Leave to defend

Appellant filed the application for leave to defend stating that the amount shown to have been disbursed to him was incorrect and that he had repaid the due amount, which was not reflected in the statement of account

Banking Court did not consider the defense taken by the appellant to be bona fide and consequently passed decree against him

Validity

Judgment passed by the Banking Court had not dealt with the defense raised by the appellant in any meaningful way

Appellant in his application for leave to defend had substantially complied with the requirements of S. 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001

Banking Court, however, had mechanically stated in the order that the appellant had not fulfilled the requirements of S. 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001

Appeal was allowed and the Banking Court was directed to expeditiously decide the application for leave to defend.

As S. 2(a) read with S. 9(5) mentions branch offices, the amount of finance availed, carrying on or transaction of business, therefore, the statement of account being sent to the defendant at his address would also be taken into consideration while deciding the leave to defend.

Wording of S. 10(1) states that in any case in which the summons has been served on the defendant under S. 9(5), the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court

While S. 10(3) gives a chance to the defendant to file leave to defend containing substantial questions of law as well as of fact.

Appellants assailed judgment and decree passed by Banking Court whereby the suit for recovery instituted by bank was decreed

Validity

Sanctioning and availing of the Letter of Credit Facility was not denied in the PLA (Petition for Leave to Appear)

Mere bald and general assertion that blank documents were executed by the appellants could not be accepted against the executed finance and security documents appended with the plaint

Partial payments made regarding the Letters of Credit in question by one of the appellants was admitted

Appellants, in their PLA, had not fulfilled the requirements of Ss. 10(4), 10(5) & 10(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 thereby entailing penal consequence by way of rejection of the PLA as stipulated in S. 10(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001

No substantial question of law and fact was raised in the PLA necessitating the grant of PLA and recording of evidence

Banking Court had lawfully and rightly passed the decree in favour of the bank

Appeal was dismissed.

Raising a plausible defence is a test for grant of leave in a suit under O. XXXVII of C.P.C. as grant of leave is a rule under the said law, whereas under Financial Institutions (Recovery of Finances) Ordinance, 2001, the grant of leave to appear is an exception.

Absence of meeting mandatory requirements of S. 10(3)(4)(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 i.e. disclosing summary of substantial questions of law as well as facts in respect of which in the opinion of the defendant evidence needed to be recorded; failure to tabulate honest disclosure about the amount of finance availed by the defendant; failure to allege the amount of finance payable by defendant; and not disclosing the amount of finances disputed by the defendant, has a consequence in law

Imperative for defendant to fulfill all these mandatory requirements and a combined reading of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, discloses that the failure of compliance of mandatory subsections entail penal consequences.

Where defendant had filed two petitions for leave to appear and had submitted that both should be read together, High Court observed that in terms of law, such expectation from the Court was not tenable.

Appellants had conceded the banker-consumer relationship, the availing of finance facilities and executing the security documents to secure the repayments of amounts availed by the appellants

Petitions for leave to appear filed by appellants did not fall in the exceptions justifying the grounds for grant of appellants' petitions

Mandatory requirements of S. 10(3)(4)(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 had not been complied with by the appellants

So far as contention of appellants that amounts deposited by them towards satisfaction of their availed finance facilities were embezzled and an FIR in that respect was lodged, was concerned High Court observed that the FIR was lodged against employees of the Bank and not against the Bank

Inherent fallacy existed in the arguments of the appellants that pendency of those proceedings constituted a ground for grant of appellants' petitions for leave to appear

Banking court had rightly dismissed the appellants' petitions for leave to appear

Appeal was dismissed.

Petitioner assailed order passed by Gas Utility Court whereby it had deleted the names of two defendants from the array of defendants

Validity

Such course was not permissible and the Gas Utility Court was to decide the application for leave to defend and prior to that no proceedings unilaterally and without any application having been filed, could be commenced by the Gas Utility Court to strike out the parties from the plaint

Impugned order was set aside

Constitutional petition was allowed and the Gas Utility Court was directed to proceed to determine the application for leave to defend first and upon that basis pass any further order if at all necessary.

Provisions of S. 10(5) of Ordinance are mandatory in nature as their non-compliance entails penal consequences, as provided under S. 10(6) of the Ordinance.

Discretion vests with the Banking Court to allow the defendant to defend the suit, or reject his application.

In order to become entitled for such benefit the defendants will have to show some substantial questions of law or fact in respect of which evidence needs to be recorded

Such necessarily implies that granting of permission to defend the suit or refusal thereof shall be dependent on the attending circumstances of each case and as such no hard and fast rule can be laid down for the purpose.

Plaintiff Bank filed suit for recovery of certain amount along with mark-up, cost of funds, charges and costs of suit from the defendant company and its directors, guarantors and mortgagors

Validity

Plaintiff's suit was based on the statements of accounts attached with the plaint duly certified under the Bankers' Books Evidence Act, 1891 and the same was not rebutted by the defendants with cogent reasons either through oral evidence or through documentary evidence

Defendant company had not denied availing finance facilities nor had it denied the documentation hence had admitted the availing of finance facilities and its documents

Plaintiff, however, had alleged default in re-payment thereof

Grievances of defendants revolved around the 'multiple allegations' and 'claims' mentioned in the Petition for Leave to Appeal (PLA)

First objection of the defendants was with respect to the incompetent institution of the suit by an unauthorized person but perusal of record revealed that suit was filed by the plaintiff through duly authorized attorneys, as their duly signed power of attorney was available on the record and therefore it was well within the requirements encapsulated under S. 9(1) of the Ordinance

Defendants had also challenged the veracity of the documents produced by the plaintiff but was just a bald allegation without any substance or proof

Defendants could not produce anything to support their stance taken in the PLA

Regarding the entries of Statement of Accounts, there was nothing untoward seen as some of the alleged disputed entries pertained to disbursement of finance facility to the defendants

Adjustment of markup was made in accordance with law and no markup over markup was charged by the plaintiff

Application of defendants for leave to defend lacked fulfilment of mandatory requirements

Defence set up in defendants' application for leave to defend was evasive, improbable and no substantial questions of law or fact were raised in the leave application and as such it was liable to be rejected

Defendants had failed to establish any ground for grant of leave to defend

Suit was decreed, in circumstances.

When a suit is filed under the Ordinance, the defendant, as provided by S. 10(1) of the Ordinance, shall not appear or defend the suit unless he obtains leave from the Court for this purpose

If the defendant does not apply within the period provided for filing an application for leave to defend, the allegations in the plaint shall be deemed to have been admitted and a decree shall follow

In the case of a suit for recovery instituted by a financial institution the application for leave to defend shall, under S. 10(4) of the Ordinance, also specifically state: (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 amount if any which the defendant disputes as payable to the financial institution and facts

Under S. 10(8) of the Ordinance, the Court is empowered to grant the defendant leave to defend the suit, if on consideration of the contents of the plaint, the application for leave to defend and the reply thereto Court is of the view that substantial questions of law or fact have been raised in respect of which evidence needs to be recorded

Court, while granting leave, may impose conditions as it may deem appropriate in the circumstances of the case, including conditions as to deposit of cash or furnishing of security by virtue of S. 10(9) of the Ordinance.

Both plaintiff and defendant have similar responsibility to plead and state in unambiguous terms the finances availed by the defendants, repayments made by them with the dates and the amounts of finance repayable by such defendants who are also under obligation to specify the amounts disputed by them.

Banking suit is normally a suit on accounts which are duly ledgered and maintained compulsorily in the books of accounts under the prescribed principles/standards of accounting in terms of the laws, rules and banking practices

As such instead of leaving it to the option of the parties to make general assertions on accounts, the Ordinance binds both the sides to be absolutely specific on accounts.

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.

Appellants assailed judgment passed by Banking Court whereby although unconditional leave was granted in respect of Letter of Credit facility and amount of markup in the suit, however, interim decree was passed regarding principal amount under the Cash Finance Facility

Contention of appellants was that Cash Finance Facility was not a renewal of any existing finance facility, rather same being a fresh facility, the Bank was bound to show its disbursement

Plea of Bank was that Cash Finance Facility was merely renewed through Sanction Advise Letter, hence there was no question of any fresh disbursement

Validity

No statement of account of Cash Finance Facility was appended with the plaint to show that Sanction Advise Letter was in respect of renewal of existing Cash Finance Facility and was not in respect of sanctioning of any fresh finance facility

Bank, in terms of Ss. 9 & 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, was required to put across its best case before the court to prove that no substantial questions of law or fact were in issue between the parties in respect of which evidence needed to be recorded

Interim decree was set aside

Appellants were granted unconditional leave in respect of principal amount of Cash Finance Facility as well

Appeal was allowed.

Appellants assailed the dismissal of their application for leave to appear and defend the suit and consequent judgment and decree passed by the Banking Court

Validity

Bank was under obligation to produce/annex complete and duly certified statement of account with the plaint but it had initially annexed "deposit statement" with the plaint which was not regarding the amount paid to the appellants

Bank in its rejoinder filed the "statement of account"

Filing of subsequent statement of account, which was not earlier annexed with the plaint itself suggested that leave should have been granted to the appellants as Bank had failed to satisfy its burden under S. 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, because the entries firstly relied upon did not provide sufficient data to show that the disbursement and utilization of the finance had been made by the appellants

Appeal was allowed, judgment and decree were set aside and the matter was remanded to the Banking Court for grant of leave to defend and then decide the case afresh after recording evidence of both sides.

Appellants challenged the validity of judgment and decree passed by Banking Court whereby suit for recovery filed by the Bank was decreed

Appellants appeared and filed application for leave to defend the suit with the stance that the Bank had illegally charged the mark-up in violation of terms and conditions of sanctioned advice

Validity

Appellants in their application for leave to defend had admitted the availing of finance facility from the Bank but the application for leave to defend was not as per S. 10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001

Penal clause of S. 10(6), Financial Institutions (Recovery of Finances) Ordinance, 2001 came into play and the applicant's leave to defend was rejected when they failed to comply with the requirements of S. 10(4), Financial Institutions (Recovery of Finances) Ordinance, 2001

Bank had appended the agreement of financing, demand promissory note, letter of hypothecation, letter of guarantee and memorandum of deposit of title deeds with the suit and said documents were not rebutted by the applicants through any evidence, rather they admitted the availing of the finance facility

No document was produced by the applicants which showed any repayment of the amount due against the availed facility from the Bank

Banking Court had rightly passed the impugned judgment and decree while invoking the jurisdiction as envisaged in penal clause of subsection (6) of S. 10, Financial Institutions (Recovery of Finances) Ordinance, 2001 and dismissed the application for leave to defend

Order accordingly.

Single Judge of High Court had properly appreciated the controversy and rightly dismissed their applications for leave to defend as no substantial question of law and facts requiring recording of evidence was raised and application for leave to defend was not in consonance with the provisions of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and was rightly refused

Single Judge of High Court had rightly relied upon the statement of accounts excluding a certain sum of amount as markup charged beyond the expiry period and decreed the suit against two of the appellants jointly and severally

Findings of Single Judge of High Court were in consonance with the material available on record and were well founded, warranting no interference

Appeal was dismissed to the extent of said appellants.

Appellants assailed judgment and decree passed by Single Judge of High Court and contended that although Single Judge of High Court held that guarantees executed by two of the appellants were continuing guarantees but failed to take into consideration that the finance agreements were subsequently renewed time and again; that the subsequent finance agreements did not mention the guarantees executed by said two appellants; that said two appellants were discharged from payment of the amount of finance as guarantors on account of novation of contract and that said appellants were entitled at least for grant of leave to defend the suit

Validity

Single Judge of High Court had referred to the continuing guarantees of said appellants but the judgment was silent as to the effect of renewal agreements, which only referred to continuing guarantee of another appellant but not of said appellants

Even the plaint was silent to that effect, which only referred to personal guarantees of said appellants up to the renewal agreement

Effect of the non-mentioning of the personal guarantees of said appellants was required to be determined while passing the impugned judgment

Said appellants were at least entitled for grant of leave to defend to establish that their guarantees were discharged

Division Bench of High Court allowed the appeal and applications for leave to defend to the extent of said appellants and remanded the matter to the Single Judge of High Court for further proceedings.

Section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 empowered three categories of persons to file suits on behalf of the financial institutions; the branch manager; an officer authorized by a power of attorney; and, an officer who was otherwise authorized by financial institutions

Section 9 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and Financial Institutions (Recovery of Finances) Ordinance, 2001 differed only by inclusion in the latter law the category of officers who were authorized through a power of attorney to institute the suit and by omission of officers who were authorized by the Board of Directors of a financial institution

Section 9 of the Ordinance was indicative of the intent of the Legislature and conveyed a definite meaning that those officers were competent to institute suits on behalf of the financial institutions on the strength of the power of attorney, which necessarily followed that those officers did not need to append anything else other than the power of attorney to demonstrate their authority to institute the suit under S. 9 of the Ordinance

Due authorization of the officer to file the suit flowed from the power of attorney in terms of S. 9 of the Ordinance and not from any other document

Any interpretation that required such category of officers to substantiate the authority of the executant of the power of attorney would nullify the effect that the Legislature intended by modifying S. 9 of the Ordinance

Officer of the financial institution holding power of attorney was designated person to file suits on its behalf apart from the Manager by the force of S. 9 of the Ordinance

Any other officer other than the Manager and the officer holding the power of attorney would be required to show due authority from the financial institution for filing of the suit

Word 'or' appearing between the three categories of persons in S. 9 of the Ordinance had to be read as 'and' and the three categories were to be read disjunctively entitling each of them to validly institute suit on behalf of a financial institution

Manager of a financial institution had recognized to be the authority to validly institute the suit in terms of S. 9 of the Ordinance

Words 'as Board of Directors of a banking company might authorize in that behalf' had been excluded on purpose from S. 9 of the Ordinance for simplifying the institution of suits and to obviate the task of the officers filing suits to show authorization from the Board of Directors of the financial institution; as such, those words could not be included in S. 9 of the Ordinance through the back door by judicial interpretation

By promulgating the Ordinance and bringing changes and modification in S. 9 of the Ordinance the purpose was to render validity to the practice of filing of suits by the financial institutions through officers holding general power of attorney

Power of attorney is a legal term of act that has a widely accepted common law meaning and was governed by Power of Attorney Act, 1882

All kinds of powers could be exercised by the donee of the power of attorney, including filing suits if such a power is reserved in the instrument creating the power of attorney

General power of attorney in favour of the officer, who had instituted the present suit, was available on the record, which contained the power to commence and institute a suit for and on behalf of the Bank; thus, the suit had validly been instituted in terms of S. 9 of the Ordinance

Statement of accounts had been duly certified by the Bankers' Books Evidence Act, 1891

Defendant had not met the mandatory requirements of S. 10 of the Ordinance, which had resulted in dismissal of the suit

Dismissal of the application of leave to defend meant that all the allegations made in the plaint would be deemed to have been accepted and the Banking Court was obliged to pass a decree thereon

Defendant had not disputed the principal liability and only called into question the claim of mark up on the ground that payment of mark up had not been included in the terms of the finance agreement

Sanction letter and finance agreement appended with the plaint stipulated for the payment of the mark-up by the defendant

Defendant had failed to raise any bona fide defence

Appeal was dismissed in circumstances.

Contention of defendant was inter alia that it had raised substantial questions of law and fact in the application for leave to defend, and the objections raised by the defendant were not considered by the Banking Court

Held, that before deciding the suit, it was duty of Banking Court to consider and examine the plaint as well as the documents relied and sued upon by the plaintiff forming basis of the proceedings

Requirement of exact adherence to legal demands was more stringent for plaintiff while invoking jurisdiction of a special court created under a special law when the conditions and prerequisites to resort to such jurisdiction had been specifically and expressly described in the special law

Court in such matters could not presume plaintiff's assertions and pleadings to be correct

Court had to apply terms of a special law and was under an obligation to follow the word of the law than the word of the plaint even in absence of any application for leave to appear and defend suit

At the stage of deciding application for leave to defend; the Banking Court had to be guided by the main rationale behind the law which was not to oust defendant from trial when the defendant had an arguable case

Defendants, in the present case, had raised substantial questions of law which could not have been brushed aside in a causal manner and could only have been decided through a speaking order

Defendants had raised an objection in an unambiguous manner that the suit had not been filed by an authorized person and the statement of accounts had not been duly certified under S. 9(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001; but the Banking Court did not adjudicate upon the same through a speaking order, which was violative of the law

High Court allowed the application for leave to defend subject to deposit of fifty percent of decretal amount and case was remanded to Banking Court with direction to proceed according to law

Appeal was allowed, accordingly.

Defendant filed application for leave to defend which was conditionally accepted by Trial Court subject to deposit of certain amount within one month

Validity

Banking Court, while granting leave to defend suit in terms of S. 10(8) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was empowered to impose conditions on defendants

Rigors of S. 22(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001 were fully applicable and remedy of appeal was not available against such order

Party could not be allowed to challenge orders through constitutional petition which were otherwise non-appealable, as it would amount to negate provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, which prohibited remedy of appeal against leave granting order

Banking Court, in its discretion, could also impose any condition while granting leave to defend the suit in terms of S. 10(9) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Constitutional petition was dismissed in circumstances.

Contention raised by defendants was that as right to fair trial had been guaranteed as fundamental right under Art. 10-A of the Constitution, thus S. 10 of Financial Institutions (Recovery of Finances) Ordinance 2001 was contrary to that fundamental right, and that hurdle to defend suit by recording evidence was to be treated ultra vies

Validity

Article 10-A of the Constitution provided opportunity of fair trial, but same did not amount to trial of suit where neither any question of law nor fact had been established

Article 10-A of the Constitution also provided for determination of civil rights and obligations

Once due process as required in terms of Financial Institutions (Recovery of Finances) Ordinance, 2001 was adopted, defendant was before court for redressal of his grievance

All the defendant had to do was to establish question of fact and law for determination of civil right and obligation by court

Application for leave to defend was supposed to be in form of written statement, which would be containing summary of substantial question of law and fact in respect of which, in opinion of defendant, evidence needed to be recorded

Under parameters of Financial Institutions (Recovery of Finances) Ordinance, 2001, defendant was entitled for relief if question of law and fact had been established

Questions as raised by defendants had been answered categorically and due process of law had been followed.

State Bank of Pakistan, by way of said Circular, had developed new set of guidelines in consultation with Banks and Federation of Pakistan Chamber of Commerce and Industries

Said guidelines did not, in any way, affect legal rights of financial institutions to recover their written off loans if they still wished to pursue them legally

Prima facie, purpose of the guidelines was to provide balance sheet to Banks in order to strengthen their financial matters, which prerogative, under clause 3 of BPD Circular No. 29, had been exclusively given to Banks and financial institutions

Circular was not, in any way, issued to be enforced upon banks to act upon it in any manner whatsoever and under any circumstance

Guidelines had categorized 'non-performing loans' into three categories

Circular had not provided guidelines that Banks and financial institutions, who were in process of setting off all such accounts which might come into such categories, might act accordingly

Guidelines did not demonstrate that those financial institutions were under any compulsion nor they could be

Under the Circular, it was for financial institutions to decide as to how and in what way such accounts were to be dealt with

Once bank had agreed to setting off accounts, then terms and guidelines as provided under BPD Circular No.29, could be made applicable as mandatory which however, did not mean that Banks were under obligation to write-off or set-off individual accounts despite prerogative of Bank which empowered them to undergo legal process for recovery of such loans.

Both the Financial Institution and customer under Ss. 9(3) & 10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 respectively had identical statutory obligations to plead and state clearly the finances availed by a defendant, repayments made by him, the dates thereof and the amounts of finance repayable by such defendant

Defendant, besides, has also been saddled with further responsibility to also specify the amounts disputed by him and facts in support thereof

Defending customer had been made responsible to also put forward a definite case in terms of Ss. 10(3), (4) & (5) of Financial Institutions (Recovery of Finances) Ordinance 2001.

In terms of S. 9 (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, the plaint would be supported by a statement of account, which in the case of financial institution would be duly certified under Banker's Books Evidence Act, 1891, and accompanied with all other relevant documents relating to the grant of finance

Use of the words, 'duly certified statement of account' actually rendered the compliance of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 as mandatory

In case of non-compliance of said mandatory requirement, the Financial Institution was bound to face adverse consequences

Word 'support' read in the mandatory perspective of the word 'shall' made the plaint filed by the financial institution as totally dependent upon the statement of account duly certified under Banker's Books Evidence Act, 1891

Plaint might be sustained only when the mandatory requirements of S. 9(2) Financial Institutions (Recovery of Finances) Ordinance, 2001 had been fulfilled and not otherwise

Under S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, copies of the plaint, statement of account and other relevant document also needed to be filed with Banking Court in sufficient numbers, so that there was one set of copy for each defendant and on extra copy

Defendant, in suit filed by the financial institution for recovery, must be confronted with the best possible restructured/well framed case that the plaintiff could put forward from the very inception

Foundation of banking suit, which normally was a suit on accounts, must be supported with certified statement of account, which would be duly certified within the meaning of S. 2(8) of Bankers' Books Evidence Act, 1891

Production of certified statement of account in support of the plaint was thus not only mandatory but the same was also very necessary pre-condition for charging the defendants with any liabilities in a suit for recovery filed by financial institution

Defendant was also under legal obligation to definitely plead and specifically state his accounts

Provisions of Ss. 9 & 10 of Financial Institutions (Recovery of Finances) Ordinance 2001 were not only mandatory but also in the event of non-compliance of the same, the parties to the suit would suffer.

Any lacuna left at time of filing of plaint could not be cured and/or rectified at time of filing of replication in answer to the leave to defend application, as in such situation, the defendants would not have the opportunity to rebut the newly built-up case and/or challenge other documents suitably if the same were brought on record through replication

Mandatory requirement of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, in no way, could be postponed or otherwise cured subsequently by way of replication

Opportunity provided to a financial institution, in terms of S. 10(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was a limited opportunity to the extent of reply only in answer to the leave to defend application.

Defendants took the plea that the plaintiff-Bank had obtained the finance documents in question in blank and filled-up the same while filing present suit

Validity

All finance agreement were coupled with Promissory Notes, and all the other documents annexed with the plaint had been duly filled-up with dates and figures, which belied the defendants' plea that said documents had been obtained in blank.

Any lacuna left at time of filing of plaint could not be cured and/or rectified at time of filing of replication in answer to the leave to defend application, as in such situation the defendants would not have the opportunity to rebut the new built-up case and/or challenge other documents suitably if the same were brought on record through replication

Mandatory requirement of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, in no way, could be postponed or otherwise cured subsequently by way of replication

Opportunity provided to a Financial Institution, in terms of S. 10(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was a limited opportunity to the extent of reply only in answer to the leave to defend application.

Defendants denied their liability to the claim filed by the plaintiff-Institute on ground that the same was false and frivolous, as the registered mortgage created by defendant in his capacity as duly constituted attorney was not enforceable under the law and the letters of guarantees had been signed in blank

Validity

Under S. 2(e) of Financial Institutions (Recovery of Finances) Ordinance, 2001, Bank's customers were not only under legal obligation and duty bound to perform and fulfil their undertakings and promises in relation to repayment of the outstanding amount of the finance facility granted to and availed by the defendant but also in respect of all other amount relating to mark-up charges etc.

Musharaka Finance Agreement in question was also coupled with promissory notes

Under S. 118 of Negotiable Instruments Act, 1881, presumption of truth was attached to the promissory note

Presumption attached to a negotiable instrument is not only statutory but also mandatory in nature

Such presumption ex-facie could not be dispelled in absence of any solid proof

Defendants had not specifically denied their signatures on the financial and security documents including the promissory note, and had only pleaded that the same had been obtained in blank and/or otherwise, the same were without consideration

Defendants were, therefore, liable to pay and liquidate the outstanding amounts as per Musharaka Finance Agreement

High Court, refusing leave to defend application and decreed the suit.

If the defendant had succeeded to show a plausible defence or was able to establish that there was some substantial question of fact or law, then he was entitled to the grant of leave to defend

If it seemed that the defence was vague or unsatisfactory or there was doubt as to its genuineness, even then leave should not be refused but certain conditions could be imposed

Court trying summary suit was required to see that there was bona fide allegation of triable issue which was not illusory and court need not to be satisfied that defence would succeed and it was enough that defence was verified by oath.