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Petitioner: SONERI BANK LIMITED through Attorneys VS Respondent: Messrs ELITE PUBLISHERS LIMITED and 3 others
Court Name: Sindh High Court Judge(s): Muhammad Tasnim Title:SONERI BANK LIMITED through Attorneys vs Messrs ELITE PUBLISHERS LIMITED
and 3 others Case No.: Suit No, B-9 of 2010 Date of Judgment:2010-11-12 Reported As: 2011 CLD 755 Result: Suit decreed Judgment ORDER ' MUHAMMAD TASNIM, J.---This is an application under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter called "Ordinance 2001") filed by defendants seeking leave to defend the suit unconditionally. 2. Brief facts leading to the controversy in this case are summarized as under: 3. Defendant No, 1, which is Public Limited Company carrying on business of printing and publishing. In the year 2005 at the request of defendant No, 1 finance facilities were allowed by plaintiff for a period valid upto 31-5-2006. Thereafter finance facilities were renewed and enhanced. Fresh facilities were allowed from time to time. Lastly the finance facilities were renewed in January, 2009 as under:-- "(a) Running Finance Rs. 70,000 million valid upto 31-12-2009 (b) Term Finance (I) Rs. 18,977 million valid upto 21-11-2010 (c) Term Finance (II) Rs. 14.068 million valid upto 29-8-2012 (d) Letter of Credit (at sight) Rs. 25.000 million valid upto 31-12-2009" 4. For the aforesaid finances terms and conditions were communicated by the plaintiff to the defendants vide their letter dated 31-1-2009, which were agreed by defendants and inter alia contains the following:-
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"Facility' No, 1 Running Finance Limit Amount Rs. 70,000,000 (Rupees Seventy Million Only)
PurposeTo meet working capital needs Pricing 6 months KIBOR + 3.5% Payment Through cash generation from Business or on demand/on realization. Expiry 31-12-2009 Commission & Charges As per Bank's schedule of charges from time to time. Security 1. 1st Hypothecation charge over Current Assets of Rs. 300.00 million.2. EM inc. LM over factory property and first charge of Rs.300.00 million over present and future assets of the company including land, building, plant and machinery. 3. Personal Guarantees of all Directors of the company.
"Facility No. 2 LTF - I Outstanding amount Rs. 18,977,000 (Rupees Eighteen Million Nine Hundred and Seventy Seven Thousand Only) Purpose For Purchase of machinery. Pricing 6 months KIBOR + 3.5% Repayment Remaining 9 Quarterly Instalments including 1 overdue instalment. Mark up to be paid quarterly. Security 1. EM incl. LM over factory property and first charge of Rs. 300.00 million over present and future assets of the company including land, building, plant and machinery. 2. Personal Guarantees of all Directors. "Facility No. 3 LFT - II Remaining Limit Amount Rs. 14,068,000 (Rupees Fourteen Million Sixty Eight Thousand Only) Purpose For purchase of Machinery Pricing 6 months KIBOR + 3.5% Repayment 15 Quarterly instalments including 1 instalment. Mark-up to be paid quarterly. overdue Security 1. EM inc. LM over factory property and first charge of Rs. 300.00 million over present and future assets of the company
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including land, building, plant and machinery. 2. Personal Guarantees of all Directors. "Facility No. 4 LC (Sight) Limit Amount Re. 25,000,000 (Rupees Twenty Five Million Only) Purpose For import of goods. Margin 10.00 % Commission & Charges As per schedule of charges Repayment On arrival of documents Expiry 31-12-2009 Security 1. Shipping Documents" 5. The defendants for repayment and due discharge of their liability hypothecated stock of cardboard, paper, ink and other allied material, used for printing and publishing and also deposited original title deeds of plot mentioned in the plaint. Defendants also executed memorandum confirming deposit of title deeds of Plot bearing No,D-118 admeasuring 2.22-Acres situated at Sindh Industrial Trading Estate (SITE), Karachi and executed deposit of title deeds for the above plots with all building, machinery, equipment, accessories etc. Defendant No,1 also executed mortgage deed for token sum of Rs,1 Million and defendants. Nos.2 to 4 executed guarantees in their personal capacities guaranteeing repayment of finance facility as per arrangement and undertaken to pay amount within two days after demand, if default is committed in fulfilment of any obligation by the defendants. The aforesaid finance was utilized by the defendants in full. However defendants committed default in fulfilment of their obligation including repayment of term finance and servicing of mark-up at quarterly basis and violated the terms of offer letter dated 31-1-2009. In the circumstances in exercise of its rights under offer letter dated 31-1-2009, the defendant No,1 was served with the legal notice dated 7-8-2009 pointing out that mark-up of running finance as well as on demand finance upto quarter ending till 30-6-2009 amounting to Rs,3.726 Million and Rs, 2.941 Million respectively is due and payable by defendant No, 1. 6. Defendant No, 1 addressed a letter dated 24-11-2009 seeking cooperation from the plaintiff-Bank with regard to providing flexibility for servicing in their overdue mark-up and quarterly instalments by deferring current overdue payment till 31-12-2009, but such request was not acceded to by the plaintiff-Bank and final notice dated 5-12-2009 was served informing the defendants that due to persistent default on the part of defendants, plaintiff-Bank is left with no option but to recall the credit finance facility and plaintiff-Bank asked the defendants to clear their liability within ten days from the receipt of this notice. Since the liability was not discharged, plaintiff filed the present suit claiming the following in paragraph-1 1 of the plaint: "(A) Running Finance (i) Amount availed Rs.70.000 million (ii) Amount repaid Rs. 0.006 million (iii) Outstanding as on 31-12- 2009Rs.69.994 million (iv) Mark-up due and payable from 1-4-2009 upto 31-12-2009Rs. 8.961 million (v) Total amount payable principal Finance and mark-upRs. 78.955 million
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(B)Term Finance (I) (i) Principal finance allowed and availedRs.18.977 million (ii) Amount repaid Rs. 2.925 million (iii) Outstanding as on 31-12- 2009Rs. 16.052 million (iv) Mark-up due and payable from 1-7-2009 upto 31-12- 2009Rs. 1.295 million (v) Total amount payable principal Finance and mark-upRs. 17.347 million Term Finance (II) (i) Principal finance allowed and availedRs.14.068 million (ii) Amount repaid Rs. 1.876 million (iii) Principal Outstanding as on 31-12-2009Rs. 12.192 million (iv) Mark-up due and payable from 1-4-2009Rs. 1,423 million (v) Total amount payable principal Finance and mark-up Rs.13.615 million" 7. After service of summons, in accordance with provisions of Ordinance, 2001, defendants filed C.M.A. No,3943 of 2010 under disposal seeking leave to defend the suit raising legal pleas to the maintainability of the suit namely the plaint has not been signed and presented by the competent persons hence plaint is liable to be rejected. It was further stated in the leave to defend application that statements of account filed by the plaintiff do not show numerous amount paid by the defendant No,1 towards repayment of its facilities and has submitted that defendant No,1 availed total amount of Rs,126,734,776 from the plaintiff-Bank in respect of various facilities and has also paid total amount of Rs,80,164,839 towards repayment of the same. The remaining amount is not yet due as term finance facilities Nos.1 and 2 are valid till 21-11-2010 and 29-8-2012 respectively. It was also stated that statements of account filed by the plaintiff have not been filed in terms of Bankers' Book Evidence Act, 1891. 8. In response to the claim of the plaintiff-Bank as set out in para 11 of the plaint defendants have responded to in their paragraph-13 of leave to defend application, wherein it is stated that no statements of account have been filed by the plaintiff-Bank in support of the claim of Rs,8.961 Million as mark-up due and payable from April 1, 2009 to December 31, 2009. In respect of running finance facility Rs,1.295 Million has been shown due and payable as mark-up for the period from 1- 7-2009 to 31-12-2009 in respect of term finance No,1 and Rs,12.192 Million as mark-up due and payable on 31-12-2009 in respect of term finance No,2 and defendants denied that there is any mark-up due and payable by them to the plaintiff-Bank. 9. After receipt of copy of leave to defend application the plaintiff filed their replication denying the claim of defendants and maintained their stand in the plaint. Statement of account relating to mark-up upon above finance facilities were also annexed thereto. 10. Ms. Saman Rafat Imtiaz, learned counsel for defendants in support of leave to defend application has submitted that plaint is liable to be rejected as the same has not been presented
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in Court by the competent persons. She further submitted that power of attorney executed in favour of two persons, who have signed the plaint has been brought on record, but no Board Resolution or Articles of Association of the Company has been brought on record. Learned counsel for defendants further submitted that since Board Resolution and memorandum of articles are not available on record, the power of attorney filed by the plaintiff-Bank is of no consequences and the plaint has been filed by incompetent persons. 11. In support of aforesaid contentions learned counsel has placed reliance on the following case- law: (1) The Central Bank of India, Ltd. Lahore v. Messrs Taj- ud-Din Abdur Rauf and others (1992 SCMR 846) (2) PICIC Commercial Bank Limited v. Spectrum Fisheries Limited (2006 CLD 440) (3) Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others (2003 CLD 931) (4) United Bank Limited v. Pak. Leather Grafts Limited and 3 others (2010 CLD 701) (5) Al-Madina Electric Store v. Habib Bank Limited (2006 CLD 734) (6) Habib Bank Limited v. A.B.M. Graner (Pvt.) Limited and others (PLD 2001 Karachi 264) (7) Nusrat Textile Mills Ltd. And others v. United Bank Ltd. (2005 CLD 1421) 12. Ms. Saman Rafat Imtiaz, learned counsel for defendants further argued that no agreement of finance containing the terms of finance has been brought on record. She further submitted that there is no expiry date mentioned in the offer letter dated 31-1-2009 hence no terms of finance was agreed upon between the parties. She further argued that since finance facilities are still in force and are operating the suit has been filed prematurely hence liable to be dismissed on this ground as well. Learned counsel for defendants further contended that nothing is due and payable by the defendants to the plaintiff. She further submitted that claim of the plaintiff-Bank is imaginary, inflated and not supported by the record hence suit of the plaintiff is liable to be dismissed. However during the course of argument, learned counsel for defendants admitted the execution of all the documents filed by the plaintiff along with plaint. She also admitted the availment of finance facilities by the defendants. She further submitted that more than what was due has already been paid and nothing is payable by the defendants to the plaintiff-Bank. In the end she submitted that leave to defend application be allowed and defendants be provided opportunity to place their case as according to learned counsel there are disputed questions of facts involved which cannot be resolved without recording of evidence of parties. 13. Conversely Mr. Azizuddin Khan, learned counsel for plaintiff submitted that defendants had availed finance facility in the sum of Rs,102.985 million. He further submitted that defendants executed number of documents for securing repayment of the finance and due discharge of obligation. He further submitted that defendants utilized the finance facility in full but did not repay the same in accordance with the terms and conditions of letter dated 31-1-2009, wherein schedule of repayment of all the finances was mentioned. He while elaborating his arguments further stated that running finance facility was to expire on 31-12-2009 and terms finance No,1 was to be repaid by the defendants in 9 quarterly instalments including one overdue instalment and it was further agreed that mark-up to be paid quarterly. Similarly term finance facility No,2 was to be cleared by the defendants in 15 quarterly instalments including one overdue instalment. It was further agreed that mark-upto be paid quarterly. 14. Learned counsel for plaintiff invited attention of the Court to other terms and conditions of offer letter dated 31-1-2009 communicated to the defendants by the plaintiff at the time of grant of finance facility, whereby plaintiff-Bank had reserved right to recall facility at any time and require the outstanding amount to be paid in full on demand. It was further agreed that plaintiff-Bank shall allow one month grace period for payment of quarterly mark-up on all finances and on failure to
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pay mark-up within one month from the date of quarter, the plaintiff-Bank will charge additional mark-up. Learned counsel for plaintiff further argued that since defendants have defaulted in payment of quarterly instalments and also failed to discharge their obligation in respect of running finance the Bank addressed a letter dated 7-8-2009, which was followed by final notice dated 5- 12-2009, whereby finance facility was recalled. Learned counsel for plaintiff further argued that leave to defend application is not in conformity with the provisions of section 10 of the Ordinance hence this application is liable to be rejected on this ground alone. In support of his contention learned counsel has placed reliance on the following case-law:-- (1) Habib Bank Limited v. Messrs Sabcos (Pvt.) Ltd. (2006 CLD 244) (2) Bank of Khyber v. Messrs Spencer Distribution Ltd. And others (2003 CLD 1406) (3) NIB Bank Limited v. Taha Spinning Mills Limited and other (2010 CLD 635) (4) Askari Commercial Bank Limited v. Hilal Corporation (Pvt.) Ltd. And others (2009 CLD 588) (5) Messrs Mach Knittrs (Pvt.) Limited and others v. Allied Bank of Pakistan Limited (2004 CLD 535) 15. With regard to maintainability of the suit learned counsel for plaintiff has submitted that suit was competently filed by the attorneys of the Bank. He argued that power of attorney was executed in pursuance of the Board Resolution of Board of Directors and power of attorney was executed under the common seal of the Soneri Bank Limited, which was notarized in accordance with the law. Learned counsel further submitted that once a power of attorney executed under the common seal has been brought on record by the persons signing the plaint the Articles of Association and Resolution of Board are not required to be filed. He further submitted that even otherwise no prejudice has been caused to the defendants due to aforesaid reason. 16. Learned counsel for the plaintiff further submitted that objection of the defendants regarding competence of person who signed the plaint was replied by the bank in their replication and bank has ratified the action taken by the attorney of the bank. He further submitted that it is for the principal to take objection regarding competence of the person who filed the plaint but it is not open to the defendants. In support of above contention he has relied upon the following cases:-- ( 1) Banque Indosuez v. Jet Travels Limited and others (1991 CLC 446) (2) National Bank of Pakistan v. Muhammad Ashraf Sanik and another (PLD 1987 Lah. 17) (3) Khyam Films and another v. Bank of Bahawalpur Ltd. (1982 CLC 1275) 17. Learned counsel for plaintiff submitted that mandatory requirement of section 10 of Ordinance 2001 has not been complied with hence leave to defend application be dismissed as the following have not been mentioned in the leave to defend application. That neither amount of finance availed by the defendants from the plaintiff-Bank has been mentioned nor the amounts paid by the defendants to the financial institution, nor the dates of payments nor the amount of finance and other amounts relating to finance payable by the defendants to the financial institution upto the date of institution of the suit have been mentioned nor the amount of finance nor other amounts relating to the finance payable by the defendants to the financial institution upto the date of institution of the suit nor they have shown the amount which they dispute as payable by them to the financial institution hence defendants are not entitled to leave to defend and their application is liable to be dismissed. Learned counsel for plaintiff further argued that no substantial question of law or facts has been raised by the defendants which requires any evidence to be recorded. He prayed that leave to defend application be dismissed and suit of the plaintiff be decreed as prayed. 18. I have heard learned counsel for the parties and have perused the record with their assistance and have gone through the judgments cited at the bar by the respective parties. 19. Now taking up the first contention of learned counsel for defendants regarding competence of persons who had signed the plaint in this suit. Such power of attorneys are in favour of MRs, Suriya Jabeen wife of Anwar Shah dated 31st August, 2009 and other is Syed Muhammad Sajid son of
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Syed Muhammad Ibrahim dated 25th August, 2009. She has further argued that the bank should have produced along with the aforesaid power of attorneys, the memorandum of articles and the resolution of the Board of DirectoRs, A bare perusal of power of attorneys would show that these power of attorneys have been issued by the plaintiff-Bank itself under its common seal and has been executed by President of the Bank/Director and one other Director and the same is notarized in accordance with law. The aforesaid power of attorneys in paragraph 10 contains as under:-- "10. 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, or otherwise; to appoint Solicitors, Advocates, Pleaders, Vakils and other legal agents; to make sign, verify, execute, plaints, petitions, Written Statement, Memorandum of Appeal, applications, tabular statements, Vakalatnamas, Warrants of Authority or any other papers, writings or documents expedient or necessary in the opinion of the Attorney to be made, signed, executed, verified, presented or filed." 20. A perusal of above quoted paragraph from the power of attorney would indicate that attorney has been 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, or otherwise; to appoint Solicitors, Advocates, etc. It further authorizes the attorney to sign, execute, verify plaints, petitions, written-statement, memorandum of appeal, applications and other allied documents. 21. The judgment cited by learned counsel for the defendants in the case of UNITED BANK LIMITED Supra (2010 CLD 701) is distinguishable on facts as in the reported judgment two officers who had signed the plaint had failed to show that Messrs Ayaz Hashim Shamsi and Aamir M. Karachiwala who had purportedly granted sub-power of attorney to the other two officers under Clause 14 of the officers power of attorney dated 23-4-2008 had the power to do so or not but in the present case power of attorney was executed in favour of signatories of the plaint by the bank under its common seal signed by the President of the bank as also one of the directors and was notarized in accordance with law so the judgment cited by the learned counsel quoted above has no application or relevance to the present case. 22. The other judgment cited by learned counsel for the defendants in the case of The Central Bank of India Ltd. Lahore v. Messrs Taj-ud-Din Abdur Rauf and others (1992 SCMR 846). In the reported judgment attorney Mr. S.K. Shikari filed suit for recovery against defendants on behalf of the bank who was allegedly holder of power of attorney on behalf of the bank but said Mr. S.K. Shikari at one stage of the proceedings submitted that he had filed the suit on receiving instruction from the appellant Bank's Central Office in Bombay, subsequently he made another statement on the same day that he was not in a position to state as to whether the said instructions were supported by under any provision of the Articles of Association of the Bank and had again on 12-3-1951 stated that the directors of the appellant-Bank were authorised under Article 116(7) of the Articles of Association of the Bank but neither he produced the alleged letter from the Central Office at Bombay to the Lahore Branch containing instructions to institute the present suit, nor the Articles of Association were produced by the bank. In view of above, suit was dismissed having been filed by an incompetent person but in the present case, as stated above, the persons who signed the plaint were equipped with power of attorneys in their favour by the bank issued under the common seal of the bank hence judgment in the case of The Central Bank of India is distinguishable on facts and does not improve the case of the defendants. 23. The other judgment In the case of PICIC Commercial Bank Limited v. Spectrum Fisheries Limited (2006 CLD 440) where proceedings under sections 306 and 305 of Companies Ordinance 1984 were initiated by the PICIC Bank and said petition was filed by authorized officers who were duly
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authorized by the President and the Company Secretary of the petitioner under the authority given to them by the Board resolution dated 17th March, 2001. In the reported case the Board of Directors had authorised the Chief Executive Officer/President and the Company Secretary of the petitioner as attorneys of the bank who in turn had authorized the person who signed the petition but had delegated their powers to the officers of the bank. But in the present case the bank had issued power of attorneys in favour of signatories of the plaint hence in this view of the matter judgment relied upon by the learned counsel for the defendants is also distinguishable on facts and does not apply to the circumstances of the present case. The other judgments in the cases of Al-Madina Electric Store v. Habib Bank Limited (2006 CLD 734), Nusrat Textile Mills Limited and others v. United Bank Limited (2005 CLD 1421) and Habib Bank Limited v. A.B.M. Graner (Pvt.) Limited and others (PLD 2001 Karachi 264) are concerned all the three judgments are distinguishable on facts and are not applicable to the case in hand. 24. In the case of Banque Indosuez v. Jet Travels Limited and others (1991 CLC 446) a learned Single Judge of this Court (as he then was) while dealing with the point in issue has held as under:- ' On verification it was found that photostat copy of the Power of Attorney was in the name of only one person i.e. Syed Rasheed Akhtar while the plaint is signed by both, Syed Rasheed Akhtar as well as Saleem. Mr. S. A. Sarwana states that due to oversight he could not file Power of Attorney of Saleem. He shows the original to the Court and files a photocopy of the Power of Muhammad Saleem, which is taken on record. The objection is, therefore, repelled. So far as the resolution by the Bank is concerned, it is not necessary to produce the same before the Court at the time of filing of the suit. Mr. Farooque Naek has relied upon the case of National Bank of Pakistan v. Muhammad Ashraf Sanik and another (PLD 1987 Lah. 17), wherein a suit filed by National Bank of Pakistan by a person holding Power of Attorney which authorised him to institute/defend any action or other proceedings relating to affairs of Principal, was held to be a proper authority. This ruling would not help the defendants." 25. In the case of National Bank of Pakistan v. Muhammad Ashraf Sanik (PLD 1987 Lahore 17) a learned Single Judge of Lahore High Court (as he then was) while dealing with the aforesaid point in paragraph 21 of the report has held as under:-- "21. The only other contention raised on behalf of the defendants which is left to be considered is the objection as to the competence of the signatory of the plaint to institute the suit on behalf of the plaintiff. Suffice it to say that the certified copy of the registered Power of Attorney in favour of Mr. Zia-uclDin one of the signatories of the plaint has been placed on record which clearly authorizes him (refer recital 13) to institute/defend etc., any action or other proceedings relating to the affairs of the Bank and it squarely meets this…
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