2015 PLP 1964 (CLD)

SHAHNAWAZ TARIQ, J.

Through the captioned First Civil Appeal, appellants Messrs Pacific Plastic Cottage Industry, through its proprietor and 2 others have agitated order dated 26-6-2014, passed by the learned Banking Court No.2, Karachi, whereby application filed by the appellants under section 12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred as "the F.I. Ordinance, 2001") was dismissed.

2. The necessary facts spelt out from instant appeal are that appellants are proprietorship concern and carrying on their business under the name and style of Messrs Pacific Plastic Cottage Industry, whereas appellants Nos.2 and 3 are its sole proprietors and co-borrowers as well as mortgagers. On the request of the appellants, respondent bank granted running finance facility to them to the extent of Rs.4,000,000 and on the terms and conditions as dilated in agreement. In addition to the above agreement, to secure above finance facility, the appellants signed and executed agreement for finance, general finance and collateral agreement, promissory note, letter of guarantee, agreement of mortgage, letter of continuity, letter of set off and letter of undertaking in favour of the respondent bank. To further secure the above finance facility, the appellant No. 2 mortgaged his immovable property bearing House No.A-16, situated at Block-18, KDA Scheme No.24, admeasuring 196 Sq. Yds, Gulshan-e-Iqbal, Karachi, by way of depositing the original title documents including memorandum of deposit of title deeds, mortgaged deed, general power of attorney, deed of assignment and partnership, indenture of sub lease, acknowledgment of possession, allotment order and general power of attorney with the respondent bank. Subsequently, appellants again approached the bank and requested for renewal of above facility, and the bank after negotiations and due consideration renewed the above facility against the execution of fresh set of charge documents dated 7-8-2008, in favour of the respondent bank. Thereafter appellants again requested for further renewal of the loan facility but further facility was not renewed by the respondent bank, as appellants had not fulfilled their obligations. It is further averred that appellants had fully availed and utilized the above loan facility but failed to fulfill their legal contractual obligations with the result a sum of Rs.5,435,746.80 along with the cost of funds and suit, till realization of the entire decretal amount, constraining the respondent to file suit against the appellants in the Banking Court for recovery of the above outstanding amount.

3. Learned counsel for appellants, inter alia, contended that notice was not served upon the appellants as they do no subscribe the newspapers daily Jung and Dawn. He further contended that appellant only came to know through the bank authorities with whom the appellant No.2 met on 5-3-2013, and they informed him about the institution of the suit for recovery by the bank against them, and thereafter appellants engaged the present counsel, and filed application under section 12 of the F.I. Ordinance, 2001, on 21-3-2013, but the same was dismissed without considering the material facts vide order dated 26-6-2014. He further submitted that in absence of proper service, appellants have been condemned unheard and impugned order is violation of Article 4 and Article 10-A of Constitution of Pakistan as no fair opportunity of trial was afforded to them. He relied on the case of Fazal-e-Rabi, (2010 CLD 972), wherein it was observed that section 12 of the F.I. Ordinance 2001 provided that where the defendant was served through citation the point of limitation of 21 days for filing application under the said provision commenced from the date of knowledge. He also relied on the case of Messrs Aamer Enterprises Ltd. and others v. United Bank Ltd. and another (2009 CLD 342), wherein it was observed that service through courier, due to alleged refusal by the addressee, as well as through publication was only presumptive in nature, therefore, if any party had disputed service of summons by such modes, this aspect of the case was to be examined by the Banking Court carefully before recording its conclusion. The above referred case-law are distinguishable from the circumstances of the case in hand as notices were sent to appellants on their given addresses and admittedly they came into knowledge of the pendency of the subject suit through bank official, but even then they did not file application for leave to defend, therefore, appellants could not take any benefit from above cited case law.

4. We have heard learned counsel for the appellants and considered the material available on record thoroughly, it has emanated that appellant availed finance facility from respondent bank but thereafter they failed to fulfill their contractual obligations and committed wilful default in payment of loan. Consequently, respondent bank filed Suit No.473 of 2011 before Banking Court No.II, Karachi. It is significant to mention that the learned Banking Court has issued notice by all four modes of service as envisaged in section 9(5) of the F.I. Ordinance, 2001, and simultaneously notices were published in two daily newspapers. As per reports of registered post A.D., courier and bailiff: the first address of appellant was untraced, while second address was closed. Indeed, appellants had not informed the respondent bank regarding the change or closure of the second address by them which also indicates the deliberate and wilful negligence on their part.

5. It is further reflected that learned Banking Court not only issued summons against the appellants by adopting all four modes, but simultaneously summons were published in daily "Jung" Karachi and daily "Dawn" Karachi on 23-11-2011, but none appeared on behalf of the appellants to contest the suit. After expiry of statutory delay of 30 days in filing to leave to defend application, the suit was ordered to be proceeded ex parte against appellants by learned Banking Court vide order dated 22-12-2011. On behalf of the respondent bank, Messrs Syed Muhammad Kamran and Farhan Iqbal authorized officers filed affidavit in ex parte proof and reiterated the contents of the plaint as well as the documents filed therewith. Due to non-appearance of the appellants, ultimately suit was decreed and appellants were jointly and severally directed to pay a sum of Rs.4,511,914.13 inclusive of markup till the date of default i.e. 25-5-2010 and thereafter cost of fund, till realization of the entire decretal amount.

6. It is worthwhile to mention that perusal of order dated 22-12-2011, passed by learned Banking Court reflects that notices were issued on correct and complete addresses provided by appellants at the time of availing initial loan facility as well as renewal of loan facility, through bailiff, registered post A.D., courier services as well as in one Urdu and one English newspapers with large circulation as envisaged section 9(5) of the F.I. Ordinance, 2001, therefore, the contention raised by the appellants that service effected on appellants through publication should not be taken into consideration as they are not subscriber of daily newspapers i.e. Jung and Dawn, has no legal substance as both the newspapers have wide circulation, as such the said plea of appellants is misconceived and lacking any sufficient ground for consideration, as section 9(5) of the F.I. Ordnance, 2001, provides that service duly effected in any one of the modes mentioned therein would be deemed to be valid service.

7. It is also important to mention that the appellant filed application under section 12 of the F.I. Ordinance, 2001, on 21-3-2013, for recalling of judgment dated 5-3-2013. Section 10(2) of the F.I. Ordinance, 2001, provides that defendant shall file application for leave to defend within 30 days of the date of first service by any one of the modes laid down in subsection (5) of section 9, while subsection (3) provides that the application for leave to defend shall be in the form of a written statement which shall contain a summary of a substantial question of law as well as if act in respect of which, in the opinion of the defendant, evidence need to be recorded. Likewise, subsection (4) of section 9 provides further details which are to be included in leave to defend, and subsection (6) categorically narrates that if application for leave to defend which does not comply with requirement of subsections (3), (4) and (5) shall be rejected unless the defendant discloses therein the sufficient cause of his inability to comply with such requirements. It is significant to mention that appellants filed application under section 12 of the F.I. Ordinance, 2001, but they have not complied with the parameters evolved in section 10 and failed to file the leave to defend as envisaged in subsections (3), (4) and (5) of section 10 of the F.I. Ordinance, 2001, instantly after having knowledge of the lis pending against them. Furthermore, appellants have asserted that appellant No.2 met with the bank officials on 5-3-2013, and they informed him about the suit filed by respondent bank. Therefore, it was incumbent upon the appellants to immediately approach the learned Banking Court on the same day and file a proper application to seek time for filing of application for leave to defend, but despite having such knowledge, they filed application under section 12 of the F.I. Ordinance, 2001, on 21-3-2013, for setting aside judgment dated 5-3-2013, without showing any sufficient cause to condone the delay in filing of said application. Consequently, the demeanor and conduct of the appellants prima facie established that they were well in knowledge about the pendency of the proceedings of the suit against them and they deliberately remained away from the subject proceedings sub judice before the Banking Court.

8. In case of Waqar Jalal Ansari v. National Bank of Pakistan (2008 SCMR 1611), the honourable Supreme Court has observed as follows:- "When no application for leave to defend was filed by the principal-debtor a guarantor was not automatically entitled for leave to defend the suit. In the present case, in the estimation of the Banking Court, guarantor in his application for leave to defend the suit, could not raise substantial question of law and fact requiring evidence to be recorded and thus it dismissed his application, against which no exception could be taken, more so when his appeal against the judgment and decree of the Banking Court was dismissed being barred by time."

9. The concept of leave to defend requires that defendant should come up with a positive defence of a particular fact which has to be supported by documentary evidence to convince the Court that there are sufficient grounds for granting leave to defend application to adjudicate the substantial question of law or fact in respect of which the evidence needed to be recorded and mere the denial of the defendant without any plausible explanation could not be considered. In case of Bank of Punjab v. Genertch Pakistan Limited (2008 CLD 765), it was observed that non-compliance with mandatory provision of section 10(2)(3)(4)(5) of the F.I. Ordinance, 2001, should provide for penalty and leave application would merit to be rejected. In case of United Bank Limited v. Progas Pakistan Limited (2010 CLD 828), it was observed that if application for leave to defend the suit did not comply with the requirement of section 10(3)(4) and (5) of the F.I. Ordinance, 2001, such application was liable to be dismissed.

10. Considering the facts, circumstances and case-law referred supra, we are of the considered view that appellants have failed to show any sufficient cause for their inability to comply with the mandatory requirements as envisaged under section 10(3)(4) and (5) of the F.I. Ordinance, 2001, and also failed to make out any substantial question of law as well as fact in respect of which any evidence was required to be led by the parties. Consequently, Banking Court did not commit any illegality in passing the impugned order dated 26-6-2014, which does not call for any interference. Resultantly, instant appeal being devoid of any legal substance stands dismissed. MH/P-15/Sindh Appeal dismissed.