Application for leave to defend

Plaintiff impugned order of Banking Court whereby plaintiff's suit against Financial Institution was rejected on ground of lack of pecuniary jurisdiction

Validity

Pecuniary jurisdiction had to be determined with reference to valuation given in plaint, and if Banking Court disagreed with valuation assessed by plaintiff, it should fix value of suit under provisions of Suits Valuation Act, 1887 after holding inquiry and collecting material as deemed expedient by Banking Court, and thereafter matter could have been referred to court of competent jurisdiction

After examining the plaint, once Banking Court had proceeded to issue summons to defendant, and application for leave to defend had been filed, then Banking Court could not take any further steps under C.P.C. without first deciding application for leave to defend under S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Impugned order was made without first deciding application for leave to defend, and therefore Banking Court had gone outside scope of S. 10(8) of the Ordinance

Impugned order was set aside, and Banking Court was directed to decide application for leave to defend and only thereafter in case leave to defend was granted, it could frame issue with regard to pecuniary jurisdiction

Appeal was allowed, accordingly.

Scope-Defendant impugned order of Banking Court whereby its application for leave to defend was rejected and suit was decreed in favour of plaintiff Bank

Contention of defendant, inter alia, was that statement of account annexed by plaintiff Bank had various defects, which were pointed out in application for leave to defend, therefore the same ought to have been adjudicated upon

Validity

Statement of account furnished by plaintiff Bank had been properly bifurcated in two parts, showing withdrawals by defendant from time of first sanction of finance, and with some deposits as well and entries therein showed markup that had been charged from time to time, and recovery of the same had been made regular intervals

Such statement of account was prepared in accordance with banking practice and procedure, and certified per S. 4 of Bankers' Books Evidence Act, 1891

Challenge to such statement of account by defendant was merely perfunctory in nature and therefore leave to defend had rightly been rejected by Banking Court

Appeal was dismissed, in circumstances.

Scope-Defendant impugned order of Banking Court whereby his application for leave to defend was rejected and suit was decreed - Contention of defendant, inter alia, was that statement of account annexed by plaintiff Bank was defective and therefore impugned order was wrongly passed

Validity

Defendant could not point out any specific entry in statement of account which had been either wrongly entered therein or any markup which had been excessively charged and said statement of account was duly certified also

High Court observed that while suit was rightly decreed by Banking Court however, three specific debit entries in statement of account, which were charged by plaintiff Bank after expiry of finance, ought to have been deleted from decretal amount as same were made in disregard to standard banking practice and procedure

High Court modified the decree to extent of said entries

Appeal was partially allowed, accordingly.

Contention of defendant inter alia, was that plaintiff bank had not annexed proper statement of account and disbursement of finance as claimed by plaintiff Bank was not made, and therefore impugned order was liable to be set aside

Validity

Record revealed that plaintiff bank had not appended documents showing disbursement of amounts to defendant and such failure of plaintiff Bank to append certified statement of account along with other documents relating to grant of finance was non-compliance of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Effect of such non-compliance entailed grant of leave to defend suit to defendant

Defect in non-filing of complete and accurate statement of account with plaint could not be cured subsequently by filing same with replication or with application seeking submission of additional documents

Application for leave to defend if dismissed while relying on a statement of account not filed with plaint or replication, then same would tantamount to infringement of Fundamental Right to Fair Trial and Due Process guaranteed under Arts. 4 & 10A of Constitution

Since mandatory requirement of filing statement of account with plaint was not fulfilled and disbursement of finance facility was not established through any valid document, therefore substantial questions of law and fact arose, and thus application for leave to defend ought to have been granted by Banking Court

Impugned order was set aside, application for leave to defend of defendant was allowed and matter was remanded to Banking Court

Appeal was allowed, accordingly.

Section 10(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provides that leave to defend shall also be in such form which contain a summary of the substantial questions of law as well as fact in respect of which evidence needs to be recorded, which should be filed according to S. 10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

Plaint, in terms of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 was required to disclose cause of action and failure to do so may lead to rejection of plaint on basis of averments of plaint, irrespective of whether leave to defend had been obtained by defendant or not

Plaint, if sought to be rejected on grounds other than averments in plaint, for example, on ground of defence of defendant, then such defendant was required to obtain leave to defend before his plea for rejection of plaint, such as on ground of res judicata or limitation, was considered by Banking Court

Application for rejection of plaint was a special kind of application, different from other interlocutory applications for reason that Banking Court itself was vested with suo motu powers to reject plaint at any stage

Grounds taken in an application for rejection of plaint may also be treated as grounds for grant of application for leave to defend, which had to be considered on its own merits and if circumstances of case so required, leave may be granted on said grounds

Dismissal of application for leave to defend did not mean that suit was to be decreed in all cases and Banking Court retained power to reject plaint in a suit or dismiss the same even after rejection of application for leave to defend, if plaintiff failed to make out a case for passing decree.

Section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 provided that a defendant/customer was required to specifically mention amount of finance availed, amounts paid to Financial Institution, dates of payments, and other information, up to date of institution of a suit for recovery

Such requirements had to be fulfilled by a defendant in stricto sensu

Where application for leave to defend contained mere vague averments and simply denied claim of Financial Institution, then such application had to be rejected by Banking Court.

Jurisdiction of Banking Court to entertain suits relating to "finance" as defined in Financial Institutions (Recovery of Finances) Ordinance, 2001

Plaintiff impugned order of Banking Court whereby plaint of plaintiff was returned by Banking Court on ground that suit in the matter should be filed before Insurance Tribunal

Contention of plaintiff/appellant, inter alia, was that suit was contested by defendant and leave to application was filed, therefore Banking Court could not pass impugned order for return of plaint before decision on application on for leave to defend

Validity

Admitted fact that basis on which suit was filed related to "finance" as defined by S. 2(f) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Without decision on leave application, plaint of appellant could not be returned by Banking Court, and impugned order was therefore an error in law

Impugned order was set aside, and Banking Court was directed to pass decision on application for leave to defend

Appeal was allowed, accordingly.

Plaintiff Bank filed suit for recovery of finance against defendants but did not append certified copy of statement of accounts

Validity

Bank was required to file such document in support of its claim which according to S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 included but was not limited to statement of accounts duly certified under Bankers' Books Evidence Act, 1891 and also by all other documents relating to grant of finances

Grant of leave to defendant revolved around statement of accounts which could only be basis for claim as made by plaintiff in plaint

In absence of such statement of account, claim could hardly be construed as an amount outstanding as statement of account was a crucial document which went to root of case which was mentioned in plaint but not available on record

High Court granted unconditional leave to defend suit to defendants as plaintiff was unable to rebut contention raised by defendants

Application was allowed in circumstances.

Petitioner impugned order of Banking Court whereby complaint of plaintiff Bank to initiate criminal proceedings against defendant on account of defendant's denial of availing finance facility was allowed

Contention of defendant, inter alia, was that it was entitled to raise its defence in the suit and said denial in his application for leave to defend did not constitute an offence under S. 20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001

Validity

Suit of the plaintiff Bank was still pending at the stage of application for leave to defend, and Banking Court had yet to decide the same and had not yet considered plea of defendant with respect to denials made in defendant's application for leave to defend

In such circumstances, Banking Court could not have initiated proceedings under S. 20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 as the entire complaint of plaintiff Bank was presumptive

Question of whether finance was obtained by defendant or not, had not been conclusively adjudicated and if at present stage Banking Court proceeded with the complaint, it would prejudice the case of the defendant in the suit for recovery

Criminal complaint filed by plaintiff Bank was therefore misconceived and Banking Court could not have proceeded with the same

Impugned order was set aside

Constitutional petition was allowed, accordingly.

Plea raised by defendant was that Banking Court did not take into consideration details of markup charged by Bank which was mentioned in application for leave to defend suit

Validity

Defendant did not bring to challenge any entry or statement of account of principal

Although it was stated that not only entire amount of principal was repaid but extra amount had also been paid but defendant did not furnish any details thereof as per requirements of section of Financial Institutions (Recovery of Finances) Ordinance, 2001

Record was not clear as to how Banking Court concluded that an amount of Rs. 1,059,052/- was paid by defendant when no such averment was made in application for leave to defend

Banking Court fell in error to such extent by deducting such amount from claim of Bank

High Court modified judgment and decree to extent of decretal amount together with costs of funds as contemplated by S. 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001

High Court declared that modified decree be treated as interim decree and leave to defend suit was granted to defendant with regards to balance claim of Bank

High Court directed Banking Court to frame necessary issues with regard to markup component of claim of Bank and to record evidence of parties

Appeal was allowed accordingly.

Suit filed by customer seeking declaration that customer was not liable to pay "appreciation charges" on finance facility, was decreed after Banking Court dismissed leave to defend application of defendant Financial Institution

Validity

Suit was decreed by Banking Court without considering arguments raised by defendant in its application for leave to defend and there was nothing before the Banking Court on basis of which it could conclude that said appreciation charges were contrary to applicable State Bank Regulations

Impugned order was set aside and case was remanded to Banking Court

Appeal was allowed accordingly.

Defendant impugned order of Banking Court whereby its application for leave to defend, wherein he denied availing the finance facility, was dismissed while relying on opinion of a Handwriting Expert which opinion stated that signatures of defendant were same as those on banking documents

Contention of defendant, inter alia, was that Banking Court could not have dismissed defendant's application for leave to defend without giving him opportunity to cross-examine said Expert

Validity

Article 84 of the Qanun-e-Shahadat, 1984 enabled Banking Court to compare signatures with others admitted/proved and said process was not employed in the present case

Opinion relied upon by Banking Court in the impugned order had not been proven in evidence and issue of authenticity of signatures could not be determined merely on opinion of an Expert and that too without framing issues or leading evidence

Impugned order was therefore not sustainable in law and dismissed, in circumstances.

Question before the High Court was whether the Banking Court, after having granted leave to defend, could reject the plaint of the plaintiff under O. VII, R. 11, C.P.C.

Held, that Banking Court in the first instance had to decide the fate of the application for leave to defend on merits and thereafter it was at liberty to reject the plaint of the plaintiff, if it reached conclusion that the case was liable to be rejected under O. VII, R. 11, C.P.C.

Banking Court however, before giving finding on an application for leave to defend, could not reject plaint under O. VII, R. 11, C.P.C.

Contention of the defendant, inter alia, was that vital questions, including question with regard to insurance stipulation in the finance agreement, were not addressed in the impugned order

Validity

Question as to whether a stipulation in the finance agreement with regard to insurance policy/arrangements had any material effect on the relationship between the parties was required to be addressed in order of Banking Court

Issue of whether plaint of plaintiff Bank was in conformity with mandatory provisions of S. 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was reasonably expected to have been at least addressed and reconciled by the Banking Court for determination of the application for leave to defend, which was not done in the impugned order

High Court observed that Banking Court was required to consider defendant's pleas comprehensively and ought not to reject the same in a perfunctory or cursory manner

Impugned order was set aside, and matter was remanded to Banking Court

Appeal was allowed, accordingly.

Where creation of a mortgage was admitted, the bald allegation that some of documents were forged was not per se a substantial question of fact in respect of which evidence needed to be recorded in terms of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001.

Application for leave to defend was not about mere denial of claim of (plaintiff) Financial Institution/Bank by raising routine and perfunctory objections vis-à-vis non-disbursement of finances and allegation of markup upon markup, but instead, accrual of excessive markup, if any

Held, such accrual of excessive markup should be clearly pinpointed and identified by the defendant/customer in the application for leave to defend.

Defendants, in a suit for recovery, in their application for leave to defend, were precluded from raising any dispute with regard to a liability which was otherwise admitted by them in their audited accounts.

Question as to whether sub-lease of mortgaged property could be done or not was not a question for the Banking Court to adjudicate at the stage of application for leave to defend, as the same pertained to execution of decree proceedings.

For banking transactions, even when there existed certain documents which were empty/blank or had not been properly filed; once the borrower/customer availed the finance facility and did not dispute the same while availing such facility; objections as to blank documents could not be appreciated or accepted and the same was also catered to by S. 20 of the Negotiable Instruments Act, 1881.

Application for defendant, filed during pendency of defendant's application for leave to defend, seeking a direction to the effect that plaintiff Bank reschedule/renew finance facility, was rejected by Banking Court

Validity

During pendency of leave to defend application, defendant was precluded from filing any miscellaneous application and Banking Court, under the Financial Institutions (Recovery of Finances) Ordinance, 2001, had no jurisdiction to direct financial institution to reschedule dues of its customers

Petitioner's application was not maintainable and was rightly declined by the Banking Court

Constitutional petition was dismissed, accordingly.

Credit card facility availed by defendant expired on 24.02.2009 and outstanding amount availed during validity of the credit card could be recovered within a period of three years from said date of expiry, which limitation period ended on 20.02.2012; and suit was filed by 16.04.2012 and was therefore not within the period of limitation

Contention of plaintiff Bank that after date of expiry of credit card, an acknowledgement as to defendant's liability was made by him which extended date of limitation under S. 19 of the Limitation Act, 1908; was a mixed question of law and fact and could not be decided without recording of evidence

Impugned decree was set aside and leave to defend was granted to the defendant, and matter was remanded to Banking Court

Appeal was allowed, accordingly.

Contention of defendant, inter alia, was that there existed objections to the entries in the statement of accounts and certain entries of the finance facilities were not reflected in the account submitted by the plaintiff Bank

Validity

Sufficient admission of liability was available on record coupled with the fact that the defendant had not complied with the necessary requirements of S. 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which did not entitle the defendant from raising objections to entries

Claim of plaintiff was duly substantiated from documents available on record as well as the statement of accounts which had been prepared in accordance with law

Application for leave to defend was dismissed, and suit was decreed, accordingly.

Non-compliance of S. 10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 entailed penal consequences specified in S. 10(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001; and such fact of non-compliance was sufficient reason alone to reject an application for leave to defend

Defendant, in a suit for recovery, was not entitled to grant of leave to defend on mere allegation of breach in fulfilment of obligations of a plaintiff/Bank, and the same did not entitle such a defendant to skirt its obligations under the Financial Institutions (Recovery of Finances) Ordinance, 2001 and for it to refuse to repay the amount of finance availed by it.

Contention of defendants was that plaintiff Bank obtained their signatures on blank documents which was prohibited under S. 18 of the Financial Institutions (Recovery of Finances) Ordinance, 2001

Validity

Entire liabilities due from the defendants had been brought forth in the last facility offer letter and defendants could not now turn around and say that the basis of the suit was certain blank document(s) obtained by the plaintiff Bank

Defendants had alleged that they had made the entire payment of the liabilities under the finance facilities disbursed and, therefore, the defendants could not blow hot and cold by stating on the one hand that they had repaid the finance facilities availed from the plaintiff-Bank while on the other hand challenging the very documents on which the finance facilities were predicated

Application for leave to defend was dismissed, in circumstances.

Plaintiff Bank impugned order of Banking Court whereby one defendant's name was struck off from list of defendants in a suit for recovery, after acceptance of such defendant's application for leave to defend

Validity

Striking off the name of the said defendant from list of defendants in terms of O.I, R. 10 of C.P.C. was not countenanced by law and if leave to defend was granted to said defendant, it was proper that issues be framed and evidence recorded

By making impugned order of deletion of name of defendant from the array of the defendants, the right of the plaintiff Bank to assert otherwise and make out a case to establish liability of said defendant was jeopardized

Impugned order was set aside

Appeal was allowed, accordingly.

Such application for leave to defend was not time-barred in circumstances.

Landlord contended that since issue on default had been framed by Rent Tribunal, it hardly made any difference, that leave to contest was granted or not

Validity

Rent Tribunal keeping in view divergent pleas of the parties had come to the conclusion that parties were at factual variance regarding rate of rent as well as period of default

Rent Tribunal concluded that there were triable issues in the case which required recording of evidence

Section 22(4) of the Act provided that Rent Tribunal shall not allow leave to contest to the tenant, unless the application disclosed sufficient grounds for production of oral evidence

Section 22(6) of the Act clearly contemplated that in case leave to contest was refused the Rent Tribunal shall pass the final order

In the present case, final order was not passed and Tribunal felt need to record evidence of the parties, therefore, for all intents and purposes the application for leave to contest was allowed

If conclusion of the Tribunal was not happily worded or no specific word for grant of leave was mentioned and issue had been framed, that did not mean that leave had not been granted

Constitutional petition was dismissed accordingly.

Parties, in a banking suit, had no option to make general allegations/assertions on aspects of accounts as the Financial Institutions (Recovery of Finances) Ordinance, 2001 bound the parties to be absolute and specific on accounts

Banking Suit was normally a suit on accounts and as such it was obligatory on both parties to definitely plead and specifically state their respective accounts

Restructuring/re-scheduling of amount already availed by a customer was not "disbursed afresh" and in such situations amounts outstanding in statement of accounts was only brought forward in the certified statement of accounts

Repayment schedule was not a notional document but was in fact an inseparable part of the rescheduling

When no entry in statement of account was specifically challenged, then it was to be presumed that the accounts prepared and maintained by plaintiff Bank were correct.

Defendant-company contended that Demand Finance facility had been created for the purpose of adjusting the Finance against Packing Credit FAPC (Finance against packing credit) facility and FAFB (finance against foreign bill) facility; and that the only amount due and payable was the amount against the Demand Finance facility, as according to the last entry in the statement of account, the liability with regard to the FAPC facility had been shown as Nil balance and in the statement of account, the Demand Finance facility had been shown as adjusted and no withdrawal had been shown; that the claim regarding FAPC facility and FAFB facility was therefore unlawful, and that no actual disbursement had taken place

Plaintiff-Bank contended that the FAPC facility and a portion of FAFB facility had been converted into the Demand Finance facility, and that said restructuring substantiated the Bank's claim with regard to the Demand Finance facility and FAFB facility separately, and that the last entry in the statement of accounts was marked as Nil for the reason that the amounts had been transferred to a new account, which was described as non-performing loan account

Validity

Facility offer letter with regard to the renewal and restructuring of certain finance facilities was already being availed by the defendant-company; some of those facilities were fresh facilities, whereas, the others were merely renewed or restructured so as to enable the defendant to repay the amounts already due from them, and which had not been paid in terms of the obligations cast upon them by way of the earlier finance agreements

Bank's claim with regard to its claim in respect of FAFB facility and FAPC facility was supported by the concise statement of account attached with the plaint, which had been validly and properly been explained by the plaintiff-Bank

Claim with regard to the Demand Finance facility was separate claim, which had been admitted by the defendant-company

Facility offer letter, the finance facilities had been renewed and restructured as a result of the arrangement reflected in said facility offer letter, which merely meant that in respect of existing entries certain adjustments had been made and for the purpose book entries had been made which were in contemplation of the contracting parties, and disbursement of facility was not necessary in said cases

Defendant, at the time of grant of renewal and restructuring of the facilities under the facility offer letter, were aware of the nature of the facilities being granted and also that for the purposes of the restructuring of those facilities, certain book entries would have to be made and adjustments of the earlier outstanding dues would also be part of the restructuring agreement

Chief Executive of the defendant-company had written a letter to the Bank, whereby, the defendant had admitted the finance facilities having been availed by them form the Bank and certain amount outstanding and due to the bank, and they also made a request to reschedule the credit line

Admission made by the defendant in the said letter was sufficient to hold them liable for the repayment of the amount mentioned in the letter

Defendant had failed to raise any substantial question of fact or law in their application for leave to defend

Suit for recovery was decreed in circumstances.

Defendant appeared before the Trial Court and moved an application that he needed copies of plaint as same had not been supplied

Defendant also sought copies of the pleadings when Vakalatnama was filed by his counsel

Nothing was on record that copies of plaint and annexures were provided to the defendant

Application for leave to defend was filed within 10 days of the time when defendant was provided the copies

Application for leave to defend could not be filed prior to having copies of the plaint

Impugned judgment and decree were set aside and matter was remanded to the Trial Court for decision afresh from the stage of hearing of application for leave to defend within a specified period

Appeal was disposed of accordingly.

Contention of the defendants was inter alia that said applications could not be dismissed when the defendants had raised dispute with regard to pledged stock; and that the pledged stock, while in possession of the plaintiff Bank, had been stolen therefore; no decree could have been passed against the defendants

Held, that under Ss. 148 & 172 of the Contract Act, 1872; bailment was the delivery of goods by one person to another for some purpose as per the contract and when the purpose of the same was accomplished, the said goods shall be returned or otherwise disposed of, according to the direction of the person delivering them

Pawnee was bound to return the pledged goods to the pawnor but where the pawnor failed to repay the debt; the pawnee was within his rights to sell the pledged goods after notice to the pawnor or retain the goods and file suit for recovery of debt

Only when the bailer had been granted a decree and he was enforcing the same in execution proceedings, the question could be asked as to whether the bailer was in a position to return the security of pledged goods to the bailee or not; and therefore where the Financial Institution was treating the pledge of goods as collateral security; leave to defend the suit could not be granted to the defendant/customer; on the basis of the status, condition and availability or otherwise, of the pledged goods

High Court observed that per provisions of S. 47 of the C.P.C.; the Executing Court was fully empowered to decide all questions regarding execution, discharge or satisfaction of the decree and therefore; all questions regarding security of pledge could be adjudicated at the time of execution of decree by the Executing Court

Impugned order of Banking Court could not be interfered with

Appeal was dismissed, in circumstances.

Contention of defendant was that service was not validly effected upon the defendant; and therefore, delay should be condoned

Held, wisdom behind proviso to S. 10(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was that there would be occasions where, in certain remote areas, newspapers did not have wide circulation therefore there could be possibility that the person upon whom the service was to be effected may not be able to get the information which had been published in a particular newspaper and had service been duly effected through other modes, then proviso to S.10(2) would not have any application

Banking Court, in the present case, did not consider whether defendants were duly served through other modes, therefore a miscarriage of justice took place

Banking Court, in dismissing application for leave to defend, ought to have considered matter in its entirety in juxtaposition with the claim of the plaintiff bank and thereafter should have passed a judicial order

Application for leave to defend, even it was not filed, or had been filed but rejected, in either case, Banking Court had to pass a well reasoned and speaking order; and had to examine the plaint on touchstone of S.9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001

High Court set aside impugned order of Banking Court and remanded matter to Banking Court to decide defendants' application for leave to defend after affording an opportunity of hearing to all parties

Appeal was allowed, accordingly.

Object of S.10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was to give an opportunity to the defendant customer to make out a case for grant of leave to defend by disclosing amounts paid by the defendant to the financial institution and dates of such payments

Defendant would not be absolved from its obligation under S.10(4) of the Ordinance by simply disputing or denying amount claimed in the suit or by stating an amount towards repayments in general or vague terms without filing documents in support thereof.

Petitioner/defendant impugned order of Banking Court whereby application for leave to defend of petitioner/defendant was dismissed

Contention of petitioner/defendant was that such dismissal was done summarily through a stereotypical order; which was identical to orders passed by the same Banking Court while dismissing other applications for leave to defend

Held, that perusal of various orders in juxtaposition with the impugned order; revealed that stereotype identical orders had been passed by the same Banking Court whereby leave to defend applications filed by various parties had been dismissed in a mechanical manner, without proper application of mind to the facts of each case

High Court set aside impugned order and remanded matter to Banking Court for decision afresh with the direction to pass a well reasoned speaking order after providing of opportunity of hearing to both parties

Constitutional petition was allowed, accordingly.

Contention of the customers/defendants was, inter alia, that statement of accounts did not depict a true picture of transactions and that markup applied was not according to the finance agreement

Validity

Execution of finance agreement had not been specifically denied by the defendants

Defendants seeking to appear and defend the suit must disclose a plausible defence or show that there were substantial questions of facts and law which needed to be tried, otherwise, leave to defend had to be refused and suit was to be decreed

Only on an evasive denial or as a routine matter, leave to defend could not be granted

All documents annexed with a plaint were to be read as part and parcel of the plaint and contents whereof could not be read in isolation

All terms and conditions of the finance agreement between the parties, and the sanction letter should be read in conjunction with the paragraphs of the plaint and it could not be argued that the Financial Institution had not disclosed cause of action and had provided wrong entries in the statement of accounts

Under S.10(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 non-compliance of provisions of S.10(4) of the Ordinance, would result in rejection of application for leave to defend

Defendants in the present case, had failed to specify amount payable to the Bank and had failed to disclose the disputed amount in their application for leave to defend

Application for leave to defend, was dismissed, in circumstances.

Contention of the defendant was that leave to defend be allowed on the ground that defendant had raised counter-claim against the plaintiff bank

Validity

Counter-claim of the defendant was based on the failure of the plaintiff Bank to disburse the total facility amount in terms of a commitment made by it, whereas the plaintiff Bank had filed a suit for the recovery of amounts disbursed to and due from, the defendant

Such were two separate and distinct issues where the suit of the plaintiff Bank would not operate as res judicata against the claim of the defendant

Section 9(3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 clearly provided that the suit should specifically provide as to what finance had been availed, what amounts had been paid and what amounts were due from the defendants and under S.10 of the Ordinance, the defendant in their leave to defend application had to show the finance availed and the finance due from them

Recovery suit was with respect to finance availed and due to the plaintiff where the issues were not directly and substantially the same as in a counter claim for damages being claimed on account of the conduct of the plaintiff bank

Held, that any grievance that the defendant had with respect to amounts not disbursed would not operate as res judicata against the defendants and such a counter claim could not be included in the leave to defend application as the leave to defend under S. 10 of the Ordinance was merely an application stating the grounds on the basis of which the defendant sought leave from the court with respect to the questions of law and fact for which evidence needed to be recorded specifically with respect to finance availed and finance due

Claim for damages could not be included in the leave to defend application as it did not give rise to the same questions of law or fact on the basis of which the court would adjudicate to decide on the claim of the plaintiff

Question of sustaining losses by the borrowers on account of conduct of the bank could be sorted out in some other forum instead of claiming relief from the Banking Court

Counter-claim related to damages was not germane to the issues raised for the purposes of grant of leave

Application for leave to defend was dismissed, in circumstances.

Contention of the defendants/ applicants was inter alia that statement of accounts had not been certified by the competent authority in terms of S. 2(8) of the Banker's Books Evidence Act, 1891 which was a requirement under S.9(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001

Validity

Statement of accounts filed with the plaint had been certified by the Senior Vice-President, Accounts Department as well as the Senior Vice-President and the Assistant Vice-President of the plaintiff Bank

Section 2(8) of the Banker's Books Evidence Act, 1891 required that certification be made by the principal accountant or the manager of the bank with his name and official title and said definition did not provide for the designation or title of the principal accountant or manager of the bank but required that a responsible officer of the bank certify the statement of accounts

Such an officer would provide his official title in the certification, meaning thereby, that the official title did not have to be a principal accountant or manager of the bank

Title of the persons maintaining the books of accounts may vary from bank to bank and may also change over time and the intent was to ensure that a responsible officer whose work related to accounts or management sign the certificate

In the present case, the certification had been issued by the Senior Vice-President, Accounts Department which was a certification by the principal accountant and the signature of the Senior Vice-President and Assistant Vice-President of the bank was a certification by the manager of the bank

Certification through the responsible officer meant the bank owned the statement of accounts and certified that the same represented the true and correct statement, as maintained in its books of accounts

Such certification enabled the court to consider the copies of the statement of accounts as admissible evidence in the suit

Requirements of S. 2(8) of the Act of 1891 was not mandatory but directory and that sufficient compliance would depend upon the facts and circumstances of each case

Where the accounts were duly signed by the agent of the bank, it implied that it was a true copy maintained by the bank in its ordinary course of business and that such book was in the custody of the bank

Contention that leave to defend had to be granted to ascertain that the signatures were that of the principal accountant and the manager of the bank was related to the authority of the persons signing the statement of accounts and no such objection had been made with regard to said authority in the present case

High Court held that the statement of accounts was compliant with S. 2(8) of the Banker's Books Evidence Act of 1891.

Defendant sought condonation of delay in filing of application for leave to defend inter alia on the ground that there was a change of management in the defendant company and that the counsel engaged by the defendant had failed to discharge his duties in filing of the application

Validity

Name of counsel purportedly engaged by the defendant company had not been disclosed in the application and date on which said counsel was engaged was also not mentioned

While seeking condonation of delay, the applicant had to submit explanation for each and every day which had not been done in the present case

Parties were bound by the acts and omissions of their counsel and in case of any negligence on part of the counsel, the parties could not claim that they were not to be held responsible

Application for condonation of delay was dismissed, in circumstances.

Unless the defendant was granted leave to defend the suit, he could not seek rejection of plaint or file an interlocutory application.

Contention of the defendants was that the plaintiff Bank had violated the terms and conditions of the Bank Guarantee by enchasing the same in favour of the beneficiary

Validity

Defendants had not placed on record the document of the guarantee establishing as to how the plaintiff had violated its terms and it was not the claim of the defendants that the guarantee had expired

While the plaintiff Bank had also not placed on record the document of the guarantee, the defendants had themselves admitted to the same

Defendants had also filed a separate suit in the civil court wherein they alleged that the beneficiary had violated the terms of the guarantee and had not alleged in the plaint that the plaintiff Bank had dishonored the terms of the guarantee

Contract of guarantee was an independent contract of the principal contract

Application for leave to defend the suit was dismissed and suit of the plaintiff Bank was decreed as prayed for.

Once leave to contest had been granted to a tenant, despite non-filing of affidavit of the witnesses by him, his right to prove the case through oral evidence must remain unimpaired.

Such statement of accounts containing complete picture of loan facility obtained by defendant would. not be considered to be a document having no legal authenticity

Non-denial of obtaining of loan facility by defendant established execution of documents mentioned in plaint and his failure to discharge his liability in accordance with agreed terns

Defendant while filing leave application had failed to comply with provisions of Ss.10(3), 10(4) & 10(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Grant of leave to defend suit could not be considered a matter of routine or right, unless the suit involved substantial question of fact and law

Defendant had neither denied execution of loan documents nor complied with mandatory requirement of law, thus, was not entitled to leave to defend

High Court dismissed leave application and suit was decreed resultantly.

Where defendant despite ample opportunity, fails and or neglects to appear and satisfy court that substantial question of law and fact have been raised in leave to defend application that necessitate recording of evidence, in default of his doing so, Banking Court in terms of S.10(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, read with provisions of Civil Procedure Code, 1908, may in such situation dismiss the application for non-prosecution and or ignore the same

Result in either of eventuality is same and by virtue of deeming clause, allegation of fact in plaint deems to be admitted and Banking Court may pass decree in favour of plaintiff on the basis thereof or such other material as Banking Court may require in the interests of justice.

Defendants filed leave to defend application but neglected, failed and defaulted to purse leave application, this failed to obtain leave within contemplation of S.10(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Despite several and last opportunity given, consequently the application was dismissed and suit on the basis of facts pleaded and material placed along with plaint, was considered and suit was decreed

Defendants were not able to make out any case for interference and High Court declined to take any exception to judgment and decree passed by Banking Court as regard principal amount

High Court appointed Local Commission to calculate mark up on outstanding principal amount in accordance with finance agreement for subject facility

Appeal was dismissed accordingly.

Such statement of accounts containing complete picture of loan facility obtained by defendant would not be considered to be a document having no legal authenticity

Non-denial of obtaining of loan facility by defendant established execution of documents mentioned in plaint and his failure to discharge his liability in accordance with agreed terms

Defendant while filing leave application had failed to comply with provisions of Ss.10(3), 10(4) & 10(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Grant of leave to defend suit could not be considered a matter of routine or right, unless the suit involved substantial question of fact and law

Defendant had neither denied execution of loan documents nor complied with mandatory requirement of law, thus, was not entitled to leave to defend

High Court dismissed leave application and suit was decreed resultantly.

Where leave to defend was not granted, the defendant had to bear the brunt of a decree, but where such leave was granted, the plaintiff was only burdened to produce the evidence in order to prove his case.

Suit by the Bank had been validily filed and was maintainable as the power of attorney had been executed by the President of the plaintiff Bank

Defendant had admitted the issuance of the finance facility and that he was regularly paying the instalments but due to unavoidable circumstances, he could not pay the same further

Effect

Defendant had not discharged his obligation as per his agreement with the plaintiff Bank and had failed to make out any substantial question of law or fact in respect of which any evidence was required to be filed

Application for leave to defend was dismissed and the suit of the plaintiff Bank was decreed, in circumstances.