2014 PLP 985 (CLD)

ZAFAR AHMED RAJPUT, J.

This First Appeal is directed against the judgment and decree dated 5-8-2013 and 19-8-2013, respectively, passed by the Banking Court No. II, Karachi, in Suit No.438 of 2011, whereby the suit filed by the respondent/plaintiff bank was decreed as prayed. Both the learned counsel for the parties have agreed for disposal of instant appeal at Katcha Peshi stage.

2. Briefly stated the facts of the case are that the respondent bank is a "financial institution" while the appellant No. is a proprietorship firm of the defendant No.2, who obtained Running Finance Facility from the respondent bank amounting to Rs.20,00,000 under Sanction Advice dated 7-8-2008 and executed various documents i.e. Agreement for Financing, Guarantee, Promissory Note, Letter of Hypothecation and Undertaking/Indemnity etc. in favour of the respondent bank. The said finance facility was expired on 31-5-2009. The appellant No.2 availed and utilized the said finance facility but failed to fulfil his obligation to repay the outstanding, liabilities; therefore, the respondent bank filed Suit No. 438 of 2011 for recovery of Rs. 1,945,545=40 along with cost of funds, under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (Herein after referred to as the "Ordinance, 2001") in the Banking Court No, II, Karachi.

3. The appellants/defendants filed an application for leave to defendant, under section 10 of the Ordinance, 2001 before the Banking Court wherein the claim of respondent/plaintiff bank for Rs.19,45,545-40 and certain facts, narrated in the plaint were seriously controverted, legal objections were raised and unconditional grant of leave to defend was prayed. However, the said application was dismissed by the Banking Court No. II, Karachi vide order dated 2-10-2012 and thereafter the respondent/plaintiff's suit was decreed vide Judgment and Decree dated 5-8-2013 and 19-8-2013, respectively, which has been impugned by the appellants/defendants in this Appeal.

4. Learned counsel for the appellants has contended that the learned Banking Court has seriously erred in law and facts while passing impugned Judgment and Decree as the suit of the respondent bank was not maintainable in the present form as the mandatory provisions of subsections (2) of section 9 of the Ordinance, 2001 were not complied with. It has been further contended that the statement of account allegedly filed by the respondent bank with the plaint does not reflect the entries of debit and credit in respect of the principal amount, markup and amount deposited/repaid by the appellants from time to time, therefore, it does not qualify as the "statement of account" defined in terms of sections 3 and 4 of the Banker's Book Evidence Act, 1891. Per learned counsel the alleged statement of account filed by respondent bank was merely a "break-up of liabilities" which did not contain the relevant entries as required to be mentioned in terms of sections 3 and 4 of Bankers' Books Evidence Act, 1891, nor the same did meet the conditions of section 9(2) of the Financial Institutions (Recovery of Finance) Ordinance, 2001, hence the suit was liable to be dismissed with cost for non-compliance of the mandatory provisions of law. It has been contended that the appellants deliberately did not file the proper statement of account in order to justify the false claim of recovery of the amount without giving credit/adjustment of the amount paid by the appellants towards their liability from time to time. In this regard the learned counsel has invited our attention towards four deposit slips dated 24-6-2011, 12-7-2011, 9-2-2011 and 14-12-2010, filed by the appellants with their application for leave to defend, each of which reflects payment of Rs.10,000 (total Rs. 40,000) by the appellants but the said amount has not been shown and adjusted in the alleged statement of account. In support of his arguments, learned counsel for the appellants has relied upon the cases of Bankers Equity Limited and 5 others v. Messers Bentonite Pakistan Limited through Chief Executive and 7 others (2010 CLD 651), Apollo Textile Mills Ltd. and others v. Sbneri Bank Ltd. (2012 CLD 337) and Messrs C. M. Textile Mills (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan (2004 CLD 587).

5. Conversely, the learned counsel for the respondent bank while supporting the impugned judgment and decree has opposed the contentions of the learned counsel for the appellants and argued that the respondent bank has filed a proper statement of account, which hears the entries of principal limit, the amount disbursed, amount paid by the appellants, markup and the total recoverable amount, which is also duly certified under the Bankers' Books Evidence Act, 1891. He has further stated that the respondent bank has no objection if the amount of Rs.40,000=00 paid by the appellants may be allowed to be adjusted, whereas, remaining, amount is still liable to be paid by the appellants in terms of impugned Judgment and Decree.

6. Heard both the learned counsel for the parties, perused the record and the impugned Judgment and Decree passed by the Banking Court in the instant case.

7. Section 9(2) of the Ordinance, 2001 provides that the plaint shall be supported by a statement of account which shall be duly certified under the Banker's Books Evidence Act, 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". The Legislature has used the word "supported" as employed in section 9(2) of Ordnance, 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. So far this case is concerned, we have observed that the statement of account filed by the respondent bank with plaint in the suit, which appears at page 103 of the instant appeal in a typed form on a white paper, being incomplete, slipshod, sketchy and unsubscribed by the principal accountant or manager, does not fulfil the mandatory requirement of the provisions of section 9(2) of the Ordinance, 2001 and sections 2(8) and 4 of the Banker's Book's Evidence Act, 1891 and therefore, the statement of account filed by the respondent bank does not qualify as a "statement of account" duly certified under the Banker's Books Evidence Act, 1891, as it does not contain the details of entire transactions between the respondent Bank and appellants/customer during finance limit period. It also does not bear any date and particulars with regard to the sanction and disbursement of the finance facility, payment of liabilities, date and period of charging mark up. Besides, the Statement of Account is undated and has been subscribed by the Attorney of the respondent bank instead of being subscribed by the principal accountant or the manager of the respondent Bank, as required under section 2(8) of the Bankers' Books Evidence Act, 1891. 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 he treated as a duly certified copy within the meaning of section 2(8) of the Bankers' Books Evidence Act, 1891. It has been held in the case of United Bank Limited v. Ilyas Enterprises through Proprietor Mr. Ilyas Malik and 2 others (2004 CLD 1338) that where the certification of the statement of accounts are 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 Messrs 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. We have also gone through the order passed by the learned Banking Court dated 2-10-2012, whereby, application for leave to defend the suit, filed by the appellants, was dismissed. It appears that the learned Banking Court has ignored the mandatory provisions of section 9(2) of the Ordinance, 2001 and sections 2(8) and 4 of the Banker's Books Evidence Act, 1891 while dismissing the said application and has wrongly treated the break-up of liabilities as statement of account which did not contain the requisite information and detail as required under proper statement of account hence, the impugned judgment/decree passed by the Banking Court is not sustainable in law.

11. For the foregoing reasons, we hold as under:-- (i) the Judgment and Decree dated 5-8-2013 and 19-8-2013, respectively, and Order dated 1-10-2012, 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 Financial Institutions (Recovery of Finances) Ordinance, 2001 and sections 2(8) and 4 of the Bankers' Books Evidence Act, 1891, and in such case, the appellants may raise/file such objections thereon as they may deem fit. The appeal is allowed in aforesaid terms with no order as to costs. KMZ/E-2/Sindh Appeal allowed.