2014 PLP 1049 (CLD)

MRS. AYESHA A. MALIK, J.

This is a suit for recovery of Rs.252.640 Million under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 with costs of funds in terms of the prayer in the plaint. After presentation of the plaint, notices were duly served and the defendants filed PLA No.74-B of 2006.

2. The case of the plaintiff is that the defendant No.1 is a private company limited by shares and is being sued in the capacity of customer and mortgagor of the plaintiff, whereas, the defendants Nos.2, 3 and 5 to 8 are guarantors for the defendant No.l. The defendant No.4 is being sued in the capacity of mortgagor. The defendant No.1 requested the plaintiff for various credit facilities. The same were approved and sanctioned and the defendants availed them from time to time. The plaintiff's claim as detailed in the plaint is as follows:-- Facilities Limit Amount Principal as on 31-5-2006 Mark-up upto 31-6-2006 Total Expiry date FAPC-II 100.000 100.000 6.483 106.483 31-5-2006 TF-III 70.000 5.830 0.303 6.133 31-5-2006 TF-IV 4.715 3.143 0.287 3.430 31-5-2006 TF-V 85.000 85.000 6.838 91.838 31-5-2006 Cash Finance 3.000 2.998 0.146 3.144 31-5-2006 FATR Sub Limit of SLC (120 Days) (25.000) 6.134 0.373 6.507 31-5-2006 Overdue acceptances 25.000 17.6 31 ISLC 3.867 0.983 Nil 18.614 3.867 31-5-2006 L.G. 15.000 12.624 Nil 12.624 31-5-2006 Total 287.715 237.227 15.413 252.640 Amounts were duly disbursed into the account of the defendant No.1 under the various finance facilities and the finances were duly utilized by the defendants. To avail the aforementioned facilities, finance and security documents were duly executed, copies of which are appended with the instant suit. Property of defendant No.4 was mortgaged by way of deposit of title documents with the plaintiff. Thereafter, the defendants failed to liquidate their liabilities as per the terms of the finance agreements. Hence this suit.

3. The defendants in their application for leave to defend (PLA) have denied the liabilities alleged by the plaintiff Bank in its plaint and submit that the suit under reply is liable to be dismissed. The grounds raised in the PLA are that the suit has not been signed and verified in accordance with law. The statement of accounts have not been duly verified as per the relevant law. The documents have not been properly witnessed in accordance with Article 17 of Qanun-e-Shahadat Order, 1984. The guarantees do not relate to the finance facility extended by the plaintiff Bank. Reliance has been placed on the cases titled "Abdul Basit v. Bank of Punjab" (2003 CLD 751, 753 (DB LHC), "Cantor Index Ltd. v. Thomson" (2008 All ER (D 271), "Muhammad Shahnawaz v. KESC" (2011 PLC (C.S.) 1579, 1599), "Rauf B. Kadri v. SBP" (PLD 2002 SC 1111, 1121), "HRCP v. GOP" (PLD 2009 SC 507, 519), "Muzaffar Abbas v. Pak PVC Ltd." (PLD 1998 Karachi 71, 78), "Sandoz Limited v. Federation" (1995 SCMR 1431, 1447), "Green Fuels v. Shell Pakistan Ltd. (2005 CLC 1602 1611) "Sandoz Limited v. Federation" (1995 SCMR 1431, 1452), "PICIC v. Frontier Ceramics Ltd." (2000 CLC 287, 289), "Ali Shan v. Essen Hotel Ltd." (2007 SCMR 741, 750).

4. Learned counsel for the defendants also raised an objection with respect to the authority of the person filing the instant suit. The suit has been filed by Mr. Waseem A. Sheikh, who is not the branch Manager. The power of attorney relied upon is signed by one director and counter signed by the company Secretary. It is his contention that the plaintiff bank cannot authorize an officer to institute a suit merely on the basis of a power of attorney, unless they are expressly authorized under the Articles of Association. He argued that neither the Articles of Association nor the board resolution has been filed. Learned counsel argued that a substantial question of fact with respect to the authority of the person filing the suit has been raised, for which leave may be granted. He also argued that the entries in the statement of accounts do not correlate to any of the finance agreements or other documents. In some of the finance agreements there is no date for repayment, hence no liability is made out against the defendants. The main point argued by the learned counsel was that a re-scheduling arrangement was offered by the plaintiff through letters dated 9-3-2006 and 3-4-2006. The defendants accepted the arrangement and performed under the rescheduling agreement but the plaintiff terminated it unilaterally on 8-5-2006. Learned counsel argued that the rescheduling agreement was agreed upon and duly acted upon by the defendants, hence the plaintiff was barred from filing the instant suit on the basis of the original finance and security documents. He argued that the new agreement came into existence vide letter dated 9-3-2006 and 3-4-2006 which has not been pleaded in the plaint. He argued that consequently the previous agreements have been novated, hence there is no liability under the documents relied upon. Learned counsel further argued that even under the novated agreement, the plaintiff is in breach on various counts. In this regard the defendants have filed C.O.S. No.184 of 2009 which suit is pending.

5. Learned counsel for the plaintiff argued that all documents have been duly executed and signed by the defendants. He argued that the documents and disbursement are admitted by the defendants who claim rescheduling of their liabilities. He argued, admittedly no amounts have been paid to the plaintiff under the claimed rescheduling. Learned counsel for the plaintiff argued with respect to the letters dated 9-3-2006 and 3-4-2006 that where only one party to the agreement alleges novation or alteration in the original agreement without any proof of the novation, mere allegation of novation would not absolve the parties from performing the original agreement. Reliance is placed upon the case titled "Mrs. Musarrat Shaukat Ali v. Mrs. Sofia Khatoon and others" (1994 SCMR 2189). Learned counsel argued that the argument of novation and rescheduling of the agreement was never raised in the PLA. This argument was raised for the first time on 12-10-2011 in the application filed under Order VII, Rule 11 of the Civil Procedure Code (C.P.C.) by the defendants, which application is still pending. He further argued that after filing the PLA no new ground can be added through the application under Order VII, Rule 11, C.P.C. Also that the PLA has to be decided first and foremost before any application filed in the suit of the plaintiff. Reliance is placed upon the case titled "Messrs Al-Kashmir Traders and 6 others v. United Bank Limited through Muhammad Jarar" (2005 CLD 1116). He further argued that the defendants have not satisfied the duties and responsibilities of a customer as provided under the Financial Institutions (Recovery of Finances) Ordinance, 2001 (F.I.O.) whilst filing the leave to defend application as mentioned in the case titled "Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd." (2012 CLD 337). With regard to the objection of the defendants on the statement of account, learned counsel argued that the same have been prepared and certified as per law applicable thereof. The Statement of Accounts attached with the plaint has been generated electronically and is governed under the Electronic Transaction Ordinance, 2002. Reliance is placed upon the case titled "Habib Metropolitan Bank Ltd. v. Mian Abdul Jabbar and another" (2013 CLD 88). The statement of accounts has been filed in accordance with law and show the required debit credit entries. As such no triable case has been made out by the defendants. Learned counsel argued that PLA filed by the defendants is in violation of the mandatory provisions of law contained in section 10(4) and (5) of the F.I.O., 2001. Reliance is placed upon on the case titled "Bolan Bank Limited through Attorneys v. Baig Textile Mills (Pvt.) Limited through Chief Executive and 6 others" (2002 CLD 557). Learned counsel argued that the defence set up by the defendants is evasive and without any substantial question of law or fact requiring recording of evidence. Reliance is placed on the case titled "Messrs Al-Madan Coal Company (Pvt.) Limited and others v. Regional Development Finance Corporation" (2009 CLD 645). Further argued that once the plaintiff has attached with the plaint the statement of accounts and other documents in support of its claim, the burden is shifted upon the defendants to answer the claim.

6. Heard learned counsel for the parties and reviewed the record available on the file.

7. The main argument raised for grant of leave is with respect to the rescheduled agreement. The defendants admittedly raised this plea in the application filed under Order VII, Rule 11, C.P.C. filed by them after filing the PLA. The Defendants rely upon letters dated 9-2-2006 and 3-4-2006 to argue that an agreement re-scheduling the debit was executed by the parties through correspondence. This was duly acted upon by the defendants. On the basis of this agreement the entire liability of the defendant No.1 was re scheduled and an amendment to the arrangement was proposed on 3-4-2006. Learned counsel for the defendants has stressed a great deal on the application under Order VII, Rule 11, C.P.C. as well as on the re-scheduled agreement, the documents of which have been appended. The record shows that the PLA was filed on 21-7-2006. Thereafter in 2011 through C.M. No.639-B of 2011 the defendants moved the application under Order VII, Rule 11, C.P.C. introducing the ground of rescheduling for the first time. The said application raised a whole new ground challenging the claim of the plaintiff which was not raised in the PLA. I am of the opinion that the defendants cannot raise a new ground through the application under Order VII, Rule 11, C.P.C. after having filed their PLA. In Para xviii the defendants state that they have borrowed Rs.367.43 Million and repaid Rs.627.27 Million. Hence the defendants claim that an excessive amount has been paid to the plaintiff which is liable to be refunded. The new ground agitated in the Order VII, Rule 11 application is that the debt was rescheduled through Correspondence. The stance taken in the PLA and the new ground adopted in the application under Order VII, Rule 11, C.P.C. are clearly contradictory. Through its PLA, the defendants are required to raise all substantial questions of law and fact, within 30 days from the date of first service by any one of the modes prescribed in section 9(5) of the F.I.O. in the instant case, through a C.M. No.639/B of 2011 filed more than four years after filing the PLA, the defendants have raised, as per their contention, a substantial question of law and fact for which evidence needs to be recorded. To my mind, the defendants cannot raise a new ground after filing the PLA as it would defeat the purpose of section 10(2) of the F.I.O. as a defendant could at any stage, after filing the PLA, raise a new ground through an application, hence rendering the 30 days requirement under section 10(2) meaningless. Reliance is also placed upon the case titled "Messrs Mohib Exports Ltd. and 4 others v. Trust Leasing Corporation Ltd. through Chief Executive" (2005 CLD 581) in which it has been held that defendants were not allowed to raise a new plea which was not the subject matter of their PLA, for the first time before the High Court. Furthermore the facts relied upon in the application were available to the defendants at the time when the PLA was filed and should have been raised at that time. The grounds raised therein cannot be considered for the purpose of leave to defend, as it was never raised in the PLA. The plaint reveals a cause of action against the defendants. The same has been defended by the defendants through P.L.A. No.74-B/06. Hence the C.M. No.639-B of 2011 is dismissed.

8. The first ground agitated in the PLA is with respect to the competence of the person filing the suit. The record shows that the suit has been filed by Waseem A. Sheikh and Arif Kamran both holders of a valid power of attorney. The power of attorney appended with the plaint authorizes them to file the suit and verify it. This establishes sufficient authority on the persons instituting the suit. No substantial question arises out of this ground.

9. The second Objection is on the certification on the statement of accounts, that it has not been testified as required under section 2(8) Bankers Book of Evidence Act, 1891. The statement of accounts is certified as required under the Bankers Book of Evidence, 1891. At the end of the statement of accounts the required stamp is available. No ground is made out.

10. The learned counsel for the defendants has argued that there was no disbursement under the agreement and that the repayment dates are not given in some agreements. No specific entry in the statement of accounts has been challenged in the PLA. The plaintiff has shown the disbursement for the FATR; FAPC cash finance and the T.F facilities. The FATR was disbursed on 7-11-2005, on 12-9-2005; on 10-11-2005, on 14-11-2005 and on 21-11-2005. As per the statement of account, the disbursement of the TF-IV was on 16-12-2003. Disbursement of TF-III was in four tranches on 7-1-2003, 14-1-2002, 1-3-2003 and 4-3-2003. TF-V was dismissed on 23-7-2004. Disbursement of FAPC-II was on 30-8-2003 in the amount of Rs.100,000,

000. Cash finance was disbursed on 24-6-2005. Details of overdue acceptance is given in the plaint. An amount of Rs.6,134 is due by the defendants. Details of amounts due are given in the plaint. The defendants have admitted that the defendant No.1 availed Rs.367.43 Million yet, there are no details of the claimed repayment of Rs.627.27 Million. As to the SNGPL guarantee, since it has not been encashed, hence no claim is made out against it. The record shows that there is no statement of account showing the mark up being claimed by the bank in the amount of Rs.15.413 Million. Hence the plaintiff is not entitled to claim any mark up. No substantial question of law or fact has been raised in the PLA. The principal amounts disbursed utilized and still outstanding are as follows:--

1. FAPC Rs.100,000,000

2. TF-III Rs.5,830,000

3. TF-IV Rs.3,143,336

4. TF-V Rs.85,000,000

5. FATR Rs.6.133,646

6. Overdue Acceptance. Rs.17,630,853

7. Cash Finance. Rs.2,998,636.15 Total Rs.220,736,471 Therefore the PLA is dismissed and the suit is decreed in the amount of Rs. 220,736,471 along with cost of funds under section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 from the date of default. The Plaintiff is also entitled to recover the decreed amount through sale of mortgaged and hypothecated properties. KMZ/B-1/L Order accordingly.