Judgment Sheet
IN THE HIGH COURT OF SINDH KARACHI
First Appeal No. 49 of 2014
Before :
Mr. Justice Nadeem Akhtar
Justice Mrs. Kausar Sultana Hussain
Appellants : M/s. Al-Rehman Traders and Abdul Majeed
through Mr. Sami Ahsan Advocate.
Respondent : Habib Bank Limited
through Mrs. Naheed A. Shahid Advocate.
Date of hearing : 11.12.2018
J U D G M E N T
NADEEM AKHTAR, J. – This appeal is directed against the judgment and decree dated 25.04.2014 and 21.05.2014, respectively, passed in Suit No.165/2009 by learned Banking Court No.III at Karachi, whereby the said Suit filed by the respondent against the appellants was decreed with costs in the sum of Rs.1,340,990.00 with cost of funds thereon from the date of filing of the Suit till realization. A decree for sale of the mortgaged property was also passed. Record shows that the application for leave to defend filed by the appellants / defendants was dismissed by the learned banking Court on 24.09.2013 for non-prosecution and the application for its restoration was also dismissed for non-prosecution vide order dated 07.04.2014. Thereafter, the learned banking Court proceeded to examine the claim of respondent No.1 and decreed the Suit against the appellants in the above terms.
2. It was contended by learned counsel for the appellants that instead of dismissing the appellants’ application for leave to defend for non-prosecution, the said application ought to have been decided on merits by the learned Banking Court. However, no valid explanation was offered by him to justify the absence of the appellants and their counsel on the dates when their application for leave to defend and the application for its restoration were fixed for hearing. It was further contended by him that once the application for leave to defend filed by the appellants was part of the record, it was the cardinal duty of the learned Banking Court to consider the plaint, the appellants’ application for leave to defend and its replication by the respondent, and thereafter to decide the said application on merits as the Financial Institutions (Recovery of Finances) Ordinance, 2001, (‘the Ordinance’) does not visualize dismissal of the application for leave to defend for non-prosecution and no such powers are conferred upon the Banking Court. In support of the above submission, he relied upon Abid Aziz Khan and 2 others V/S Bank of Punjab through Branch Manager, 2007 CLD 997.
3. It was frankly conceded by learned counsel for the appellants that in their joint application for leave to defend, the appellants had failed to comply with the mandatory requirements of Sub-Section (4) of Section 10 of the Ordinance. Under Sub-Section (4) ibid, the appellants were obliged to disclose (a) the amount of finance availed by them from the respondent, (b) the amounts paid by them to the respondent and the dates of such payments, (c) the amount of finance and other amounts relating to the finance payable by them to the respondent up to the date of institution of the Suit, and (d) the amount, if any, which they disputed as payable to the respondent, and the facts in support thereof. However, perusal of their application for leave to defend reveals that they had failed to disclose any of the above particulars, and as such they had not complied with the mandatory requirements of Sub-Section (4) ibid as contemplated therein. The implications for not complying with the mandatory requirements of Sub-Section (4) ibid are specifically provided in Sub-Section (6) of Section 10 of the Ordinance, which provides that an application for leave to defend which does not comply with the requirements of any of Sub-Sections (3), (4) and or (5) of Section 10 ibid, shall be rejected unless the defendant discloses therein sufficient cause for his inability to comply with any such requirements. The appellants had not only failed in fulfilling the mandatory requirements of Sub-Section (4) ibid, but had also failed to disclose any sufficient cause for their inability in complying with the same.
4. In Apollo Textile Mills Ltd. and others V/S Soneri Bank Ltd., PLD 2012 Supreme Court 268 = 2012 CLD 337, it has been held by the Hon’ble Supreme Court that the plaintiff institution and the defending customer have identical statutory responsibility respectively under Sections 9(3) and 10(4) of the Ordinance, to plead and state clearly and particularly the finances availed by a defendant, repayments made by him, the dates thereof, and the amounts of finance repayable by such defendant, who is saddled with an additional responsibility to also specify the amounts disputed by him. It has been further held that a defending customer is obliged to put in a definite response to the bank’s accounting and has under Sub-Sections (3) and (4) of Section 10 ibid to compulsorily plead and answer in the application for leave to defend his accounts as well as the facts and amounts disputed by him as repayable to the plaintiff. It has been further held that a 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 ; and the parties to a Suit have been obligated equally to definitely plead and to specifically state their respective accounts. It has been specifically held that non-impleadment of accounts under Sub-Sections (3) and (4) of Section 10 ibid and Sub-Section (3) of Section 9 of the Ordinance in terms thereof, entails legal consequences under Sub-Sections (1), (6) and (11) of Section 10 ibid. It has been further held that because of the Ordinance being a special law, the provisions of Section 4 thereof override all other laws ; the provisions contained in the said Sections require strict compliance ; and, non-compliance therewith attract consequences of rejection of the application for leave to defend along with decree. At the time of filing the application for leave to defend, the appellants had the full opportunity to comply with the mandatory requirements of Sub-Section (4) of Section 10 ibid, but as they failed in availing such opportunity, they were bound to face the consequence of their non-compliance as held by the Hon’ble Supreme Court in Apollo Textile Mills Ltd. supra. In view of the above, their application for leave to defend was liable to be dismissed even on merits.
5. We have examined the case of Abid Aziz Khan (supra) cited and relied upon by learned counsel for the appellants wherein it was held by the learned Lahore High Court that the position which emerges from reading Section 10 of the Ordinance is clear and unambiguous, that the defendant is required to file application for leave to defend in accordance with the conditions enumerated in Section 10 of the Ordinance ; and, the Banking Court is required to examine it and if it fulfills the requirements set there, to place it on record. Indeed it was held in the above-cited case that once the application for leave to defend is part of the record, it is the cardinal duty of the Banking Court to consider the plaint, the application for leave to defend and its replication and then to decide the said application on merits as the Ordinance does not visualize dismissal of the application for leave to defend for non-prosecution and no such powers are conferred upon the Banking Court. However, it is to be noted that the ratio of the above-cited case is subject to the condition that the application for leave to defend is compliant of the mandatory conditions and requirements enumerated in Section 10 ibid in all respects. As noted above, the mandatory requirements of Section 10 ibid were admittedly not complied with by the appellants in the instant case. Therefore, the case of Abid Aziz Khan (supra), being clearly distinguishable, is of no help to them.
6. We have also examined the plaint of the Suit instituted by the respondent and find that proper disclosure of all necessary particulars relating to the finance facility were made therein in compliance of Section 9 of the Ordinance. Perusal of the impugned judgment and decree shows that claim of the respondent was minutely examined by the learned Banking Court before decreeing the Suit. In the above circumstances we are of the considered view that the impugned judgment and decree do not require any interference by this Court.
7. We have noticed that in the impugned judgment and decree cost of funds has been granted by the learned Banking Court from the date of institution of the Suit instead of the date of default. Under Section 3(2) of the Ordinance, cost of funds has to be awarded by the Banking Court from the date of default by the customer and not from the date of institution of the Suit. Therefore, the decree is modified by granting cost of funds to the respondent from the date of default.
8. Foregoing are the reasons of the short order announced by us on 11.12.2018 whereby this appeal and CMA No.1568/2014 were dismissed with no order as to costs.
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