IN THE HIGH COURT OF SINDH, KARACHI

                                                  

 

   Present

                                                   Mr. Justice Mushir Alam, C.J

   Mr. Justice Aqeel Ahmed Abbasi.

 

1.                            First Appeal No.39 of 2008

 

Habib Bank Limited……………………………………………….Appellant

Versus

Rafiq Ahmed & 2 others Respondents……………………Respondents

 

 

2.                             First  Appeal No.47 of 2008

                  

Rafiq Ahmed & 2 others ………………..………………………Appellants

Versus

 

Habib Bank Limited…………………………………………….Respondent

 

Date of hearing                 :                   22.08.2011

Date of judgment              :                   03.10.2011

 

Appellant /Respondent :         through Mr. Nadeem Akhtar

                                           Advocate.

 

Respondents/Appellants          :                   through Mr. Tasawar Ali Hashmi,

                                                         Advocate

 

J U D G M E N T

 

Aqeel Ahmed Abbasi, J.   Through this judgment, we intend to dispose of both the cross appeals i.e. I.A.No.39 of 2008 and I.A. No.47 of 2008 filed against the common judgment passed by the learned Judge of Banking Court No.III, Karachi, in Suit No.292 of 2001 on 3rd June 2008. On 30.10.2008 when the matter was taken-up for hearing both the learned counsel agreed for final disposal of the appeals at Katcha Peshi stage. Accordingly, on 22.08.2011 the matter was heard finally and judgment was reserved.

 

2.       The brief facts as stated in I.A.No.39 of 2008 leading to the instant controversy are that the appellant Bank filed Suit No.1492 of 1999 in the High Court of Sindh at Karachi (Banking Jurisdiction) against the respondent/defendant M/s Rafiq Ahmed, the sole proprietor of M/s Wynco Traders and M/s Pakistan Vinyl Corporation for the recovery of Rs.30,728,117.88, and for sale of mortgaged properties. However, upon promulgation of Ordinance XLVI of 2001, due to change in the pecuniary jurisdiction suit was transferred from High Court to Banking Court No.III, where it was renumbered as Suit No.292 of 2001. Respondents are the customers of the appellant and availed various running finance and demand finance facilities from the appellant through Account No.404394-79, 405219-09 and 45407-18. Account Nos. 404394-79 and 405219-09 were running finance accounts in the names of respondents 2 and 3 respectively, whereas Account No.454071-18 was a demand finance account in the joint names of respondents 2 & 3. Originally all the aforesaid facilities were interest based, however, after introduction of non-interest based finance system in Pakistan, various running finance, export finance and demand finance facilities were extended from time to time by the appellant. In the year 1992 at the request of respondents running finance facility of Rs.6.5 million and a demand finance facility of Rs.3.5 million respectively was granted to the respondent No. 2 and 3 and the respondent No.2 and 3 availed the said finance facilities  severely and jointly from time to time through their respective accounts at the relevant time. In consideration of the aforesaid running finance facility, respondents executed an Agreement of Finance (available at page 99 as annexure A-3 in I.A.No.39/2008), a Facility Letter (available at page 107) and a Demand Promissory Note (available at page 109), all for Rs.8.232 million and all dated 21.10.1992. Similarly, in consideration of the aforesaid demand finance facility, respondents executed an Agreement of Finance (available at page 111), a Facility Letter (available at page 119) and a Demand Promissory Note (available at page 121), all for Rs.4,497 and all dated 21.10.1992. The respondents were required to settle their outstanding liability in respect of running finance facility on or before 30.9.1993. However, due to financial constraint, respondents could not settle the same and requested for extension of this facility. In consideration of such extension, respondents executed an Agreement of Finance (available at page 123), a Facility Letter (available at page 131), a Demand Promissory Note (available at page 133), a Letter of Hypothecation (available at page 135), Letter of Pledge (available at page 139) and a Guarantee (available at page 143), all for Rs.134,70,836.00 and all dated 30th March 1994. As security for re-payment of their outstanding liabilities, the respondents also created an equitable mortgage of their immovable property i.e. Industrial Plot No.D/79, SITE, Survey Sheet No.28, Survey Sheet No.35-P/1, measuring 13 acres, situated in the Industrial Trading Estates Area, Trans Lyari Quarters, Karachi, together with all buildings, structures, plants etc. On the basis of these submissions, the appellant filed the above referred suit and claimed that respondents were liable to pay Rs.2,56,06,764.90 to the appellant in respect of the above mentioned three accounts. Appellant also claims in suit a sum of Rs.5,121,352.98 from respondents on account of liquidated damages at the rate of 20% on the aforesaid outstanding amount. Thus, the total amount claimed in a suit by the appellant Bank from respondents was Rs.30,728,117.88. On 09.04.2001, following issues were settled by the Court.

1.       Whether the defendants are liable to pay the amount claimed in the present suit?

 

2.       Whether markup on markup or interest has been charged in the present suit since the inception of the Islamic mode of finance?

 

3.          What should the decree be?

 

3.       M/s Afzal Munif, Chartered Accountants were appointed to examine the accounts of Plaintiff Bank in respect of respondents namely M/s Wynco Traders and Pakistan Vinyl Corporation and further to determine the following facts:

a)       What was the amount due on the date of conversion in respect of each account. Such should include the markup charged for the first year of agreement.

 

b)       What is the actual amount disbursed in each account and actually utilized by the defendants.

 

c)       What was the amount of repayment made by the defendants.

 

d)       What is the markup that was charged after the date of expiry of the two agreements in 1985 and 1986 as aforesaid.

 

e)       What is the amount due as in respect of each account after deducting the markup/interest that has been charged after the date of expiry of the aforesaid agreement and

 

f)        What are all that charges that have been claimed in the accounts which shall include, service charges, excise duty or other charges as may be named.

 

4.       The Chartered Accountant was also called for cross-examination on his report dated 04.07.2007. After cross-examination of the Chartered Accountant in respect of the report submitted by him, the matter was proceeded for evidence of both the parties.

 

5.       The learned Banking Judge on examination of the report submitted by the Chartered Accountant, and after discussing the entire evidence given his findings on the issues as under:

Issue No.1……………………………………………Not proved.

Issue No.2…………………………………………....Affirmative.

Issue No.3…………………………………………....Suit dismissed.

         In view of above findings, the suit of the plaintiff was dismissed.

 

6.       The appellant Bank in I.A.No.39/2008 has assailed the impugned judgment and decree mainly on the following grounds:

(i)       That since the respondent had admitted an amount of Rs.10,62,053/- to be recoverable. The learned Banking Court was not justified to dismiss the suit under the circumstances and should have allowed the claim of the bank at least to the extent of admitted liability as mentioned above.

 

(ii)      That the learned Banking Court has failed to appreciate that rolling over/restructuring/ rescheduling/renewal is void without actual disbursement and consideration as held in number of cases by superior Courts. However, it has not been held that rolling over/restructuring/ rescheduling/ renewal is void or illegal even there is consideration or actual disbursement.

 

(iii)     The learned Banking Court failed to appreciate the definition of (obligation) as contained in Section 2(e)(i) of Ordinance XLVI of 2001, by virtue of which the appellant Bank was entitled to charge mark-up and as such the appellant's suit should have been decreed in his favour.

 

(iv)     That the learned Banking Court erred in fact and law by simply adopting the record of the Chartered Accountant who instead of giving his findings on the accounts has virtually decided the entire suit and dispute between the parties.

 

7.          Whereas respondents, besides, having filed cross-appeal i.e. I.A.No.47 of 2008, filed reply to the appeal filed by the Bank and denied the averments made by the appellant Bank. The allegation of admitted liability to the tune of Rs.1,062,053/- has been vehemently denied. Learned counsel for the respondents has stated that the respondent never admitted such liability in unequivocal terms. It was submitted that the respondent did not deny the availing of various finance facilities but has denied the total liabilities containing mark-up over mark-up/interest and compound interest, which according to respondent were not recoverable. It was contended that in order to ascertain veracity of accounts an independent firm of Chartered Accountant was appointed, who has submitted its detailed report that report was thoroughly scrutinized and even the Chartered Accountant was cross-examined by the appellant after which the learned Banking Court has given its judgment. Per learned counsel, appellant has not been able to point out any illegality, which may require interference by this Court in appellate jurisdiction. It was therefore, argued by the respondent’s counsel that the Ist. Appeal filed by the appellant Bank may be dismissed with cost, and sought modification of the judgment/decree by passing a decree for Rs.6,374,369.30 in the light of Chartered Accountant Report dated 4.7.2002 in favour of respondent plus mark-up from 1985 till realization and further direction to the appellant to hand over all original title documents of the mortgaged property bearing Plot No.D-79, Site Survey Sheet No.28, Survey Sheet No.35-P/1, measuring 1.3 acres or thereabout situated at Estate Avenue, S.I.T.E, Karachi. This seems to be the prayer of the respondent in I.A.No.47 of 2008.

 

8.          Learned counsel for the appellant in I.A. No.39/2008 and respondent in I.A.No.47 of 2008 has contended that respondents are the customers of the appellant. Respondent No.1 is the proprietor of respondents Nos.2 and 3 viz M/s Wynco Traders and M/s Pakistan Vinly Corporation. It has been contended by the learned counsel for the appellant that the respondents availed various Running Finance and Demand Finance facilities from the appellant through Account Nos. 404394-79, 405219-09 and 454071-18. Per learned counsel, Account Nos.404394-79 and 405219-09 were Running Finance accounts in the names of respondents 2 and 3 respectively, whereas Account No.454071-18 was a Demand Finance account in the joint names of respondents Nos. 2 and 3. Originally all the aforesaid facilities were interest based. Learned counsel has contended that after introduction of the non-interest based finance system in Pakistan, various Running Finance, Export Finance and Demand Finance facilities were extended by the appellant to respondents at the request of respondents.  Learned counsel has submitted that the respondents continued to avail all the aforesaid facilities, which were renewed at their request as they failed to adjust their outstanding liabilities. Per leaned counsel, in the year 1992 at the request of respondents, a Running Finance facility of Rs.6.500 million was granted to respondent No.2 and a Demand Finance Facility of Rs.3,500 million was granted to respondent No.3. Per learned counsel, respondents availed and enjoyed the said Running Finance facility beyond the sanctioned limit and period. Learned counsel has submitted that in consideration of the aforesaid Running Finance facility, respondents executed an Agreement of Finance (available at page 99), a Facility Letter (available at page 107) and a Demand Promissory Note (available at page 109), all for Rs.8.232 million and all dated 21.10.1992. Learned counsel has contended that in consideration of the aforesaid Demand Finance facility, respondents executed an Agreement of Finance (available at page 111), a Facility Letter (available at page 119) and a Demand Promissory Note (available at page 121), all for Rs.4.497 million and all dated 21.10.1992. Learned counsel has submitted that the respondents were required to settle their outstanding liabilities in respect of the Running Finance facility on or before 30.09.1993. However, they requested for extension of this facility as they had failed to settle the same. Per learned counsel, in consideration of such extension, respondents executed an Agreement of Finance (available at page 123), a Facility Letter (available at page 131), a Demand Promissory Note (available at page 133), a Letter of Hypothecation (available at page 135), a Letter of Pledge (available at page 139) and a Guarantee (available at page 143), all for Rs.13.470,836.00 and all dated 30.03.1994. Learned counsel has submitted that as security for repayment of their outstanding liabilities, the respondents also created in favour the appellant an equitable mortgage of their immovable property viz. Industrial Plot No.D/79, SITE Survey Sheet No.28, Survey Sheet No.35-P/1, measuring 1.3 acres, situated in the Industrial Trading Estates Area, Trans, Lyari Quarters, Karachi, together with all buildings, structures, plants, etc.  In support of his contention, he has placed reliance on the following judgments:

 

1.       United Bank Limited v. Messrs Central Cotton Mills Ltd. and 5 others 2001 MLD 78

 

2.      Banque Indosuez v. Banking Tribunal for Sindh & Balochistan and others  1994 CLC 2272

 

3.          Trinity Private School and another v. Mumtaz H.          Hidayatullah and others 1997 SCMR 494

 

4.      Habib Bank Limited v. Service Fabrics Ltd. and others 2004 CLD 1117

 

5.      Messrs Dadabhoy Cement Industries Limited and others v. Messrs National Development Finance Corporation 2002 CLC 166

 

6.      Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation, Karachi PLD 2002 SC 500

 

7.      Government of N.W.F.P v. Hussain Khan and others 2004 CLC 1229

 

9.           Conversely, learned counsel for respondents in I.A. No.39/2008 and appellants in I.A.No.47/2008 has contended that in para 4 of the plaint, the Bank has admitted the fact that Rafiq Ahmed and others were availing financial facilities on the basis of interest and thereafter the facilities were converted to non-interest from inception of non-interest based system (mark-up). On the basis of various averments in the plaint, the Bank has calculated its alleged outstanding dues in para 9 of the plaint and has also charged liquidated damages for an amount of Rs.51,21,352.98, making a total outstanding amount as Rs.30,728,117.88, which amount contains accrued undebited Markup as well as markup on markup. Per learned counsel, the respondents filed application under Section 10 of the Banking Companies Act, 1997 (available at page 147) wherein it was stated that the suit amount contains markup on markup and/or interest and compound interest which is legally not recoverable. It is further asserted in para 7 of the affidavit in support of Leave to Defend Application, (available at page 153) that the outstanding balance as on 31.12.1994 shown as Rs.11,462,485.00 was excessive, improper, illegal and incorrect and that the relevant statement of accounts must be supplied by the Bank. As regards para 12 of the affidavit in support of said application it has been stated that there was never an admission of the outstanding amount against the borrowers as alleged by the appellant. It was only an approximation of the amount which is subject to scrutiny of statement of account containing markup on markup and compound interest. State Bank Circular No.13 was also relied upon, which was annexed alongwith Circular No.32 by the respondents.

 

10.          Learned counsel for the respondents further argued that after filing of written statement and counter claim, issues were framed and affidavit-in-evidence of Rafiq Ahmed was filed and at the request of counsel for the bank, the Chartered Accountant was called for the purpose of cross-examination. In his cross-examination he has categorically stated that he prepared the report on the basis of directions given by the High Court. It is noted that he was never cross-examined on various calculations made by him in the report hence the said calculations remained unrebutted. Learned counsel has submitted that report of Chartered Accountant has very clearly calculated various amounts as referred to him by the Court. There is no ambiguity as all the calculations and details are depicted in the report. The final outcome of the report is mentioned in annex-IX (page 289) which shows that after deducting various amounts in respect of markup on markup and compound interest an amount of Rs.6,374,369.30 is due and payable by the Bank to the Borrower. Learned counsel has prayed that Ist Appeal No.39/2008 filed by the Bank may be dismissed, whereas Ist Appeal No.47/2008 may be allowed by amending the impugned judgment and decree to the extent that Bank is liable to pay a sum of Rs.63,74,369.30 to the appellant in Ist Appeal No.47/2008 and further entitled for redemption of mortgaged property. In support of his contention, he has placed reliance on the following judgments:

 

1.       Syed Iqbal Hussain v.Mst. Sarwari Begum PLD 1967 Lahore 1138

 

2.      Zaheer-ur-Din v. Mst. Khurshida Begum 1996 CLC 580

 

3.      M.A. Khan v. Mst. Masooda Shaheen 1981 CLC 1358

 

4.      Darbar Khan Talukdar and others v. Babu Apurba Kumar Hazra and others PLD 1959 Dacca 26

 

5.      Chandan Mull Indra Kumar and others v. Chiman Lal Girdhar Das Parekh and another AIR 1940 Privy Council 3

 

6.      Bhawani Sahai Saliq Ram v. Chhajju Mal and otehrs 1937 Allahabad 276

 

7.      B.B. Harjimal and Sons v, Firm of Dhampatmal AIR 1921 Sind 42

 

8.      Haji Fazal Elahi & Sons v. Bank of Punjab 2004 CLD (Lahore) 162

 

9.      Samar Gul v. Central Government and others PLD 1986 SC 35

 

10.    Syed Niamat Ali and 4 others v. Dewan Jairam Dass and another PLD 1983 SC 5

 

11.          Mehar Din v. Dr. Bashir Ahmed Khan 1985 SCMR 1

 

12.    Habib Bank Limited v. Al-Jalal Textile Mills Ltd 2003 CLD 1007.

 

11.     We have heard the learned counsel for the parties and perused the record. Before adverting to the merits of the case it will be relevant to refer to the order dated 24.5.2001 passed by the learned Single Judge of this Court in the suit proceedings whereby the Chartered Accountant was appointed to examine the accounts submitted by the bank. The relevant portion of the order reads as follows:

"The present suit is bases on agreement entered into in 1992 and it seems that during the period from 1986 till 1992 there have been certain disbursements and markup has been charged on such disbursements. It has since been held and is now well established that no roll over can be allowed. For the purposes of determination as to what is the actual amount that was disbursed, and set off against the repayments, it is necessary to appoint a Chartered Accountant.

This case is fixed for evidence today, however, by a previous order on 3.5.2001 both the parties were required to submit details, which have been filed. From the details it is evident that the report of the Chartered Accountant before whom the both parties shall appear may be able to resolve the whole matter in dispute. The documents or execution thereof even if denied would not effect the decision in suit as the date of conversion is not denied and subsequent thereof by law markup or interest cannot be charged nor can any roll over be granted. In view of the above, M/s Afzal Munif, Chartered Accountants is appointed to look into the accounts of the plaintiff in respect of both namely, Wynco Traders and Pakistan Vinyl Corporation."

 

12.          Accordingly, the Chartered Accountant prepared his report dated 15.06.2002, which was duly submitted by him on 4.7.2002, whereupon the appellant as well as respondents filed objections. However, it will be advantageous to reproduce the observations and conclusion of the Chartered Accountant, which reads as follows:

          OBSERVATIONS

          We have examined the statements/calculations and records produced by the parties and have scrutinised the running finance account from the bank statements and other supporting evidences and have found that the amounts calculated by both the Plaintiff and the Defendants are not correct on the following grounds:-

1.          The Bank has debited markup and markup over markup in respective accounts of the Defendants.

 

2.          There are several entries in the running finance accounts both on Debit and Credit sides which do not pertains to the running finance account and the markup has also been charged on these balances.

 

3.          Markup on Central Excise duty, fine on late payment of Export Refinance, Godown staff salary, Export documentation charges and miscellaneous charges have been debited to the respective accounts of the Defendants.

On the other hand the amount claimed by the Defendants are also not correct as:-

 

4.          Defendants have calculated the amount of markup due to bank after treating the account of both Wynco Traders and Pakistan Vinyl Corporation as a combined account. Hence the markup has been charged at the joint balance outstanding in the accounts taking benefits of credit balance in the account of Pakistan Vinyl Corporation.

 

5.          The amount of markup on running finance is not correct, as the same has not been calculated on the basis of daily product. Moreover, the markup on the balance outstanding has been calculated from July 1, 1985 whereas the switching over to non-interest based mode was made after this date, the difference is very nominal to which the parties have no objection.   

 

          CONCLUSION

In our opinion, there has been roll over and mark-up and mark-up over mark-up has also been charged by the Bank due to roll over of the amount due in the bank statement, which should be excluded from the debit balance of bank statements.

Moreover, mark-up on financing other than running finance, has also been charged in the running finance account.

In accordance with the scope of work determined by the Hon'ble High Court of Sindh and on the basis of our findings we have tabulated the figures as under:-

 

 

DESCRIPTION

WYNCO

TRADERS

Annexure

Reference

PAKISTAN

VINYL

CORPORATION

Annexure

Reference

A

The amount due on the date of conversion in respect of each account (including the markup charged for that first year of agreement

 

 

 

 

Rs.(79,323.53)

 

Appendix

A

Page 3 of 49

 

 

 

Rs.(888,159.27)

 

 

 

 

Appendix

B

Page 2 of 22

 

 

B

The actual amount disbursed and actually utilized by the defendants:

 

 

 

Rs.(87,117,561.96)

 

 

 

Appendix

I

Page 269

 

 

 

Rs. (40,751,556.14)

 

 

 

Appendix

V

Page 279

 

C

What was the amount of repayment made by the defendants:

 

Rs. 88,576,789.41

 

Annexure II

 

Rs. 50,047,384.97

 

Annexure

VI

D

What is the markup that was charged after the date of expiry of the two agreements in 1985 and 1986 as aforesaid:

 

 

Rs. 13,244,096.93

 

 

Annexure

III

 

 

Rs. 8,531,327.56

 

 

Annexure

VII

E

What is the amount due as in respect of each account after deducting the markup/interest that has been charged after the date of expiry of the aforesaid agreements

 

 

 

 

 

Rs. (317,146.40)

 

 

 

 

 

Annexure

IV

 

 

 

 

 

Rs.9,197,802.70

 

 

 

 

 

Annexure

VIII

F

What are all that charges that have been claimed in the accounts which shall include, service charges, excise duty or other charges

 

 

 

Rs. 984,050.32

 

Appendix

A

Page 48 of 49

 

 

 

Rs.1,209,866.86

 

 

 

 

Appendix

B

Page 21 of 22

 

 

 

Scrutiny of the Bank statements and calculations submitted for our examination reveals that the Plaintiff has debited markup and markup over markup in the running finance account of the Defendants. Markup on bank service charges. Central Excise Duty, Export documentation charges godown salary charges and other charges have also been debited to the accounts of the Defendants.

Running Finance accounts of the Defendants also contain entries other than running finance accounts (i.e. Finance Against Trust Receipts. Finance against Fixed Assets and Export Refinance), both on debit and credit sides. Markup has also been charged on these balances.

 

13.          Thereafter by consent of both the parties, M/s Afzal Munif Chartered Accountant was called for cross-examination. The matter proceeded for evidence of both the parties. The appellant examined the witness namely Syed Tanveer Hussain, who filed his affidavit-in-evidence and was duly cross-examined by the respondent.  Similarly, on behalf of respondents, one Rafiq Ahmed filed his affidavit-in-evidence and was cross-examined by the appellant. After recording of the evidence, learned trail Court formulated three issues as mentioned in para 2 hereinabove. While deciding the issues so formulated, the learned trial Court after examination of the report of the Chartered Accountant and the documentary evidence produced by the parties has observed that sanctioned Running Finance Facility to the defendants in the sum of Rs.65,00,000/- on markup basis at the rate of 0.48 paisa per thousand per day w.e.f 21.10.1992 to 30.09.1993 with purchase price of Rs.82,32,000/- was made. The appellant bank also sanctioned/granted another Running Finance Facility in the sum of Rs.35,00,000/- on markup basis at the rate of 048 paisa per thousand per day w.e.f. 21.10.1992 to 20.10.1994 with purchase price of Rs.44,97,000/-. That above accounts were converted on 13.08.1985 and 27.01.1986 respectively from interest based to non-interest financing and the debit balance on the conversion dates, with interest thereon were brought forward as opening balance in non-interest, being account as per Chartered Accountant, determined working in the said account shown in the report. Learned Judge further noted that in the report of Chartered Accountant, an amount of Rs.7,92,323/53 was due on date of conversion of account of Wynco Traders. The facility provided to the respondent was Running Finance Facility, therefore, from time to time the respondent disbursed from Wynco Traders account a total amount of Rs.87,117,561/96. During such period the appellant claimed an amount of Rs.9,84,050/32 with regard to Service Charges, Excise Duty and Other Charges. Thus when an amount of Rs.7,92,323/53, Rs.87,117,561/96 and Rs.984,050/32 are calculated with each other, the total comes to Rs.88,893,935/81. It has also borne over the record that during such period the respondent made repayments in the sum of Rs.88,576,789/41. On calculation, an amount in the sum of Rs.3,17,146/40 remain due from respondent to the Habib Bank Limited.

 

14.     As regard the 2nd Running Finance Facility, the learned Banking Judge in view of Report of Chartered Accountant, held that an amount of Rs.8,88,159/27 was due on the date of conversion of account of Pakistan Vinyl Corporation. The facility provided to the respondent was Running Finance Facility, therefore, from time to time the respondent disbursed from Pakistan Vinyl Corporation account a total amount of Rs.40,751,556/14. During such period the appellant claimed an amount of Rs.1,209,866/86 with regard to Service Charges, Excise Duty and Other charges. When the amount of Rs.8,88,159/27, Rs.40,751,556/14 and Rs.1,209,866/86 are calculated with each other, total comes to Rs.42,849,582/27. It has also surfaced through the report that during such period the respondent made repayments in the sum of Rs.50,047,384/97. On the calculation, it has been held that an amount in the sum of Rs.7,197,802/70 remains due from Habib Bank Limited to the respondent.

 

15.     It has been further held by the learned Banking Judge that as per Sanction Advice of Running Finance, the respondents were required to adjust the balance on or before 30.09.1993 and the respondents once again sought the extention of time for adjustment of the liability for the period expiring on 31.12.1994. The appellant enhanced a Demand Finance Facility in the sum of Rs.1,02,79,157/- on markup basis at the rate of 0.48 paisa per thousand per day w.e.f. 30.03.1994 to 31.12.1994, which the appellant has claimed in the suit as outstanding liability upto 04.12.1996 in respect of Demand Finance Wynco Traders and Pakistan Vinyl Corporation as Rs.5,06,287/- plus the markup accrued upon May, 1999 as Rs.3,43,440/-, the amount shown in respect of Demand Finance has been observed to have been taken into reconciliation statement of amount of claim and amount due made by Chartered Accountant in his report Annexure XI.

 

16.       The learned Banking Judge has also examined the overall calculations drawn by Chartered Accountant in his report which has been reproduced in the impugned judgment, and after going through the tabulated figures and the conclusion arrived in the Chartered Accountant’s Report the learned Banking Judge observed that the Assessment of Accounts has thoroughly been made by the Chartered Accountant, as he has dealt in details each and every transaction of the three Accounts maintained by the respondents with the appellant and such figures have not been controverted by the appellant during the cross- examination. It has been further held that while dealing with the Accounts, the Entries from the Books of Accounts and the Registers made for the purpose of calculations, were in accordance with Section 74 and Section 76 of Qanun-e-Shahadat Order 1984 and the conclusion arrived at after affording extensive cross-examination of the Chartered Accountant by the learned counsel for the appellant, the report of the Chartered Accountant and the opinion arrived therein falls within the paramateria of Article 48 and Article 65 of Qanun-e-Shahadat Order 1984. We are of the view that the learned counsel for the appellant has not been able to point out any error either in the observation and conclusion drawn by the Chartered Accountant in his report nor any illegality has been pointed out in the impugned judgment and decree passed by the learned Banking Judge, which otherwise is based on proper reading of evidence and sound principles of law. Moreover, during the course of arguments, learned counsel for the appellant has mostly referred to para 12 of the leave to defend application filed by the respondents, which per learned counsel was an admission on the part of the respondents, therefore, pleaded that the Banking Judge could have passed a judgment and decree to the extent of such admission in favour of the appellant.

 

17.          Contention of the learned counsel for the appellant relating to judgment and decree on the basis of purported admission by the respondents in para 12 of the leave to defend application filed by the respondents appears to be misconceived as neither the appellant filed any such application before the learned Banking Court for judgment and decree in terms of the alleged admissions as contained in para 12 nor such admission was made in unequivocal terms. Moreover, after appointment of the Chartered Accountant in the instant case, proper accounts have been taken into consideration whereupon recording evidence of both the parties, the Chartered Accountant has not approved such contention of the learned counsel for the appellant. In order to attract provision of Order XII Rule 6 CPC, admission necessarily has to be unequivocal, clear, unconditional and unambiguous. Such admission should not only be in respect of amount but liability to pay the same to plaintiff. We are not persuaded to agree with the contention of the learned counsel for the appellant raised in this regard. We may also observe that it is the duty of the plaintiff bank to state his claim in the plaint by specifying (a) the amount of finance availed by the defendant from the financial institution; (b) the amounts paid by the defendant to the financial institution and the debits of payments; and (c) the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit and the supporting evidence. Reference in this regard can be made to the reported judgment of Macdonal Layton & Co. Pak. Ltd.v. Uzin Export-Import Foreign Trade Co. 1996 SCMR 696. In the instant case, the Chartered Accountant after taking accounts and considering the entire record of the finance has observed that the amounts calculated by both the Plaintiff and the Defendants are not correct on the grounds as disclosed in his report as observations referred in para 12 hereinabove.

 

18.     While submitting conclusion the Chartered Accountant has concluded that there has been roll over and markup and markup over markup charged by the bank due to roll over of the amount due in the bank statement, which should be excluded from the debit balance of bank statements. It has been further concluded that markup on financing other than running finance has been charged in the running finance account. We do not find any error in the said conclusion which is in accordance with law and does not require any interference by this Court.

 

19.     We are of the view that the Chartered Accountant’s report, has been considered to determine the quantum and not the factum of liability which factum has been derived from the trial during the course of evidence of appellant’s and respondent’s witnesses and more specifically from the cross-examination of the Chartered Accountant on his report wherein neither the Accounts or calculations nor the figures have been controverted as to have been wrongly calculated. In view of hereinabove, we are of the opinion that the learned Banking Judge, was right in holding, that  in view of the calculations  arrived in the Chartered Accountant’s Report, the evidence borne over the record, and in the presence of Markup over Markup and Roll over in the Accounts of respondents, the claim of outstanding liability of the appellant on the respondents has not been established by the appellant in accordance with Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

 

20.     As regards purported counter claim of the respondents, the learned Judge has observed that since no evidence was led by the respondents in support of their claim nor the appellant acknowledged receipt of counter claim during the course of final argument, therefore, he has confined his judgment to the extent of suit filed by the Bank, whereas no issue in this regard was framed. Since no evidence was led by the respondents in support of their purported counter claim nor any issue was formulated in this regard by the learned Judge, therefore, there has been no discussion or finding in this regard in the impugned judgment. Moreover, it is seen from the purported counter claim submitted in para 18 of the written statement that neither any basis nor the actual amount of the purported counter claim was mentioned by the respondents. Nothing has been brought by the learned counsel for the respondents while arguing the appeal nor any error has been pointed out in the impugned judgment and decree, which could require any interference by this Court at this stage. We may observe that the case-laws relied upon by the parties in respect of their claims are not relevant on the facts and circumstances of this case, hence no assistance to the parties.      

 

21.          Accordingly, we do not find any error in the impugned judgment and decree passed by the learned Banking Judge, which is otherwise based upon the report of an expert, whereas neither the appellant nor the respondents could refer to any document or evidence which could possibly justify any interference by this Court in the impugned judgment. We do not find any merits in both the appeals, which are hereby dismissed.

 

                                                                                                              

                                                                                       JUDGE

Karachi                                    CHIEF JUSTICE

Dated:  03.10.2011