Judgment Sheet
IN THE HIGH COURT OF SINDH KARACHI
First Appeal No. 56 of 2015
Before :
Mr. Justice Nadeem Akhtar
Justice Mrs. Kausar Sultana Hussain
Appellants : M/S Victor Corporation (Pvt.) Ltd., Zafar Hassan Khan,
Ali Hassan Khan and Mrs. Zeba Zafar through
Mr. Khaleeq Ahmed Advocate.
Respondent : Faysal Bank Limited, through
Syed Aijaz Hussain Shirazi Advocate.
Date of hearing : 06.11.2018.
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J U D G M E N T
NADEEM AKHTAR, J. – Through this appeal under Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, (‘the Ordinance’) the appellants have impugned the judgment delivered on 18.06.2015 and decree drawn on 27.06.2015 by learned Banking Court No.V at Karachi in Suit No.905/2008, whereby the said Suit filed by the respondent was decreed with costs against the appellants in the sum of Rs.15,000,000.00 with cost of funds thereon from the date of default viz. July 2006 till realization.
2. Relevant facts of the case are that the above Suit was filed by the respondent against the appellants before the learned Banking Court for recovery of Rs.18,639,911.60 along with liquidated damages thereon at the rate of 20% and cost of funds thereon from the date of default till realization of the entire amount. Appellant No.1 was sued as the principal borrower and appellants 2, 3 and 4 were sued as guarantors of appellant No.1. The case of the respondent / plaintiff, as averred in the plaint, was that a term finance facility to the tune of Rs.17,000,000.00 was sanctioned by the respondent in favour of appellant No.1 vide sanction letter dated 12.07.2005, the terms and conditions whereof were duly accepted by appellant No.1 by signing the same ; thereafter an agreement for financing dated 12.07.2005 for the above facility was executed by the parties ; on the same day appellant No.1 also executed in favour of the respondent Memorandum of Confirmation of Sale and Buy Back, Letter of Continuity, Letter of Arrangement / Undertaking, Irrevocable Authority to recover approved mark-up and Demand Promissory Note for Rs.19,550,000.00 ; the above finance facility was payable by the appellants in 17 equal instalments of Rs.1.000 million each for which post-dated cheques were issued by them in favour of the respondent ; the amounts of cheques in respect of first two instalments were received by the respondent, but all 15 remaining cheques were dishonoured upon presentation ; and, appellant No.1, being the principal borrower, and appellants 2, 3 and 4, being the guarantors, were jointly and severally liable to pay the entire outstanding principal amount to the respondent along with the agreed mark-up thereon, which came to Rs.18,639,911.60 as per the disclosure made in the plaint in terms of Section 9(3) of the Ordinance.
3. The appellants filed a joint application under Section 10 of the Ordinance seeking unconditional leave to defend the Suit, which was dismissed on merits after hearing the parties vide order dated 13.06.2011. Thereafter, learned Banking Court proceeded to examine the respondent’s claim and through the impugned judgment and decree, decreed the Suit with costs jointly and severally against the appellants in the sum of Rs.15,000,000.00 with cost of funds thereon from the date of default viz. July 2006 till realization.
4. It was contended by learned counsel for the appellants that the Suit filed by the respondent was not maintainable as compliance of Sub-Section (2) of Section 9 of the Ordinance, which is mandatory in nature, was not made by the respondent. According to him, the statement of account filed with the plaint was not certified under the Banker’s Books Evidence Act, 1891, and thus was not in conformity with the requirement contained in Sub-Section (2) ibid. It was urged by him that the Suit was liable to be dismissed on this ground alone and by not doing so, the learned Banking Court failed in performing its statutory duty. It was further urged that the appellants had made out a strong case for the grant of unconditional leave by raising substantial questions of law and fact which required evidence and could not be decided summarily. Learned counsel drew our attention to several documents executed by the appellants in order to show that they were not liable to pay the amount claimed in the Suit. In the end, it was prayed by him that the impugned judgment and decree, being bad in law, be set aside.
5. Learned counsel for the respondent-bank opposed the grounds urged in this appeal and strongly supported the impugned judgment and decree. It was pointed out by him that it was never denied by the appellants that the subject facility was availed by them and in consideration thereof they had executed the above mentioned finance agreement and other documents. It was urged by him that the appellants’ application for leave to defend was rightly dismissed as the same was not compliant of Sub-Sections (3), (4) and (5) of Section 10 of the Ordinance, and thus the Suit was rightly decreed. It was further urged by him that in the above circumstances the learned Banking Court was fully justified in dismissing the application for leave to defend filed by the appellants and decreeing the Suit against them.
6. We have heard learned counsel for the parties at considerable length and have also examined the material available on record. It was frankly conceded by learned counsel for the appellants that they did not comply with the mandatory requirements of Section 10 of the Ordinance in their application for leave to defend. In this context, we may refer to the case of Apollo Textile Mills Ltd. and others V/S Soneri Bank Ltd., PLD 2012 Supreme Court 268 = 2012 CLD 337, wherein it has been held, inter alia, 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 them, 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 ; 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 ; 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 in the above-cited authority 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 ; 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.
7. At the time of filing the application for leave to defend, the appellants had full opportunity to comply with the mandatory requirements of Sub-Sections (4) and (5) of Section 10 ibid, but as they admittedly failed in complying with the same, 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. Accordingly, their application for leave to defend was rightly dismissed and the Suit was rightly decreed against them.
8. As to the objection raised on behalf of the appellants that the Suit filed by the respondent was not maintainable because of non-compliance of Sub-Section (2) of Section 9 of the Ordinance, we have examined the statement of account filed by the respondent along with the plaint before the learned Banking Court. It contains only three (03) entries, one debit entry of Rs.17,000,000.00 on 15.07.2005 and two credit entries of Rs.1,000,000.00 each on 02.09.2005 and 31.03.2006. The above entries clearly support the case of the respondent / plaintiff and correspond to the claim made in the plaint that the entire facility of Rs.17,000,000.00 was availed by the appellants, but they paid only two instalments Rs.1,000,000.00 each instead of 17 instalments of the said amount. It may be noted that the facility in question was not a running finance facility wherein numerous debit and credit entries, showing frequent withdrawals and deposits by the customer, are seen in the statement of account. The subject facility was admittedly a term finance facility and the entire facility was availed by the appellants in one go which was to be repaid in 17 equal instalments of Rs.1,000,000.00 each. It was/is not the case of the appellants that they had paid further instalments which were not adjusted or shown by the respondent in the statement of account. Therefore, it was an admitted position that except for the two instalments pleaded by the respondent, no other instalment was paid by the appellants. In view of this admitted position, no other entry in the statement of account was either possible or was required to be disclosed by the respondent. In addition to the above statement of account regarding the principal amount, a detailed statement was also filed by the respondent showing complete break-up of the mark-up claimed on the outstanding principal amount. Both the above statements were duly certified in the prescribed manner. Thus, the statements of account filed and relied upon by the respondent in relation to the principal amount and mark-up were proper and legal.
9. In view of the above discussion, the impugned judgment and decree do not require any interference by this Court. Foregoing are the reasons of the short order announced by us on 06.11.2018 whereby this appeal and listed application were dismissed with no order as to costs.
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