IN THE HIGH COURT OF SINDH, KARACHI
Special High Court Appeal No.32 of 2012
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Date Order with Signature(s) of Judge(s)
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Present:
AQEEL AHMED ABBASI, J.
ABDUL MAALIK GADDI, J.
Date of Hearing : 06.09.2016
Date of Judgment : 10.10.2016
Appellant : M/s. Dewan Automotive Engineering Limited
formerly Delta Innovations Limited,
Through M/s. Syed Muhammad Abbas Hyder alongwith Atif Hafeez, Advocates
Respondent : M/s. Soneri Bank Limited
Through Mr. Neel Keshav Advocate alongwith
Mr. Nisar Ahmed Channa, Head Recovery Officer.
1. For hearing of CMA No.380/2012
2. For hearing of Main Case
3. For hearing of CMA No.381/2012.
J U D G M E N T
Abdul Maalik Gaddi, J. – Through instant Special High Court Appeal, the appellant has assailed the legality and propriety of the Judgment and Decree dated 16.12.2011, passed by the learned Single Judge of this Court in a Banking Suit bearing No.B-73 of 2010 filed by the respondent under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for recovery of Rs.60,075,056/- (Rupees Six Crore Seventy Five Thousand Fifty Six only), whereby the learned Single Judge after hearing the parties and perusal of record passed the judgment and decree in favour of the respondent of Rs.41,396,316.91/- (Rupees Four Crore Thirteen Lac Ninety Six Thousand Three Hundred Sixteen only) with cost of the suit as well as cost of funds from 23.02.2008 till the entire decretal amount is paid.
2. Briefly stated facts as those emerge out of this appeal are that the respondent filed a Banking Suit bearing No.B-73 of 2010 for recovery of Rs.60,075,056/- (Rupees Six Crore Seventy Five Thousand Fifty Six only) with agreed markup, costs of funds etc., under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 against the appellant with the following prayers:-
a) Decree for the total amount recoverable as on 20-5-2010 Rs.60,075,056/- (Six Crores Seventy Five Thousand Fifty Six only) alongwith agreed mark up and cost of funds (as approved by SBP) from the date of first default i.e. 1-1-2009 (March Quarter) till realization of decreetal amount;
b) Enforce and execute the said decree for the above sum against the Defendants by attachment and sale of hypothecated goods mentioned in the letter of Hypothecation dated 25-2-2005;
c) Restrain under Section 16 of the Ordinance, 2001 the sale, creation or transfer of any interest, right, charge, lease, dispose or disposition of the current assets (movable) of the Defendant pending adjudication of the present suit. Attachment and sale of the current assets mentioned in the Hypothecated letter to the satisfaction of the Decree;
d) The Plaintiff may also be allowed cost of the suit;
e) Any other or further relief or relief(s) against the Defendants that this Hon’ble Court may consider just and proper in the circumstances of the case.
3. It appears from the record that after filing of aforesaid Banking Suit, notice was issued to the appellant/defendant, wherein, the appellant/defendant had filed an application under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with Section 151 CPC being CMA No.8879 of 2010 for Leave to Defend the Suit, wherein, the appellant/defendant denied the claim of the respondent and claimed a Set-Off/Counter Claim to PKR 49,071,205/- against the respondent. The said CMA was disposed of vide Order dated 13.10.2010, while referring the matter to the Chartered Accountant. For the sake of convenience, it would be expedient to reproduce the Order dated 13.10.2010, passed by the learned Single Judge, which reads as under:-
“13.10.2010.
Mr. Neel Keshav Advocate.
Mr. Saleem Salam Ansari Advocate.
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Both learned counsels have drawn attention of this Court to the order dated 12.8.2010 passed in Suit No.B-183 of 2009 whereby Honourable Court was pleased to dispose of Leave to Defend Application while referring the matter to the Chartered Accountant in which facts and circumstances were same.
Case of the Plaintiff is that the Plaintiff granted a Running Finance Facility to the Defendant in the nature of Running Finance (RF) to the tune of Rs.50.000 Million (five Crores) for working capital requirements and LC DA (within which DA Delivery of Documents) Facility for Rs.50.000 million (Five Crores only) which both facilities had been fully availed by the Defendant on terms and conditions mentioned in the Finance Agreement dated 21.7.2004 and another agreement dated 19.2.2007.
That in the year 2007, the Defendant requested vide its letter dated 17.1.2007 addressed to Plaintiff for renewal and sanction of finance facility which it was already availing because this facility expired on 31.12.2006 and such renewal of finance facilities were made on 24.2.2007. The Defendant in pursuance of such renewal executed following documents:
1. Agreement of Finance Dated 19.2.2007.
2. Demand Promissory Note Dated 19.2.2007.
3. Facility letter by the Customer dated 19.02.2007.
4. Debit Authority Letter/under taking of mark up dated 19.2.2007.
5. Over Draft cash Credit/Loan Account 19570 dated 19.2.2007.
6. Declaration under SBP Prudential Regulations alongwith list of Directors.
The Defendant is claiming set off decree of Rs.49,071,205/-. By consent of both counsels M/s. Haroon Zakarya & Company Chartered Accountants are appointed who shall calculate mark up and repayment on the basis of rates mentioned in the letters and submit their report within two months. Parties to supply statements of accounts and the letters containing the mark-up rates mentioned in the letters. Fee of Chartered Accountant of Rs.1,00,000/- (Rupees one lac) will be paid by the plaintiff. The Chartered Accountant will have full authority to decide if objection raised by either party and hear the same and it would be decided without referring the matter to the Court as per Banking Regulations. In view of consent order the said application is disposed off, the Chartered Account shall submit his final Repot to this Court.”
4. Learned counsel for the appellant has contended that the learned Single Judge of this Court has seriously erred in law and facts while passing the impugned Judgment and Decree as the suit of the respondent bank has been filed through an incompetent person. The officer’s power of attorney annexed with the plaint were executed by an unauthorized person and no reference of any Board Resolution or otherwise to show that how the executant had acquired the authority to execute the power of attorney. Per learned counsel, the suit of the respondent bank was not maintainable in the present form, as the mandatory provision of sub-Section (2) of Section 9 of the Ordinance, 2001 was not complied with as the statement of account allegedly filed by the respondent bank with the plaint has not been verified or signed by any principal Accountant or Manager as required by the Banker’s Book Evidence Act, rendering the same as inadmissible, consequently, the suit of the respondent is liable to be dismissed. Learned counsel further submits that as evident from the statement of account, annexed to the memo of appeal (Pages 183 to 185), absolutely no amount was disbursed after and during the period of subject finance agreement dated 19.02.2007 and the only debit balance as posted on 31.01.2007 is the amount, as evident from the statement of account, brought forward from the previous account/period and the amount of mark up charged on such amount. Per learned counsel, in the first place no mark up could have been charged on the aforesaid amount of Rs.49,960,797.21/- and secondly even the so-called amount posted by way of brought forward could not have been allowed to the bank for the reason that absolutely nothing was due and outstanding against the appellant before 31.01.2007 and there was no question of bringing forward any outstanding amount against the appellant on 31.01.2007. Learned counsel also refers to a statement of account prepared and filed by the appellant at page 71 of the file, which shows that since 2004, the year when the appellant commenced banking with the respondent bank, and up to 02.03.2009, the appellant has deposited more amount than the appellant withdrew from his account with the respondent bank. However, he submits that neither the Chartered Accountant examined and commented on the said statement of account nor has the bank produced any evidence to belie the said statement of account. Under the aforementioned facts and circumstances, he has prayed that instant appeal is liable to be allowed on the basis of facts and grounds as stated in the memo of appeal, however, in support of his arguments, he has filed his written synopsis alongwith the following case laws:-
i) Deputy Manager PESCO WAPDA Abbotabad & 2 others v. Ali Match (Pvt.) Ltd and 9 others reported as 2016 CLC 1133;
ii) Telecard Limited through Authorized representative v. Pakistan Telecommunication Authority through Chairman reported as 2014 CLD 415;
iii) Hasnain Cotex Ltd. and 2 others v. Jasim Khan reported as 2012 YLR 2743;
iv) Messrs Pharmatec Pakistan (Pvt.) Ltd. through Managing Director and 3 others v. AMJID ALI SHAH reported as 2016 MLD 1341;
v) Mamdot (Represented by 6 Heirs v. Messrs Ghulam Nabi Corporation Ltd., Lahore reported as PLD 1971 Supreme Court 550;
vi) Elbow Room and another v. MCB Bank Limited reported as 2014 CLD 985;
vii) Habib-ur-Rehman v. Judge Banking Court No.4, Lahore and another reported as 2006 CLD 217;
viii) United Bank Limited, Stock Exchange Branch, Lahore v. S. Khalid Hakeem reported as 2002 CLD 1275;
ix) Messrs International Business Centre, through Managing Director and another v. Habib Credit And Exchange Bank Ltd reported as 2004 CLD 1552;
x) Mst. Bhag Bhari and another v. Fateh Khan and others reported as PLD 1960 (W.P.) Lahore 1216;
xi) Mirza Abdul Hamid and another v. The Custodian of Evacuee Property and another reported as PLD 1969 Lahore 404;
xii) Messrs Khatri Brothers through Proprietor v. Federation of Pakistan through Secretary, Revenue Division and Chairman Federal Board of Revenue, Islamabad reported as 2010 PTD 1225;
xiii) Messrs ICEPAC Limited and 2 others v. Messrs Pakitan Industrial Leasing Corporation Ltd. reported as 2005 CLD 1186;
xiv) Asad Pervaiz and another v. Habib Bank Ltd. through Manager reported as 2005 CLD 1525;
xv) Messrs Bank Al-Falah Limited v. The Presiding Officer and another reported as 2014 CLD 160.
5. Conversely, the learned counsel for the respondent bank while supporting the impugned Judgment and Decree has opposed the contentions of the learned counsel for the appellant and argued that the respondent bank has filed the suit through competent person duly authorized through power of attorney in accordance to Section 9(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 alongwith the proper statement of account which bears the entries of principal limit, the amount disbursed, amount paid by the appellant, mark up and total recoverable amount, which is also duly certified under the Banker’s Book Evidence Act, 1891. During the course of his arguments, he draws our attention towards the order dated 13.10.2010, whereby application for leave to defend filed by the appellant being CMA No.8879 of 2010, was disposed off by consent and matter was referred to Chartered Accountant with direction to examine the accounts and calculate mark up and repayment on the basis of rates mentioned in the letters/agreement. Per learned counsel, in compliance of the said order, the Chartered Accountant has submitted his report dated 08.02.2011, which is on record, available at page 157 of the case file, after considering the objections raised by the appellant, prima facie, shows the claim of the respondent bank while rejecting the counter claim of the appellant. Although the appellant has challenged the said report before the learned Single Judge but the same was rejected on valid reasons, however, as per Court directions, as contained in order dated 14.12.2011, break up was filed by the respondent bank and consequently, the suit was decreed. Per learned counsel, after disposing off the application for leave to defend and submission of the Chartered Accountant’s report in favour of the respondent bank, this appeal is liable to be dismissed.
6. We have heard learned counsel for the parties at a considerable length and perused the record with their assistance.
7. The first ground agitated by the appellant in this appeal is in respect of the competence of the person filing the suit. In order to meet this objection, it will be advantageous to reproduce the Section 9(1) of the Financial Institution (Recovery of Finances) Ordinance, 2001, which reads as under:-
“9. Procedure of Banking Courts. (1) Where a customer or a financial institution commits a default in fulfillment of any obligation with regard to any finance, the financial institution or, as the case may be, the customer, may institute a suit in the Banking Court by presenting a plaint, which shall be verified on oath in the case of a financial institution by the Branch Manager or such other Officer of the financial institution as may be duly authorized in this behalf by power of attorney or otherwise.”
An examination of record reveals that the plaint has been filed by Mr. Nisar Ahmed Channa son of Budhal Khan Channa, Litigation Officer of the respondent bank, who has duly been authorized by the M/s. Soneri Bank Limited to act as an attorney of the respondent bank vide Power of Attorney dated 24.03.2007, annexed with the plaint as annexure ‘P-2’. Power of Attorney dated 06.01.2004 has also been attached as annexure ‘P-1’ by the M/s. Soneri Bank Limited duly appointed Mr. Muhammad Iqbal son of Muhammad Wazir (late), employee of respondent bank, to act as attorney of the respondent bank. Both these power of attorneys were duly signed by the Director concerned bank. A perusal of the above said power of attorneys would reveal that these power of attorneys have duly been executed by the Directors of the respondent bank in favour of the above named attorneys. In the instant case, the person, who had signed the plaint is holding valid power of attorney by fulfilling all the legal requirements and, hence, could not be said that he was not competent person, who has instituted the suit. The decision relied upon the learned counsel for appellant in this regard does not appear to be applicable. No substantial question arises out of this ground. Now coming to the second limb of the arguments advanced by the learned counsel for the appellant that the two statements of account filed by the respondent bank with the plaint i.e. Statement of Account No.019570-02 (page No.71 to 95), the same had not been verified or signed by the principal accountant or manager as required by the Banker’s Books Evidence Act, rendering the same as inadmissible, consequently, the suit of the respondent bank was liable to be dismissed. In order to meet this objection, it will be expedient to reproduce sub-Section (2) of Section 9 of the Financial Institution (Recovery of Finances) Ordinance, 2001, which reads as under:-
“9(2) The plaint shall be supported by a statement of account which in the case of a financial institution shall be duly certified under the Bankers Books Evidence Act, 1891 (XVII of 1891), and all other relevant documents relating to the grant of finance. Copies of the 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 and one extra copy.”
Learned counsel for the respondent bank argued that all the documents have been duly certified and are appended with the memo of plaint in the suit. We have perused the statements of account available at pages 71 to 95 and 97 to 99 of the memo of appeal, which shows that the statements of account are certified as required under the Bankers Books Evidence Act, 1891. These documents also show that at the end of the statements of account, the required stamps are available alongwith signatures of the competent authority. This establishes fulfilling the legal requirements of law. No substantial question arises out of this ground also.
8. The next contention of the learned counsel for the appellant as setup in his leave to defend application is by denying the claim of the respondent bank and raised a counter claim of Rs.49,071,205/-. However, the claim of the respondent bank is that at the request of appellant vide its letter dated 21.07.2004 and 23.07.2004, the respondent bank granted a running finance facility in the nature of running finance to the tune of Rs.50.000 Million (Five Crore) for working capital requirement and LC DA (within which DA Delivery of Documents) facilities for Rs.50 Million i.e. (Five Crore only) which, both facilities had been fully availed by the appellant on terms and conditions mentioned in the Finance Agreement dated 21.07.2004 and other relevant documents which were handed over to the appellant which he fully read and signed. These facilities were being extended time to time from 2004 to 31.12.2007. It is also the case of the respondent bank that after due acceptance by the appellant over supra stated conditions and in furtherance of said agreement to secure the facilities the appellant also executed letter of hypothecation dated 21.07.2004 alongwith affidavit, Form X, Certificate of Registration dated 26.07.2004, Demand Promissory Note dated 21.07.2004 amounting to Rs.55.400 million (Five Crores Fifty Four Lacs only) in respect of both the above stated facilities. These facilities were time and again renewed and the same terms and conditions and appellant had also executed a supplementary letter of hypothecation dated 25.02.2005, affidavit, Form 16 and Charge Certificate dated 28.02.2005. It also appears from the record that in year 2007, the appellant request through a letter dated 17.01.2007 for renewal and sanction of finance facility which it was already availing because these facilities expired on 31.12.2006 and such renewal of finance facilities were made on 24.02.2007. The appellant in pursuance of such renewal, executed following documents:-
i) Agreement of Financing dated 19.02.2007;
ii) Demand Promissory Note dated 19.02.2007;
iii) Facility Letter by the Customer dated 19.02.2007;
iv) Debit Authority Letter/undertaking of markup dated 19.02.2007;
v) Over draft cash credit/loan account 19570 dated 19.02.2007;
vi) Declaration under SBP Prudential Regulations alongwith list of Directors.
It is also the case of the respondent bank that since 01.01.2009, the appellant has not complied with the schedule of payments under running finance aggregating to Rs.50.00 Million (Five Crore only) coupled with agreed mark up i.e. Rs.10,765,053.93/- i.e. (Rupees One Crore Seven Lac Sixty Five Thousand Fifty Three and Paisas Ninety Three only), as mark up accrued thereon upto 20.05.2010 and defaulted in performing the obligations under the agreement. However, as per respondent bank, till December, 2008, the appellant complied the terms and conditions of the agreement for finances on mark up basis and DA L/C’s terms and conditions but thereafter from March, 2009, (quarter) the appellant failed to comply with the terms and conditions of the agreement for finance on mark up basis executed between the parties. Under the aforementioned facts and circumstances, the respondent bank filed a suit for recovery of amount as prayed in plaint.
9. As observed above, after filing of suit, the appellant filed an application under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with Section 151 CPC being CMA No.8879 of 2010 for Leave to Defend the Suit denied the claim of the respondent bank and claimed a Set-Off/Counter Claim to PKR 49,071,205/- against the respondent. It appears from the record that CMA No.8879 of 2010 was disposed off by consent vide order dated 13.10.2010, which has already been reproduced in preceding para No.3, as referred to hereinabove, the matter was referred to M/s. Haroon Zakarya & Company Chartered Accountants with the directions to calculate mark up and repayments on the basis of rates mentioned in the letters and submit their report before the learned Single Judge.
10. It appears from the record that in compliance of said order, M/s. Haroon Zakarya & Company Chartered Accountants after considering the claims of the parties has submitted detail report in all respect dated 08.02.2011 available at page 157 of appeal file. For the sake of convenience, it would be appropriate to reproduce the factual finding of the aforesaid report, which reads as follows:-
“Factual Finding
We have worked out mark up amount at Rs.32,203,177 as against charged by the plaintiff at Rs.35,636,792 out of which Rs.24,871,739 has been paid or adjusted against the running finance facility and balance mark up of Rs.7,331,439 is still payable in addition to principal amount of Rs.49,310,002 i.e. total amount of Rs.56,641,441 is payable by the defendant to the plaintiff. Detail working is enclosed and marked as Annexure-C.”
We have perused the report submitted by the Chartered Accountant, which appears to exhaustive in nature despite of this fact, the appellant filed objection against the said report which was considered by the learned Single Judge but the same was not found to be correct. therefore, the same were rejected and the respondent bank was directed to file a break up. For the sake of convenience it would be beneficial to reproduce the order dated 14.12.2011 passed by the learned Single Judge, which reads as follows:-
“14.12.2011
Mr. Neel Keshav, Advocate for the plaintiff.
Mr. Mukhtar A. Kubar, Advocate for defendant.
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Mr. Kubar, learned counsel for the defendant, has disputed the Chartered Accountant’s report on the ground that it contends markup beyond contracted period. He has pointed out that the loan agreement was executed between the parties in February, 2007 and the plaintiff at the most would be entitled to charge markup under that agreement for the contracted period but admittedly the plaintiff have charged markup up to 2010 and after expiry of agreement, the plaintiff at the most would be entitled to cost of funds but not markup.
On the other hand, Mr. Neel Keshav, learned counsel for the plaintiff alongwith Attorney, contends that the proposition is not disputed and even if the markup beyond the contracted period is reduced and the plaintiff is granted cost of funds, he will have no objection for such decree.
Security of the statement of accounts reflects on the date when the agreement was executed, the statement of account admittedly reflects debit balance of Rs.49960797/- and on this amount the plaintiff is entitled to the markup for the contracted period, however, Mr. Kubar states that the plaintiff have charged markup much more than contracted period during February, 2007 till 2010.
In the circumstances, plaintiff to file breakup statement reflecting all payments made by the defendants onward January, 2007 and corresponding withdrawals so that net amount could be ascertained on which the plaintiff entitlement would be the markup for the contracted period and cost of funds thereafter. To come up on 16.12.2011 at 8:30 a.m.”
In compliance of the aforesaid order, the respondent bank through his counsel filed a breakup statement, which is available at page 183 to 187 of the appeal file. We have perused the said breakup statement filed by the respondent bank, which contains all entries of withdrawal, markup, repayment and balance amount. The figures containing in the said breakup statement filed by the respondent bank has not been challenged in writing before the learned Single Judge, which has attained finality, consequently, the learned Single Judge after considering all the material and the documents available on record, decreed the suit filed by the respondent bank by passing following order dated 16.12.2011, which reads as under:-
“16.12.2011
Mr. Neel Keshav, Advocate for the Plaintiff alongwith Mr. Nisar Ahmed Channa, Litigation Officer/AVP Soneri Bank Ltd.
Mr. Mukhtiar A. Kubar, Advocate for the Defendant alongwith Mr. Manzoor Ahmed, G.M. Finance of the Defendant.
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Vide Order dated 13.10.2010, Chartered Accountant was appointed who submitted his report which was objected to by the Counsel for the Defendant on the ground that admittedly the Finance Agreement was executed on 19.02.2007 and the Plaintiff at the most could be entitled to markup for one year from the date of agreement i.e. upto 18.02.2008, whereas, the Chartered Accountant has calculated markup upto 2010 i.e. till filing of the suit. However, Counsel admitted that upon termination of the agreement, the cost of fund should have been awarded instead of markup. Consequently, vide Order dated 14.12.2011, the Plaintiff was directed to file a break of the Statement of Account right from the date of agreement dated 19.02.2007 till filing of the suit by excluding all markup beyond the contracted period and today such statement has been filed reflecting the principal outstanding as well as the markup for contractual period and decree in the sum of Rs.41,396,316.91/- is sought, of course with the cost of funds from the date of default i.e. 23.02.2008 till the entire amount is repaid. Mr. Mukhtiar A. Kubar alongwith Manzoor Ahmed, G.M. Finance of Defendant has also filed a breakup reflecting Rs.41,262,386/- as outstanding with a difference of Rs.1,33,630/- between two amounts. The reason for such difference is that the Defendants have calculated markup upto 31.12.2007 and have conceded for cost of funds from 01.01.2008 instead of calculating markup upto 18.02.2008 or the markup as agreed in the Finance Agreement which is higher than what is claimed. The markup if calculated upto 18.02.2008 the figure given by the Plaintiffs proves to be correct.
In the circumstances, the suit of the Plaintiff is decreed for Rs.41,396,316.91 with cost of the suit as well as of funds from 23.02.2008 till the entire decretal amount is paid.”
It appears from the record that the appellant has not denied the execution of documents in between the parties and, thus, is not entitled for leave to defend in the instant case. Since the appellant has not discharged his obligation as per the agreements, the present suit appears to be rightly instituted by respondent bank. The only case of the appellant as setup in his leave to defend application is by denying the claim of the respondent bank and raised a counter claim of Rs.49,071,205/-. In order to resolve the controversy, by consent the matter was referred to Chartered Accountants, whose report is on record at page 157 of appeal file. After receiving of the report of Chartered Accountant, the order dated 14.12.2011 and final order dated 16.12.2011, as referred to hereinabove, had been passed.
11. From the perusal of above impugned order, passed by the learned Single Judge of this Court, it appears that after having examined the material facts and documents available on record, the learned Single Judge decreed the suit of the respondent bank. While confronted with the final order dated 16.12.2011, which is exhaustive in nature, learned counsel for the appellant could not controvert the same nor could assist this Court as to how such order is erroneous, or based on mis-reading and non-reading of evidence or documents. Under the aforementioned facts and circumstances, we are of the opinion that the finding as recorded by the learned Single Judge with regard to claim of respondent bank is found to be correct, hence, does not require any interference by this Court, as no substantial question of law and fact has arisen from the impugned order. Accordingly, instant appeal being devoid of any merits is hereby dismissed alongwith listed applications. The case laws cited by the learned counsel for the appellant in support of his claim have been perused and considered by us but did not find to be applicable to the present case, hence, are not helpful for him.
JUDGE
JUDGE
Faizan/