sanction advice, hence it would be presumed that no relationship of customer and financial institution existed at the time of disbursal of the amounts mentioned above. It has been further argued that the sanction letter dated 21-8-2001 regarding approval of finance of Rs.8.500 (Million) instead of Rs.20.000 (Million) was not accepted by the appellants/defendants and thus prayed that this appeal be accepted and the judgment and decree dated 1-11-2008 be set aside. On the other hand, the learned counsel for the respondent/plaintiff bank vehemently supported the impugned judgment and decree.

7. We have considered the arguments advanced by learned counsels for the parties.

8. The learned counsel for the appellants has mainly hinged his arguments on the premise that since no formal approval was in the field at the time when the amount was withdrawn through three different cheques from account No.1668-3 (in the name of Messrs Lasani Builders), therefore no relationship of banker and customer existed between the parties.

8. We are of the opinion that the appellants filed an application for the grant of running finance facility of Rs.10.000 (Million) and in anticipation of the grant of the finance facility, executed all the charge documents and also provided the collateral securities in the form of properties which were validly mortgaged with the respondent/plaintiff bank. Since, all the charge documents had been executed and valid security had been provided to the respondent/plaintiff bank; the appellants/defendants were allowed to partially avail the finance facility in anticipation of its approval. It is also an admitted fact that the amount was disbursed and subsequently withdrawn by the appellant/defendant No.2 through three different cheques which were presented by him. The appellant/defendant No.2 while appearing as D.W.1 admitted that he had signed all the documents Exh.P.A to Exh.P.N. There is also no denial to the fact that appellant/defendant No.2 withdrew the amount through three different cheques Exh.P.BB, Ex.P.CC and Ex.P.DD from account No.1668-3.

10. There is no denial to the fact that at the time of withdrawal of amounts from the account of Messrs Lasani Builders, the appellant/defendant No.2 get executed all the charge documents including the finance agreement and promissory note and has also provided collateral security to the respondent/plaintiff bank.

11. The terms finance has been defined in section 2(d) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which is reproduced as under:-- (d) "finance" includes-- (i) ............................................................................ (ii) ............................................................................ (iii) ............................................................................ (iv) a loan, advance, cash credit, overdraft, packing credit, a bill discounted and purchased or any other financial accommodation provided by a financial institution to a customer; (v) ............................................................................ (vi) ............................................................................

12. The perusal of definition of word finance in itself shows that the term finance is an exhaustive term and includes every conceivable transaction between a borrower and a Financial Institution even a financing agreement which obliges a banking company and a customer to do certain acts constitutes the relationship of a customer and a banker/financial institution between the parties. As discussed above appellant's executed all the charge documents in favour of respondent-bank and in anticipation of grant of finance facility withdrew an amount of Rs.8.5 million and the withdrawal of this amount was given ex-post facto approval by the competent authority through sanction letter dated 23-7-2001.

13. In our view, the issuance of approval letter is an internal arrangement of the financial institution and even if, at the time when the amount was withdrawn through three different cheques, there was no formal approval; the same was done through sanction letter dated 23-7-2001 which was given effect from 23-2-2001 i.e. the date from which appellant/defendant No.2 started withdrawing the amounts from the account of Messrs Lasani Builders. The appellant/defendant No.2 has not denied that cheques Exh.P.BB, Exh.P.CC and Exh.P.DD were not signed by him, which leads us to this conclusion that this amount had been withdrawn by the appellant/defendant No.2. The appellant in this case cannot wriggle out of his liability/obligation to repay the amount which had been withdrawn by him through three different cheques on the ground that since there was no formal sanction letter, therefore, no obligation or liability would ensue; as the facility availed by the appellant was sanctioned through sanction letter dated 23-7-2001 and was given effect from 23-2-2001.

14. We are not in agreement with the argument advanced by the learned counsel for the appellants that he had infact applied for the finance facility of Rs:20.000 (Million) but when through sanction letter dated 23-7-2001, a finance facility of Rs.8.500 (Million) was advanced; the appellant/defendant No.2 through letter received by the respondent/plaintiff bank on 22-8-2001, refused to accept the sanction letter. In fact, the grant of finance facility is prerogative of the financial institution and the finance facilities are not allowed at the whims of the customer as the financial institution has to take into consideration different financial aspects of the case. The letter issued by appellant/defendant No.2 regarding non acceptance of the finance facility has no bearing upon the recovery suit filed by the respondent/plaintiff bank as at that time the appellant had already availed an amount of Rs.8.500 (Million). We are constrained to observe that appellants had filed a separate suit bearing No.12 of 2002 praying for a declaration to the effect that an outstanding amount of Rs.86,47,397/42 in A/c No.1668-3 be declared as void and result of fraud and collusion; the suit filed by the appellants has been dismissed but the appellants have not challenged the decree passed in the above mentioned suit. Meaning thereby the appellants have themselves acquiesced to the judgment and decree passed by learned Banking Court-IV, Lahore.

15. For what has been discussed above, we are not inclined to interfere with the well reasoned judgment and decree passed by the "Banking Court". Resultantly, this appeal is dismissed. MH/L-14/L Appeal dismisse