IN THE HIGH COURT OF SINDH AT KARACHI

IN THE HIGH COURT OF SINDH AT KARACHI

Suit No. B-02 of 2010

Plaintiff:- NIB, a Banking Company and Successor-in-interest of PICIC Commercial Bank, office at Muhammadi House, I.I. Chundrigar Road, Karachi.

Through M/s. Syed Mazharul Haq and Mushtaq A. Memon,

Advocates for the plaintiff.

Defendants:- 1) M/s. Bukhari Commercial Exporters.

At Attique Market, 3^rd Floor, Bombay Bazar, Kharadar, Karachi, through its proprietor Mr.Abdul Qadir Jangda S/o Abdul Razzak,

2} Abdul Qadir Jangda S/o Abdul Razzaq

Jangda, R/o. 114/1, Street No.5, Khayaban-e-Muhafiz, Phase-V, DHA, Karachi.

None present for the defendants.

Date of hearing 28.04.2010

Date of Judgment 26.05.2010

J U D G M E N T

SYED HASAN AZHAR RIZVI, J The present suit has been filed by the plaintiff against the defendants for recovery of Rs.172,415,586/- under Financial Institution (Recovery of Finances) Ordinance, 2001. The plaintiff is a Banking Company, incorporated under the Companies Ordinance, 1984. Another Banking Company known as PICIC Commercial Bank Ltd has been merged into the plaintiff vide scheme of merger and amalgamation approved by the State Bank of Pakistan vide letter dated 31.12.2007 and the Security Exchange Commission of Pakistan vide certificate dated 14.1.2008. The defendant is a proprietary concern carried out its export, import business and allied trades at Karachi. The defendant No.2 is the proprietor of defendant No.1 and has been maintaining account at New Chali Branch of the plaintiff since 2004. The present suit has been filed by the plaintiff for recovery of Rs.172,415,586/- under Financial Institution (Recovery of Finances) Ordinance, 2001 against the defendants. The defendant No.1 on 5.4.2004 approached the plaintiff through the defendant No.2 its proprietor for grant of certain financial facilities and accommodation for expansion and development of its business and allied trading activities. The plaintiff vide its letter of sanction dated 5^th May, 2004 approved and sanctioned credit facility being 'Finance Against Packing Credit' (FAPC-I) under the Export Refinance Scheme of State Bank of Pakistan to the extent of Rs.100,000,000/- (Rupees one hundred million) which financial facility/accommodation was fully availed by the defendants through its relevant FAPC account in accordance with the terms and conditions set forth in the letter of approval of credit facility dated 5.4.2004 and the said letter of approval was duly endorsed by the defendants in token of acceptance of terms thereof. The defendants in consideration of and as security for the repayment of the above mentioned financial facility/accommodation signed, executed and delivered the following documents in favour of the plaintiff:-

i) Agreement for finance for short/medium/long terms on mark-up basis dated 10.06.2004 in the sum of buy back price of Rs.114,431,507/- (one hundred fourteen million four hundred thirty one thousand five hundred seven only).

ii) Demand Promissory Note 26.07.2004 for a sum of Rs.114,431,507/- (one hundred fourteen million four hundred thirty one thousand five hundred seven only).

iii) Letter of Continuity dated 10.06.2004 in the sum of Rs.114,431,507/-.

iv) Letter of Disbursement of Facility of Rs.100,000,000/- (One Hundred Million) dated 10.06.2004.

v) Letter of Hypothecation of movable goods and assets dated 10.06.2004 in the sum of Rs.133,333,334/-.

vi) Letter of Irrevocable Authority to recovery accrued mark-up due on account of above facility and any party thereof.

vii) Guarantee dated 10.06.2004 favouring PICIC Commercial Bank by Bukhari Commercial Exporters.

2. The defendants in consideration of and also as security for the repayment, liquidation, adjustment of the entire sums by the plaintiff found due and payable against the abovementioned facility and/or facility which may be extended or any part thereof have created equitable mortgage in favour of the plaintiff against five immovable property owned by the defendants by way of depositing the original title deeds and documents pertaining to each of the said immovable properties with understanding to create mortgage security and charge against each of the said properties until full and final adjustment of all outstanding, debts and part thereof which mortgages still continue to subsist and are binding over the mortgager until full and final satisfaction of the entire liabilities outstanding in respect of the above facilities and for any part thereof:-

A. DESCRIPTION OF MORTGAGE PROPERTY No.1.

3. Plot No.GPC 10, KDA Scheme No.5, Karachi admeasuring 200 square yards alongwith four storied commercial building constructed on the said plot consisting of basement, ground floor, mezzanine, first floor, second floor and entire roof top.

i) Original Memorandum of deposit of title deed dated 23.06.2004.

ii) Sale Deed dated 15.06.2004 executed by Dr. Mohammad Saleem Hingora S/o Usman Hingora in favour of Mr. Abdul Qadir S/o Abdul Razzaq duly registered with Registrar/Sub- registered T. Div. II-A, bearing Registered at No.2106 M.F. Roll No.38714/ 1877, Photo Registrar Karachi dated 16.06.2004.

iii) Original Indenture of lease dated 29.06.2000 made by KDA in favour of Dr. Mohammad Saleem Hingora in respect of property No.GPC-10, Sector 5 Clifton, Karachi, Registration No.2798 dated 20.9.2000 alongwith receipt of payment of Rs.100,000,000/- (one hundred lacs only) by Dr. Mohammad Saleem Hingora in favour of Mr. Abdul Qadir, Challans, KDA transfer order dated 30.01.1999, Registration Receipt.

iv) Original Irrevocable General Power of Attorney dated 20.2.1999 duly registered with Registrar/Sub-registered T.Div.II-A, bearing Registered at No.70, M.F. Roll No.5268-IV, Photo Registrar Karachi.

v) General Power of Attorney dated 23.06.2004 executed by Abdul Qadir in favour of PICIC Commercial Bank Limited in respect of Plot No.GPC-10, Block-5, KDA Scheme No.5, Registration No.429 dated 23.06.2004, M.F. Roll No.41009.

B. DESCRIPTION OF MORTGAGE PROPERTY No.2.

4. Plot No.52/II, measuring 497.22 Sq. Yds or thereabout, with double storey bungalow constructed thereon, Khayaban-e-Hilal, Phase-VI, situated in Pakistan Defence Officers Housing Authority, Karachi, together with all the fixtures and fittings existing therein including electricity, sanitary, gas and water fixtures, fittings and all the advantages of electricity, gas water connection, sanctions, security deposits within the area of Defence Authority.

i) Original memorandum of deposit of title deed dated 2.6.2004.

ii) Original Deed of Conveyance dated 2.12.2000 between Mehmood Ali Khan and Abdul Qadir in respect of Property No. 53/11, Khayaban-e-Hilal, Phase-VI, DHA Karachi duly registered with Registrar/Sub-registered T. Div-II-A, bearing Registered at No.3950 M.F. Roll No.U-38463/291, Photo Registrar Karachi dated 8.12.2000.

iii) Conveyance Deed dated 2.8.1998 between Mrs. Parveen Bukhari and Mehmood Ali Khan in respect of Property No.52/II, Khayaban-e-Hilal, Phase-VI, DHA, Karachi, registration No.4678 at Page 83 to 90, volume 3282 of Book-I add dated 4.9.1998.

iv) General Power of Attorney dated 2.6.2004 executed by Mr. Abdul Qadir S/o Abdul Razzaq, in favour of PICIC Commercial Bank Limited duly registered with Registrar/sub-registered T.Div.II-A, bearing Registered at No.3798 M.F. Roll No.721 B-IV, Photo Registrar Karachi dated 24.6.2004.

v) Original Irrevocable General Power of Attorney dated 28.6.2000 duly registered with Registrar/sub-registered T.Div.II-A, bearing Registered at No.690, M.F. Roll No.U-20398, Photo Registrar Karachi dated 14.7.2000.

vi) Original Sub-Lease A dated 13.2.1995.

vii) Original Sub-Lease B dated 13.2.1995.

C. DESCRIPTION OF MORTGAGE PROPERTY No.3

5. Plot measuring two Kanal and two Marlas baring Khasra No.399, Khewat No.109, Khatooni No.369, situated at Hadbast Mouza Pindi Rajputan, Tehsil Cantt; & District Lahore.

D. DESCRIPTION OF MORGTAGE PROPERTY No.4.

6. Plot measuring two Kanal bearing Khasra No.342-536, Khewat No.105/1, Khatooni No.362/1-364, situated at Hadbast Mouza Pindi Rajputan, Tehsil Cantt: & District Lahore.

E. DESCRIPTION OF MORTGAGE PROPERTY No.5.

7. Plot measuring Four Kanal bearing Khasra No.369, Khewat No.104, Khatooni No.331, situated at Hadbast Mouza Pindi Rajputan, Tehsil Cantt: & District Lahore.

i) Memorandum of Title dated July 2004 in respect of three properties situated at Hadbast mouza Pindi Rajputan, Tehsil Cantt: and District Lahore.

ii) Sale Deed with respect of Property 3, executed Taj Din S/o Chiragh Din as general attorney to Mohammad Ali and others in favour of Abdul Qadir S/o Abdul Razzak, registered as Document No.12071, Book No.1, Volume 737 dated 29.6.2004;

iii) Sale Deed with respect to Property 4, executed by Taj Din S/o Chirag Din as general attorney to Mohammad Ali and others in favour of Abdul Qadir S/o Abdul Razzak, registered as Document No.12072, Book No.1, Volume 736 dated 29.6.2004.

iv) Sale Deed with respect to Property 5, executed by Taj Din S/o Chirag Din as general attorney to Mohammad Ali and others in favour of Abdul Qadir S/o Abdul Razzak, registered as Document No.12073, Book No.1, Volume 737 dated 29.6.2004.

v) Mortgage Deed dated 27.10.2004 executed by Abdul Qadir S/o Abdul Razzaq in favour of PICIC Commercial Bank Limited.

vi) General Power of Attorney dated 27.10.2004 executed by Abdul Qadir in favour of PICIC Commercial Bank Limited in respect of above properties.

8. The plaintiff on expiry of the above said financial facilities further extended and renewed the said FAPC facility for further period subject to continuation of the mortgages and securities previously executed in favour of the plaintiff and also in compliance of the terms and conditions stipulated in the letter of renewal dated 15.8.2005 endorsed and signed by the defendants as token of acceptance thereof. The defendants in consideration of extension and renewal of the above facility and also as security thereof signed, executed and delivered following documents in favour of the plaintiff:-

i) Agreement of finance for short/medium and long term on mark-up basis dated 24.8.2005 in the sum of Rs.109,000,000/- Rupees One Hundred Nine Million).

ii) Promissory Note dated 12.11.2005 in the sum of Rs.109,000,000/- Rupees One Hundred Nine Million).

iii) Letter of Continuity dated 24.8.2005 in the sum of Rs.100,000,000/-.

iv) Letter of Disbursement dated 15.8.2005.

v) Letter of Hypothecation of movable properties dated 18.10.2003 in the sum of Rs.109,000,000/-.

vi) Letter of Irrevocable Authority to recover accrued mark up.

vii) Letter of Guarantee dated 24.8.2005.

9. The defendants got further renewal of the facility upto 31.12.2006 and availed the same accordingly in the respective account and signed, executed and delivered the following documents in favour of the Plaintiff for the extended period of facility:-

i) Agreement of finance for Short/Medium and Long term on mark up basis dated 1.12.2006 in the sum of buy back price of Rs.109,000,000/-

ii) Promissory Note dated 1.12.2006 for sum of Rs.109,000,000/-.

iii) Letter of Disbursement dated 1.12.2006.

iv) Letter of Hypothecation dated 1.12.2006.

10. The defendant even after formal expiry of the facility continued to avail the facility from time to time which availment was allowed by the plaintiff at the request of the defendants against payment of overdue mark up. The defendant further availed and withdrew the sum of Rs.100,000,000/- (Rupees One Hundred Million) through the respective account during the period from 06.12.2006 to 13.3.2007 and lastly on 25.7.2008 which amount is still reflected as overdue and unpaid in the respective account. The defendants however signed, executed, delivered the following documents in furtherance of the earlier arrangement to the plaintiff in respect of extended facilities:-

i) Agreement of Finance dated 8.1.2007 for sum of Rs.109,000,000/-

ii) Agreement of finance dated 25.7.2008 for sum of Rs.109,000,000/-

iii) Declaration-cum-undertaking dated Nil in order to cover all subsequent extended facilities whereby the defendants confirmed the existing mortgages and also unconditional authority of the Plaintiff to sell the mortgaged properties in case the defendants further delay or default the adjustment of the facilities or any part thereof.

11. The defendants despite having made promises, undertaking and assurance to repay, adjust and liquidate the entire outstanding liabilities within the period agreed/extended by them but failed to adjust the same within the stipulated period and manner, Consequently, the plaintiff served several letters of demand upon the defendants from time to time pursuing the defendants for adjustment of the liabilities within stipulated time and manner and the defendants in response to the said letters of demand repeatedly promised to fulfill the agreed terms and conditions of the facilities but it is regretfully pointed out that the defendant have failed to abide by their own promises. The plaintiff issued demand notices/letters to the defendants from time to time. Besides the letters/notices the plaintiff also served legal notice through its counsel dated 16.2.2006 which was replied by the defendants through their advocate's letter dated 28.2.2006. On continuous failure and willful default on the part of the defendants, the plaintiff served three notices of demand under Section 15 of the Financial Institution (Recovery of Finance) Ordinance, 2001, upon the defendants/mortgagor whereby the plaintiff finally called upon the defendants to pay the outstanding amounts of financial facilities secured against the mortgaged properties mentioned against therein within stipulated time. The said notices were replied by the defendants through counsel vide letter dated 11.4.2007 and 23.4.2007.

12. The plaintiff also got published a notice for auction of properties under provision 15 of the Financial Institution (Recovery of Finance) Ordinance 2001 in two widely circulated newspaper being (i) daily Jang Karachi on 12.10.2006 and (ii) Daily Dawn Karachi on 12.10.2006 whereby the plaintiff invited offers for sale of the mortgaged properties in sealed cover envelopes as prescribed in law. The publication of similar notices was repeated by the plaintiff in Daily News and Daily Jang on 15.1.2008 again in Daily Jang Karachi on 5.4.2009 because of continuous failure on the part of the defendants in repayment of outstanding liabilities.

13. The publication of the aforementioned auction notice in daily Dawn Karachi and daily Jang Karachi on 12.10.2006, one Anas Mehmood S/o Mehmood Trankwala resident of Karachi filed a suit in the Original Jurisdiction of this Court being Suit No. Nil of 2006 against the defendant No.2 and the plaintiff alleging execution of agreement of sale dated 17.6.2004 between himself and Abdul Qadir Jangda to purchase the property. The said Anas Mehmood has sought declaration and specific performance of the alleged agreement of sale in his favour and further sought permanent injunction order restraining the plaintiff from disposing of the said mortgaged property. The said application filed by the said Anas Mehmood was declined for want of proof about alleged payment of part consideration. Even ad-interim stay order granted in intra-Court Appeal filed by the said Anas Mehmood was recalled upon his failure to deposit the alleged balance of consideration as directed by this Court. The defendant No.2 in the present suit Mr. Abdul Qadir Jangda in the said suit, although has denied the allegation of Anas Mehmood, did not file any written statement despite lapse of very long time. After publication of auction notices in news papers on 15.1.2008 regarding property No.GPC-10, Block No.5, Clifton, Karachi, one Arshad Iqbal S/o Iqbal Ahmed has filed Suit No.472 of 2008 against the present plaintiff and defendant No.1 wherein said Arshad Iqbal has similarly claimed having agreed to purchase the mortgaged property vide agreement dated 16.6.2004. The said suit is still pending in this Court, but there exists no interim injunction in that suit. The defendant No.1 has not filed any written statement also in that suit. In addition to the above mentioned two suits in Suit No.1563/2008 was filed by one Muhammad Hussain Khan against the plaintiff and Abdul Qadir Jangda defendant No.2 whereby he has also claimed having entered into an agreement of sale dated 4.12.2000 with Abdul Qadir Jangda about purchase of other mortgaged residential bungalow No.52/II, Khayaban-e-Hilal, Phase-VI, admeasuring 500 square yards, DHA Karachi for a total consideration of Rs.6,000,000/- (Rupees Six Million). The said suit is also pending in this Court without any interim injunction and despite of lapse of considerable long time Abdul Qadir Jangda failed to file written statement in that suit. The plaintiff after fresh publication of auction notice in daily newspapers on 5.4.2009, received certain undue pressure from a Sub-Inspector of F.I.A. Sindh who directed the plaintiff to refrain from auctioning the five mortgaged properties, mentioned above and also to furnish original title deeds and documents of the properties as those documents are allegedly required by him in connection with certain investigation. The plaintiff filed a Constitutional Petition being C.P. No.1033 of 2009 before this Court, Officials of F.I.A. and other respondents appeared in that Constitutional Petition and made statement that there is no investigation now pending in the matter and the title deeds and documents of the property are no more required by them. After recording the statement this Court was pleased to dispose of the C.P. No.1033/2009. The civil suits filed without prejudice to legal and factual averments made by the plaintiff, according to the plaintiff the proceedings are collusive, false, fabricated and malice, according to the plaintiff even if any persons claims having agreed to purchase the mortgaged properties in any manner from the respective owners of the said properties during subsistence of mortgage such purchasers do not acquire any right and title without satisfaction of existing encumbrances, mortgages and charges there against.

14 The plaintiff is claming that the defendants are liable to make payment of the outstanding amount of the plaintiff on account of the financial facilities/accommodations availed by them as under:-

(a) The amount of finance availed by the Defendant on account of FAPC-I (SBP) pre-shipment-during the period of facility from 5.5.2004 to 31.12.2008………..…………………..Rs.400,000,000/-

(b) The amount repaid by the Defendant on account of principal amount of facility during the period of facility from 5.5.2004 to 31.12.2008……..…Rs.300,000,000/-

(c) The total principle amount payable by the defendants on account of financial liabilities overdue during the period………………………………….Rs.100,000,000/-

(d) The amount of mark-up accrued during upto 30.11.2009 @ 9% per annum………Rs.23,772,548/-

(e) The amount of surcharge penalty paid by the plaintiff to SBP due to violation of SBP Refinance as per terms……………………………………...Rs.6,600,000/-

(f) Mark-up charged on SBP penalties @ 9% per annum…………………………………….Rs.1,505,737/-

(g) The amount of cost of fund from the date of default i.e. 1.8.2008 upto 30.11.2009 @ the rate as prescribed by SBP 10.56%.................Rs.14,089,644/-

Total amount due and payable by the

Defendant…………………..…………..Rs.146,027,929/-

15. Besides and in addition to above the plaintiff is also claiming cost of fund on account of over due amount from 1.12.2009 till realization of the entire amount as prescribed by the State Bank of Pakistan for the time being or at such rate which may be prescribed by SBP at any time until full and final payment of entire liabilities. The plaintiff further claims the liquidated damages at the rate of 20% on account of losses and damages sustained by the plaintiff due to non repayment of the liabilities. On failure of the defendants to repay the outstanding amount the plaintiff has filed the present plaint it has been signed and verified by Mr. Tahsin A. Mahmudi S/o M.M. Mahmudi Officer/Attorney of the bank being the holder of General Power of Attorney having fully authorized to institute the present suit and verify the pleadings with the following prayer:-

a) "Judgment and decree in favour of the plaintiff and against the defendants jointly and severally for a sum of Rs.172,415,586/- alongwith Mark up at the rate of 16% per annum till full and final realization of the entire decretal amount.

b) Decree for sale of the mortgage properties mentioned in the plaint towards adjustment of the decretal amount and if the sale proceeds of the mortgage properties is found insufficient to appropriate the amount due under the decree the plaintiff prays for personal decree against the defendants U/s 34 of Civil Procedure Code.

c) A decree for sale of all the stock-in-possession of the defendants and/or any one else in whatever capacity and sale proceeds thereof be allowed to be adjusted towards decretal amount and/or any part thereof.

d) A decree for sale of hypothecated goods mentioned in the plaint towards adjustment of the decretal amount and if the amount of sale proceeds is found insufficient then the plaintiff prays for the personal decree against the defendant on this account.

e) A decree for a sum of Rs.172,415,586/- on account of the cost of fund on the entire outstanding liabilities @ 10.56% prescribed by State Bank of Pakistan or at such rate which may e subsequently prescribed by SBP from the date of filing of the suit till realization of the entire decretal amount.

f) A decree for recovery of liquidated damages at the rate of 20% on the outstanding sum till recovery thereof be granted.

g) An order of attachment for mortgaged properties, hypothecated/pledge goods be made till full and final realization of the plaintiff's claim in order to protect the interest of the plaintiff in the said---.

h) Any other relief."

16. Process under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 issued to the defendants Nos.1 and 2 by all four modes. The plaintiff has produced the receipts of courier, registered post A.D. and also publication in newspapers i.e. daily Dawn English Karachi dated 16.1.2010 and daily Jang Karachi dated 18.1.2010. On 9.2.2010 this Court passed the order of attachment in respect of the properties mentioned in
para-5 of memo of plaint in the present suit. By the diary sheets of Additional Registrar dated 26.3.2010 and 2.4.2010 it is clear that no application for leave to defend has been filed by the defendants. On 28.4.2010 the matter was fixed before this Court for final disposal.

17. I have heard M/s. Syed Mazharul Haq and Mushtaq A. Memon, Advocates for the plaintiff. The learned counsel for the plaintiffs have referred to 2008 CLD page 1317 the case of Soneri Bank Ltd Vs. Abdul Qadir Jangda the present defendant No.2. In that case also the statutory period for filing leave to defend the suit has expired and this Court decreed the suit in favour of the bank. Learned counsel for the plaintiffs have also cited 2008 CLD
page-688, 2002 CLD 242, PLD 1990 SC page 497. There is nothing on record from the side of the defendants to dislodge, deny, controvert or challenge the claim of the plaintiff as mentioned in the memo of plaint. Keeping in view the case law cited by the learned counsels for the plaintiffs, which supports unchallenged and unrebutted pleas and contentions of the plaintiffs. Hence the present suit is decreed in favour of the plaintiff and against the defendants jointly and severally as under;

a) For a sum of Rs.146,027,929/- alongwith mark up at the rate prescribed by the State Bank of Pakistan from the date of filing of the suit till full and final realization of the entire decretal amount.

b) The prayer clause (b), (c), (d) and (g) are granted as prayed for with costs of the suit.

JUDGE