ORDER SHEET
IN THE HIGH COURT OF SINDH, KARACHI
Suit
No.B-71 OF 2008
Date Order with signature of Judge
For hearing of CMA 10785 of 2008.
Date of hearing: 1st October, 2010.
Mr. Nafees Siddiqui Advocate for the Plaintiff.
Mr. Khaleeq Ahmed Advocate for the Defendants.
Muhammad Ali Mazhar J., The Plaintiff has filed this banking Suit for recovery of Rs.402.871 Millions under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001. It is inter alia contended in the plaint that the Defendant No.1 is a private limited company and the Defendants No.2 & 3 are the directors/guarantors and the Defendant No.4 is shareholder/guarantor of the Defendant No.1. Initially, the defendant No.1 was a partnership, thereafter it was converted into a private limited company. The defendant No.1 was enjoying the following finance facilities from the plaintiff:
a. ERF/I/II/RF Rs. 95 Million.
b. Running Finance-Additional Rs. 50 Million.
c. Term Finance. Rs. 120 Million.
d. Letter of Guarantee Rs. 10.122 Million.
e. Letter of Credit (Foreign) Rs. 30 Million.
f. Letter of Credit (DA) Rs. 180 Million.
g. IFB Overdue Sight (F) Rs. 53.353 Million.
h. IFB Overdue DA (F) Rs. 7.548 Million.
i. IFB Overdue DA (L) Rs. 43.783 Million.
j. FBP Rs. 142.796 Million.
k. IBP Rs. 45.780 Million.
In order to substantiate the enjoyment of aforesaid facilities, the plaintiff has attached different offer/sanction letters with the plaint. The defendants Nos. 2 to 4 also executed certain financing/charge documents. After conversion from a partnership firm to a private limited company, the account was changed into a private limited company. The plaintiff has also attached a copy of change of status of “Classic Denim Mills” into “Classic Denim Mills (Pvt.) Ltd”. It is further alleged that at the time of conversion of the defendant No.1, the total outstanding liability of the defendants including fund based and non-fund based facilities were Rs. 674,750,000/-. Upon request of the defendants Nos. 2 to 4, such finances were renewed from time to time and in the last sanction letter dated 29.5.2007 the facilities were renewed as under:
i. RF and/or ERF Part I&II. Rs. 95 Million.
ii. Term/Demand Finance Rs. 170 Million.
iii. FBP(L/C DA/DP) Rs. 100 Million.
iv. LC(Sight) Foreign Rs. 30 Million.
v. L/C(DA)Foreign/Local Rs. 190 Million.
vi. IBP(I/C DA)Local Rs. 100 Million.
vii. LG Rs. 17.438 Million.
At the time of extension/renewal of finance, the plaintiff required additional securities to secure its repayment obligations from the defendants. In response to this requirement, the defendants created certain charges in favour of the plaintiff on their properties including land, building, plant and machinery, furthermore, the defendant No.2 also created registered and equitable mortgage over its bungalow No. 4-A, Sunset Street, Phase-II, D.H.A., Karachi in favour of the plaintiff. In order to secure repayments obligations, the defendants No. 2 to 4 executed various financing/charge documents in favour of the plaintiff which are more particularly described in paragraph No.11 of the plaint. It is further stated that the defendant No.1 availed all facilities but defaulted in its repayment, therefore, all the defendants are equally liable to repay to the plaintiff entire outstanding amount. The plaintiff tendered legal notice for payment, but no response was received from the defendants, therefore, the plaintiff was left with no other option but to institute the present suit for recovery. Along with plaint, the plaintiff has attached statement of accounts and in order to fulfill requirement of sub-section 3 of Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the plaintiff in paragraph No.18 of the plaint has mentioned amount availed, amount paid by the defendants and the outstanding amount liable to be paid by the defendants to the plaintiff. In paragraph No.22, it has been stated that the suit has been signed, verified and filed through Mr. Nasim Ahmed Siddiqui and Mr. Khalid Mohiuddin, who have been appointed duly constituted attorneys by virtue of power of attorney dated 23.7.2004 and 13.5.2006, respectively.
After notice, all the defendants filed a joint leave to defend application with separate verifications by each defendant. In the leave to defend application, the defendants have taken preliminary legal objections that in the power of attorney attached with the plaint, Mr. Nasim Ahmed Siddiqui is not allowed to institute the present suit singly. It is further submitted that the plaintiff has not filed the complete and correct statement of account with the plaint and the plaintiff’s claim is based on various documents which were obtained by suppression of facts and were blank which have been filled-up by the plaintiff on its own choice for the exaggerated amounts and dates and without any authority of the defendants. The figures mentioned in the documents are contradictory to the plaintiff’s own claim. It is further submitted that the plaintiff has included an exaggerated amount of mark-up in the principal amount which is neither permissible nor the same is allowed by the State Bank of Pakistan. Under the purchase and sale agreement, the defendant No.1 is indebted to the plaintiff only for repurchase price. Besides these preliminary legal objections, the defendants have also raised question of law inter alia that the statement of accounts is not in accordance with section 9 of the Ordinance, 2001 and the same is not certified in accordance with Bankers Book Evidence Act. In order to justify the requirement of sub-section 4 of section 10 of the Ordinance, 2001, the defendants have shown amount availed, the amount paid but shown liability nil and the entire claim of the plaintiff is said to be disputed amount.
Heard learned counsel for the parties. Mr. Khaleeq Ahmed, the learned counsel for the defendants in support of leave to defend application argued that the present suit is not maintainable. In the plaint, it is mentioned that the suit has been filed by M/s Khalid Mohiuddin and Nasim Ahmed Siddiqui being the attorneys of the plaintiff, but only one attorney has verified the plaint signally but nobody has signed the plaint on behalf of the plaintiff. It was further contended that the plaintiff also failed to file complete statement of accounts which is a mandatory requirement of law. The plaintiff brought the statement of accounts on record through statement which is not permissible under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001. Learned counsel further argued that the banking court usually grant the defendant leave to defend the suit if on consideration of contents of plaint, the application for leave to defend and reply thereto, it is of the view that substantial question of law and fact have been raised in respect of which evidence needs to be recorded. He further contended that under the settled principle of law, the plaintiff has to prove its case even in the ex parte proceedings and the onus to prove always lies upon the plaintiff. In the instant case, the plaintiff has failed to produce charge documents and complete statement of accounts duly certified under the Bankers Book Evidence, 1891 as required under Section 9 of the Ordinance, 2001, thus, the plaintiff has failed to discharge his obligations.
The claim of the plaintiff relates to the finance granted in the year 2002 but the plaintiff has neither pleaded said transactions specifically nor brought on record any document in support of its contentions to substantiate its claim for the said period. It is further argued by learned counsel that facilities so disbursed under the finance agreement dated 29th May, 2007 has been fully repaid. The plaintiff in the statement of accounts has not disclosed repayment of the sale proceeds of the bungalow, therefore, no presumption of truth can be attached to it which is neither complete nor certified as required under the law. The claim of the plaintiff is based on renewals, role over and rescheduling, which includes markup on markup with various miscellaneous charges and unless and until, leave to defend is granted unconditionally, it is not possible to ascertain the truth without recording the evidence in the matter. Learned counsel further argued that in view of the newly inserted Article 10-A in the Constitution of Islamic Republic of Pakistan, the defendants are entitled to a fair trial and due process. In support of his arguments, learned counsel for the defendants relied upon the following case law:
1.Unreported judgment of Sindh High Court in a banking suit No.B-27 of 2006, (M/s Standard Chartered Bank Pakistan Limited vs. M/s MAK Dyeing & Finishing Mills Limited). In this matter, learned single Judge of this Court held that one of the attorneys was not authorized to institute the suit on behalf of the plaintiff and the defendants have raised substantial question of law and fact which requires recording of evidence. The defendants were granted leave to defend.
2.Unreported judgment of Sindh High Court, in banking suit No.B-141 of 2009 (United Bank Limited vs. Pak Leather Crafts Limited). In this matter, the learned single Judge of this Court held that if the principal continues to act through agent on the basis of power of attorney despite objection, being raised by the other party is deemed to have been ratified by the principal. Despite objection, replication was filed by the same attorney, the previous act was ratified whose very sub-power was challenged by the counsel for the defendants. The up shot of the discussion would therefore, be that at best, the counsel for the defendant can thrash out the authenticity of the sub-power of attorney at the time of trial, therefore, case for leave was made out by the defendants on this ground.
3.PLD 2003 Azad J&K 16 (Munir Hussain vs. Muhammad Aslam). In this judgment, it was held that where a power is delegated by a principal jointly to more than one agent for performance of the acts on his behalf, then single agent cannot do any act without joining the other. Where a power is given to joint agents, presumption is that such power has been granted on the consideration of the personal nature and their act can bind the principal only if the agents act jointly.
4.PLD 1999 Karachi 260 (National Bank of Pakistan vs. Karachi Development Authority). In this matter, the learned Single Judge of this Court held that the suits were filed by authorized officer on behalf of the plaintiff. Authorized attorneys were not examined as witnesses. Burden to show that the suits had been filed by authorized attorneys were upon the plaintiffs. Mere existence of clause in the power of attorneys empowering the attorneys to initiate proceedings, in the absence of Articles of Association and exercise of authority in terms thereof was not sufficient. Suits instituted by the plaintiffs were not maintainable in circumstances.
5. 2001 CLD 171 (Citibank N.A. vs. Judge Banking Court-IV). In this matter, the learned divisional bench of Lahore High Court held that suit filed by bank was dismissed being incompetent simply on the ground that power of attorney was not annexed with the plaint. Requirement of law was to file plaint along with statement of account and that requirement was fulfilled by the plaintiff. Plaint though was to be filed by duly and lawfully authorized person, but Section 9 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 had not provided that if copy of power of attorney was not filed along with plaint, the plaint would be rejected and suit would be dismissed. Absence of copy of power of attorney at best could have been a ground for consideration while deciding question of leave to defend the suit but suit could not be dismissed straightaway due to non filing a copy of power of attorney. Whether or not suit was instituted by a duly authorized person, would be a question of fact, which could not be decided without proper evidence. Court could have allowed time for filing of power of attorney and attended to question thereafter by granting opportunity of evidence. Dismissal of suit in summary manner and that too in violation of rules of natural justice, was neither proper nor permissible in law. Judgment of trial Court was set aside.
6.2009 CLD 1440 (Kinza Fashion (Pvt) Ltd. vs. Habib Bank Ltd). In this judgment, the learned divisional bench held that banking court dismissed leave to defend application in a hasty manner without examining in detail, the defence put up by the defendant and absence of any material with regard to availing the FATR facility. Judgment and decree passed in favour of plaintiff bank was set aside and case was remanded to banking court.
7.PLJ 2004 Lahore 1147 (C.M. Textile Mills (Pvt) Ltd. vs. Investment Corporation of Pakistan). In this matter, the learned divisional bench of Lahore High Court held that suit for recovery of finances unaccompanied by statement of account. Suit was remanded to banking court for deciding the same afresh in accordance with law with direction that judgment and decree of Banking Court was set aside. Application for leave to defend suit was granted to the defendant. It was further held that in absence of statement of account showing all debits and credits and dates thereof, no presumption of admissibility in terms of Bankers Books Evidence Act, 1891 can be given to schedule of balances. No presumption of truth on correctness could be attached to schedule/certificate of balances to be admissible in evidence and to become basis of a suit or decree.
Learned counsel for the defendants concluded his arguments that so many questions of law and fact are involved in this matter and the Plaintiff also failed to file complete statement of accounts along with plaint, but by way of replication, lacuna of non filing the complete statement of account was filled up, which is not permissible under the law, therefore, defendants are entitled to unconditional leave to defend the suit and unless issues are framed and evidence is recorded, controversy between the parties cannot be resolved.
In rebuttal, Mr. Nafees Siddiqui, the learned counsel for the plaintiff argued that the defendants have filed a joint application for leave to defend which is not maintainable. The defendants have also failed to fulfill requirement of sub-section 4 of Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, therefore, leave to defend application is liable to be dismissed. He further argued that the defendant No.1 is private limited company, but in the year 2002, the defendant No.1 was partnership firm and opened their account in May, 2002 in the name of Classic Denim Mills and the defendants No.2 to 4 were partners. In the year 2005, the said partnership was converted into a private limited company, whereby it took over the liabilities of partnership firm and continued to enjoy the financial facilities. At the time of conversion, they have also accepted the outstanding liability of Rs. 726.372 Millions as on 01.10.2005. In the year, 2007, the defendants requested for re-alignment/enhancement of financial limit, therefore, the bank issued sanction letter on 29.5.2007 which was accepted by the defendants. In order to secure repayment, the defendants have also signed and executed finance agreement, promissory note and personal guarantees besides executing memorandum, confirming the deposit of title deeds. In the month of April, 2003, property was mortgaged and registered mortgage deed was also executed. In addition thereto, letter of hypothecation of movable and receivable was also executed. He further argued that statement of account attached with the plaint is duly certified in accordance with the Banker’s Book Evidence Act. Learned counsel further argued that Mr. Nasim Ahmed, attorney of the Bank could sign the plaint severally since he is the Bank Manager. So far as no signature on the plaint is concerned, same is mere irregularity and not illegality and can be easily cured with the permission of the Court. Furthermore, the permission to sign the plaint now by this Court will in no way prejudice the defendants. Learned counsel further argued that the entire financial facilities mentioned in the plaint are reflecting true position and the defendants have availed different financial facilities accordingly, but the defendants have defaulted in payment. The plaintiff issued legal notice but no response was received, therefore, the plaintiff had left with no other option but to institute the present suit. As per books of accounts, defendant No.1 is liable to pay an aggregate amount of Rs.402.871 Millions. He further argued that in compliance of section 9 of Ordinance, 2001, the plaintiff has already reproduced proper details in paragraph No.18 of the plaint. In support of his arguments, the learned counsel relied upon the following case law:
1.2008 CLD 765, (Bank of Punjab vs. Genertech Pakistan Ltd.). In this judgment, the learned single Judge of Lahore High Court held that non compliance with the mandatory provisions of section 10 (3) (4) & (5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 would provide penalty and leave application would merit be rejected. In the same judgment, it was further held that leave application jointly filed by the defendant not meeting the requirements of law was dismissed.
2.2006 CLD 244 (Habib Bank Limited vs. Sabcos (Pvt). In this case, the learned Judge held that scheme of Financial Institutions (Recovery of Finances) Ordinance, 2001 is that the suits involving financial matters between the financial institutions and customers should be decided expeditiously in summary manner and all vexatious and mala fide pleas of defence should be curtailed so that proceedings may be completed with shortest possible time. In order to achieve the scheme, Section 10 has been framed to put check upon the defence led by the defendants. Non compliance with the requirements mentioned in section 10 (3) (4) & (5) would entail rejection of plaint.
3. 2004 CLD 1741, (Zeeshan Energy Ltd vs. Faisal Bank Ltd). In this case, it was held that the application for leave to defend the suit was to be rejected under section 10 (6) of Financial Institutions (Recovery of Finances) Ordinance, 2001 for the failure of defendant to meet with the requirement of section 10 (3) & (4) of the Ordinance. Provisions are mandatory in nature. Cushion was available to the defendant, who failed in this behalf, to disclose sufficient cause for his inability to meet the requirements.
4.2003 CLD 1406, (Bank of Khyber vs. Spencer Distribution Ltd.). In this judgment, it was held that non-compliance with the provisions of section 10 (3), (4) & (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001. Effect, presumption would be that no application for grant of leave to defend suit was pending. Leave application filed by defendants would be liable to be rejected as perforce of section 10 (6) of the Ordinance. Provision of law couched with penal consequences would be considered as mandatory.
5.2009 CLD 761, (International Finance Corporation vs. Sarah Textiles Ltd). In this matter, learned Single Judge held that statement of accounts appended with the plaint was not in accordance with the parameters of section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 which has been certified as required by law. Defendants did not object to any specific entry in the statement of accounts as they were required in law to raise a specific objection but it was not done. No specific objection to statement of accounts having been raised in petition for leave to appear and defend the suit, therefore, same could not be raised later on under the principle of secundum allegata et probate.
6.2009 CLD 412, (H.B.L vs. Crescent Soft wear Products (Pvt.) Ltd.). In this judgment, it was held that non complying with the mandatory requirement of section 10 (3), (4) & (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 in the leave to defend application. Such application would become liable to be dismissed under section 10 (6) of the Ordinance. Non filing of resolution of Board of Directors of defendant company along with leave application. Effect. Lis on behalf of company without such resolution would have no sanctity. Leave application was dismissed.
7.2009 CLD 1346, (Habib Bank Ltd. vs. Paragon Industries (Pvt.) Ltd. In this matter, it was held that application for leave to defend the suit was filed by a person who had been authorized by Directors through resolution of company but no power of attorney or any authority existed in his favour on behalf of directors. Resolution was signed by directors of the company and not by them in their personal capacity. Except such resolution no other authority letter or power of attorney had been given by the defendants in their personal capacity, therefore, the defendants could not claim to have filed any application on their behalf. Application was considered to have only filed by company being authorized by resolution. Application for leave to defendant without fulfilling mandatory requirement of section 10 (3), (4) & (5) of the Ordinance. Such application for leave to defend was liable to be dismissed under section 10 (6) of Financial Institutions (Recovery of Finances) Ordinance, 2001.
8.2003 CLD 1033, ( Siddique Woolen Mills vs. Allied Bank of Pakistan). In this judgment, the hon’ble Supreme Court has held that Banking Court in exercise of its jurisdiction under section 10 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 could only entertain defence of the borrower, if prima facie a bona fide dispute had been disclosed. Since the borrowers had not denied their liability towards the Bank, therefore, Banking Court has rightly passed the judgment and decree which was maintained by High Court.
9.1981 SCMR 687, (Ismail vs. Mst. Razia Begum). In this judgment, the hon’ble Supreme Court has held that plaintiffs all along prosecuting their suit with diligence and also appearing as their own witnesses non signing of plaint by plaintiffs at proper stage in such circumstances is a mere irregularity. District Judge entirely justified directing rectification of such irregularity. Defendant’s counsel was not able to show as to how such irregularity prejudiced the defendant. Objection, hence, only technical, particularly when substantial justice done between parties.
10.PLD 1987 Karachi 180, (Haji Muhamad Rafiq vs. Shahenshah Jehan Begum). In this judgment, the single judge of this court held that where a plaint or a rent case was not properly signed or verified but was admitted and entered in the register of suits or rent cases, same would not cease to be a plaint or a rent case. Defects with regard to signature on a plaint or eviction application were technical irregularity relating to a matter of procedure.
11.PLD 1963 Supreme Court 382, (Imtiaz Ahmad vs. Ghulam Ali). In this judgment, the hon’ble Supreme Court held that the proper place of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights. All technicalities have to be avoided unless it be essential to comply with them on grounds of public policy. The English system of administration of justice on which our own is based may be to certain extent technical but we are not to take from that system its defects. Any system, which by giving effect to the form and not to the substance defeats substantive rights, is defective to that extent. The ideal must always be a system that gives to every person what is his.
12.2000 CLC 1455, (Qatar Airways PLC vs. ANZ Grindlays Bank). In this judgment, it was held that non compliance of Rule 15 & 16 of Order VI, C.P.C. was a mere technicality and same could be cured at a later stage.
13. PLD 1974 Supreme Court 134, (Niaz Muhammad Khan vs. Mian Fazal Raqib). In this judgment, the hon’ble Supreme Court
has held that as a general rule, a statute is understood to be directory when it contains matter merely of direction, but not when those directions are followed up by an express provision that, in default of following them, the facts shall be null and void. To put it differently, if the Act is directory, its disobedience does not entail any invalidity. if the Act is mandatory, disobedience entails serious legal consequences amounting to the invalidity of the act done in disobedience to the provision.
After hearing the pros and cons of the matter, I have reached to the conclusion that though the plaint is verified by Mr. Nasim Ahmed Siddiqui, one of the attorneys of the plaintiff, but it is also a fact that the plaint was not signed by any of the attorneys and it was instituted only with the signature of the plaintiff’s counsel. Second last page of plaint (page-19) shows that the plaint was to be signed on behalf of the plaintiff by its principal officer and attorney but nobody has signed the plaint on behalf of the plaintiff. This is a reason that the defendants along with leave to defend application filed a certified true copy of the plaint to show that the plaint was not signed by any person on behalf of the plaintiff. It is also a fact that in paragraph No.22 of the plaint, it is mentioned that Mr. Khalid Mohiuddin and Mr. Nasim Ahmed Siddiqui have been appointed duly constituted attorneys by the plaintiff vide indenture of power of attorney dated 23.7.2004 and 13.5.2006. Indenture of power of attorney are available on the court file as Annexure G to G-1 (page 539 to 549). In the both power of attorneys, powers vested in the attorneys to act jointly with another attorney of the Bank for and in the name and on behalf of Bank to transact certain acts, matters, deeds and things which are more particularly provided in the indenture itself for both the attorneys to act jointly. It is a fact that in the present form, the plaint has not been signed by any of the attorneys but it is simply verified by one of the attorneys Mr. Nasim Ahmed Siddiqui. Learned counsel for the plaintiff argued that attorney Nasim Ahmed could sign the plaint severally since he is the Bank Manager. Nothing is mentioned in the plaint to show that Mr. Nasim Ahmed is the Branch/Bank Manager, on contrary, it is mentioned in paragraph No.22 of the plaint that Mr. Khalid Mohiuddin and Mr. Nasim Ahmed both have been appointed attorneys to act on behalf of the plaintiff. The provision of signing the plaint and its verification have been provided separately under Order 6 Rules 14 & 15, C.P.C.
Rule 14. Pleading to be signed.-- Every pleading shall be signed by the party and his pleader (if any): Provided that where a party pleading is, by reason of absence or for other good cause, unable to sign the pleading, it may be signed by any person duly authorized by him to sign the same or to sue or defend on his behalf.
Rule 15. Verification of pleadings.-- (1) Save as otherwise provided by any law for the time being in force, every pleading shall be verified [on oath or solemn affirmation] at the foot by the party or by one of the parties pleading or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case.
(2) The person verifying shall specify, by reference to the numbered paragraphs of the pleading, what he verifies of his own knowledge and what he verifies upon information
(3) The verification shall be signed by the person making it and shall state the date on which and the place at which it was signed.
It is clear from Rule 14, that every pleading shall be signed by the parties and its pleader and Rule 15 provides that every pleading shall be verified on oath or solemn affirmation at the foot by a party or by one of the parties. So far as verification clause is concerned, the plaint is duly verified by one of the attorneys Mr. Nasim Ahmed, but at the same time there is technical defect and lacuna in the form of suit as nobody has signed the plaint. Since, the plaintiff has appointed two attorneys to act jointly, therefore, the plaint should have been signed by both of the attorneys, but the plaintiff can not be non-suited on this ground alone as it is mere irregularity that can be cured at any stage and on the basis of this technical defect, the plaint can not be rejected. The judgments relied upon by learned counsel for the plaintiff in this context are quite applicable and attracted to the facts and circumstances of this case. The Hon’ble Supreme Court in its judgment reported in 1981 SCMR 687, held that failure to sign the plaint is mere irregularity. Similarly, in another judgment reported in PLD 1987 Karachi 180, the learned single Judge of this Court held that where the plaint or rent case was not properly signed or verified but was admitted and entertained in the register of suit, same could not cease to be a plaint or a rent case. Defects with regard to signature held, were technical irregularity relating to matter of procedure. The hon’ble Supreme Court has held in its landmark judgment reported in PLD 1963 Supreme Court 382, that proper place of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights. All technicalities have to be avoided unless it be essential to comply with them on grounds of public policy. In the system which by giving effect to the from and not to the substance defeats substantive rights, is defective to that extent. The ideal must always be a system that gives to every person what is his. While considering the effect of the provision of law, whether directory or mandatory in nature, the hon’ble Supreme Court in its judgment reported in PLD 1974 SC 134, held that a statute is understood to be directory when it contains matter merely of direction, but not when those directions are followed up by an express provision that, in default of following them, the facts shall be null and void. To put it differently, if the Act is directory, its disobedience does not entail any invalidity, if the Act is mandatory, disobedience entails serious legal consequences amounting to the invalidity of the act done in disobedience to the provision. Signing, verification and drafting of plaint in a particular manner were matter of mere procedure, thus, relevant provisions could not be strictly construed. Rules regarding verification and signatures on plaint, being matter relating to procedure, were to be liberally construed. Such presentation or signing could not make plaint a nullity. Rules and regulations are only meant to streamline the procedure and administer the course of justice, but not to thwart the same. Duty of the Court is to do substantial justice. Prime object behind all legal formalities is to safeguard the paramount interest of justice. Mere technicality, unless offering insurmountable hurdle should not be allowed to defeat the ends of justice. Legal precepts are devised with a view to impart certainty, consistency and uniformity to administration of justice and to secure the same against arbitrariness.
The nut shell of this discussion is that the non signing of the plaint is an irregularity that can be cured at any stage and the plaintiff cannot be non suited on this ground alone. The arguments advanced by learned counsel for the defendants that the plaint is defective and due to non signing of it by both the attorneys, the plaint is liable to be rejected, is not a convincing argument. However, in order to proceed further, it would be proper to allow an opportunity to the plaintiff to cure the defect by signing the plaint through its duly constituted attorneys.
In the leave to defend application, defendants have taken plea that the plaintiff has failed to file complete and correct statement of account with the plaint and the alleged statement of account is a vague, false, fabricated and defected. It is further stated in the application that the defendants have mostly repaid the amount and without proper accounts, it is not possible to ascertain the outstanding amount, if any, due and payable by the defendants to the plaintiff. It is further alleged that if proper accounts are taken into consideration, no such exorbitant or exaggerated amount would be found due and payable by the defendants to the plaintiff. In the same sequence, the defendants have also proposed question of law in the leave to defend application that whether statement of account attached with the plaint is complete and in accordance with requirement of Section 9 (1) & (2) of the Ordinance, 2001.
…… The Financial Institutions (Recovery of Finances) Ordinance, 2001 is a special law which regulates the relationship between Financial Institutions and the customers. This special law provides different obligations for the financial institutions and the customers which are to be fulfilled while instituting the plaint or applying leave to defend in the matter. Section 9 (2) of the Ordinance, 2001, clearly provides that the plaint shall be supported by statement of account which in the case of Financial Institutions shall be duly certified under the Banker’s Book Evidence Act, 1891 and all supported documents reflecting to the grant of finance, a copy of plaint, statement of account and other relevant documents shall be filed with the Banking Court in sufficient numbers so that there is one set of copies for each defendant after institution of suit. After fulfilling the requirement of Section 9 of the Ordinance, 2001 by the plaintiff, the defendant has to apply for leave to defend and fulfill its part of obligation. In the present case, the suit was instituted on 10.09.2008, leave to defend application was filed on 8.11.2008 and replication was filed by the plaintiff on 27.4.2009. Since, in the leave to defend application, the defendants took specific plea that the plaintiff has instituted suit with incomplete statement of account, therefore, the plaintiff in the replication stated that the statement of accounts are complete, proper, correct and legal as duly certified, however, due to clerical mistake entire statement of account was not filed with the plaint, however, along with the replication, the plaintiff attached statement of account and marked as “Annexure-H”. Learned counsel for the defendants also pointed out that after filing the replication on 27.4.2009, another statement was filed by the plaintiff on 1.6.2009 and along with this statement, eleven more documents were filed with a list of additional documents in support of replication. Learned counsel for the defendants rightly pointed out that the statement filed on 1.6.2009 was never placed in the Court for orders and the plaintiff simply filed these documents along with the statement without any permission or directions of the Court.
The crux of the arguments of the learned counsel for the defendants, in so far as relate to the statement of account is that the suit was filed without complete statement of account and on the basis of available statement of account, the defendants had filed their leave to defend application and after filing further statement of account with replication and additional documents with a statement, no opportunity was available to the defendants to rebut the said statement of account and additional documents and unless entire documents are considered during course of evidence, no exact liability can be adjudicated or determined.
It is a fact that the plaintiff did not file complete statement of account along with plaint, therefore, in the replication it has been admitted that due to some clerical error, complete statement of account could not be filed with the plaint and in order to cure defects in the plaint, the plaintiff has filed statement of account as Annexure-H with the replication. It is also a fact which is clearly transpiring from the Court file that after filing replication, the plaintiff filed further documents along with a statement on 1.6.2009 which were not initially filed with the plaint.
In the judgment reported in PLJ 2004 Lahore 1147, learned divisional bench of Lahore High Court held that in absence of statement of account showing all debits and credits and dates thereof, no presumption of admissibility in terms of Banker’s Book Evidence Act, 1891 can be given to schedule of balances. No presumption of truth on correctness could be attached to schedule/certificate of balances to be admissible in evidence and to become basis of a suit or decree. It is the plaintiff’s burden to set out and formulate the plaint with mandatory requirements of law. To succeed in the rule, he has to prove its claim as raised and pleaded in the plaint. If the suit has been developed on documents, the plaintiff will be entitled to the relief only on showing the cause of action to arise from the documents sued upon. The requirement of exact adherence to the legal demands is more stringent for the plaintiff invoking jurisdiction of a special Court created under a special law when the conditions and pre-requisites for resort to such jurisdiction have been specifically and expressly prescribed in the special law. In the same judgment (supra), learned divisional bench has also quoted judgment of Hon’ble Supreme Court in case of Haji Ali Khan & Company v. Allied Bank of Pakistan Limited (PLD 1995 SC 1995) in which Hon’ble Mr. Justice Fazal Karim, as he then was, added note of opinion that consequences of the absence of leave is that the allegations in the plaint shall be deemed to be admitted and the party shall be entitled to a decree. Does it mean that the Court must pass decree although the allegations of fact in the plaint do not entitle him to it. Suppose, the allegations in the plaint show that the plaintiff has no cause of action for the suit or that the suit has not been instituted timeously and is barred by time, neither of these cases will entitle the plaintiff to a decree, nor court will be to pass one. This means that the Court is to exercise some judgment in the case, it does not necessarily follow the prayer, but give the plaintiff the relief to which, on the allegations in his statement of claim, he appears to be entitled. The Banking Court is not required by law to accept the ipsi dixit of a plaintiff qua its suit for any amount it may choose to claim from the defendant. It is, on the other hand, under a legal duty to first ascertain as to whether according to the record of the case before it, amount claimed in the suit could legally be so claimed, failing which, the suit, as a whole, or to the extent of the amount held to be not recoverable as such must be dismissed.
In my view, it is clear beyond any shadow of doubt that while instituting the pliant in the Banking Court, it is duty of the plaintiff to file complete statement of account. The purpose of this obligation on the plaintiff is to give fair opportunity to the defendant to come up with cogent justification and ground for leave to defend and if the plaintiff is left open and allowed to file statement of account in piecemeal through replication or by way of separate statement then no opportunity could be availed by the defendants to counter or reply subsequent statement of account as after filing leave to defend application, law does not permit further or fresh leave to defend application as it is clear from Section 10 of the Ordinance, 2001, that where an application for leave to defend is accepted, the Banking Court shall treat the application as written statement.
Since the complete statement of account was filed with the replication and further additional documents were filed through statement, no opportunity was given to the defendants to rebut the statement of account and to answer the additional documents. After 18th Amendment, right of a fair trial has become a fundamental right under Article 10-A of the Constitution of the Islamic Republic of Pakistan, 1973 which clearly provides that for the determination of civil rights and obligations or in any criminal charge, a person shall be entitled to a fair trial and due process.
Whether the defendants have fulfilled requirements of sub-section (3) and (4) of section 10 of the Ordinance, 2001 or not, this could only be taken into consideration provided the plaintiff first should fulfill requirement of sub-section (2) of section 9 of the Ordinance, 2001. In the present situation, the plaintiff has failed to file complete statement of account along with plaint and this defect was tried to be cured subsequently by filing complete statement of account with replication and thereafter, additional documents were brought on record through statement which was never fixed for orders in the Court and the same were brought on record without leave of the Court. Though, in the leave to defend application, the defendants have tried to show the compliance of sub-sections (3) & (4) of section 10 of the Ordinance, 2001, however, at this stage, non fulfillment of requirement of sub-sections (3) & (4) of section 10 of the Ordinance, 2001 cannot be strictly enforced, unless the defendants are provided complete statement of account and suit is instituted in accordance with the sub-section (2) of section 9 of the Ordinance, 2001. The purpose of allowing an opportunity to file replication is to reply the leave to defend application and it is not intended by the legislature to provide an opportunity to the plaintiff to remove the lacuna or to make improvement in the case through replication. The filing of complete and accurate statement of account with the plaint is a mandatory requirement which defect can not be rectified through replication. If leave to defend application is dismissed on the basis of incomplete statement of account, it will tantamount a violation of Ordinance 2001 and will also amount an infringement of newly secured and guaranteed fundamental right under Article 10-A of the Constitution of Pakistan which reads as under:
Right to fair trial:
“For the determination for his civil rights and obligations or in any criminal charge against him a person shall be entitled to a fair trial and due process”
The whys and wherefores lead me to a conclusion that in all conscience, the controversy can only be resolved after leading evidence by the parties, therefore, the defendants are entitled to unconditional leave. The leave to defend application is allowed and converted into written statement. Since I have already held that non signing of plaint by the duly constituted attorneys of the plaintiff is an irregularity and technical defect that can be cured and rectified at any stage of proceedings, therefore, the plaintiff is also allowed to remove this technical defect and irregularly from the plaint. Accordingly, the plaintiff’s attorneys are directed to sign the plaint in the office within ten days. The objection raised by the plaintiff that joint leave to defend application can not be filed in not sustainable in this case as each defendant has separately verified the application which has fulfilled the legal requirement and no prejudice is caused to the claim of plaintiff due to joint leave to defend application.
Under sub-section 10 of Section 10 of the Financial Institutions (Recoveries of Finances) Ordinance, 2001, it is clearly provided that where the application for leave to defend is accepted, the Banking Court shall treat the application as a written statement and in its order granting leave shall frame the issues relating to substantial questions of law and fact, therefore, after examining the plaint and written statement, I frame the following issues:
Issues
1. Whether the defendants No.1 to 4 are jointly and severally liable to pay a sum of Rs.402, 871,000/- to the plaintiff along with mark-up and the cost of funds from the date of filing of suit till its realization?
2. Whether the plaintiff is entitled to charge mark-up on mark-up without written agreement?
3. Whether the statement of account submitted by the plaintiff is accurate and duly certified in accordance with Banker’s Book Evidence Act, 1891?
4. Whether the defendants have already paid to the plaintiff a sum of Rs.1,267,764,376 and nothing is outstanding against them?
5. Whether the parties have entered into any financial agreement for restructuring, rescheduling, or role over of previous transactions?
6. What should the decree be?
List of witnesses within seven days. Documents and commission, if any, within one month. Parties are at liberty to file additional issues, if any, within ten weeks. Office is directed to fix the matter for evidence.
Application is disposed of in the above terms.
Karachi:-
Dated. 30.11.2010 JUDGE