Suit for recovery of loan

2021 CLD 1112 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss. 9 & 10Suit for recovery of loanLeave to defendScope

Defendant, in order to succeed, shall have to show that the Petition for Leave to Appeal (PLA) is compliant of all the mandatory requirements of S. 10 of the Ordinance; and, likewise the plaintiff shall have to show, even if PLA is refused to the defendant, that his plaint is compliant of all the mandatory requirements of S. 9 of the Ordinance, and the suit is not barred by any law.

2020 SCMR 984 SUPREME-COURT Judicial Precedent

S. 9(2)-Bankers' Books Evidence Act (XVIII of 1891), S. 2(8)Suit for recovery of loanStatement of account submitted by financial institution before the Banking CourtVerification in terms of Bankers' Books Evidence Act, 1891Scope

In the present case, the account statement submitted before the Banking Court carried a note at the end stating "Certified and verified on Oath that all the entries contained in the statement of account are true copies of the entries contained in ordinary books of the bank maintained and prepared in ordinary course of business and the said books are still in the custody of the bank. These entries have been certified after verification from the original ledger/ bills of the banker"

Said note practically incorporated the language of S. 2(8) of the Bankers' Books Evidence Act, 1891 and therefore met the requirement of law

Furthermore each page of the account statement was duly stamped and initialled by the concerned official of the Bank which amply and adequately met the requirements of the law

Petition for leave to appeal was dismissed and suit of financial institution was held to be pending before the Banking Court.

2020 SCMR 984 SUPREME-COURT Judicial Precedent

S. 9(2)-Bankers' Books Evidence Act (XVIII of 1891), S. 2(8)Suit for recovery of loanStatement of account submitted by financial institution before the Banking CourtVerification in terms of Bankers' Books Evidence Act, 1891Scope

Account statement was one comprehensive document containing the entire history of the account containing credit and debit entries in a chronological order and was only required to contain verification at the end of such document.

2020 CLD 737 SUPREME-COURT Judicial Precedent

S. 9(2)-Bankers' Books Evidence Act (XVIII of 1891), S. 2(8)Suit for recovery of loanStatement of account submitted by financial institution before the Banking CourtVerification in terms of Bankers' Books Evidence Act, 1891Scope

Account statement was one comprehensive document containing the entire history of the account containing credit and debit entries in a chronological order and was only required to contain verification at the end of such document.

2020 CLD 737 SUPREME-COURT Judicial Precedent

S. 9(2)-Bankers' Books Evidence Act (XVIII of 1891), S. 2(8)Suit for recovery of loanStatement of account submitted by financial institution before the Banking CourtVerification in terms of Bankers' Books Evidence Act, 1891Scope

In the present case, the account statement submitted before the Banking Court carried a note at the end stating "Certified and verified on Oath that all the entries contained in the statement of account are true copies of the entries contained in ordinary books of the bank maintained and prepared in ordinary course of business and the said books are still in the custody of the bank. These entries have been certified after verification from the original ledger/ bills of the banker"

Said note practically incorporated the language of S. 2(8) of the Bankers' Books Evidence Act, 1891 and therefore met the requirement of law

Furthermore each page of the account statement was duly stamped and initialled by the concerned official of the Bank which amply and adequately met the requirements of the law

Petition for leave to appeal was dismissed and suit of financial institution was held to be pending before the Banking Court.

2019 SCMR 1873 SUPREME-COURT Judicial Precedent

S. 9Suit for recovery of loanMark-up based running finance facilityMark-up allowed only till date of repayment of amount

Recovery suit filed by respondent Bank was decreed for the principal amount along with mark-up that was chargeable under the agreement upto 31.12.2010

Mark-up beyond such period though was claimed in the suit but was not granted, and only cost of funds was allowed to be recovered beyond such period

Held, that the contract on the basis of which financial facility was lastly availed was executed on 03.03.2010, under which the amount was repayable by 31.12.2010, hence the Banking Court rightly allowed claim of mark-up only upto 31.12.2010 and beyond such period only cost of funds was awarded

Petition for leave to appeal was dismissed.

2019 SCMR 1873 SUPREME-COURT Judicial Precedent

S. 9Suit for recovery of loanPlea of forged documents negated by admissionPetitioner-customer contended that the banking suit had been filed on basis of forged documents

Held, that record showed that petitioner had admitted availing the financial facility in question and there was not specific denial as to the quantum of financial facility nor any calculation error in the statement of accounts had been pointed nor any entry in the statement of accounts was questioned

Petition for leave to appeal was dismissed.

2019 SCMR 1679 SUPREME-COURT Judicial Precedent

Ss. 9 & 22Suit for recovery of loanDecree by Banking CourtExecution proceedingsNotice not required

Section 19 (1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 had done away with the general requirement of instituting fresh proceedings for the execution of the decree as provided in the Code of Civil Procedure, 1908

After the banking suit was decreed, the proceedings did not come to an end but stood automatically converted into execution proceedings for which no fresh notice was required to be served.

2019 CLD 1222 SUPREME-COURT Judicial Precedent

Ss. 9 & 22Suit for recovery of loanDecree by Banking CourtExecution proceedingsNotice not required

Section 19 (1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 had done away with the general requirement of instituting fresh proceedings for the execution of the decree as provided in the Code of Civil Procedure, 1908

After the banking suit was decreed, the proceedings did not come to an end but stood automatically converted into execution proceedings for which no fresh notice was required to be served.

2018 CLD 1311 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

S. 9Suit for recovery of loanAuction of mortgaged property by the Banking CourtObjection petitionFraudProof

Banking Court granted interim relief (suspension of auction) on 23-05-2017 subject to deposit of 50% cash of decretal amount and next date of hearing was fixed as 30-05-2017 but auction of property was completed on 25-05-2017

Contention of petitioners was that objection petition was dismissed without affording proper hearing and Banking Court had failed to appreciate the facts properly

Validity

Petitioners were not afforded time till 30-05-2017 for deposit of 50% cash of decretal amount

Subsequently conducting auction proceedings on 25-05-2017 were not in defiance with the court's order

Applicants had failed to point out any irregularity or fraud in publication or conducting auction of mortgaged property

If fraud was alleged in an objection petition then its necessary ingredients must be pleaded so as to prove the same

General and bald allegations of fraud could not form basis to upset the proceedings otherwise validly conducted by a Court of competent jurisdiction

Petitioners had failed to prove fraud by the Bank

Banking Court had rightly dismissed the objection petition filed by the petitioners

No illegality or perversity was pointed out in the impugned order passed by the Banking Court

Appeal was dismissed in circumstances.

2015 GBLR 159 SUPREME-APPELLATE-COURT Judicial Precedent

Ss. 5, 7 & 9Suit for recovery of loanJurisdiction of Banking CourtScope

Chief Court vide the impugned judgment accepted review petitions partially and set aside its judgment, holding that Banking Judge, was appointed in consonance with S. 5 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and proceedings and orders by Banking Judge, were in accordance with prevailing law

Petitioners/judgment-debtors contended that, Banking Court was not vested with jurisdiction under the mandatory provisions of the Financial Institutions (Recovery of Finances) Ordinance, 2001, therefore, order of the Banking Court, was void ab initio and arbitrary in the eyes of law; that Chief Court had not appreciated that District Judge had no jurisdiction in the matter and judgment/decrees passed by said court were coram non judice and that both the District Court and Banking Court were not established in accordance with law, and their Presiding Officers having not been appointed by the Federal Government in pursuance of the mandatory provisions of the Financial Institutions (Recovery of Finances) Ordinance, 2001, therefore, orders/judgments rendered by said courts were coram non judice, not sustainable and were liable to be set aside

Petitioners had prayed that impugned order passed by Chief Court be set aside

Contention of counsel for respondent/Bank was that orders/judgments passed by the Chief Court were well reasoned and according to law and that Banking Court was established in accordance with law and its Presiding Officer was also competently appointed; as after promulgation of the Gilgit-Baltistan (Empowerment and Self-Governance) Order, 2009 authority for the appointment rested with the Gilgit-Baltistan council under serials 5, 13 & 50 of the Third Schedule of the order

No illegality and infirmity had been found in the judgment passed by the Chief Court

Petitions for leave to appeal were converted into appeals and were dismissed, in circumstances.

2015 CLD 1902 ISLAMABAD Judicial Precedent

Ss. 22 & 19(7)Suit for recovery of loanConsent orderAppealMaintainabilityImpugned order was passed with the consent of the partiesNo appeal would lie against a consent orderAppellant had not raised any cogent ground on the basis of which impugned order could be set aside

Appeal was dismissed in circumstances.

2013 CLD 2080 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss. 19 & 7Civil Procedure Code (V of 1908), Ss. 11, 47, O.VII, R.11 & O.XXIII, R.3Suit for recovery of loanRejection of plaintRes judicata, principle ofApplicabilityScopeCompromise between Bank and customerConsent decree, execution of

Suit for recovery was decreed in terms of a compromise, after which the Bank filed fresh suit for recovery on the ground that the defendant failed to pay installments in terms of said compromise

Plaint was rejected concurrently on ground of res judicata for the reason that the plaintiff Bank should have instead filed an execution petition under S.47 of the C.P.C.

Contention of the plaintiff Bank was that after passing of the consent decree there were three subsequent agreements between the parties, which gave rise to fresh causes of action, and for which the only remedy was filing of a fresh suit

Validity

Contention of the Bank was not tenable as present case was not one where the total outstanding liability had been repaid or any condition was incorporated in the re-scheduling agreements which went beyond the scope of the previous suit and compromise decree

Plaintiff Bank had not argued that the new principal debtors or fresh guarantors were introduced or old properties were released and new properties were mortgaged or such similar conditions were agreed in the subsequent agreements which were beyond the scope of the suit, compromise decree and outside the jurisdiction of the Executing Court

In absence of any such material change in the compromise decree, the Executing Court would be in a position to execute the decree under S.47 of the C.P.C., and could also take into consideration event of agreements and understandings arrived at between the decree holder Bank and the judgment debtors, even after passing of the compromise decree

Appeal was dismissed, in circumstances.

2013 CLD 1661 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss. 3, 17 & 22Civil Procedure Code (V of 1908), S.47Suit for recovery of loanGrant of costs of funds

Cost of funds in the decree were allowed under Ss. 3 & 17 of the Financial Institutions (Recovery of Finances) Ordinance, 2001

Determination of cost of funds by the Executing Court

Executing Court granted cost of funds from the date of institution of suit

Bank had impugned the order of the Banking Court whereby the cost of funds had been determined from the date of institution of the suit and not from the date of default till realization of amount, as claimed by the Bank

Contentions of the Bank were that under Ss. 3 & 17 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the Bank was entitled to the grant of cost of funds from the date of default till its realization and not from the date of institution of suit and that the date of default was to be considered as the date beyond which the mark-up was not allowed by the Banking Court

Respondents contended that the cost of funds could only be recovered from the respondents from the date of institution of suit and that no date of default was determined by the Banking Court while passing the decree

Validity

Under the provisions of Ss.3 & 17 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the customer was liable to pay cost of funds from the date of default till realization of the cost of funds as certified by the State Bank of Pakistan

Banking Court while passing the decree in favour of the Bank had granted cost of funds under Ss. 3 & 17 of the Ordinance

Although specific date of default was not mentioned in the decree, however, the date of default was defined in a manner that the claim of the Bank of an amount of mark-up charged after the date of default was declined by the Banking Court while passing the decree

Banking Court was mindful of the date of default at the time of passing the decree, after which date no mark-up was allowed to the Bank

Statement of account showed the relevant date of default beyond which the mark-up was not allowed in the decree by the Banking Court, and this date was to be taken as the date of default for the purposes of S.3 of the Ordinance

Argument of the respondents that cost of funds should be from the date of institution of suit was not tenable for two reasons, firstly, that under S.3 of the Ordinance, the cost of funds were to be granted from the date of default, and secondly, that the date of default was already determined in the decree

Executing Court could determine the date of default under S. 47, C.P.C., if no such date was defined in the decree but, in the present case, date of default was defined and could be ascertained from the decree

Impugned order was not sustainable in view of the settled principle of law that an Executing Court could not go behind the decree and was obliged to execute the decree as it was

Impugned order of the Banking Court was set aside and the appeal was allowed by the High Court, in the circumstances.

2012 SCMR 1688 SUPREME-COURT Judicial Precedent

O. VII, R. 7Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 9Suit for recovery of loanRelief to be specifically statedScope

Banking Court decreeing a suit for recovery of finance including a finance facility, which was not subject matter of the suit

Validity

No application was filed for amendment of memo of plaint to incorporate the said finance facility and same was not the subject matter before the Banking Court

Banking Court could not decree the suit in respect of an amount which was not subject matter before it in the suit

Appeal was allowed, judgments and decrees of courts below were set aside and matter was remanded to the Banking Court for decision afresh strictly in accordance with the law.

2012 CLD 1578 Gilgit-Baltistan Chief Court Judicial Precedent

Ss. 2(b)(ii) & 22Gilgit-Baltistan (Empowerment and Self-Governance) Order, 2009, Arts. 69, 71(2)Writ petitionSuit for recovery of loanJurisdiction of Chief Court to entertain suit filed under Financial Institutions (Recovery of Finances) Ordinance, 2001ScopeIntra-court appeal before Chief CourtScope

Bank (respondent) had filed a recovery suit against the defaulters (petitioners), and since the claim exceeded fifty million rupees, as envisaged under S.2(b)(ii) of Financial Institutions (Recovery of Finances) Ordinance, 2001, Chief judge of the Chief Court entrusted the suit to a judge of the Chief Court

Defaulters filed a writ petition against such order of the Chief judge with the contentions that nomination and entrustment of the suit to any judge of the Chief Court, was derogatory to S.2(b)(ii) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, which section only envisaged "High Court" and not the "Chief Court", and that the Chief Court had no concept of intra-court appeal and if the nominated judge passed any decree against the defaulters, they would be deprived of their right to intra-court appeal

Validity

Chief Court assumed and exercised all the powers of a "High Court" under general laws extended to Gilgit-Baltistan

Chief Court had been empowered to entertain the suits under the Financial Institutions (Recovery of Finances) Ordinance, 2001, as a "High Court"

Chief judge exercised jurisdiction of the Banking Court under the Ordinance and did not act as a judge of the High Court in its ordinary jurisdiction, therefore, any order/ judgment/decree passed by him could be appealed against before the Chief Court under S.22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, notwithstanding the fact that the Chief Court had no rules of intra-court appeal

Chief Court directed the competent authority having legislative power to look into the serious consequences of the issue and to introduce necessary amendments to the Gilgit-Baltistan (Empowerment and Self-Governance) Order, 2009

Order accordingly.

2012 CLC 1264 Gilgit-Baltistan Chief Court Judicial Precedent

S. 2(b)(ii) & 22Gilgit-Baltistan (Empowerment and Self-Governance) Order, 2009, Arts.69 & 71(2)Writ petitionSuit for recovery of loanJurisdiction of Chief Court to entertain suit filed under Financial Institutions (Recovery of Finances) Ordinance, 2001ScopeIntra-court appeal before Chief CourtScope

Bank(respondent) had filed a recovery suit against the defaulters (petitioners), and since the claim exceeded fifty million rupees, as envisaged under section 2(b)(ii) of Financial Institutions (Recovery of Finances) Ordinance, 2001, Chief Judge of the Chief Court entrusted the suit to a Judge of the Chief Court

Defaulters filed a writ petition against such order of the Chief Judge with the contentions that nomination and entrustment of the suit to any Judge of the Chief Court, was derogatory to section 2(b)(ii) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, which section only envisaged "High Court" and not the "Chief Court", and that the Chief Court had no concept of Intra-court appeal and if the nominated Judge passed any decree against the defaulters, they would be deprived of their right to Intra-court appeal

Validity

Chief Court assumed and exercised all the powers of a "High Court" under general laws extended to Gilgit-Baltistan

Chief Court had been empowered to entertain the suits under the Financial Institutions (Recovery of Finances) Ordinance, 2001, as a "High Court"

Chief Judge exercised jurisdiction of the Banking Court under the Ordinance and did not act as a Judge of the High Court in its ordinary jurisdiction, therefore, any order/judgment/ decree passed by him could be appealed against before the Chief Court under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, notwithstanding the fact that the Chief Court had no rules of Intra-court appeal

Chief Court directed the competent authority having legislative power to look into the serious consequences of the issue and to introduce necessary amendments to the Gilgit-Baltistan (Empowerment and Self-Governance) Order, 2009

Order accordingly.