2009 PLP 1143 (CLD)

PLA No.49-B of 2005 MIAN SAQIB NISAR, J.

The plaintiff-Bank has instituted a suit for recovery of pan amount of Rs. 117,468,737.00 with the costs of funds, against the defendants, and its case is that defendant No.1 the principal borrower has been availing Export Refinance/Finance Against Packing Credit etc. (ERF/FAPC) facilities in the sum of Rs.70.000 million and Cash Finance (CF) facility in the sum of Rs.95.000 million. The amounts under the said facilities were payable on or before 30-9-2001. The defendant company committed default in the repayment of the aforementioned facilities and an amount of Rs.75,329,000.00 being the principal and Rs.36,547,000.00 representing the mark-up under the aforesaid facilities became overdue. The defendant company approached the plaintiff Bank with the request to grant two Demand Finance facilities to be utilized for the adjustment of the ERF/FAPC and CF facilities. On the above, the plaintiff Bank granted the rescheduling/restructuring package to the company vide its offer letter dated 23-10-2002, the terms whereof were duly accepted by the defendant company. In terms of the aforesaid offer letter the plaintiff Bank agreed to grant the following facilities to the defendant company:-- (a) Demand Finance facility (DF-I) for Rs.75.329 million. The said facility was payable with' mark-up in monthly instalments commencing from 1-12-2002 with the last instalment being payable on 1-9-2008. (b) 'Demand Finance (Mark-up freeze) facility (DF-II) for Rs.36.547 million. The said facility was payable in fifteen (15) monthly instalments commencing from 1-9-2008 with the last instalment being payable on 1-11-2009.

2. It is also the Bank's claim in paragraph 6 of the plaint, that pursuant to the above the defendants also executed the documents mentioned therein. This includes the finance agreement, D.P. Note etc. It is stated in paragraph 7 that defendants Nos.2 to 5 in consideration of the grant of aforementioned facilities by the plaintiff Bank to the defendant company executed their guarantees in favour of the plaintiff. Defendant No.6 in same consideration mortgaged the properties described in paragraph

8. In nutshell the plaintiff claims that as the defendants have violated the terms of the finance according to the repayment schedule, therefore, the amount mentioned in the plaint is due to the plaintiff, which should be recovered in their respective capacities. Along with the suit the relevant documents particularly the agreement of restructuring/finance agreement, the offer letter, resolution of the defendant company, personal guarantees and the statement of accounts of both the Demand Finance facilities (DF-I) and (15F-II) have been appended.

3. The notice in terms of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, was issued to the defendants and they have filed a joint leave application/ written statement, which has been replied to by the plaintiff.

4. Arguments heard. As has been mentioned earlier, the mainstay of the plaintiffs case is based upon the finance agreement, the offer letter and the resolution of the company coupled with the execution of the documents by the defendants jointly and severally as described in paragraphs 6 to 8.

5. The counsel for the defendants though has admitted the execution of all the documents appended with the plaint, but has refuted the claim on the ground that such execution is not on account of free consent of the defendants, rather is the result of fraud, misrepresentation and undue influence practised by the plaintiff Bank upon the defendants, and therefore, these documents are viodable in terms of section 19 of the Contract Act and no claim can be based thereupon. It is also submitted that the entire statement of accounts, from the date when the actual disbursement of the amounts under the two original facilities were given to defendant No.1, has not been appended along with the plaint, and therefore, it is violation of the provisions of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, thus the plaint in view of the judgments reported as Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931 and Messrs C.M. Textile Mills (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587, is liable to be rejected. In order to support that the entire picture of the claim must be propounded before the Court by placing the complete statement of accounts, reliance has been placed upon Habib-ur-Rehman and another v. Judge Banking Court No.4 Lahore and another 2006 CLD

217. It is also submitted that defendant No.6 has never mortgaged its properties as has been alleged/claimed by the plaintiff, rather the mortgage was so created in respect of Elahi Enterprises another company and for a distinct facility, and only for the reasons that the title documents in that behalf are available with the plaintiff, ,does not mean that the mortgage in this case was also created.

6. In order to elaborate the features of undue influence, fraud and misrepresentation having been practised by the plaintiff upon the defendants, reference has been made to paragraph 5 of the leave application which is a reply to paragraph 5 of the plaint. For the unauthorized entries in the two statements of accounts, which are stated to be simply brought forward and no disbursement has been made against those as has been shown in these statements, counsel for the defendants has referred to paragraphs 7 and 8 of the preliminary submissions highlighting the discrepancies in the statement of accounts. It may also be added here that for the purpose as to on what substantial questions of law and facts the leave should be granted, defendants' counsel has referred to the following formulations of the PLA, particularly:-- Questions of law (A) Whether the requirements of section 9 of the Ordinance are mandatory and have not been fulfilled by the plaintiff Bank in the present case? (J) Whether Sale Price specified in the agreement(s) for financing is required to be disbursed for the purposes of creating obligation on the customer to make payment of the Purchase Price? (R) Whether any admission implied or actual, which is wrong in point of fact or is ignorant of legal rights has a binding effect on the person making it? (T) Whether the alleged statement of account complies with the requirement of law, including the provisions of the Ordinance and the Bankers Book of Evidence Act? Questions of Fact. (C) Whether there were any agreement(s) for finance between the defendant No.1 and the plaintiff Bank prior to December, 2002? (D) Whether the plaintiff Bank made any disbursements vis-a-vis the alleged agreements for financing?

7. Heard. It is quite a simple case of rescheduling and restructuring of a previous finance; when liability of the borrower company became overdue, a request was made by it for the renewal/restructuring thereof; in this behalf, the resolution of the company dated 21-9-2002, the offer of the Bank dated 23-10-2002 and the agreement dated 11-12-2002, are sufficient to prove the case of the plaintiff. Obviously, in the cases pertaining to restructuring the amount is not disbursed, rather is brought forward envisaging as liability of the customer, and therefore, to argue that as no physical disbursement of the amount was made, resultantly, the claim of the Bank is false or unfounded, is a submission which is misconceived and without merit. I am also not convinced if there has been any fraud or misrepresentation on the part of the Bank in inducing the defendants (except defendant No.6) asking for rescheduling or the execution of all the relevant documents in that regard including the guarantees and the finance agreement. The bald and baseless allegations of fraud cannot be termed as the substantial questions of facts, in the light of admittedly executed documents on account of which the leave can be solicited or granted. I am also not convinced that the plaint lacks in fulfilling the requirements of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The relevant backdrop of the finance arrangement between the plaintiff and the defendants has been appropriately given in the plaint, which is supported by the requisite documents. In view of the above restructuring/rescheduling, it was not obligatory and incumbent upon the Bank to have brought on record the statements of accounts prior to the agreement dated 30-9-2001, through which the restructuring has been made as this was/is an admitted amount duly acknowledged by the defendants. There is no question of the disbursement of the amount involved in the matter, as it is a case of restructuring and not in the nature of a fresh finance, in which the disbursement may become relevant. No vice, illegality or error has been pointed out in the statements of accounts appended with the plaint in support thereof either in view of the provisions of the Ordinance or Banker's Books of Evidence Act.

8. For another submission, if there are any agreements of finance between defendant No.6 and the plaintiff-Bank prior to 2002, suffice it to say that the explanation in this behalf has been adequately given in the plaint and it is obviously on account of the above agreements when defendant No.1 defaulted that the restructuring was requested by it and was c duly granted by the plaintiff Bank. This plea on its own force is not relevant for granting the leave, therefore, the leave to defendants Nos. 1 to 5 is refused. However, the mortgage deed placed on the record by the Bank envisages the mortgage for Messrs Elahi Enterprises (Pvt.) Limited, whereas in the instant case the borrower company is Taj Textile Mills Limited (defendant No.1), only for the reason that either the Managing Director or the managing structure of two companies i.e. Taj Textile Mills and Elahi enterprises .is the same, therefore, the mortgage should be presumed is not prima facie tenable and the question/proposition needs the recording of evidence, resultantly, to the extent of defendant No.6 leave is accordingly granted.

9. In the light of above, suit of the plaintiff in its favour and against defendants Nos. 1 to 5 is decreed to the tune of the suit amount along with costs of funds from the date of the decree till the final realization and also the costs of the suit. M.B.A./H-15/L Order accordingly.