2016 PLP 1897 (CLD)

KHALID MAHMOOD MALIK, J.

This appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 is directed against the judgment and decree dated 08.05.2013, passed by learned Judge Banking Court No.III, Multan, whereby he dismissed the application for leave to defend the suit and decreed suit of plaintiff/respondent for recovery of Rs. 49,99,812/- as principal amount and Rs. 1,45,422/- as mark-up in favour of plaintiff against the defendants/petitioners jointly and severally, with costs. Cost of funds was also awarded to the plaintiff/respondent from the date of expiry i.e. 31.01.2008 till the date of realization.

2. Precisely facts necessary for disposal of appeal in hand are that plaintiff/bank, (hereinafter called respondent) has filed a suit for recovery of Rs.56,18,016.84/- against Messrs Hassan Cotton Ginners etc. defendants (hereinafter called as appellants) under section 9 of the ibid Ordinance stating therein that appellant No.1 through appellants Nos.2 and 3 had applied for Running Finance to the tune of Rs. 5 Million and a Cash Finance Facility to the tune of Rs.35 Million on the term and conditions contained in the documents and agreements executed in favour of the plaintiff/respondent(bank) by the defendants/appellants. After observing legal formalities, facilities were disbursed to and utilized by the defendants/appellants for the purpose of their business for the first time in the year 2005. Subsequently, on the request of defendants/appellants, the facilities were renewed from time to time pursuant to which the defendants/appellants further executed various agreements and documents, in favour of plaintiff/ respondent (bank). In addition to that appellants Nos.4 and 5 mortgaged their immovable properties for repayment of amount owed by the appellants to the plaintiff/respondent (bank). The details of documents, particulars of mortgaged properties and details of credit balance and outstanding amounts are well described in the plaint. It is alleged that the appellants have failed to liquidate their liabilities, thus suit amount of Rs.56,18,016.84/- is outstanding against the appellants.

3. The summons prescribed under section 9(5) of the Ordinance were issued to appellants, in response appellants appeared before the learned Banking Court and filed application for leave to defend the suit, which was contested by respondent (bank). Learned Banking Court has dismissed the application for leave to defend and decreed suit of respondent (bank) as described supra vide impugned judgment dated 08.05.2013. Hence this appeal.

4. In their application for leave to defend the suit, appellants raised numerous preliminary objections that respondent(bank) has not produced statement of accounts as required under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and statements of accounts has not been certified in accordance with Bankers' Books Evidence Act, 1891. The documents annexed with the plaint have not executed in accordance with Article 17 of Qanun-e-Shahadat Order, 1984. Memorandum of deposit of title deed shown to have been executed by appellants Nos.2 and 3 have no legal sanctity, therefore, suit and claim of respondent (bank) is not proceedable. The suit has not been filed by authorized person on behalf of bank, so suit is liable to be dismissed on this score only. Respondent (bank) had charged illegally amount i.e. Rs.25,78,388/- on account of mark-up after the expiry date which is not permissible under the law. On merits, appellants have also controverted the version of respondent (bank) as narrated in the plaint.

5. Respondent (bank) vehemently denied the objections raised by the appellants and reiterated its version as described in the plaint with the plea that the appellants have failed to furnish all the documents in support of their version and have failed to comply with the mandatory Provision of section 10(3) to (5). The appellants have not denied the execution of finance documents, the availing of financial facilities and the execution of the security documents in favour of respondent (bank). Thus they have failed to raise question of law and facts.

6. Learned counsel for appellants has argued in the line and grounds described in the application for leave to defend and relied upon certain case laws i.e. "Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others (2003 CLD 931), National Bank of Pakistan through Manager v. Messrs Mujahid Nawaz Cotton Ginners through Partners and 6 others (2007 CLD 678), Habib Metropolitan Bank Limited v. Abid Nisar (2014 CLD 1367), Appollo Textile Mills Ltd. and others v. Soneri Bank Ltd. (2012 CLD 337), Bankers Equity Limited and 5 others v. Messrs Bentonite Pakistan Limited through Chief Executive and 7 others (2010 CLD 651).

7. Conversely learned counsel for respondent has defended the impugned judgment and decree by pleading that suit has been filed by the plaintiff/respondent(bank) after fulfilment of the basic requirement of section 9 of the ibid Ordinance. Proper verified statement of accounts as per Provisions of finances Ordinance and under section 2(8) of Bankers Books Evidence Act, 1891 has filed which clearly established the liabilities of the appellants.

8. Arguments put forwarded by learned counsel for parties and survey of documents available on record, it is established that appellants have obtained finance facilities as claimed by the bank. At the time of sanction of finance facilities, certain documents in shape of Demand Promissory Notes, Agreements for financing for short/medium/long term on mark-up basis, letters of Hypothecation, letters of authority, facility letters, personal guarantees and Memorandum of deposit of title deeds were executed between the parties. In addition to that appellants Nos.4 and 5 mortgaged their properties to secure and repayment of amount obtained by appellants in favour of plaintiff (bank). Appellants have not challenged the legality and genuineness of the afore-mentioned documents before any competent forum allegedly executed in year 2005 and subsequently till institution of suit.

9. Under section 9(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, financial institution can file a suit against the consumer in the Banking Court through Branch Manager or such other Officer of Financial Institution as may be duly authorized in this behalf by power of attorney or otherwise. The present case has been filed by the Bank Manager who is competent to file the plaint. Section 9(2) of the ibid Ordinance provides that the plaint shall be supported by statement of accounts which in the case of financial institution shall be duly certified under the Bankers' Books Evidence Act, 1891 and other relevant documents relating to the grant of finances. From the contents of plaint and documents annexed with the plaint, it reveals that respondent (bank) has filed a plaint after fulfillment of mandatory requirement of section 9 of the Ordinance. The statement of accounts and documents annexed with the plaint are also signed, verified by the competent/authorized person while appellants have failed to produce any documents with the application to substantiate their claims and with regard to illegal and incorrect changed entries of Rs.25,78,388/- as alleged by the appellants. Learned counsel for appellants vehemently argued that appellants/ defendants never requested to the respondent (bank) for availment of any finance facility against current account of the firm. Firm had only availed a cash finance facility from the respondent (bank) which it had got adjusted in time and there is no liability outstanding against the firm. While statement Annexure-I annexed with the plaint, indicates that on 17.6.2005, opening balance of the appellants was Rs.1000/- and from 17.06.2005 to 07.08.2008, various amounts had been credited in current account of appellants and on closing date balance of appellants was Rs.49,99,812.56/-. Appellants did not challenge the legality, genuineness of finance agreement and charged documents before any Court of law meaning thereby appellants have accepted the terms and conditions settled between the parties. Consumer has right to utilize the finance facility subject to terms and conditions of agreement and charged documents. In addition to that for the first time appellants/ defendants have taken this plea after the institution of the suit. Record further indicates that respondent (bank) initiated auction proceedings of mortgaged properties under section 15 of the Ordinance after serving notices of demand on the appellants. On the date of auction, appellants approached respondent (bank) and requested to postpone auction. Request of the appellants was accepted by the respondent (bank) and compromise agreement dated 27.8.2007 was executed between the parties which was available on record as Annexure-D-3, in which the appellants have offered certain conditions which were accepted by the bank and written in shape of compromise agreement. Paras Nos.1 to 3 of said compromise agreement is reproduced as under:-

1. That the customer will deposit all the mark up due and agreed till today.

2. The Mortgagor/Defaulter/Customer hereby agrees that the customer will deposit total mark-up amount Rs.1,027,051.28/- with the bank to compromise/renew his Finance Facility.

3. That the bank hereby agrees to renew the existing RF Facility of Rs.5.00(M) up-till 30.6.2008 amongst following terms and conditions. (i) The customer will ensure all the adjustments as full and final by the due dates along with all due markup as agreed by the bank. (ii) The customer will pay in cash all charges incurred so far in respect of recovery process of the defaulted amount which includes Legal Charges, Advertisement and Proclamation charges and all other charges incurred for the execution of recovery proceedings.

10. In view of the admitted agreement, the objection with regard to availment of Finance Facilities against current account of appellants firm has no substance and the respondent (bank) is entitled due principal amounts including markup, cost of finances till the date of expiry. Learned Banking Court has rightly dismissed the application of appellants for leave to defend the suit as appellants have failed to raise any substantial question of law and facts, which requires evidence as the controversy with regard to principal amount, mark-up and cost of finances etc. can be resolved keeping in view all the documents available on record. As per documents and statement of accounts, principal amount of Rs.49,99,812/- is outstanding against the appellants and the respondent (bank) is entitled the same including mark-up, cost of finances till the date of expiry. The case laws cited by learned counsel for appellants as discussed in para No.6 of this judgment are not applicable as facts of the case are quite distinguishable from case in hand. Learned counsel for appellants has failed to point out any illegality, material irregularity or non-appreciation of documentary evidence in the findings and observation of the learned Judge Banking Court, in the impugned judgment. Resultantly, instant appeal having no merits is hereby dismissed. ZC/H-27/L Appeal dismissed.