P L D 1988 Lahore 162 (PLP)

This suit for recovery of Rs.46,37,941.80 inter alia by sale of mortgaged property has been instituted under the Banking Companies (Recovery of Loans) Ordinance, 1979 by Allied Bank of Pakistan Ltd., Bank Square Branch, Gujranwala‑plaintiff against Messrs Feroze Khan Metal Works (Regd.), Gujranwala and two others‑‑defendants. The plaintiffs has also prayed for award of interest at the rate of 14% per annum with quarterly rests w.e.f. 31‑8‑1986 till realization) of the claimed amount and costs of the suit.

2. It has been asserted by the plaintiff in the plaint that two loan facilities were availed by deceased Feroze Khan the father and predecessor‑in‑interest of defendants Nos. 2 and 3 in the name of defendant No. 1 from the plaintiff‑Bank, viz. (a) a cash credit facility with an initial limit of Rs.10,00,000 and (b) an overdraft facility with an initial limit of Rs.5,35,

000. The borrowing details are given in the statement of account annexed with the plaint and duly certified under the Bankers Books Evidence Act, 1891. The loan was secured through a number of charge documents executed by late Feroze Khan on various dates.

3. Feroze Khan having died on 7‑8‑1981, defendants Nos. 2 and 3 who are his sons and on whom the business of defendant No. 1 devolved, executed an agreement, dated 3‑5‑1983 whereby they admitted the loans aforementioned, liability whereunder had as on 31‑8‑1982 accumulated to Rs.28,50,

614. The said agreement, dated 3‑5‑1983 executed by defendants Nos. 2 and 3 in favour of the plaintiff has been placed on record in original. Vide the said agreement the defendants undertook to repay the amount in the manner provided in para. 1 of the agreement. The balance confirmations executed by late Feroze Khan and subsequently by defendants Nos. 2 and 3 from time to time have also been annexed with the plaint. The last such acknowledgment has been asserted by the plaintiff to have been made' by defendants vide their letter, dated 21‑8‑1985.

4. The further allegation in the plaint is that the defendants having not paid the amount despite legal notice, dated 13‑8‑1985 the plaintiff has been obliged to institute the present suit.

5. It has also been asserted that the loan was, inter alia, secured through mortgage of properties detailed in para. 5 of the plaint and by personal guarantees of the defendants.

6. Summonses in form No. 4 of Appendix B of the Code Civil Procedure were issued to the defendants who in response thereto filed a petition for leave to appear and defend the suit (P.L.A. No. 21/ B‑87) .

7. This petition has been resisted by the plaintiff‑Bank.

8. The learned counsel for the defendants in support of the petition for leave to appear and defend the suit raised the following contentions: (i) The suit instituted by the signatories of the plaint on the basis of powers of attorney executed in their favour on 31‑8‑1971 and 11‑5‑1974 has not been competently filed as fresh powers of attorney were required to be executed after the promulgation of the Banks Nationalization Act, 1974. The learned counsel elaborated his submission by stating that the power‑of‑attorney executed in favour of one signatory namely Abdul Hafeez by Sarhad Bank Ltd. is dated 31‑8‑1971, whilst the second is by Austalasia Bank Ltd. in favour of Naeem Shafqat, the other signatory which is dated 11‑5‑1974 whereas the suit has been instituted in the name of Allied Bank of Pakistan Ltd. from whom no power‑of‑attorney has been conferred on the signatories of the plaint; (ii) that the defendants have denied the execution of the various charge documents placed on record as signatures were obtained from them on blank papers which were subsequently filled in. The learned counsel referred to the agreement, dated 3‑5‑1983 executed by defendants Nos. 2 and 3 and pointed out that the signatures of defendant No. 3 Nisar Abid Khan have been overwritten by the typed material of the alleged agreement on thee last page which is indicative of the fact that the blank paper had been got signed; and (iii) that the charge of insurance premium and other miscellaneous charges could not be debited to the account of the defendants as these were never agreed to be paid by the defendants.

9. On the contrary, the learned counsel for the plaintiff contended. First, that the powers‑of‑attorney annexed with the plaint continue to remain in full force as provided by section 16(b) of the Banks Nationalization Act, 1974, that Sarhad Bank Ltd. was merged into Australasia Bank Ltd. by virtue of section 15 of the aforementioned Act, that the name of the latter‑Bank was chatrged Deb Allied lank of Pakistan Ltd. w.e.f. 30‑6‑1974 and, therefore, the first contention of the learned counsel for the defendants has no valid basis; Secondly, that the debit of insurance premium and other miscellaneous expenses has been lawfully made to the account of the defendants as clause 4th of the Pledge Agreement, dated 5‑10‑1982 specifically provides for the same; and Lastly, that the contention that charge documents were not executed by the defendants and that some blank papers were got signed from them stands belied by the averments of the petition for leave to appear and defend the suit itself in that the agreement, dated 3‑5‑1983 has been admitted as having been executed by the defendants vide paras. 3 and 4 of the rejoinder filed by them.

10. Having given consideration .to the controversy involved I am of the view that the contentions raised on behalf of the defendants have no force.

11. Section 16(B) of the Banks Nationalization Act, 1974 clearly provides that the powers‑of‑attorney other than those in favour of a person vacating his office under the Act subsisting before the commencing day of the Act. shall be of as full force and effect as these were immediately before the commencing day. The power‑of‑attorney dated 31‑8‑1971 in favour of one of the signatories by Sarhad lank Ltd where Bank had been merged in Australasia Bank Ltd. in pursuance of the provisions contained in section 15 of the aforesaid Act shall, therefore, have full force and effect notwithstanding the promulgation of the Act. Similarly the name Australasia Bank Ltd. itself having been changed to Allied Bank of Pakistan Ltd. the change of name will in no manner detract from they validity and effectiveness of the powers of attorney executed in favour of the Officers of the Bank before the change of name.

12. It may also be observed that the learned counsel for the defendants when confronted with the position how the power of attorney, dated 11‑5‑1974 in favour of one of the signatories of the plaint having been executed subsequent to the promulgation of the Act could be dubbed as not conferring power on the signatories to commence and institute the suit had nothing to submit. The first contention of the learned counsel for the defendants, therefore, fails.

13. Taking into consideration the second contention raised on behalf of the defendants it may be observed that this contention also hash no force. Even the particular document referred to by the learned counsel viz. agreement, dated 3‑5‑1983 in no manner remotely shows that the signatures had been obtained from the defendants on any plain paper and that the contents of the document were incorporated later on. The document viz. agreement, dated 3‑5‑1983 has signatures of defendants Nos. 2 and 3 on the first page as well as on the second page thereof. On the first page, the signatures are just below the typed contents on the said page and at places which clearly indicate that. the signatures were affixed subsequent to the incorporation of typed material. On the second page, although the signatures of one of the defendants, namely defendant No. 3 cross over the typed material but these even to a naked eye are above they typed material and the typed material is not typed over them. They above factor alone coupled with the fact that no other document has been specifically referred to as having been got signed whilst it wasp blank proves beyond any shadow of doubt that the documents had been duly executed by the defendants of their free will and whilst those were complete in all respects.

14. Apart altogether from the above position it has also been` pertinently pointed out by the learned counsel for the plaintiff than the agreement aforesaid has been unambiguously admitted as having: been executed by the defendants and even the contents of the same through narration in paras 3 and 4 of the rejoinder filed by they defendants stand admitted. The second contention raised on behalf 6 the defendants also, therefore, falls.

15. Adverting now to the only other contention of the learned counsel for the defendants, I suffice by observing that the same hasp no valid basis whatsoever in view of the agreement of the defendants,,, to pay the disputed charges by virtue of clause 4th of the Pledge Agreement, dated 25‑10‑1982.

16. In view of the foregoing discussion the petition for leave to appear and defend the suit (P.L.A. No. 21/B‑87) is dismissed as having no force.

17. I, however, enquired from the learned counsel for the plaintiff about the basis on which penal interest has been charged and debit pertaining thereto made in the accounts of the defendants. He drew my attention to agreement, dated 3‑5‑1983 referred to above and stated that penal interest has been agreed to by the defendants. When further asked about the rate of interest which is not mentioned in the aforesaid clause the learned counsel submitted that the plaintiff does not claim the penal interest and that the same nay be deducted from the total claim. The plaintiff has today also placed on record the details of the penal interest charged in the statement of account annexed with the plaint under the cover of an application, dated 20‑10‑1987 whereby the plaintiff has agreed that the amount of Rs.2,16,152 may be deducted from the total amount of claim in the plaint.

18. Resultantly the contents of the plaint except to the extent of the amount of penal interest viz. Rs.2,16,152 (claim regarding which has been withdrawn by the plaintiff) shall be deemed to have been admitted and a preliminary decree with costs is hereby passed in favour of the plaintiff and against the defendants for the recovery of the sum of Rs.44,21,789.80 (Rs.46,37,941.80 total claimed in plaint‑‑Rs.2,16,152 the amount of penal interest). The plaintiff shall also be entitled to interest at the rate of! 14% P.A. with quarterly rests on the decretal amount chargeable w.e.f. 24‑9‑1986 the date of institution of the suit till the realization of the total amount.

19. The defendants are allowed to make payment of t amount within five months from today failing which the plaintiff-Bank may apply for passing of a final decree. A.A./A‑221/L Order accordingly. P L D 1988 Lahore 162 Before Mahboob Ahmad, J ALLIED BANK OF PAKISTAN LIMITED‑‑Plaintiff versus Messrs FEROZE KHAN METAL WORKS (Regd) and 2 others‑‑Defendants C.O.S. No. 22 of 1986 and P.L.A. No. 21 of 1987, heard on 20th October, 1987. (a) Banks Nationalization Act (XIX of 1974) ‑‑‑Ss. 15 & 16(B)‑‑Powers of attorney executed by Banks which were subsequently merged with nationalized Banks‑‑Such powers of attorney whether effective and valid on behalf of Nationalized Banks for purpose of recovery of loans having been advanced by merged Banks‑‑Powers of attorney executed by a Bank which had been subsequently merged with Nationalized Bank, in favour of one of signatories of such merged Bank would have full force and effect notwithstanding promulgation of Banks Nationalization Act‑‑Change of name of Bank as a result of Nationalization, held, would in no manner detract from validity and effectiveness of powers of attorney executed in favour of officers of the Bank before change of name. (b) Banking Companies (Recovery of Loans) Ordinance (XIX of 1979) ‑‑‑S. 2‑‑Civil Procedure Code (V of 1908),

0. XXXVII, R. 3‑‑Recovery of bank loan‑‑Leave to appear and defend suit‑‑Denial of execution of documents and plea of obtaining of signatures on blank papers‑‑Such plea not supported by any material on record and fact that execution thereof, having been unambiguously admitted by defendants in rejoinder filed by them, held, would belie denial of execution of agreement by such defendants‑‑Application for leave to defend suit being devoid of merit, was dismissed in circumstances. (c) Banking Companies (Recovery of Loans) Ordinance (XIX of 1979) ‑‑‑S. 2‑‑Civil Procedure Code (V of 1908), O. XXXVII, R. 3‑‑Recovery of Bank loan, entitlement to‑‑Where contents of plaint except to the extent of amount of penal interest had been admitted by borrower and claim of penal interest had been withdrawn by plaintiff‑Bank, Court passed a preliminary decree for the amount claimed after deduction of penal interest. Shahid Hamid for Plaintiff. C.M. Latif Rawn for Defendants. Date of hearing: 20th October, 1987. JUDGMENT This suit for recovery of Rs.46,37,941.80 inter alia by sale of mortgaged property has been instituted under the Banking Companies (Recovery of Loans) Ordinance, 1979 by Allied Bank of Pakistan Ltd., Bank Square Branch, Gujranwala‑plaintiff against Messrs Feroze Khan Metal Works (Regd.), Gujranwala and two others‑‑defendants. The plaintiffs has also prayed for award of interest at the rate of 14% per annum with quarterly rests w.e.f. 31‑8‑1986 till realization) of the claimed amount and costs of the suit.

2. It has been asserted by the plaintiff in the plaint that two loan facilities were availed by deceased Feroze Khan the father and predecessor‑in‑interest of defendants Nos. 2 and 3 in the name of defendant No. 1 from the plaintiff‑Bank, viz. (a) a cash credit facility with an initial limit of Rs.10,00,000 and (b) an overdraft facility with an initial limit of Rs.5,35,

000. The borrowing details are given in the statement of account annexed with the plaint and duly certified under the Bankers Books Evidence Act, 1891. The loan was secured through a number of charge documents executed by late Feroze Khan on various dates.

3. Feroze Khan having died on 7‑8‑1981, defendants Nos. 2 and 3 who are his sons and on whom the business of defendant No. 1 devolved, executed an agreement, dated 3‑5‑1983 whereby they admitted the loans aforementioned, liability whereunder had as on 31‑8‑1982 accumulated to Rs.28,50,

614. The said agreement, dated 3‑5‑1983 executed by defendants Nos. 2 and 3 in favour of the plaintiff has been placed on record in original. Vide the said agreement the defendants undertook to repay the amount in the manner provided in para. 1 of the agreement. The balance confirmations executed by late Feroze Khan and subsequently by defendants Nos. 2 and 3 from time to time have also been annexed with the plaint. The last such acknowledgment has been asserted by the plaintiff to have been made' by defendants vide their letter, dated 21‑8‑1985.

4. The further allegation in the plaint is that the defendants having not paid the amount despite legal notice, dated 13‑8‑1985 the plaintiff has been obliged to institute the present suit.

5. It has also been asserted that the loan was, inter alia, secured through mortgage of properties detailed in para. 5 of the plaint and by personal guarantees of the defendants.

6. Summonses in form No. 4 of Appendix B of the Code Civil Procedure were issued to the defendants who in response thereto filed a petition for leave to appear and defend the suit (P.L.A. No. 21/ B‑87) .

7. This petition has been resisted by the plaintiff‑Bank.

8. The learned counsel for the defendants in support of the petition for leave to appear and defend the suit raised the following contentions: (i) The suit instituted by the signatories of the plaint on the basis of powers of attorney executed in their favour on 31‑8‑1971 and 11‑5‑1974 has not been competently filed as fresh powers of attorney were required to be executed after the promulgation of the Banks Nationalization Act, 1974. The learned counsel elaborated his submission by stating that the power‑of‑attorney executed in favour of one signatory namely Abdul Hafeez by Sarhad Bank Ltd. is dated 31‑8‑1971, whilst the second is by Austalasia Bank Ltd. in favour of Naeem Shafqat, the other signatory which is dated 11‑5‑1974 whereas the suit has been instituted in the name of Allied Bank of Pakistan Ltd. from whom no power‑of‑attorney has been conferred on the signatories of the plaint; (ii) that the defendants have denied the execution of the various charge documents placed on record as signatures were obtained from them on blank papers which were subsequently filled in. The learned counsel referred to the agreement, dated 3‑5‑1983 executed by defendants Nos. 2 and 3 and pointed out that the signatures of defendant No. 3 Nisar Abid Khan have been overwritten by the typed material of the alleged agreement on thee last page which is indicative of the fact that the blank paper had been got signed; and (iii) that the charge of insurance premium and other miscellaneous charges could not be debited to the account of the defendants as these were never agreed to be paid by the defendants.

9. On the contrary, the learned counsel for the plaintiff contended. First, that the powers‑of‑attorney annexed with the plaint continue to remain in full force as provided by section 16(b) of the Banks Nationalization Act, 1974, that Sarhad Bank Ltd. was merged into Australasia Bank Ltd. by virtue of section 15 of the aforementioned Act, that the name of the latter‑Bank was chatrged Deb Allied lank of Pakistan Ltd. w.e.f. 30‑6‑1974 and, therefore, the first contention of the learned counsel for the defendants has no valid basis; Secondly, that the debit of insurance premium and other miscellaneous expenses has been lawfully made to the account of the defendants as clause 4th of the Pledge Agreement, dated 5‑10‑1982 specifically provides for the same; and Lastly, that the contention that charge documents were not executed by the defendants and that some blank papers were got signed from them stands belied by the averments of the petition for leave to appear and defend the suit itself in that the agreement, dated 3‑5‑1983 has been admitted as having been executed by the defendants vide paras. 3 and 4 of the rejoinder filed by them.

10. Having given consideration .to the controversy involved I am of the view that the contentions raised on behalf of the defendants have no force.

11. Section 16(B) of the Banks Nationalization Act, 1974 clearly provides that the powers‑of‑attorney other than those in favour of a person vacating his office under the Act subsisting before the commencing day of the Act. shall be of as full force and effect as these were immediately before the commencing day. The power‑of‑attorney dated 31‑8‑1971 in favour of one of the signatories by Sarhad lank Ltd where Bank had been merged in Australasia Bank Ltd. in pursuance of the provisions contained in section 15 of the aforesaid Act shall, therefore, have full force and effect notwithstanding the promulgation of the Act. Similarly the name Australasia Bank Ltd. itself having been changed to Allied Bank of Pakistan Ltd. the change of name will in no manner detract from they validity and effectiveness of the powers of attorney executed in favour of the Officers of the Bank before the change of name.

12. It may also be observed that the learned counsel for the defendants when confronted with the position how the power of attorney, dated 11‑5‑1974 in favour of one of the signatories of the plaint having been executed subsequent to the promulgation of the Act could be dubbed as not conferring power on the signatories to commence and institute the suit had nothing to submit. The first contention of the learned counsel for the defendants, therefore, fails.

13. Taking into consideration the second contention raised on behalf of the defendants it may be observed that this contention also hash no force. Even the particular document referred to by the learned counsel viz. agreement, dated 3‑5‑1983 in no manner remotely shows that the signatures had been obtained from the defendants on any plain paper and that the contents of the document were incorporated later on. The document viz. agreement, dated 3‑5‑1983 has signatures of defendants Nos. 2 and 3 on the first page as well as on the second page thereof. On the first page, the signatures are just below the typed contents on the said page and at places which clearly indicate that. the signatures were affixed subsequent to the incorporation of typed material. On the second page, although the signatures of one of the defendants, namely defendant No. 3 cross over the typed material but these even to a naked eye are above they typed material and the typed material is not typed over them. They above factor alone coupled with the fact that no other document has been specifically referred to as having been got signed whilst it wasp blank proves beyond any shadow of doubt that the documents had been duly executed by the defendants of their free will and whilst those were complete in all respects.

14. Apart altogether from the above position it has also been` pertinently pointed out by the learned counsel for the plaintiff than the agreement aforesaid has been unambiguously admitted as having: been executed by the defendants and even the contents of the same through narration in paras 3 and 4 of the rejoinder filed by they defendants stand admitted. The second contention raised on behalf 6 the defendants also, therefore, falls.

15. Adverting now to the only other contention of the learned counsel for the defendants, I suffice by observing that the same hasp no valid basis whatsoever in view of the agreement of the defendants,,, to pay the disputed charges by virtue of clause 4th of the Pledge Agreement, dated 25‑10‑1982.

16. In view of the foregoing discussion the petition for leave to appear and defend the suit (P.L.A. No. 21/B‑87) is dismissed as having no force.

17. I, however, enquired from the learned counsel for the plaintiff about the basis on which penal interest has been charged and debit pertaining thereto made in the accounts of the defendants. He drew my attention to agreement, dated 3‑5‑1983 referred to above and stated that penal interest has been agreed to by the defendants. When further asked about the rate of interest which is not mentioned in the aforesaid clause the learned counsel submitted that the plaintiff does not claim the penal interest and that the same nay be deducted from the total claim. The plaintiff has today also placed on record the details of the penal interest charged in the statement of account annexed with the plaint under the cover of an application, dated 20‑10‑1987 whereby the plaintiff has agreed that the amount of Rs.2,16,152 may be deducted from the total amount of claim in the plaint.

18. Resultantly the contents of the plaint except to the extent of the amount of penal interest viz. Rs.2,16,152 (claim regarding which has been withdrawn by the plaintiff) shall be deemed to have been admitted and a preliminary decree with costs is hereby passed in favour of the plaintiff and against the defendants for the recovery of the sum of Rs.44,21,789.80 (Rs.46,37,941.80 total claimed in plaint‑‑Rs.2,16,152 the amount of penal interest). The plaintiff shall also be entitled to interest at the rate of! 14% P.A. with quarterly rests on the decretal amount chargeable w.e.f. 24‑9‑1986 the date of institution of the suit till the realization of the total amount.

19. The defendants are allowed to make payment of t amount within five months from today failing which the plaintiff-Bank may apply for passing of a final decree. A.A./A‑221/L Order accordingly.