Judgment Sheet
IN THE HIGH COURT OF SINDH KARACHI
Suit No. B – 59 of 2013
Present :
Mr. Justice Nadeem Akhtar
Plaintiff : KASB Bank Limited,
through Mr. Muhammad Ishaq Ali, Advocate.
Defendant : Muhammad Ahmed Ansari,
through Mr. Khaleeq Ahmed, Advocate.
Date of hearing : 15.04.2014
J U D G M E N T
NADEEM AKHTAR, J. – The defendant has filed C.M.A. No. 6048 of 2013 praying that unconditional leave be granted to him to defend this Suit. The Suit has been filed by the plaintiff / financial institution against its customer / the defendant under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001 (‘the Ordinance’), for recovery of Rs.62,376,461.55 with cost of funds thereon, as well as for the sale of the immovable properties mortgaged in its favour by the defendant in consideration of the finance facilities availed by him.
2. It is the case of the plaintiff that at the request of the defendant, a running finance facility of Rs.30.000 million was granted to him by the plaintiff on 29.09.2006, which was enhanced at his request to Rs.37.000 million on 07.04.2007, and to Rs.40.000 million on 23.06.2007. The said facility was then renewed at his request to the extent of Rs.37.000 million on 05.12.2007 and 28.03.2008. On 22.09.2009, at the request of the defendant, a new demand finance facility of Rs.13.000 million was granted by the plaintiff to him, and the above running finance facility of Rs.37.000 million was also renewed in his favour. The defendant accepted the terms and conditions offered by the plaintiff, by signing the plaintiff’s offer letters, and also executed finance agreements in respect of both the facilities. In order to secure the repayment of the said finance facilities, the defendant mortgaged in favour of the plaintiff his two immovable properties ; namely, (1) Plot No.6-B, 15th South Street, Phase-II, Defence Housing Authority, Karachi, measuring 1,000 sq. yds., with the bungalow constructed thereon, and (2) property No. BZ-5, Street-2, Business Zone, Defence Housing Authority, Karachi, hereinafter collectively referred to as ‘the mortgaged properties’. Personal guarantees, demand promissory notes and letters of continuity were also executed and handed over to the plaintiff by the defendant as security. The plaintiff has alleged that both the facilities were fully availed and utilized by the defendant, but he committed breach in fulfilment of his obligations. As per the disclosure made in the plaint under Section 9(3) of the Ordinance, the defendant is liable to pay to the plaintiff an amount of Rs.62,376,461.55 towards the outstanding principal amount and the mark-up thereon in respect of both the facilities.
3. Upon service of summons, the defendant filed his application bearing C.M.A. No. 6048 of 2013 for leave to defend the Suit under Section 10 of the Ordinance, to which the plaintiff filed its replication. Mr. Khaleeq Ahmed, learned counsel for the defendant, submitted that the Suit is not maintainable as the plaintiff has not complied with the mandatory requirements of Section 9(3) of the Ordinance. He contended that the defendant has filed a Suit against the present plaintiff for declaration and rendition of accounts, which is sub judice before the Banking Court and wherein leave to defend has been granted to the present plaintiff ; therefore, leave should be granted to the defendant in this Suit. He further contended that the statement of account filed and relied upon by the plaintiff does not support its claim in this Suit, the entries thereof are incorrect, and the payments made by the defendant have been suppressed by the plaintiff. The learned counsel submitted that there is a serious discrepancy in the plaintiff’s claim as the statement filed by the plaintiff in this Suit and the one filed in the defendant’s Suit pertain to two different accounts having different numbers. He further submitted that the demand finance facility of Rs.13.000 million was never disbursed to the defendant, nor does the statement of account reflect any such amount, and also that the plaintiff has not filed any document in relation to this facility. It was urged that the defendant has raised substantial questions of law and facts, and as such he is entitled to an unconditional leave to defend the Suit.
4. Mr. Muhammad Ishaq Ali, learned counsel for the plaintiff, refuted the assertions made on behalf of the defendant. He raised a preliminary objection that the defendant has not complied with the mandatory requirements of Section 10(4) of the Ordinance, and as such his application is liable to be dismissed on this ground alone. Without prejudice to his said objection, he emphasized that despite raising all sorts of objections, the defendant has not denied the execution of the documents filed and relied upon by the plaintiff ; he has not disputed that the facilities were availed by him ; and, he has not filed a single document to show that the facilities have been settled by him. By referring to paragraph 8 of the plaint, the learned counsel submitted that the mandatory requirements of Section 9(3) of the Ordinance have been duly complied with therein by the plaintiff. He also referred to the various finance agreements executed by the defendant, including the one pertaining to the demand finance facility of Rs.13.000 million, as well as to the statements of account pertaining to both the facilities. It was pointed out by him that the two facilities were availed by the defendant through two separate accounts, and that is why there are two separate statements of account on record reflecting two separate account numbers. The learned counsel submitted that the defendant himself has filed as annexure ‘P’ to his application, the statement of account relating to the demand finance facility, showing credit of Rs.13.000 million in his favour. It was urged that the defendant has miserably failed in raising any substantial question of law or fact, the application is frivolous, and is liable to be dismissed.
5. I have heard the learned counsel for the parties and have perused the record with their assistance. I have examined the contents of paragraph 8 of the plaint, wherein the plaintiff has made disclosure in relation to both the facilities, containing the amounts sanctioned by the plaintiff, the amounts availed and paid by the defendant, the outstanding principal amounts and the mark-up accrued thereon till 15.09.2011. The outstanding principal amount and the outstanding mark-up have been shown separately for both the facilities. As the disclosure made by the plaintiff is in accordance with Section 9(3) of the Ordinance, the objection in this regard by the learned counsel for the defendant, is not tenable. The contentions of the learned counsel for the defendant that the demand finance facility of Rs.13.000 million was never disbursed to the defendant, nor does the statement of account reflect any such amount, and the plaintiff has not filed any document in relation to this facility, do not appear to be correct. The finance agreement in respect of this facility is available on record, the execution whereof has not been denied by the defendant. The statement of account filed by the plaintiff as well as by the defendant in relation to the demand finance facility of Rs.13.000 million clearly shows that the said amount was credited to the defendant’s account.
6. The other contention of the learned counsel for the defendant that leave should be granted to the defendant in this Suit as a matter of right as leave has been granted to the present plaintiff in the Suit filed by the defendant, has no force. It is now well-settled that where separate Suits are filed against each other by the financial institution and the customer, applications for leave to defend filed in both Suits are to be heard and decided independently and on their own merits ; the order passed on one application for leave to defend in one Suit does not affect or prejudice the merits or demerits of the application for leave to defend in the other Suit ; and, in case leave to defend is granted in one Suit, even then the defendant in the other Suit does not become entitled for leave to defend the Suit as a matter of right.
7. Regarding the contention of the learned counsel for the defendant in relation to the amounts disclosed by the plaintiff in the plaint and the statements of account annexed to the plaint, he was unable to show or specify any irregular, wrong or illegal debit entry of markup, or any other amount, either in the amounts disclosed in the plaint or in the statements of account annexed to the plaint. Moreover, the defendant has not filed any document to show that the facilities availed by him from the plaintiff have been settled by him. After minutely examining the statements of account annexed to the plaint, I have come to the conclusion that the entries appearing therein and the claim made in this Suit, fully corroborate each other. As the defendant has not denied the execution of the documents filed and relied upon by the plaintiff and the availing of finance facilities, he has not been able to show or specify any irregular, wrong or illegal debit entry of markup, or any other amount, either in the amounts disclosed in the plaint or in the statements of account annexed to the plaint, in my humble opinion there appears no substantial question of law or fact in this matter that may require evidence. Therefore, the application for leave to defend the Suit filed by the defendant is liable to be dismissed.
8. Under Sub-Section (4) of Section 10 of the Ordinance, the defendant was obliged to disclose (a) the amount of finance availed by him from the plaintiff, (b) the amounts paid by him to the plaintiff and the dates of payments, (c) the amount of finance and other amounts relating to the finance payable by him to the plaintiff up to the date of institution of the Suit, and (d) the amount, if any, which he disputes as payable to the plaintiff, and the facts in support thereof. A perusal of the defendant’s application for leave to defend reveals that he has vaguely stated the “amount deposited”, “amount withdraw”(!), “amount payable / excessive paid” and “amount disputed : Nil”. Thus, he has not complied with the mandatory requirements of Sub-Section (4) ibid as provided therein. Under Sub-Section (5) of Section 10 of the Ordinance, the defendant was obliged to file all such documents along with his application which, in his opinion, support the purported substantial questions of law and fact raised by him. However, no such document has been filed by him. The implications for not complying with the mandatory requirements of Sub-Sections (4) and (5) 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 requirement. The defendant has not only failed in fulfilling the mandatory requirements of Sub-Sections (4) and (5) ibid, but he has also failed to disclose any sufficient cause for his inability in complying with the same. Due to this reason, the cases relied upon by the learned counsel for the defendant, are of no help to him.
9. In the most recent authoritative pronouncement of the Hon'ble Supreme Court in the case of Apollo Textile Mills Ltd. and others V/S Soneri Bank Ltd., PLD 2012 Supreme Court 268 = 2012 CLD 337, it has been held 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 defendant had the full opportunity to comply with the mandatory requirements of Sub-Sections (4) and (5) of Section 10 ibid, but as he failed in availing such opportunity, he is bound to face the consequence of his non-compliance as held by the Hon’ble Supreme Court in Apollo Textile Mills Ltd. supra. His application is liable to be dismissed on this ground also.
10. Accordingly, C.M.A. No. 6048 of 2013 filed by the defendant for leave to defend the Suit is liable to be dismissed on both the grounds, that is, it does not comply with the mandatory requirements of Section 10(4) and (5) of the Ordinance, and also as he has not been able to raise any substantial question of law or fact that may require evidence in this matter. These are the reasons of the short order announced by me on 15.04.2014, whereby the aforementioned application was dismissed.
11. Upon dismissal of the defendant’s application, I have proceeded to examine the plaintiff’s claim in this Suit. In paragraph 8 of the plaint, the plaintiff has claimed amounts of Rs.46,217,332.99 and Rs.16,159,128.56 against the defendant in respect of the running finance facility and demand finance facility, respectively, including the outstanding principal amount and the markup thereon, which have been shown separately as noted above. Thus, the total amount that has been claimed in this Suit by the plaintiff is Rs.62,376,461.55. I have noticed that the disclosure made in the plaint by the plaintiff in terms of Section 9(3) of the Ordinance, does not contain any amount towards liquidated damages, penalties, penal charges or any such amount which is not permissible in law. I have already held that the entries appearing in the statement of account and the claim made in this Suit, fully corroborate each other. Accordingly, the Suit of the plaintiff is hereby decreed against the defendant in the sum of Rs.62,376,461.55 (Rupees sixty two million three hundred seventy six thousand four hundred sixty one and Paisa fifty five only) with cost of funds thereon from the date of default at the rate prescribed by the State Bank of Pakistan. A decree for the sale of the mortgaged properties is also passed, and costs of the Suit are also awarded to the plaintiff.
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JUDGE