2020 PLP 415 (CLD)

CH. MUHAMMAD IQBAL, J.

Through this single judgment, we intend to decide titled RFA along with connected R.F.A. No.896 of 2012 as the subject matter is same in both the appeals and they have arisen out of the same impugned judgment and decree as well as common questions of law and facts are involved therein.

2. Through these appeals, the appellants have challenged the validity of judgment and decree dated 20.09.2012 passed by the learned Judge Banking 'Court-I, Gujranwala (Camp at Sialkot) whereby suit for recovery filed by Respondent No. 1 was decreed equivalent to Rs.1,41,03,564.59/- against the appellants jointly as well as severally with costs and cost of funds as determined by the State Bank of Pakistan from the date of default till full and final realization of the decretal amount as provided by the provisions of section 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001.

3. Brief facts of these' appeals are that the appellants / defendants applied for the finance facility and also executed various charge documents i.e. agreement of financing, Demand. Promissory Note, Letter of Hypothecation, Letter of Guarantee and Memorandum of Deposit of Title Deeds etc., in favour of the bank but they defaulted in repayment of outstanding amount of Rs.1,41,03,564.59/-, which resulted into filing of suit for recovery on 22.05.2007 by the bank. The appellants appeared and filed petition for leave to defend the suit with the stance that the bank has illegally charged the markup in violation of terms and conditions of sanction advice etc. The bank filed reply by raising objection that petition for leave to defend is not in consonance with the provision of section. 10(4) and (5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and the same is liable to be dismissed under section 10(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The learned Judge Banking Court-I Gujranwala (Camp at Sialkot) dismissed the leave application and decreed the suit vide judgment and decree dated 20.09.2012 to the tune of Rs. 1,41,03,564.59/- jointly as well as severally with costs and cost of funds as determined by the State Bank of Pakistan from the date of default till full and final realization of the decretal amount as provided by the provisions of section 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001. Hence, these appeals.

4. Heard. Admittedly, the appellants in their petition for leave to defend admitted the availing of finance facility from the bank but the petition for leave to defend of the appellants is not as per section 10(4) of the Financial Institutions (Recovery of Finances), Ordinance, 2001. For ready reference, provision of section 10(4) is reproduced as under:- "10 (4) In the case of a suit for recovery instituted by a financial institution the application for leave to defend shall also specifically state the following:-- (a) the amount of finance availed by the defendant from the financial institution; the amounts paid by the defendant to the financial institution and the dates of payments; (b) the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit; (c) the amounts of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit; (d) the amount if any which the defendant disputes as payable to the financial institution and facts in support thereto: Explanation.

For the purposes of clause (b) any payment made to a financial institution by a customer in respect of a finance shall be appropriated first against other amounts relating to the finance and the balance, if any, against the principal amount of the finance." When the appellants failed to comply with required parameters of provision of section 10(4) of the Ordinance, 2001 then penal clause of section 10(6) shall come into play and their leave to defend is necessarily liable to be rejected. For ready reference, section 10(6) is reproduced as under:-- "10(6) An application for leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement." Respondent bank appended the agreement for financing, Demand Promissory Note, Letter of Hypothecation, Letter of Guarantee and Memorandum of Deposit of Title Deeds with the suit and these documents could not be rebutted by the appellants through any evidence, rather they admitted the availing of the finance facility. There is no document produced by the appellants which may show any re-payment of the amount due against the availed facility from the bank. When confronted as to whether the appellants/defendants have fulfilled the mandatory requirements of section 10(4) and (5) -of Ordinance, 2001 the learned counsel for the appellants remained unable to satisfy this Court. In view of the above backdrop, the learned Judge Banking Court has rightly passed the impugned judgment and decree while invoking the jurisdiction as envisaged in penal clause of subsection (6) of section 10 of the Ordinance ibid and dismissed the petition for leave to defend. Reliance is placed on the case titled as Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. (PLD 2012 SC 268) wherein it has been held as under:-- "

19. In this case, the application for leave to defend the suit filed by the petitioners did not fulfil the requirements of section 10(3), (4) and (5) of the Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001. It was admittedly not in conformity with the said mandatory provisions. No cause or the reason for inability to comply with said requirements was shown. Instead it was expressly admitted by the learned Senior Advocate Supreme Court for the petitioners before the High Court and also before us that the petitioners failed to fulfill the mandates of the said provisions and did not plead the required Accounts. The petitioners/defendants thus attracted the prescribed legal consequences of:-- (i) Rejection of their leave petition under section 10(6) (ii) Non-entitlement under section 10(1) to defend the suit for not obtaining leave to defend the suit in terms provided for in section 10; (iii) The allegations of fact in the plaint were deemed under section 10(1) to have been admitted by them; and (iv) A judgment and decree against them and in favour of the plaintiff bank under section 10(1) and (11) ibid. Reliance can also be placed on the 'cases titled as Shahid Farooq Sheikh v. Allied Bank of Pakistan Limited through Manager (2005 CLD 1489), Messrs Sadia Industries and 3 others v. Messrs Soneri Bank Limited (2014 CLD 1458) and KASB Bank Limited v.Muhammad Ahmed Ansari (2014 CLD 1518). Moreover in the instant appeals this Court passed order dated 21.11.2012 directing the appellants to deposit five million with the Deputy Registrar (Judicial) of this Court but the appellants failed to deposit the same and non-deposit of the said amount also casts a negative impression on the bona fide of the appellants as they are not ready to pay back the decretal amount.

5. Learned counsel for the appellants has not been able to point out any illegality and material irregularity in the impugned judgment and decree passed by the learned Judge Banking Court nor identify any jurisdictional defect.

6. In view of above, both the appeals are hereby dismissed. No order as to costs. SA/F-23/L Appeals dismissed.