IN THE HIGH COURT OF SINDH AT KARACHI
1st Appeal No. 42 / 2015
1. For orders on CMA No. 5504/2015
2. For orders on office objections.
3. For hearing of CMA No. 184/2015
4. For hearing of main case.
10.11.2015
Mr. Sami Ahsan, advocate for the appellants.
Ms. Jamila Siraj advocate alongwith Mr. Abdul Shakoor,
advocate for the Respondent-Bank.
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The appellants, through the instant appeal has impugned the judgment dated 15.05.2015 and the decree dated 20.05.2015 passed by Banking Court-2 in Suit No. 148/2010. In the said suit respondent-bank claimed recovery of Rs.3,627,555.44 alongwith profit and cost of funds. The respondent’s case was that it provided a running finance facility against the limit of Rs.2.800 millions chargeable to mark-up at the rate of 12 per cent per annum. In this regard an agreement was also executed on 15.07.2005 and the finance was secured by executing memorandum of deposit of title deed on the same date. A statement of accounts was also annexed with the suit. Leave to defend application was filed whereby it was claimed that the suit was barred by time as agreement expired on 30th June, 2006 whereas the recovery suit was filed on 16.08.2010. It was also claimed that payment in excess of lawful liability has been recovered from the appellant, which the respondent is liable to return. Leave to defend application was dismissed. On the basis of break-up statement filed by the respondent the suit was decreed in the sum of Rs.3,017,395/-. Learned counsel for the appellants argued that the matter was heard in March 2014 and the impugned order on leave to defend application was passed 24.10.2014 therefore it is contrary to the Supreme Court’s judgment passed in the case of M/s. MFMY Industries Ltd. v. Federation of Pakistan and the matter may be remanded back to the banking court for re-hearing. He also argued that the appellants have also filed Suit No. B-62/2008 wherein common questions of facts and law are involved, therefore, leave to defend ought to have been granted by the Banking Court so that both the suits could be decided together. He also argued that there was another agreement that was executed for an amount of Rs.2.20 Million on 28.02.2005 wherein no mark-up rate is prescribed. He also claimed that on 1st June 2007 yet another agreement was also executed.
Counsel for the appellants also argued that the person, who had filed the recovery suit on behalf of the respondents’ bank was not authorized to file the same. In support of his contentions he relied upon the cases reported in PLD 1966 SC 684; 1987 CLC 367; PLD 1971 SC 550(b); 2008 CLD 239; PLD 2012 SC 269 and 2004 YLR 115.
Learned counsel for the respondent-Bank on the other hand argued and referred to a document dated 12.07.2015 which provided for two facilities; first was Running Finance and the other was Letter of Credit. He contended that facility against Letter of Credit was not availed while the Running Finance Facility was availed by the appellants, which was sanctioned to the extent of Rs.2.800 Million. As to the plea of limitation, he contended that as the finance was extended against mortgage of property, a period of 12 years is available for filing of the suit. He further contended that no entry in the statement of accounts was disputed except the component of mark-up. He further contended that the Banking Court only disallowed withholding tax which every bank is required to deduct under the law.
We have examined the pleas advanced by the learned counsel for the parties. As to the plea of limitation suit was filed against mortgage hence it was filed well within 12 years, thus not barred by time. In paragraph 28 of the Leave to defend application there is a reference to the respondents’ statement of accounts that were attached to the memo of plaint. No specific entry was denied nor is the availing of finance in dispute. Only dispute relates to the withholding tax. Hence all the debit entries which relate to availing of finance by the appellant remained unrebutted. Only during the course of the arguments advanced before us, it was submitted by appellant’s counsel that a sum of Rs.100,000/- was deposited by the mortgagor but the same is accounted for in the statement of accounts. As to the authority of the person who filed the suit on behalf of the respondent-bank, alongwith the plaint is attached a copy of power of attorney wherein specific mention has been made that the said attorney is duly authorized to commence, prosecute, continue and defend all actions, suits or legal proceedings. Therefore, there was no legal infirmity on that score as well. However, as the respondent has itself claimed that it provided finance facility under the agreement dated 15.07.2005 which expired on 30.06.2006 the respondent would be entitled for mark-up at the agreed rate upto 30.06.2006 only. Thereafter the appellants would be liable to pay Cost of Funds as provided under Section 3 of the Financial Institutions (Recovery of Finances) Ordinance 2001. Insofar as the withholding tax is concerned, it is an obligation of the respondents to deduct the same therefore it is liability of the respondent-bank to deduct such amount and deposit it with the treasury and such liability is to be borne by the appellants. In case a sum of Rs.100,000/=, as claimed to have been paid by the mortgagor has also been recovered, but the same is not reflected in bank’s statement of accounts then the Banking Court shall give credit to the appellants for such payment. In view of the above, decree stands modified. The Banking Court shall accordingly re-calculate the mark-up amount and Cost of Funds.
The instant 1st Appeal alongwith the pending applications stands disposed of in the above terms.
CHIEF JUSTICE
J U D G E
Zahid Baig