P L D 2001 Karachi 143 (PLP)

(f)???????? Any other or further relief or reliefs against the defendants Nos. 1 and 2 that this Hon'ble Court may consider just and proper in the circumstances of the case."

5. After service of summons in accordance with the section 9 of the Act, 1997, the defendants filed applications under section 10 for leave to defend the above suits. In their application for leave to defend the suit, the defendants took several pleas, however, at the time of arguments Mr. Ch. Muhammad Iqbal, learned counsel for the defendants in both the suits urged the following points only:--

1. That the suit is not competent because the person signing the plaint has not been authorised by a resolution or Board of Directors of the plaintiff; Bank, to file the suit.

2. The suits are based on agreement for financing the projects, and therefore, the relationship between the plaintiff and the defendants was not that of banker and borrower but that of partners like in Musharakah Agreement as such the defendants were absolved from making any payment until project starts earning profit.

3. The defendants were not wilful defaulter but because of change in circumstances and economic recession in the country and the step?motherly treatment by the Provincial Government of N.-W.F.P. with the project be deemed as a force majeure beyond the control of the .defendants, the agreement of finance was frustrated and consequently defendant should not be forced to pay the amount.

6. Elaborating first point, it is urged by Mr. Ch. Muhanlmad Iqbal that plaintiff has not filed any resolution of Board of Directors authorizing Ghulam Ali, Manager Legal Affairs to file the suit. Learned counsel has referred to para.2 of the plaint, wherein it is averred that said Ghulam Ali has, been authorized by power of attorney, inter alia to sign and verify the plaint, institute these proceedings. However; according to Mr. Ch. Muhammad Iqbal such averment does not mean that the person has been authorized to institute the proceedings as well. Learned counsel has referred the case of (i) Messrs Muhammad Sadiq Muhammad Umar v. The Australasia Bank Ltd. (PLD 1966 SC 684), (ii) Khan Iftikhar Hussain Khan of Mamdot (presented by 6 Heirs) v. Messrs Ghulam Nabi Corporation Ltd. (PLD 1971 SC 550), (iii) Government of Pakistan v. Premier Sugar Mills and others PLD 1991 Lahore 381).

7. In Muhammad Sadiq Muhammad Umar v. Australasia Bank Ltd. (PLD 1966 SC 684), it was observed that suit on behalf of a public limited company was filed by an officer mentioned in rule 1 of Order 29 of the C.P.C., copy of power of attorney was produced. The question still remains to be ascertained as to whether those who gave him that power were competent to do so on behalf of the public limited company. For this purpose a reference to the Articles of Association was necessary to see whether the directors were competent to delegate power. It was not necessary to see whether the Directors had in fact approved of the giving of such power to person who presented the plaint. In Khan Iftikhar Hussain Khan of Mamdot's case (supra), wherein institution of the proceedings on behalf of the companies was held irregular and unauthorized for the simple reason that the resolution authorizing the institution of the proceedings was passed during the meeting of the Board of Directors which had not properly been authorised. However, in the present case, the plaintiff has not relied upon or produced any resolution of the Board of Directors but instead alongwith the plaint a copy of general power of attorney favouring said Ghulam Ali has been produced and such also shown at the time of presentation, which was returned by the office after the comparison. In Government of Pakistan v. Premier Sugar Mills (PLD 1991 Lahore 381), the Division Bench of Lahore High Court following the dictum of, Iftikhar Khan of Mamdot case, held that when a company institutes a suit, it has to establish that the suit has been competently and authorizedly instituted on its behalf. The rigour of this principle is to the extent that even a person in charge of the affairs of the company, unless specifically authorized in this regard, is not considered competent to initiate proceedings on behalf of the corporate entity.

8. Mr. Kamal Azfar, learned counsel for the plaintiff has met this plea by two-fold contentions. First contention of Mr. Kamal Azfar, learned counsel for the plaintiff was that the defendant has not taken the plea in their leave to defend application that the plaint has not been signed by an authorized person and the suit is, therefore, not competent or the person signing the plaint has not been authorized by a resolution of Board of Directors. This question is of facts and the defendants are not entitled to raise such question during arguments. Mr. Ch. Muhammad Iqbal submitted in reply that he was entitled to raise this question because it is the question of law. The submission is .not correct because whether or not a person who has signed the plaint was an authorised person or not is question of fact and not purely of law. The submission of Mr. Kamal Azfar is obviously right, the defendant was not entitled to raise this question during the arguments. I am supported in this regard, by the view taken in United Bank Ltd. v. Shahyar Textile Mills Ltd. (1996 CLC 106) by G.H. Malik, J.) (as he than was), wherein similar contention was not allowed to be raised through rejoinder affidavit by holding that whether or not power of attorney had been executed in favour of the person who, had signed the plaint is a question of fact.

9. On second leg of his arguments to meet the submission raised on behalf of the defendants, Mr. Kamal Azfar learned counsel for the plaintiff submission was that the plaintiff-Bank is a Foreign Banking Company incorporated under the law of England. "The suit has been filed by Ghulam Ali on the basis of authority given to him by the Bank under the English law. Said power of attorney has been attested and authenticated by Notary Public, with certification as required under the English law. He further contended that under clause (18) of the power of attorney, said Ghulam Ali has been authorised to institute, bring, commence and prosecute and appear for the bank and defend any suits, actions, summonses, petitions, appeals or other proceedings in any Court of law or Equity, which reads as follows:-- "

18. To institute, bring, commence and prosecute and appear for and the bank in and defend all and any suits, actions, summonses, petitions, appeals or other proceedings in any Court of law or Equity or other judicature or in any Court or Tribunal of Criminal Revenue, Fiscal, Labour or other jurisdiction generally or before any other officer or authority having judicial or quasi-judicial functions or duties at or in the country in which the said Branch is situate or at or in all or any of the other places aforesaid or elsewhere whether arising out of the matters or things aforesaid or otherwise in which the Bank may now or shall hereafter be in any way interested or concerned and in any such suit, action, appeal or other proceedings to consent to or submit to or apply for the enforcement of or appeal against any judgment, decree or order or to discontinue, become non-suit, compromise, compound, withdraw of refer to arbitration upon any terms as the Attorney shall think fit or to resist payment of any sums or sum of money or compliance with or fulfilment of any claim or demand or otherwise to pay and satisfy the same AND in connection with any of the aforesaid to deposit and withdraw any money in cash or securities and to do all such generally as the Attorney may in his absolute discretion think fit."

10. Mr. Kamal Azfar, learned counsel for the plaintiff by referring the Halsbury's Laws of England, containing the provision regulating the appointment of Notary Public, authenticity attributed to their acts and judicial notice of such acts, contended that the prima facie rule is that the law of the place where the contract is executed is the proper law; and submitted that the power of attorney in the instant case was executed in England. This would be governed by the law relating to such documents. He further contended that office of Notary Public is public office, which is of great antiquity, recognized in all civilized countries and by the law of nations, his acts have credit everywhere. Such public offices are authorised by Statute to use distinctive seals, which are directed either to be noticed judicially, or to be received in evidence without proof of genuineness, treating the same as effectually done by a duly qualified person in the United Kingdom, and any instrument so sworn or attested is receivable in evidence without proof of his seal or signature of his official character. He referred section 1 pertaining to office of Notary and its definition given in Volume 28, Halsbury's Laws of England.

121. Definition of notary and his office.--A Notary Public is a duly appointed officer whose public office it is, amongst other matters, to draw, attest, or certify, usually under his official seal, deeds and other documents, including conveyance of real and personal property, and powers of attorney relating to real and personal property situate in England, other countries in the Commonwealth, or in foreign countries to note or certify transactions relating to negotiable instruments; to prepare wills or other testamentary documents to draw up protests or other formal papers relating to occurrence on the voyage of ships and their navigation as well as the carriage of cargo in ships. "

11. Mr. Kamal Azfar, learned counsel for the plaintiff further contended that presumption as to authenticity and genuineness of power of attorney has been attached under the provisions of Article 95 of Qanun-e-Shahadat Order that every document purporting to be a power of attorney, and to have been executed before and authenticated by, a Notary Public or any Court, Judge, Magistrate, British Counsel or Vice-Counsel or representative of Federal Government, was so executed and authenticated. The authentication is not merely attestation, but something more. It means that the person authenticating has assumed himself of the identity of the person who has signed the instrument as well as the fact of execution. It is for this reason that a power of attorney bearing the authentication of notary public or an authority mentioned in Article 95 is taken as sufficient evidence of the execution of the instrument by the person, who appears to be the executant on the face of it. In this regard Mr. Kamal Azfar has referred the following cases: (1) Performing Right Society v. Indian Morning Restaurant AIR 1939 Bombay 347, (2) Wali Muhammad Chaudhry and others v. Jamal Uddin Chaudhri, AIR 1950 All. 534, (3) Jugrej Singh and another v. Jaswant Singh and others AIR 1971 SC 761, (4) Muhammad Aslam v. Mst. Gulraj Begum 1989 SCMR 1, (5) Central Bank of India v. Tajuddin Rauf 1992 SCMR 846, (6) Mrs. Jannat Bi Khan v. Mrs. National Motors Co. 1991 CLC 1950, (7) Khyam Films v. Bank of Bahawalpur 1982 CLC 1275 and (8) Lal Baz v. Gulan 1989 CLC 8.

12. It may be noted here that the provision of Article 95 of the Qanun-e?Shahadat, 1984 is analogous to the provision of section 85 of repealed Evidence Act, 1872. I. would not like to burden this order by reappraisal of all the case-law referred by Mr. Kamal Azfar, except by way of reference to first three cases, involving execution of Power of Attorney in foreign country and presumption attributed to such power of attorney executed before Notary Public and authenticated by such Notary.

13. In Performing Right Society v. Indian Morning Restaurant AIR 1939 Bombay 347, similar objection was raised about the authenticity of a power of attorney, attested by Notary Public of City of London as in the present case. The following observation was made:-- "The power of attorney is given under the seal of a Notary Public of the city of London, and has been duly executed and attested. Under section 85, Evidence Act, the Court shall presume that a power of attorney executed before, and authenticated by, a Notary Public, was so executed and authenticated. The provision is mandatory, and it is open to the Court to presume that all the necessary requirements for the proper execution of the power of. attorney have been duly fulfilled. I may further point out that under section 57(6), Evidence Act, the Court shall take judicial notice of inter alia, all seals of Notaries Public."

14. It was further observed that "there is a certificate annexed to the power of attorney in suit by the Notary Public in which he says that the common seal of the plaintiff-company had been affixed to the power, and it was executed in his presence in pursuance of a resolution of the Board of Directors and in the presence of two of the directors of the company and its secretary. In my opinion the power of attorney is properly executed".

15. In Wali Muhammad Chaudhari and others v. Jamal Uddin Chaudhari (AIR 1950 Allahabad 534) similar view was taken that under section 85 of the Evidence Act there is a presumption that every document purporting to be a power of attorney, and to have been executed before and authenticated by, a Notary Public, or any Court, Judge, Magistrate, British Counsel or Vice-Counsel or representative of Her Majesty or of the Central Government, was so executed and authenticated. The authentication is not merely attestation, but something more. It means that the person authenticating has assured himself of the identity of the person who has signed the instrument as well as the fact of execution. It is for this reason that a power of attorney bearing the authentication of a Notary Public or an authority mentioned in section 85 is taken as sufficient evidence of the execution of the instrument by the person who appears to be the executant on the fact of it. The presumption no doubt, is rebutable. But unless rebutted the presumption stands and the document can be admitted in evidence as a document executed by the person alleged to have executed it without any further proof.

16. In Jugraj Singh and another v. Jaswant Singh and others AIR 1971 SC 761, wherein the short question was wether Mr. Chawla possessed such a power of*attorney for executing the document and for presentation of it for registration. It was held that the second power of attorney, however, does show that it was executed before a proper Notary Public who complied with the laws of California and authenticated the document as required by the law. We are satisfied that power of attorney is also duly authenticated in accordance with our laws. The only complaint is that the Notary Public did not say in the endorsement that Mr. Chawla had been identified to his satisfaction. But that flows from the fact that he endorsed on the document that it had been subscribed and sworn before him. There is a presumption of regularity of official acts and we are satisfied that he must have satisfied himself in the discharge of his duties that the person who was executing it was the said person. This makes the second power of attorney valid and effective both under section 85 of the Indian Evidence Act and section 33 of the Indian Registration Act.

17. In the present case, the plaintiff has filed the plaint through its lawfully constituted attorney under a power of attorney executed in presence of Notary Public, who has authenticated the same under the law of England. The certificate annexed to the power of attorney by the Notary Public in which he says:

"On the day of the date hereof the Common Seal of the Company styled ANZ Grindlays Bank plc of London, England, was affixed at foot of the Power of Attorney hereunto annexed, in my presence and in that of Jospeh Richard Moon and Michael Anthony Broughton Bradford, together duly Authorised Officers of the said ANZ Grindlays Bank plc who singed in my presence at foot of the said Power of Attorney as such Authorised Officers and as witnessing the affixing of the said Common Seal; And that the said power of attorney being so sealed and signed is executed by the said ANZ Grindlays Bank plc in due form of law, the said seal having been affixed and the said signatures subscribed in accordance with the regulations of the said Company and in accordance with the provisions of English law relating to Companies." The certificate referred above shows that Notary Public before the attestation and authentication of the Power of Attorney has satisfied himself that the persons who are executing the power of attorney are' authorized officer of the company. There is also presumption of regularity of official acts particularly regarding execution and authentication of the Power of Attorney, which takes the same as valid and effective under the provisions of Article 95 of the Qanun-e-Shahadat Order. Secondly, whether the person signing the plaint has, the authority on behalf of the plaintiff is a question of fact cannot be allowed to be raised unless pleaded and the other side has opportunity to meet such plea. Therefore, the submission is untenable.

18. Reverting to the second contention in reply thereto, Mr. Kamal Azfar, learned counsel for the plaintiff submitted that Term Finance Agreement dated 27-5-1998 executed between the parties is not a Musharakah Agreement but is in the nature of credit sale whereby the defendants, the buyer agreed to pay the marked-up price in quarterly instalments over a period of 1/3 years.

19. The argument of Mr. Ch. Muhammad Iqbal, `learned counsel for the defendants that the Term Finance Agreement dated 27-5-1998 in the nature of Musharakah Agreement is misconceived. Musharakah is a relationship established by parties to undertake some specific business venture or to undertake business generally as pertners through a mutual contract wherein the proportion of profit to be distributed between the partners must be agreed upon at the time of effecting the contract which must conform to the ratio of capital (sic) by them and in which each partner agrees to bear the loss exactly according to ratio of his investment. The provisions of the Term Finance Agreement forming the basis of the relationship between the parties clearly show that it is not a Musharakah (partnership agreement) as the parties to the agreement have no where stated that they are entering into a relationship as partners and would share or distribute the profits of the business in agreed proportion.

20. A bare perusal of the Finance Agreement dated 27-5-1998, shows that said document is Murabahah (Bai Mu'ajjal or Sale on deferred Payment Basis which is also termed as Agreement for Sale on Credit), wherein the defendants agreed to pay the marked-up price of the goods in quarterly instalments over a period in terms of Schedule "A" to the said agreement. Mr. Ch. Muhammad Iqbal was not able to show any provision whatsoever in the agreement from which it could be inferred or deduced that it was a (Partnership Agreement) as asserted by him. The argument of learned counsel for the defendants is thus not tenable.

21. Reverting to the plea of Force Majeure, Mr. Ch. Muhammad Iqbal's submission was that due to economic recession in the country and step-motherly treatment by the Provincial Government in allotment of the land for the establishment of the Cement Plant in N.-W.F.P., the project failed to see the light of the day, frustrated the contract.

22. Mr. Kamal Azfar, learned counsel for the plaintiff has contended that the plea is not based upon correct understanding of law and added that there is no clause relating to Force Majeure in the arguments which is normally expressly included, if the parties wish to specify the unusual contingencies and circumstances which they contemplate could occur during the existence of the agreement and its effect and consequences on the contract. He also referred view taken by Mr. Justice S. Ahmed Sarwana in Askari Commercial Bank Limited and others v. Pakland Cement and others PLD 2000 Karachi 246, wherein the similar plea was rejected with following observations:-- "The argument of Mr. Hussain that the imposition of Customs Duty, Sales Tax and Regulatory Duty on the import of machinery frustrated the contract is not based upon correct understanding of law. He did not show any provision from the Contract Act, 1872 or any other law or reported judgment on the basis of which it could be argued that the Customs Duty, Sales Tax and/or Regulatory Duty is imposed on import of goods, an agreement between the buyer and seller which requires payment of the price in instalment over a period of time becomes frustrated and the buyer is absolved from his obligation to perform his part of the contract i.e. to pay the price of the goods which have been received by him. The learned counsel also did not show any provision in the Term Finance Agreement or any law to support his argument that if a banking company fulfils its commitment and provides finance to the customer, the latter is discharged from his obligation to pay back the finance/loan to the bank which has advanced credit to him. No doubt under section 56 of the Contract Act, a contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. In the present case the plaintiff ?bank provided finance to Pakland and fulfilled its part of the contract, the only thing that remained to be done was for Pakland (Customer) to fulfil its obligation of paying the instalments on the agreed dates. It cannot be argued that because the Government imposed Customs Duty, Sales Tax and Regulatory Duty on the import of machinery and/or certain other financial institutions backed out from their commitment to provide finance to Pakland, the Term Finance Agreement between the plaintiff and Pakland became impossible and, therefore, void thereby absolving Pakland from performing its part of the contract i.e. to pay the instalments of the marked-up price as promised." Mr. Kamal Azfar in his submissions is correct in absence of a Force Majeure clause in the agreement such plea is not available to the defendants. Thus, the plea of Force Majeure is not available to the defendants.

23. In the light of the above discussion, I am of the view that no serious and bona fide dispute has been raised on behalf of the defendants for the grant of leave to defend as the availing of the facility, execution of document, liability to pay have not been disputed, as such. I am of the view that defendants have failed to make out a case for leave to defend, therefore, the applications are dismissed. This brings me to the question of determination of the liability of the defendants. 24. 1 have examined the statement of account with the assistance of learned counsel for the plaintiff, the loan was restructured by Term Finance Agreement dated 27-5-1998, whereby amount due was shown at Rs.93,629,921 (purchase price) with marked-up price in the sum of Rs.113,845,898 (repurchase price). In the statement, the plaintiff-bank has claimed the mark-up to the date of the filing of the suit, though they are not entitled under the law for the any amount access of repurchase price.

25. Defendant, Tariq Mohsin has executed the guarantee in the sum of Rs.113,845,898 as such his liability cannot exceed the amount of the guarantee. The relevant portion of the letter of guarantee whereby the liability has come to be affixed on defendant No.3 reads as under:-- "

1. That the liability under this Guarantee is limited to the payment Rs.113,845,898 together with the amounts specified above as per schedule of payment attached herewith and not for the lump sum payment of the full facility.

2. The liability of the Guarantor under the Guarantee shall be only for payments to ANZ for the amount of financial obligations of the Principal-debtor arising under the Agreement on the due dates mentioned therein subject to a maximum liability for the total amount to Rs.113,845,898 as per schedule attached to the Agreement. This Guarantee shall stand reduced proportionately with the payment of each instalment under and in terms of the agreement. "

26. The plain reading of the above extract indicates that the ultimate limit of the defendant No.3 was of the amount specified therein. The liability of the guarantor is limited to the amount of the guarantee. In this regard, the observations made are reproduced with advantage in Mian Munir Ahmed v. United Bank Ltd. and 3 others PLD 1998 Karachi 278: "A plain reading of the above extract, which forms the opening words of the letter of guarantee, should indicate that the ultimate limit of liability of the appellant-guarantor was a sum of Rs.40 million. The learned counsel for the respondent-Bank has, however, urged before us that such figure relates only to the principal amount and not to the accruing interest and other charges on the loan, which was guaranteed. The objection does not seem to be supported on the phraseology of the relevant provision. The limit of the guarantee, as will readily be seen, is spelled out twice over, first positively and then in negative language, with, apparently, clear intendment. More than this we would not like to ?ay on the subject."

27. Thus, the liability of the defendant Tariq Mohsin is to the extent of amount of guarantee, which is also repurchase price. Therefore, the suit of the plaintiff against the defendants is decreed in the sum of Rs.113,845,898 with mark-up 2% above State Bank rate from the date of suit till realization.

28. I have examined the statement of account with the assistance of learned counsel for the plaintiff, the loan was restructured by term finance agreement dated 27-5-1998, whereby amount due was shown at Rs.70.220,734 (purchase price) with marked-up price in the sum of Rs.87,096,622 (repurchase price). In the statement, the plaintiff Bank has claimed the mark-up to the date of the filing of the suit, though they are not entitled under the law for the any amount access of repurchase price from the defendant No.1. The liability of defendant No.2 is to the extent of guaranteed amount, which is also equivalent to the repurchase price. Therefore, the suit of the plaintiff against the defendants is decreed in the sum of Rs.87,096,622 with mark-up 2% above State Bank rate from the date of suit till realization

29. These are the reasons for short order announced on 12-12-2000. Q.M.H./M.A.K./A-120/K ????????????????????????????????????????????????????????????????????????????? Suit decreed.