1993 PLP 1211 (MLD)

(ii) Letter of set-off and lien; (iii) Letter of partnership; (iv) Letter of hypothecation (packing credit) (v) Bill discounting agreement; (vi) Joint and several guarantee of both the partners; (vii) Letter of Arrangements.

4. It is the plaintiff's case that this loan was granted to the defendants which was availed by defendant No.1 not only against the security of hypothecation of stocks and export bills bi: also against the personal guarantees executed by both the partners and also through mortgage of property of defendant No.2 who handed over the title deeds of his property and created mortgage upon the same as security for repayment of the loan granted by the plaintiff to defendant No.l. The particulars of the mortgage deed have been fully described in para.7 of the plaint which need not be repeated. The plaintiff also averred that defendant No.l through defendant No.2 used to draw sums, through various cheques issued from time to time and apart from availing the facility of loan against packing credit (LAPC) the defendant No.1 also used to avail the advance facilities in terms of loan against foreign bills (LAFB). The details of outstanding loans of defendant No.l have been set out in the statements of accounts LAFB and LAPC attached with the plaint. It has also been alleged in the plaint that the defendants failed to repay the entire loan amount outstanding against them according to the commitment and in spite of repeated demands made by the plaintiff-Bank from the defendants, they failed to liquidate their liability. Defendant No.l on 14-10-1984 as has been averred. in order to re-assure the plaintiff and to express its bona fides signed and executed the following fresh security documents in favour of the plaintiff:-- (i) Demand Promissory Note; (ii) Letter of Continuity; (iii) Letter of set-off and lien; (iv) Letter of arrangement; (v) Bill discounting agreement; (vi) Letter of Hypothecation of stocks; (vii) Letter of Guarantee;

5. The plaintiff has stated that an amount of Rs.26,39,644 is outstanding against the defendants as on 30-9-1985 on account of the said loan utilized by defendant No.l to which the plaintiff is entitled alongwith interest at the rate of 14% per annum from the date of filing of this suit till the realization of the entire amount with costs. It has been stated that the cause of action originally arose on 29-11-1979 when defendant No.l started availing loan facility and then it arose on 12-2-1980 when the defendants signed and executed charge security document and it also arose on 9-9-1981 when defendant No.2 created mortgage upon his property and on 17-1-1984 when defendant No.l executed a balance confirmation slip and subsequently on 31-12-1983 and 14-10-1984 when the defendants executed fresh security documents in favour of the plaintiff. It has also been averred that the defendants paid an amount of Rs.15,000 on 15-10-1984 and Rs.10,000 on 5-2-1985, therefore, the cause of action was stated to have arisen also on the said dates and finally it arose on the execution of the balance confirmation slip by defendant No.l on 23-7-1985. The suit was filed on 22-12-1985. The defendants have filed this application (PLA No.14/B-86) for grant of leave to appear and defend the suit. I have noticed that so far as the allegations of the plaintiff-Bank that the loan was obtained by the defendants is concerned, this fact was not disputed in this application, rather it has been stated in para.12 of this application that the loan was availed and secured. An objection has been raised that the suit was hopelessly barred by time. The execution -of set of documents in 1984 has been denied and it has also been averred that there was no agreement between the parties regarding payment of penal interest. They have also taken the objection that the plaintiff-Bank forced the defendants to send carpets which were to be exported to the consignee through the plaintiff which would be released to the consignee/importer in the foreign country with the permission of the plaintiff-Bank and since the loans were obtained for meeting the order of the importers in foreign country, the negative approach of the plaintiff-Bank which was alleged to be violative of law and in breach of conditions of the agreement, the release of the consignment could not be effected and in spite of repeated requests by foreign consignee the plaintiff did not release the consignment at the appointed time. It has been averred that since the sale of the carpets could not be effected and the defendants could not realize the amount of consignment out of which the liability of the plaintiff-Bank was to be cleared, therefore, the defendants had suffered a great loss as the consignment in question is still lying in U.S.A. to the knowledge of the plaintiff-Bank.

7. I have heard learned counsel for both the parties. It is manifest from the application that there was no denial that the loan facility was availed of by the defendants. The realization of consignment etc. have no bearing upon the liability of the plaintiff to pay back the amount of loan and if the defendants think that they have suffered some loss on account of act of the plaintiff-Bank in realizing the consignment they may seek remedy separately as this matter cannot be connected with the recovery of loan matter. The only substantial question which prima facie appears to have been raised was whether the suit was barred by time. This question directly relates to the merits of the suit, therefore, I heard learned counsel for the parties on this question. Learned counsel for the plaintiff-Bank relied upon judgment reported as Messrs United Bank Ltd. v. Messrs Iftikhar and Company and 6 others (PLD 1990 Lah. 111) to argue that Article 132 of the Limitation Act, is applicable to the present case which prescribes period of 12 years for suit to enforce A payment of money charged upon immovable property. The starting point of limitation under this Article is the date` when the money sued for, becomes due. Explanation "C" of this Article has put the matter beyond doubt which provides that advance secured by mortgage by deposit of title deeds shall be deemed to be money charged upon immovable property. This reported judgment is fully applicable to the facts of this case as in this case also the advance has been secured by mortgage by deposit of title deeds, the execution of which has not been even remotely denied even in the application. Learned counsel for the defendants on the other hand placed reliance on judgment reported as Allied Bank of Pakistan v. United Builders and others (1986 MLD 478) in support of his argument that it is Article 64-A of the Limitation Act, which is applicable as that Article is in the nature of special provision of law prescribing period of limitation for suits under Order 37 of the Code of Civil Procedure which is three years. According to. the learned counsel for the defendants this provision of law having been made applicable for suits under Order 37, C.P.C., therefore, general provision of Article 132 would not be attracted. The fallacy of this argument consisted in assuming that the suits filed under the Banking Companies (Recovery of Loans) Ordinance. 1979 are suits. under Order 37 of the C.P.C. That is not the legal position. Section 7 of the Ordinance provides as to which procedure the Court shall follow in trying the suit under the Ordinance. Subsection (2) of this section enacts that the Special Court shall in all suits brought before it including suits based on mortgages of all kinds on statement of accounts for recovery of B money paid to, or to the order of the defendant, follow the summary procedure provided for in Order XXXVII of the P.P.C. It is implicit in this provision that it is an enabling provision and only provides that in trying suit the procedure as laid down in Order XXXVII would be followed which does not mean that the suit in substance was under Order XXXVII. In my view Article 132 of the Limitation Act, is applicable and under the said Article the suit is well within limitation.

8. The objections raised by the defendants in the application have no substance and they have failed to disclose such facts which should make the plaintiff-Bank to prove consideration. The defendants have also failed to disclose any other fact in the application which should induce the Court to grant them leave to appear and defend the suit. I have examined the documents attached with the plaint on the basis of which the suit has been filed. Even if that set of documents executed in 1984 the execution of which has been denied the other documents are sufficient to establish the case of the plaintiff-Bank, the execution of which has not been disputed, coupled with the admission of the defendants that they had obtained the loan. The objection regarding charge of interest has also, been raised without any basis. It is manifest from the documents placed on the record that the defendants agreed to pay interest at the rate of 4% above the Bank rate, therefore, the plaintiff has rightly charged the interest at the rate of 14% per annum. In the result the application for grant of leave to appear and defend (PLA No.14/B-86) is hereby dismissed. Since the defendants have been declined the- prayer of leave to appear and defend the suit, as such, the allegations in the plaint shall be deemed to be admitted, therefore, the plaintiff-Bank is entitled to a decree as prayed for.

9. For the foregoing reasons a preliminary decree is passed in favour of the plaintiff-Bank against the defendants for the sued amount, jointly and severely. The defendants are hereby directed to pay the decretal amount within six months alongwith interest at the rate of 14% per annum from the date of filing of the suit till the realization of the amount. The plaintiff may make an application for passing final decree if the decretal amount is not paid. A.A./U-24 /L Suit decreed.