Judgment Sheet
IN THE HIGH COURT OF SINDH,CIRCUIT COURT, HYDERABAD
Before:
Mr. Justice Nadeem Akhtar
Mr. Justice Adnan-ul-Karim Memon
First Appeal No. D–17 of 2017
(Mst. Shaneela Raza and another V/S ABL and another)
First Appeal No. D–18 of 2017
(M/S Shaheen Corporation and another V/S ABL and another)
Appellants in I. A. No.D-17/2017 : Mst. Shahneela Raza and Noor
Khan, through Mian Taj Muhammad
Keerio Advocate.
Appellants in I. A. No.D-18/2017 : M/S Shaheen Corporation and
Waleed Qamar, through Mr. Imran
Ali Borano Advocate.
Respondent No.1 in both I. A. : Allied Bank Limited, through
Mr. Yasir Tehseen Talpur Advocate.
Respondent No.2 in I.A. No.D-17/2017 : M/S Shaheen Corporation,
Respondent No.2 in I.A. No.D-18/2017 : Banking Court No.I Hyderabad.
Dates of hearing : 27.11.2019 and 24.12.2019.
J U D G M E N T
NADEEM AKHTAR, J. – Both these Appeals under Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (‘the Ordinance’), are directed against the judgment and decree dated 28.04.2017 passed by learned Banking Court No.I Hyderabad, whereby Suit No.160/2015 filed by the respondent No.1-bank against the appellants in both these Appeals was decreed against them jointly and severally in the sum of Rs.10,954,562.00 with costs and cost of funds from the date of default till realization, with direction to them to satisfy the decree within thirty days. A decree for sale of the properties mortgaged by the appellants was also passed. Since the facts and questions of law are common in both these Appeals, they were heard together and are being disposed of through this common judgment with the consent of learned counsel for the parties.
2. Relevant facts of the case are that the above Suit was filed by the respondent No.1-bank against the appellants under Section 9 of the Ordinance for recovery of Rs.10,954,562.34. M/S Shaheen Corporation, appellant No.1 in Appeal No.D-18/2017 and respondent No.2 in Appeal No.D-17/2017, was sued as the principal borrower through its proprietor Qamar Zaman ; Mst. Shaneela Raza and Noor Khan, appellants in Appeal No.D-17/2017, were sued as mortgagors and guarantors ; and, Waleed Qamar, appellant No.2 in Appeal No.D-18/2017, was sued as the guarantor. The case of respondent No.1, as averred in the plaint, was that at the request of the above named principal borrower / appellant, respondent No.1 granted a running finance facility to him on 27.06.2008 for a period of one year, which was fully availed and utilized by him ; thereafter, he requested for renewal of the said facility on markup basis from year to year which request was accepted by respondent No.1 ; as per Sanction Advice dated 14.02.2013, the last renewal to the extent of Rs.9,500,000.00 was agreed on markup basis for three months, which was payable in a lump sum on or before 30.06.2013 ; finance agreements, promissory notes and guarantees were executed by the principal borrower in consideration of the above facility and its renewals ; in order to secure repayment of the subject facility, the principal borrower hypothecated all his stocks, raw material, parts, machinery, etc. in favour of respondent No.1 ; in order to further secure repayment of the subject facility, the principal borrower and appellants in appeal No.D-17/2017 mortgaged their respective immovable properties, described in paragraphs 8 and 9 of the pliant, in favour of respondent No.1 ; and, all the appellants also executed their personal guarantees in favour of respondent No.1. It was alleged in the plaint that the subject facility was not repaid by the appellants despite repeated demands by respondent No.1, and as such they had committed breach of their obligation. In this background, the Suit was filed by respondent No.1 for recovery of the above mentioned amount jointly and severally against all the appellants.
3. Appellants in Appeal No.18/2017 filed their joint application for leave to defend the Suit, which was dismissed for non-prosecution vide order dated 14.11.2016 and the application filed by them for its restoration was also dismissed on 22.04.2017. Whereas, the application for leave to defend filed by appellants in Appeal No.17/2017 was dismissed vide order dated 22.04.2017. Thereafter, the learned Banking Court proceeded to examine the claim of respondent No.1 and decreed the Suit on 28.04.2017 in the above terms.
4. It was contended by learned counsel for the appellants in Appeal No.18/2017 that they had raised substantial questions of law and facts in their application for leave to defend which ought to have been decided on merits and by not doing so, the learned Banking Court has committed a grave error in law ; respondent No.1 had not filed complete statement of account as required under the law ; in its purported statement of account filed with the plaint, respondent No.1 itself had shown that the amount payable by the appellants was “Nil” ; and, as such, the claim / Suit of respondent No.1 was not maintainable and was liable to be dismissed. By adopting the above arguments, learned counsel for the appellants in Appeal No.17/2017 further submitted that the appellants in the said Appeal, being mortgagor and guarantors, could not be held liable if the Suit was not maintainable against the principal borrower. It was urged on behalf of all the appellants that the impugned decree is liable to be set aside in view of the above.
5. At the very outset, a preliminary objection was raised by learned counsel for respondent No.1 that both these Appeals are barred by limitation. On merits, it was contended by him that the applications for leave to defend filed by the appellants were not maintainable, and upon dismissal of the same, the Suit was rightly decreed by the learned Banking Court. The objection with regard to maintainability of these Appeals on the ground of limitation has to be decided first. Record shows that the impugned judgment was pronounced on 28.04.2017 and impugned decree was drawn on the same day ; and, Appeal No.D-17/2017 and Appeal No.D-18/2017 were presented on 27.05.2017 and 29.05.2017, respectively. According to the endorsements made by the copyist on the certified copies, if the time consumed in obtaining the same is excluded while computing the period of limitation under the law, the former Appeal was presented on the twenty ninth (29th) day and the latter one on the thirtieth (30th) day. As both the Appeals were filed within the limitation of thirty (30) days prescribed by the Ordinance, the objection raised on behalf of respondent No.1 is not sustainable and is hereby rejected.
6. In their applications for leave to defend, the appellants were required to disclose the mandatory particulars / information with regard to the subject finance facility, as contemplated in Section 10(4) of the Ordinance, viz. (a) the amount of finance availed by them from respondent No.1, (b) the amounts paid by them to respondent No.1 and the dates of payments, (c) the amount of finance and other amounts relating to the finance payable by them to respondent No.1 up to the date of institution of the Suit, and (d) the amount, if any, which they had disputed as payable to respondent No.1, and the facts in support thereof. However, perusal of their applications for leave to defend reveals that the appellants did not comply with the mandatory requirement of Sub-Section (4) ibid as none of the above particulars was disclosed by them in their said applications. The implications of non-compliance of the mandatory requirement of Sub-Section (4) 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 appellants had not only failed in fulfilling the mandatory requirement of Sub-Section (4) ibid, but had also failed to disclose any sufficient cause for their inability in complying with the same.
7. In the above context, we respectfully rely upon the case of Apollo Textile Mills Ltd. and others V/S Soneri Bank Ltd., PLD 2012 Supreme Court 268 = 2012 CLD 337, wherein it was held by the Hon'ble Supreme Court that the plaintiff institution and the defending customer have identical statutory responsibility respectively under Sections 9(3) and 10(4) of the Ordinance, to plead and state clearly and particularly the finances availed by a defendant, repayments made by 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 ; 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 of the Ordinance 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 financial institution ; 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 ; the parties to a Suit have been obligated equally to definitely plead and to specifically state their respective accounts ; non-impleadment of accounts under Sub-Sections (3) and (4) ibid in terms thereof, entails legal consequences under Sub-Sections (1), (6) and (11) of Section 10 ibid ; because of the Ordinance being a special law, the provisions of Section 4 thereof override all other laws ; the provisions contained in the said Sections require strict compliance ; and, non-compliance therewith shall attract consequences of rejection of the application for leave to defend along with decree.
8. At the time of filing the applications for leave to defend, the appellants 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 were bound to face the consequence of their non-compliance. In view of the law laid down by the Hon’ble Supreme Court in Apollo Textile Mills Ltd. (supra), the applications for leave to defend filed by the appellants were liable to be dismissed on this ground alone. However, since other grounds have also been urged on behalf of the appellants, we deem it necessary to give our findings in respect thereof.
9. The statement of account filed along with its plaint by respondent No.1 shows that the finance facility of Rs.9,487,242.00 was credited in the account of the principal borrower on 10.11.2014 which was withdrawn by him on the same day as per the debit entry of the same date. The grand total of all the credits and debits in the said statement was the same i.e. Rs.10,954,562.34, including four previous minor transactions showing debits of all the said four amounts that were credited in the account of the principal borrower. The Suit was filed by respondent No.1 for recovery of the above mentioned amount of Rs.10,954,562.34. Since there were no other transactions of disbursements or repayments nor had/have the appellants made any such claim, the statement of account was complete and proper for filing the Suit, and no other or further statement was required to be filed. Regarding the contention that as per the said statement amount payable by the appellants was “Nil”, it is significant to note that it was/is not the case of the appellants that they have repaid the entire facility or any part thereof, nor was there any receipt or bank statement on record before the learned Banking Court, or even before this Court, in this behalf. Learned counsel for the appellants were unable to justify as to how the above mentioned outstanding amount shown in the statement of account was wrong, or in what manner and when was it settled by the appellants. In view of the above, it is apparent that the appellants had failed to settle their liability and it is obvious that due to this reason they did not disclose in their applications for leave to defend any of the mandatory particulars required under Section 10(4) of the Ordinance.
10. In view of the above discussion, we do not find any infirmity or illegality in the impugned judgment and decree, and as such the same do not require any interference by this Court. Accordingly, both these Appeals are dismissed with no order as to costs, with direction to the learned Banking Court to execute the decree forthwith in accordance with law.
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