Judgment Sheet

IN THE HIGH COURT OF SINDH AT KARACHI

Suit No. B – 97 of 2009

Present :

Mr. Justice Nadeem Akhtar

1. 1. For hearing of CMA No.11945 / 2010 (U/S 5 of the Limitation Act, 1908) :

2. 2. For hearing of CMA No. 8596 / 2009 (Leave to defend) :

3. 3. For hearing of CMA No. 2202 / 2010 (U/O-VII R 17 rlw 0-X111 & Sec.151

4. CPC) :

5. 4. For hearing of CMA No. 2100/2012 (U/S 6 of the Bankers’ Books Evidence

6. Act, 1891) :

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Plaintiff : Habib Bank Limited, through Mr. Nabeel Kolachi Advocate.

Defendants : Mahmood Alam Shirani and Mrs. Zareen Mahmood, and

their learned counsel Mr. Siddiq Mirza Advocate called absent.

Date of hearing : 12.12.2013.

JUDGMENT

NADEEM AKHTAR, J. : C.M.A. No. 11945 of 2010 has been filed by the defendants praying that “the alleged 1-day delay in filing of Leave to Defend Application” be condoned.

2. This Suit was instituted on 09.06.2009 by the plaintiff bank against its customers / the defendants under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001 (‘the Ordinance’), for recovery of Rs.65,127,533.46, and for a final mortgage decree in respect of the three immovable properties mortgaged in its favour by the defendants in consideration of the finance facilities availed by them. In pursuance of Section 9(5) of the Ordinance, summons were issued through all the four modes prescribed therein. Summons were published on 25.07.2009 in the Karachi editions of the English daily ‘DAWN’ and the Urdu daily ‘JANG’ ; they were issued on 25.07.2009 through courier service and registered post ; and, were issued on 22.07.2009 through bailiff. Defendant No.1 filed the application for leave to defend the Suit bearing C.M.A. No. 8596 of 2009 on 26.07.2009, on which the office raised an objection that the same was barred by time. As defendant No.2 did not file any such application, she was declared ex parte vide order dated 08.12.2009.

3. Learned counsel for the defendants appeared in this case for the last
time on 06.04.2012, and thereafter he either remained absent or requests for adjournment were made on his behalf. On 04.09.2013, it was observed by the Court that the learned counsel for the defendants was seeking adjournments for one reason or the other. On that date, last chance was given to him to proceed with this matter on the next date with a caution that no further adjournment shall be granted. On 12.12.2013 this matter was called twice, but the defendants and their counsel remained absent without any intimation, although the name of the learned counsel had appeared in the daily cause list. As lenience was shown by the Court in favour of the defendants on five previous dates of hearing by adjourning the matter either due to the absence of the defendants’ counsel or in view of the requests for adjournment made on his behalf, the defendants did not deserve any further indulgence. It would not be out of place to mention here that the applications filed by the defendants for leave to defend the Suit and for condoning the delay in filing the same, are pending since 26.08.2009 and 23.11.2010, respectively. However, instead of dismissing the listed applications filed by the defendants for non-prosecution on 12.12.2013, learned counsel for the plaintiff was heard and the applications were examined, and thereafter the matter was reserved so that the applications may be decided on merits.

4. In the affidavit filed by defendant No.1 in support of this application for
condonation of the delay, he has admitted that summons were published in newspapers on 25.07.2009, and were issued on the same day, which were served upon the defendants on 27.07.2009. He has averred that since the defendants were served on 27.07.2009 through courier service, the application for leave to defend the Suit filed by him on 26.07.2009 was within time. He has further averred that service only through bailiff is considered as valid and effective service, and service through other modes is of no significance. In his affidavit-in-rejoinder, defendant No.1 has claimed that he was not in Karachi, and when he returned to Karachi in the second week of August 2009, he was informed by one of his business competitors that there was publication of a Court notice against the defendants. He has averred that when such information came to his knowledge, “legal steps were already in progress”, and accordingly the application for leave to defend the Suit was filed on 26.08.2009. The specific date of his alleged return to Karachi and the name of the person who had purportedly informed him about the publication, have not been disclosed by defendant No.1 in his rejoinder.

5. Mr. Nabeel Kolachi, learned counsel for the plaintiff, contended that
Section 9(5) of the Ordinance specifically provides that service duly effected in any of the modes prescribed therein shall be deemed to be valid service for purposes of the Ordinance. He further contended that since summons were published in two newspapers on 25.07.2009, the prescribed period of limitation shall be computed from the said date and not from any such subsequent date on which service was effected through any other mode. He submitted that the limitation of thirty days provided in Section 10(2) of the Ordinance for filing the application for leave to defend the Suit by defendant No.1, expired in this case on 24.08.2009. He further submitted that the application filed on 26.08.2009 by defendant No.1 was barred by two days, and no plausible explanation has been given by him for the said delay of two days. It was urged that the application for condoning the delay as well as the application for leave to defend the Suit filed by defendant No.1 are liable to be dismissed on this ground alone. In support of his submissions, the learned counsel cited and relied upon the cases of Messrs Ahmad Autos and another V/S Allied Bank of Pakistan Limited, PLD 1990 Supreme Court 497, Messrs Qureshi Salt & Spices Industries, Khushab and another V/S Muslim Commercial Bank Limited, Karachi through President and 3 others, 1999 SCMR 2353, Mst. Hajra Bibi V/S Zarai Taraqiati Bank Limited (ADBP) through Manager, 2006 CLD 261, and My Bank Limited V/S Messrs Muslim Cotton Mills (Pvt.) Ltd. through Chief Executive and 3 others, 2011 CLD 1721.

6. I have heard the learned counsel for the plaintiff, and despite the
absence of the defendants and their learned counsel, I have carefully gone through the applications filed by them in order to appreciate their point of view. Before adverting to the application filed by defendant No.1 for condoning the delay, it is necessary to determine whether his application for leave to defend the Suit was barred by time or not. Under Section 10(2) of the Ordinance, the defendants were duty-bound to file the application for leave to defend within thirty (30) days of the date of first service by any one of the four modes prescribed in Section 9(5) of the Ordinance. Because of the word “shall” used in Section 10(2) ibid, the provisions thereof are mandatory in nature. As noted above, summons in the instant Suit were published on 25.07.2009 in the Karachi editions of the English daily ‘DAWN’ and the Urdu daily ‘JANG’ ; they were issued on 25.07.2009 through courier service and registered post ; and, were issued on 22.07.2009 through bailiff. The application for leave to defend the Suit was filed by defendant No.1 on 26.07.2009. It has not been disputed by him that summons were published on 25.07.2009 in the above mentioned two newspapers, nor has he alleged that the said publication was defective. In fact, defendant No.1 has admitted in his rejoinder that when the publication came to his knowledge, “legal steps were already in progress”. Thus in view of the mandatory provisions of Section 10(2) ibid, the prescribed period of thirty days for filing the application for leave to defend the Suit shall be reckoned from 25.07.2009, being the date of first service by any one of the four modes prescribed in Section 9(5) of the Ordinance. As held by the Hon’ble Supreme Court in Apollo Textile Mills Ltd. and others V/S Soneri Bank Ltd, PLD 2012 Supreme Court 268 = 2012 CLD 337, the Ordinance is a special law, and by virtue of Section 4 thereof, its provisions override all other laws ; and, the provisions contained in Section 10 of the Ordinance require strict compliance. This being the position, the prescribed period of thirty days expired on 24.08.2009, after excluding the first day (25.07.2009). The application for leave to defend the Suit filed by defendant No.1 on 26.08.2009 was, therefore, barred by two days. The contention of defendant No.1 that the prescribed period of limitation should be computed from 27.09.2009 when he was served through courier service and not from the date of publication, is not tenable in view of the following authorities, which fortify the above view expressed by me.

7. The leading authority in the above context is the case of Messrs Ahmad Autos (supra) relied upon by the learned counsel for the plaintiff, wherein the Hon’ble Supreme Court was pleased to hold that service is to be held good service if it is effected by any one or more modes of service provided for in Rule 8 of the Banking Companies (Recovery of Loans) Rules, 1980, which provided three simultaneous modes of service ; namely, through bailiff, registered post acknowledgement due and by way of publication. In Mst. Hajra Bibi (supra), the appellant / defendant was served on 30.01.2004 through publication and on 06.02.2004 through bailiff. It was held in the cited case by a learned Division Bench of the Lahore Court that under Section 10(2) of the Ordinance, the defendant was required to file the application for leave to defend within thirty days of the date of first service by any one of the four modes prescribed in Section 9(5) of the Ordinance ; the first date of service was the date of publication ; and, since the application was not filed within thirty days of the publication / first service, the same was barred by time. In addition to the above cases referred to by the learned counsel for the plaintiff, reference may be made to the case of Khawaja Muhammad Bilal V/S Union Bank Limited through Branch Manager, 2004 CLD 1555, wherein a learned Division Bench of the Lahore High Court, comprising of members who are now the Hon’ble Judges of the Supreme Court of Pakistan, followed the case of Messrs Ahmed Autos (supra), and were pleased to hold that service by any of the modes provided and effected under law, is sufficient service. Similar view was taken by separate learned Division Benches of the Lahore High Court in Masood Alam V/S Muslim Commercial Bank, 2004 CLD 1227, Akhtar Kaleem V/S Citibank N.A., 2004 CLD 1361 and Rajana Cotton Factory (Pvt.) Ltd. V/S Bank of Punjab, 2004 CLD 1569.

8. As I have already held that the defendant No.1’s application for leave to defend the Suit was barred by two days, I shall now consider his application for condoning the delay. It is to be noted that the application for leave to defend the Suit filed by defendant No.1 on 26.08.2009 was not accompanied by any application for condoning the delay, and the present application for condoning the delay was filed by him on 23.11.2010. It is also to be noted that instead of giving a plausible explanation or justification for the delay, defendant No.1 has insisted in his application for condoning the delay that his application for leave to defend the Suit was not barred by time. He has sought condonation of “the alleged 1-day delay in filing of Leave to Defend Application” by assuming that there was no delay of two days, and by claiming that even the delay of one day was an alleged delay. It is a well-established principle of law that, while seeking condonation of delay, the applicant has to submit explanation for the delay of each and every day ; and, if each and every day’s delay is not explained or justified in a satisfactory and convincing manner, the delay cannot be condoned. For invoking the discretionary power of this Court in order to condone the delay, defendant No.1 ought to have shown very strong and solid grounds, and also to explain the delay of each and every day. However, the application, on the face of it, shows that he has not even attempted to explain or justify the delay of two days. In lmtiaz Ali V/S Atta Muhammad and another, PLD 2008 Supreme Court 462, the Hon’ble Supreme Court was pleased to hold that the appeal, having been filed one day after the period of limitation, had created valuable right in favour of the respondents, and no sufficient cause was found for filing the appeal beyond the period of limitation. Even the delay of only one day was not condoned by the Hon’ble Supreme Court. In Pakistan Handicrafts, Sindh Small Industries Corporation, Government of Sindh V/S Pakistan Industrial Development Corporation (Pvt.) Ltd. and two others, 2010 CLC 323, it was held by this Court that limitation is not a technicality because it confers very valuable rights as held by the Hon’ble Supreme Court in the case of lmtiaz All (supra).

9. For the foregoing reasons, I do not find any merit in C.M.A. No. 11945
of 2010 filed by defendant No.1 for condoning the delay, which is accordingly dismissed with no order as to costs. Consequently, C.M.A. No. 8596 of 2009 filed by defendant No.1 for leave to defend the Suit, being barred by limitation, is also dismissed with no order as to costs.

10. C.M.A. No. 2202 of 2010 has been filed by the defendants under Order VII Rule 17 read with Order XIII and Section 151 CPC, seeking direction against the plaintiff to produce the original entries of statement of accounts and other documents mentioned therein, and for impounding the same. The defendants have also filed C.M.A. No. 2100 of 2012 under Section 6 of the Bankers’ Book Evidence Act, 1891, praying that the plaintiff be directed to produce account-wise details of the statements of account mentioned therein. As both the above applications were filed by the defendants before the grant of leave to defend the Suit to them, the same are not maintainable in view of Waheed Corporation V/S Allied Bank Limited, 2003 CLD 245, wherein it was held by a learned Division Bench of the Lahore High Court that the defendant could not even file interlocutory / ancillary application and had no right to defend the Suit unless he was allowed by the Court to defend the Suit. Therefore, C.M.A. No. 2202 of 2010 and C.M.A. No. 2100 of 2012 filed by the defendants, being not maintainable, are dismissed with no order as to costs.

11. Upon dismissal of the defendant No.1’s application for leave to defend
the Suit, and as defendant No.2 has been declared ex parte, I have proceeded to examine the claim made by the plaintiff in this Suit. It is the case of the plaintiff that defendant No.1 initially availed three finance facilities from the plaintiff ; namely, Running Finance, L/C (Sight) and Finance Against Trust Receipt (FATR), by executing separate finance agreements in respect thereof in the year 2003. The said facilities were renewed from time to time at the request of defendant No.1, and further facilities of ‘Inland Bill Purchase’ (IBL) and Additional Running Finance of Rs.20.000 million were granted by the plaintiff to him at his request on 11.12.2006 and 13.07.2007, respectively. As security for the repayment of the said facilities, defendant No.1 executed in favour of the plaintiff promissory notes and letters of hypothecation for his movable assets and receivables, and also mortgaged in favour of the plaintiff his three immovable properties by executing mortgage documents from time to time. By executing her personal guarantee to the extent of Rs.25,230,000.00 and delivering the same to the plaintiff, defendant No.2 stood as a guarantor on behalf of defendant No.1. It has been alleged by the plaintiff that the defendants failed in fulfilling their obligations, as the principal amount and the agreed markup thereon have not been paid by them as per the terms and conditions of the finance agreements.

12. In compliance of Sub-Section (3) of Section 9 of the Ordinance, the plaintiff has disclosed in paragraph 28 of the plaint all relevant details of the amounts availed by the defendants ; amounts repaid by them ; markup payable by them ; and, the total amount payable by them including the outstanding principal amount and the agreed markup thereon. It is to be noted that the above details, as required under Section 9(3) ibid, have been disclosed by the plaintiff only in respect of two facilities, that is, the Running Finance Facility and Finance Against Trust Receipt (FATR). Thus, the claim of the plaintiff in this Suit is confined only to the extent of the said two facilities. It is also to be noted that the above disclosure in the plaint by the plaintiff does not include any amount on account of liquidated damages, penalties, penal charges, or any such amount which is not permissible in law. In relation to the Running Finance Facility, the plaintiff has stated that an amount of Rs.376,428,123.37 was availed by the defendants ; the amount paid by them is Rs.324,441,426.46 ; markup of Rs.4,548,142.71 is payable by them till 31.12.2008 ; and, the total amount payable by them, including the outstanding principal amount and the markup thereon, is Rs.56,534,839.62. Regarding Finance Against Trust Receipt (FATR), it stated that a sum of Rs.8,246,997.84 was availed by the defendants ; there have been no repayments by them ; markup payable by them is Rs.345,969.00 ; and, the total amount payable by them, including the outstanding principal amount and the markup thereon, is Rs.8,592,963.84. According to the above statement of account disclosed in paragraph 28 of the plaint, which is verified on oath, the defendants are liable to pay to the plaintiff an amount of Rs.65,127,533.46, being the aggregate of the outstanding amounts of both the above facilities. I have noticed activities in the form of debit and credit entries in the statement of account throughout the period of finance, subsequent renewals and the additional finance, and the detailed statement of account filed along with the plaint and the claim made in this Suit fully corroborate each other.

13. Sub-Section (11) of Section 10 of the Ordinance provides that where the application for leave to defend is rejected, or where the defendant fails to fulfill the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant. However, the Banking Court can exercise jurisdiction under Sub-Section (1) or under Sub-Section (11) of Section 10 ibid and pass a decree thereunder in favour of the plaintiff, only when summons in the prescribed form are issued and served on the defendant as provided in Section 9(5) ibid ; the plaint is compliant of the mandatory requirements of Section 9(3) ibid ; the allegations of fact in the plaint disclose a subsisting cause of action against the defendant ; the Suit is maintainable by all standards ; and, the plaintiff is able to show that he is entitled to the relief prayed for against the defendant. If any one of the above conditions precedent for a competent Suit is lacking, the plaintiff shall not be entitled to a decree either under Sub-Section (1) or under Sub-Section (11) of Section 10 ibid. Since none of the above conditions precedent is lacking in this Suit and the defendants’ application for leave to defend has been dismissed, the plaintiff is entitled forthwith to a judgment and decree in its favour against the defendants under Section 10(11) ibid.

14. As a result of the above discussion, the Suit is hereby decreed against defendant No.1 in the sum of Rs.65,127,533.46 (Rupees sixty five million one hundred twenty seven thousand five hundred thirty three and Paisas forty six only), and in the sum of Rs.25,230,000.00 (Rupees twenty five million two hundred and thirty thousand only) against defendant No.2, with cost of funds thereon at the rate prescribed by the State Bank of Pakistan, from the date of default till realization of the entire decreed amount. A final decree is also passed for the attachment and sale of the three immovable mortgaged properties described in paragraphs 4-A, 18 and 19 of the plaint, as well as all the hypothecated movable assets and receivables described in the letters of hypothecation. Costs of the Suit are also awarded to the plaintiff.

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JUDGE