Order  Sheet

 

IN THE HIGH COURT OF SINDH AT KARACHI


Suit No. B – 101 of 2013

 

 

Date

               Order with signature of Judge

 

 

1. For hearing of CMA No.13835/2013 (Leave to defend by defendants 1 & 2) :

2. For hearing of CMA No.13836/2013 (Leave to defend by defendant No.3) :

3. For hearing of CMA No.13837/2013 (Leave to defend by defendant No.4) :

4. For hearing of CMA No.13838/2013 (Leave to defend by defendant No.5) :

5. For hearing of CMA No.13839/2013 (Leave to defend by defendant No.6) :

 

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Plaintiff         : Silkbank Limited, through Syed Muhammad Kazim Advocate.

 

Defendants  : M/S AZM Chemical Company, Syed Wajahat Hussain Zaidi,

                         M/S Aslam Chemical Industries (Pvt.) Ltd., Ghulam Abbas,  

                         Mst. BatoolNaqvi and Mst. Syeda Mehmooda Khatoon, and

                         their counsel Mr. Sami Ahsan Advocate called absent.

 

Date of hearing : 15.04.2014.

 

 

ORDER

 

 

NADEEM AKHTAR, J.– The listed applications have been filed by the defendants under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001 (‘the Ordinance’), praying that unconditional leave be granted to them to defend this Suit. The Suit has been filed by the plaintiff / financial institution against its customers / the defendants under Section 9 of the Ordinance for recovery of Rs.112,676,944.00 with markup and cost of funds thereon, as well as for the sale of the assets hypothecated and the immovable properties mortgaged in its favour by the defendants in consideration of the finance facilities availed by them.

 

2.         The learned counsel for the defendants has not appeared in this case on any date of hearing. On 14.02.2014 when the defendants and their counsel were absent, the matter was adjourned as an indulgence, with a caution that if no one appears for the defendants on the next date, appropriate orders will be passed. On 18.03.2014, which was the next date, a request for adjournment was made on behalf of the defendants’ counsel on the ground that he was busy before another Bench. In view of this request, the defendants and their counsel were accommodated, and indulgence was again shown by adjourning the matter. On 15.04.2014, the defendants and their counsel were called, but they remained absent without any intimation although the name of the counsel had appeared in the daily cause list. As lenience had been shown by the Court in favour of the defendants on previous dates of hearing by adjourning the matter either due to the absence of their counsel or in view of the request for adjournment made on his behalf, the defendants did not deserve any further indulgence, especially when despite the caution given and observation made earlier, they and their counsel had chosen to remain absent without any intimation. However, instead of dismissing the defendants’ applications for non-prosecution on 15.04.2014, learned counsel for the plaintiff was heard and the applications were examined, and thereafter the matter was reserved so that the applications may be decided on merits.

 

3.         Despite the unexplained and unjustified absence of the defendants and their learned counsel, I have carefully gone through the listed applications filed by them in order to appreciate their point of view. A perusal of the defendants’ application for leave to defend the Suit reveals that they have not complied with the mandatory requirements of Sub-Sections (4) and (5) of Section 10 of the Ordinance. Under Sub-Section (4) ibid, the defendants were obliged to disclose (a) the amount of finance availed by them from the plaintiff, (b) the amounts paid by them to the plaintiff and the dates of payments, (c) the amount of finance and other amounts relating to the finance payable by them to the plaintiff up to the date of institution of the Suit, and (d) the amount, if any, which they dispute as payable to the plaintiff, and the facts in support thereof. None of the above particulars have been disclosed by the defendants in their application. Under Sub-Section (5) ibid, the defendants were obliged to file all such documents along with their application which, in their opinion, support the purported substantial questions of law and fact raised by them. However, no such document has been filed by them, and the few documents filed by them have no relevance with the purported questions raised by them. 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 defendants have not only failed in fulfilling the mandatory requirements of Sub-Sections (4) and (5) ibid, but they have also failed to disclose any sufficient cause for their inability in complying with the same.

 

4.         The effect and implications for not complying with the mandatory provisions of Sub-Sections (4) and (5) ibid, have been discussed in detail by the Hon’ble Supreme Court in the most recent authoritative pronouncement in the case of Apollo Textile Mills Ltd. and others V/S Soneri Bank Ltd., PLD 2012 Supreme Court 268 = 2012 CLD 337. The law laid down in the cited authority by the Hon’ble Supreme Court is 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.

 

5.         Some of the paragraphs of the cited authority, which are relevant for the purposes of deciding the listed applications, are reproduced here for convenience and ready reference :

 

"14.     The plaintiff institution and the defending 'customer' have identical statutory responsibility respectively under sections 9(3) and 10(4) 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 has also been saddled with the additional responsibility to also specify the amounts disputed by him.

 

            A defending customer is thus obliged to put in a definite response to the banks' accounting and has under sections 10(3) and (4) to compulsorily plead in answer in the leave petition his accounts as well as the facts and amount disputed by him as repayable to the plaintiff.

 

15.       The rationale of the schematic discipline of Ordinance of 2001 is evident.  A banking suit is normally as 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. The parties to a suit have been obliged equally to definitely plead and to specifically state their respective accounts.

 

16.       To scope of the suit thus becomes well defined.  The controversies are confined to the claimed and / or the disputed numbers, facts and reasons thereof.  Unnecessary controversial details, the evidence thereto and the time of the trial, are curtailed.  The trial would remain within the laid out parametrical scope of the claimed and the disputed accounts.

 

17.       ……………………………

 

18.       The Financial Institutions (Recovery of Finances) Ordinance, 2001 i.e. is a Special law.  It provides a special procedure for the banking suits.  The provisions of the Ordinance, 2001 under section 4 thereof override all other laws.  The provisions contained in the said Sections require strict compliance.  Non-compliance therewith attract as above referred, consequences of rejection of leave petition along with decree etc. etc.

 

19. In this case, the application for leave to defend the suit filed by the petitioners did not fulfil the requirements of section 10(3), (4) and (5) of the Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001. It was admittedly not in conformity with the said mandatory provisions. No cause or the reason for inability to comply with said requirements was shown. Instead it was expressly admitted by the learned Senior Advocate Supreme Court for the petitioners before the High Court and also before us that the petitioners failed to fulfil the mandates of the said provisions and did not plead the required Accounts.  The petitioners / defendants thus attracted the prescribed legal consequences of :-

 

(i) rejection of their leave petition under section 10(6) ;

 

(ii) non-entitlement under section 10(1) to defend the suit for not obtaining leave to defend the suit in terms provided for in section 10 ; 

 

(iii) the allegations of fact in the plaint were deemed under section 10(1) to have been admitted by them ; and

 

(iv)  a judgment and decree against them and in favour of the plaintiff bank under section 10(1) and (11) ibid. " 

 

(Emphasis added)

 

6.         At the time of filing the application for leave to defend, the defendants had full opportunity to comply with the mandatory requirements of Section 10(4) and (5) ibid, but as they failed in availing such opportunity, they are bound to face the implications and consequences of their non-compliance. As held by the Hon’ble Supreme Court in Apollo Textile Mills Ltd. (supra), the Ordinance is a special law, and by virtue of Section 4 thereof, its provisions override all other laws ; the provisions contained in Sections 9 and 10 of the Ordinance require strict compliance ; and, non-compliance therewith attract consequences of rejection of the application for leave to defend along with decree. In view of the law laid down by the Hon’ble Supreme Court, I have no option left but to hold that the applications for leave to defend filed by the defendants are not maintainable, as they have failed to comply with the mandatory requirements of Section 10(4) and (5) of the Ordinance.

 

7.         In their abnormally lengthy applications for leave to defend, which are five in number comprising of 24 pages each, the defendants have raised all sorts of objections, most of them are absolutely irrelevant and contrary to the criteria laid down by the Superior Courts for obtaining leave to defend under Section 10 of the Ordinance. The applications have been drafted in complete disregard of the well-settled principles for drafting the pleadings, as the same are argumentative in nature ; the defendants have attempted to make a mockery out of the plaintiff’s claim by using improper remarks and exclamations, whilst also using a sarcastic tone ; several provisions of the Ordinance and CPC have been reproduced therein unnecessarily ; and, several reported cases with head notes have been discussed therein. The plaintiff was subjected to respond to these extraordinarily lengthy applications by filing an equally lengthy replication. Due to the above reason, the Court was subjected to painstakingly examine the unnecessarily lengthy applications, resulting in a waste of its precious time which would have been better utilized in deciding other and more important matters.

 

8.         As I have already held that the listed applications filed by the defendants for leave to defend the Suit are not maintainable in view of the law laid down by the Hon’ble Supreme Court, the same are hereby dismissed with costs of Rs.10,000.00 (Rupees ten thousand only) which shall be paid by each of the defendants to the Sindh High Court Library within fifteen (15) days hereof.

 

 

 

 

 

__________________

   JUDGE