IN THE HIGH COURT OF SINDH, KARACHI

I.A No. 17 OF 2012

Present

Mr. Justice Aqeel Ahmed Abbasi

Mr. Justice Muhammad Junaid Ghaffar

First Dawood Investment Bank Limited……………………….Appellant

Versus

Bank Islami Pakistan Limited……..………………….……….Respondent

Date of Hearing: 08.10.2013 & 09.10.2013

Date of Order: 31.10.2013

Mr. Salman Talibuddin Advocate for the Appellant.

Mr. Murtaza Wahab Advocate for Respondent

J U D G E M E N T

Muhammad Junaid Ghaffar, J: - This 1^stappeal arises out of the judgment/decree passed by the Banking Court No. II at Karachi in Suit No. 445/2010 whereby the suit filed under Section 9 of the Financial Institution (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as “Ordinance 2001”) filed by the respondent has been decreed for an amount of Rs.6, 418,223/- with future costs of fund at the present rate prescribed by the State Bank of Pakistan from the date of filing of suit till realization, besides the costs of the suit. By consent of the learned counsel the instant appeal is being finally decided at Katcha Peshi stage.

2. Facts relevant for the disposal of the instant appeal are that the respondent filed a suit under Section 9 of the Ordinance, 2001, against the appellant for recovery of an amount of Rs.6, 418,223/- alongwith cost of funds and cost of suit. The appellant, filed an application under Section 10 of the Ordinance 2001, seeking leave to defend together with a counter claim for recovery of Rs.21,123,000/-. Such counter claim according to the appellant arose as a result of the respondent’s breach of its obligations as trustee of the Sukuk Facility. However, subsequently at the time of hearing of leave to defend application, the appellant didn’t pressed the counter claim as it intended to file a separate suit on the said cause of action. The appellant had raised three questions of law at the time of filing of the leave to defend application before the learned Banking Court. The three questions raised therein are reproduced for ease reference:-

i. Whether the suit as filed is maintainable against the defendant or at all?

ii. On a consideration of the plaint and its annexures, particularly annexures M to M-7, can it be said that the plaintiff has established any entitlement to the suit amount as against the defendant?

iii. Whether in light of the counter claim being filed herewith the plaintiff is entitled to any decree against the defendant?

3. The learned counsel appearing on behalf of the appellant did not dispute, rather admitted amount of recovery as well as relationship with respondent bank. However, the learned counsel for the appellant submitted that he will argue his appeal only on one legal ground, and that is, as to the maintainability of the suit filed by the respondent bank. According to the learned counsel for the appellant, the same was not properly instituted as per the provision of Section 9 of the Ordinance 2001. The learned counsel referred to annexures-A at page 59 and A-1 at page 63, which are, Power of Attorneys executed by the Chief Executive Officer of the respondent bank in favour of its two representatives, namely Masood Ahmed s/o Haji Muhammad Sharif Khan and Ms. Shamim Naz D/o Abdul Ghafoor, through whom the suit for recovery was filed by the respondent bank before the learned banking Court No. II at Karachi. He made specific reference to Para Nos. 6 & 9 of the said Power of Attorneys to substantiate his contention in this regard. The relevant Para 6 & 9 are also reproduced below for ease of reference:-

6. “To provide necessary information to the concerned authority regarding the Branch/Department to commence, prosecute, continue and defend all actions, suits, or legal proceedings, whether civil, criminal or revenue including proceedings to procure or establish the bankruptcy or insolvency of any person or firm or liquidation or winding up of any company either in such suits or proceedings or otherwise in any court of law or authority in Pakistan.

9. For all or any of aforesaid purpose to appear on behalf of the bank in the courts, banking tribunals, banking courts, civil courts, superior courts including High Court, Supreme Court of Pakistan, Shariat Courts, before all Judges, Magistrates, Registrar, Sub Registrar and other Officers of Government and Semi Government Organizations and other Authorities, Bodies in Pakistan as instructed by Competent Authority from time to time.”

4. Learned counsel for the appellant also referred to the order dated 07.07.2011 passed by the learned Banking Court while deciding the leave to defend application under Section 10 of the Ordinance 2001, in which it was observed by the Banking Court that maintainability of the suit can be decided at the time of final decision of the suit and per learned counsel, since the Banking Court vide impugned judgment failed to record any finding on the maintainability of the suit as observed in the leave refusal order, therefore, the impugned judgment/decree is liable to be set aside, and the matter may be remanded to the Banking Court for giving its finding on the maintainability of suit before deciding the matter on merits.

5. The only contention raised by the learned counsel was to the effect that since the recovery suit was not properly instituted as such was quorum non judice. However, he did not dispute the relationship with the respondent and also the decretal amount impugned in the instant appeal. In support of his argument the learned counsel relied upon the case of Imamdin & 4 others vs. Bashir Ahmed & 10 others, reported in PLD 2005 SC 418, Abdul Rahim Vs. UBL, reported in PLD 1997 Kar 62, and the case of M. A. Karim Iqbal Vs. Presiding Officer Banking Court No.3 & 4 others, reported as 2003 CLD 1447.

6. Conversely the learned counsel for the respondent, at the very outset, has raised an objection as to maintainability of instant appeal for being time barred. According to the learned counsel, the appeal was filed on 08.02.2012 whereas the judgment is dated 16.12.2011 and the decree is dated 24.12.2011 and therefore, in terms of Section 22 of the Ordinance 2001, the appeal is barred by 17 days. It has been further contended that since no application for condontion of delay has been filed, nor any reason whatsoever is given for such delay, therefore, the appeal is liable to be dismissed in limine. Per learned counsel, perusal of record reveals that appellant filed an application for issuance of certified copy on 02.12.2011, for judgment dated 30.11.2011, whereas, the judgment is dated 16.12.2011, as such the appellant had not filed any valid application for issuance of certified copy of the impugned judgment and decree, therefore, the time lapsed during this period could not be excluded, and the benefit of Section 12 of the Limitation Act cannot be extended to the appellant in the instant case. It has been further argued that the appellant was not even vigilant to pursue the application for issuance of certified copy, as according to him there was no judgment dated 30.11.2011 as such in fact no proper application was ever filed by the appellant for issuance of certified copy of the impugned judgment and decree. In support of his contention learned counsel for the respondent has relied upon the case of Muhammad Khan Vs. Fatima Bhai, reported in AIR 1930 Naghpur 139, Balwant Rao Vs. Balmukund & Others, reported in AIR 1935 Nagpur 109, and the case of Punjab province Vs. M. Noorullah, reported in PLD 1957 (W.P) Lah 370, and the case of MCB Ltd. Vs. Aslam Khan, reported in NLR 1981 AC 121.

7. On the question of maintainability of the suit the learned counsel for the respondent relied upon paragraph Nos. 6 & 9 of the Power of Attorney available at pages 59 & 61 of the file. It has been contended by the learned counsel that both the Power of Attorneys were duly signed and executed by the Chief Executive Officer of the respondent bank whereas certain powers and authority, including filing of suit in court of law were also given to the attorney’s, therefore reference to “Credit Administration Department” in the preamble of Power of Attorney is not relevant nor does it restricts the authority of the attorney to perform various functions on behalf of the respondent bank as detailed in various clauses of such power of attorney. Learned Counsel also referred to the last Para of the power of attorney at page 65 i.e. “And the Bank doth hereby agree to ratify and confirm all and whatsoever the said Nominee shall lawfully do or cause to be done by virtue of this Power being made…..” and contended that even if there was any deficiency in the power of attorney, without prejudice, the same stands ratified by virtue of above clause of Power of Attorney. It was further argued by the learned counsel that the power of attorney could only be challenged or disputed by the principal, and since no such dispute has been raised nor the power of attorney has been withdrawn by the principal i.e. Chief Executive officer of respondent bank, as such, the suit filed before the learned Banking Court was competent under Section 9 of the Ordinance 2001. In support of his contention learned counsel has relied upon the cases of Amir Ali Ahmed & others Vs. HBL, reported in 2005 CLD 934, Haji Saghir Ahmed Vs. UBL, reported in 2004 CLD 1334, Silk Bank Ltd., Vs. Dewan Sugar Mills Ltd reported in 2011 CLD 436, Khayam Films V/s Bank of Bahawalpur Limited reported in 1982 CLC 1275, Noor Rehman V/s Sher Muhammad Khan reported in 2004 CLC 349 and finally on Imamdin & 4 others vs. Bashir Ahmed PLD 2005 SC 418.

8. Mr. Salman Talibuddin, learned counsel for the appellant while making rebuttal of the objection of limitation i.e. appeal being barred by 17 days, has submitted that initially the learned Banking Court, vide diary sheet dated 16.11.2011 had adjourned the matter for judgment on 30.11.2011. Per learned counsel on 30.11.2011 neither the judgment was announced nor the counsel for the appellant was intimated the next date fixed by the learned banking court for the announcement of judgment, and subsequently, as an abundant caution, and presuming that the date of the judgment will be 30.11.2011, an application for issuance of certified copy was filed before the learned Banking court on 02.12.2011. Per learned counsel, such application dated 02.12.2011 was filed in good faith under bonafide impression and to avoid any delay in obtaining the certified copy of judgment and decree. Learned Counsel while concluding his arguments has submitted that the learned Banking Court did not raise any objection in this regard and the application dated 02.02.2011 filed by the appellant for issuance of certified copy of the judgment which was actually announced on 16.12.2011 was treated as a proper application and the copy of the judgment was also issued to the appellant on the basis of such application, wherein it has been endorsed that the application was made on 02.12.2011; but the certified copy was made ready on 06.02.2012, hence according to learned counsel, instant appeal filed on 08.02.2012, is within time and the objection so raised by the learned counsel for the respondent at this stage is mis-conceived, frivolous and liable to be rejected.

9. We have heard both the learned counsels and have perused the record as well as R & P which was also summoned by this Court vide order dated 12.12.2012. We will first take up the objection raised by the learned counsel for the respondent, as to the appeal being time barred. We have seen the endorsement made by the Banking Court No. II on the certified copy of the impugned judgment, and have noticed that although it is mentioned on the said endorsement that the application for issuance of certified copy on 02.12.2011 was not only entertained by the office but even the fees was also estimated on the same date i.e. 02.12.2011, whereas, on that date the judgment was not ready and was subsequently announced on 16.12.2011. The concerned staff of the learned Banking Court was not, and could not, have been in a position to estimate the costs/fees for issuance of the certified copy of the impugned judgment and decree on 02.012.2011. Endorsement of the copyist also reflects that the certified copy was made ready on 06.02.2012 and on the same date it was issued by the Banking Court to the appellant. In view of hereinabove facts, we are of the opinion that apparently, the appellant was vigilant in approaching the Banking Court to obtain certified copy of the judgment which was fixed by court for announcement on 30.11.2011, whereas, it was the mistake of the concerned staff of the Banking Court, who not only entertained the application for issuance of certified copy of the judgment which was not ready, but also estimated costs/fees of the certified copy on the same date i.e. 02.12.2011 in-spite of the fact that on 30.11.2011 the judgment was not announced. Accordingly, we are left with no other option but to hold that the appeal filed by the appellant is within time as prescribed under the Ordinance, 2001, whereas the date of judgment as mentioned in the application under a bonafide belief on account of inadvertence could not be made the basis of treating the said application as redundant. Since we have already observed that it was a mistake primarily on the part of the Banking Court and as such the appellant could not be penalized for the act of the Court. The case law relied upon by the learned counsel for the respondent in this regard is of no relevance as the facts and circumstances of this case are clearly distinguishable from the facts of the case law relied upon by the learned counsel for the respondent. Accordingly the objection with regard to the period of limitation raised by the learned counsel for the respondent is hereby repelled.

10. In the instant appeal admittedly there is only one legal issue which is to be decided by this Court, that whether the suit filed by the respondent bank in terms of Section 9 of Ordinance 2001, was competently filed or not. Since the controversy in hand is governed by a special law i.e. Ordinance 2001, we would like the reproduce Section 9 of the said Ordinance, which relates to the filing of suit before the Banking Court:-

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”.

11. From perusal of the above, it could be seen, that the financial institution on failure of a customer to fulfill any of its obligation with regard to any finance, may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath, 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. It may be observed that unlike the provisions of CPC or the Banking Tribunal Ordinance 1984, (“1984 Ordinance”) as well as the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), the provision of Section 9 of the Ordinance 2001, is somewhat different and independent in so far as the institution of proceedings by way of filing of suit is concerned. Since the learned counsel for the appellant very forcefully relied upon the judgment in the case of Abdul Rahim (Supra) which is a judgment passed in respect the 1984 Ordinance, we would like to reproduce the relevant provision of the 1984 Ordinance with regard to institution of suit under the said Ordinance. The relevant provision was contained in Section 6 of 1984 Ordinance which is reproduced as under:-

6. “Procedure of Banking Tribunal: (1) Where a customer commits default in fulfilling any obligation to a banking company, the banking company may file against such customer with Banking Tribunal a plaint which shall be verified on oath by the Branch Manager or an officer of the rank of Assistant Vice President or Assistant Manager or such other officer as the Board of Directors of the banking company may authorize in this behalf”. (Underlining supplied)

12. From perusal of Section 6 of 1984 Ordinance, it can be seen that this provision is not Pari Materia with that of the provision of Section 9 of the Ordinance 2001, in as much as the words used in this sub-section are, that the suit can be filed by the Branch Manager or an officer of the rank of Assistant Vice President or Assistant Manager or such other officer as Board of Director of the banking company may authorize in this behalf. The basic difference between the relevant provisions of the two Ordinances i.e. of Ordinance, 1984 and Ordinance, 2001 is to the effect, that under the 1984 Ordinance, the suit could be filed by the bank with the approval of the Board of Directors of the bank and not otherwise. Whereas, under the 2001 Ordinance, the suit can be filed by authorized officer on the basis of a power of attorney duly executed in favor of such officer. We have examined the power of attorney available on record, and we are of the opinion that it has been issued in terms of Section 9 of the Ordinance 2001 by the Chief Executive of the bank, whereas, the objection of the learned counsel for the appellant that the same has been issued on behalf of the “Credit Administration Department” and not by the Bank itself, is misconceived on the face of record. The learned counsel for the appellant had admitted that although it was signed and executed by the Chief Executive Officer of the respondent Bank, but since it was on behalf of the Credit Administration Department as such the same was not on behalf of the bank. We believe that this objection besides being hyper technical is otherwise misconceived as reference to some particular department as per organizational set up would not, in any manner render the power of attorney as invalid, when it is otherwise issued by the authorized officer of the Bank and duly authorizes the attorney to file recovery proceedings in the court of law. Similarly, the power of attorney issued on behalf of the legal department of the respondent Bank is also signed by the Chief Executive Officer of the respondent Bank and has been duly notarized under law, as such we would hold that both the power of attorneys are valid whereby the concerned officers of the respondent Bank were duly authorized to commence, prosecute, continue and defend all actions, suits, or legal proceedings, whether civil, criminal or revenue including proceedings to procure or establish the bankruptcy or insolvency of any person or firm or liquidation or winding up of any company either in such suits or proceedings or otherwise in any court of law or authority in Pakistan. The said power of attorneys also authorized the said officers for and/or any of the aforesaid purposes to appear on behalf of the bank in Courts, banking tribunal, banking courts, civil courts, superior courts including High Court and Supreme Court of Pakistan, Shariat Court before all Judges, Magistrate, Registrar, Sub-registrar, and other officers of Government or Semi Government organization and other authorities, bodies in Pakistan as instructed by the competent authority from time to time.

13. We have also noticed that the power of attorney issued in favor of the authorized representative of the respondent allows them to initiate legal proceedings on behalf of the Bank and such authority is given by the Chief Executive of the Bank and could not be disputed. We may also observe that while interpreting the contents of a power of attorney, the acts done by the attorney in furtherance to the main purpose for which the power of attorney has been issued, and which are for the benefit of the principal, the same may be protected and may be considered as valid irrespective of the fact that such authority or power was not specifically mentioned in such power of Attorney. If the acts performed by the attorney are detrimental or against the interest of principal, then the same has to be strictly constructed and in such exceptional cases exercise of such power by the attorney will not be considered as valid. Reference in this regard can be made to a judgment of the Hon’ble Supreme Court in the case of Qadir Bakhsh & 10 others Vs. Kh. Nizam-ud-din Khan & 4 others, reported in 2001 SCMR 1091, wherein it was contended by one of the parties that since the power of attorney was only to manage the immoveable properties, and, therefore, the attorney was not competent to file suit or prefer appeal there against, as the power of attorney is to be construed strictly, whereas, the authority in question is to be found within the four corners of the instrument; either in express terms or by necessary implication. Such objection was repelled by the Hon’ble Supreme Court while interpreting the contents of the power of attorney and it was observed that the power of attorney vests full rights in the agent to perform the specified acts and to vest in him all the present and future property rights and interest of the principal including filing of suit or appeal in respect of the said property. The relevant portion of the judgment is reproduced as under:

“19. The underlined portion of the impugned power of attorney is in essence of the operative part and a bare reading thereof would show that the authority conferred on the attorney in the underlined portion of the power of attorney was much higher and extensive rather than the filing of the suit or of the appeal. Generally, in interpreting the power of attorney, it is ignored that it has two aspects: (i) the power to do something on behalf of the principal which is generally beneficial to him and (ii) the power to exercise the discretion depriving the principal of his right to his assets, properties etc. The part of the power of attorney which tends to accretion of the right to the proprieties and assets to the principal may not be interpreted in stringent terms for instance to file a suit or appeal as has been clearly laid down in the power of attorney in the instant case authorizing the attorney to file suit/action either civil or criminal or to defend them if filed against the principal and to peruse it from the lower Court to the High Court. In the instant case the attorney has been authorized even to sell, bequeath the immovable property of the pre-emptors. Such a right tends to deprive the principal of his valuable rights in the immovable property. If the attorney has been given that much power there is no earthly reason as to why he should be deemed to be deprived of the power to file suit or appeal on behalf of his principal”.

14. We have also noticed that the appellant in its leave to defend application did not take any specific plea in respect of any alleged deficiency in the power of attorney, and rather a very generalized objection was taken that as to whether the suit is maintainable or not. But such objection was not specific viz; the power of attorney, therefore, the learned Banking Court was justified in giving its findings of the case on its own merits and not on the issue of validity or otherwise of the power of attorney under dispute. Once the matter has been decided on merits by the Court, it would also be meant to have been decided taking into consideration all the objections including the maintainability of the case as well; therefore, we are not inclined to agree with the submission made by the learned counsel for the appellant that since no specific finding has been given by the learned Banking Court as to the maintainability of the suit, the same shall be remanded back to the learned Banking Court. We are of the view that the matter has been adjudicated upon by the learned Banking Court on merits of the case which have not been disputed before us by the appellant and in fact the relationship as well as the availing of the finance facility and disbursement of the amount in favor of the appellant has been admitted.

15. We are of the view that all these authorities and acts so conferred upon the authorized officers of the respondent bank, do fulfill the requirement as contemplated under Section 9 of the Ordinance, 2001 and, therefore, the objection of the learned counsel for the appellant with regard to the maintainability of the suit is devoid of any merits, which is hereby repelled. In so far as the case law relied upon by the learned counsel for the appellant is concerned, the only relevant judgment on which the learned counsel had vehemently relied upon was in the case of Abdul Rahim (supra), which is not applicable on the facts of the present case as it was in respect of Section 6 of the 1984 Ordinance and since we have already explained hereinabove that the provisions of section 6 of the 1984 Ordinance are not analogous to the provision of Section 9 of the Ordinance 2001 and the same are materially different, as such, the law settled in the case of Abdul Rahim (supra), is clearly distinguishable with the facts of the instant appeal. In so far as the case of M. Karim Iqbal (supra) is concerned, the same is also not applicable as in fact the same is in respect of an altogether different situation. Lastly the case of Imamdin (supra) is also not applicable in the instant matter as the issue therein was regarding the authority of the attorney in respect of purchase and sale of the property and the Hon’ble Supreme Court settled a guide line with respect to the covenants of the power of attorney and held that the power of attorney shall strictly be construed and further held that the object and scope of the power of attorney must be seen in the light of its recital to ascertain the manner of the exercise of the authority in relation to the terms and conditions specified in the instrument. With utmost respect to the learned counsel for the appellant, we find no similarity in the facts and circumstances of the instant case with the case in hand before the Hon’ble Supreme Court as such the same has no relevance and is clearly distinguishable.

16. In view of hereinabove, we are of the opinion that the suit was competently instituted on behalf of the respondent in terms of the provisions of the Ordinance 2001. Since other aspects of the case have not been argued before us, therefore, we do not find any merits in the instant appeal, which is hereby dismissed along with listed application(s), however, with no order as to cost.

J U D G E