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Petitioner: The BANK OF PUNJAB VS Respondent: ARIF ALI SHAH BUKHARI
Court Name: Sindh High Court Judge(s): Aziz-ur-Rehman Title: The BANK OF PUNJAB vs ARIF ALI SHAH BUKHARI Case No.: Suit No, B-112 of 2013 Date of Judgment:2015-12-10 Reported As: 2016 CLD 1301 Result: Suit decreed
JUDGMENT
JUDGMENT AZIZ-UR-REHMAN, J.---The Plaintiff Bank has filed the instant Suit on 27-11-2013 under section 9 of the Financial Institutions [Recovery of Finances] Ordinance, 2001 [Ordinance XLVI of 2001] for recovery of Rs,203,132,535.04/- plus 'cost of fund' through Muhammad Adil Masood son of Muhammad Masood Sarwar being a duly Constituted Attorney of the Plaintiff's Institution with the following prayers:- i. Money Decree for Rs, 203,132,535.04/-. ii. Costs of funds as determined by the State Bank of Pakistan on the decreed amount from the date of default i.e, 15.08.2011 till realization; iii. Attachment and sale of the mortgaged immovable properties bearing: Amalgamated plots bearing No, Com-2/4 and Com-2/5 located at Block-1, KDA Scheme No,5, Clifton, Karachi fully described in Annexures BB to EE to this Plaint. Costs of the suit. Any other relief that this Hon'ble Court may deem fit and proper in the facts and circumstances of the case. 2. The relevant facts arising to the filing of the above suit and as gleaned from the 'plaint' in the instant suit read as follows:- 3. Plaintiff is a Financial Institution in terms of section 2(a) of F.I.O., 2001 [Ordinance XLVI of 2001], having its' Head Office at BoP Tower, 10-B, Block E/II, Main Boulevard, Gulberg HI, Lahore and having one of its' Branches known as DHA Branch at Street No,26, Khayaban-e-Shahbaz, DHA, Phase VI, Karachi and Defendant is a person residing/carrying on his business at the addresses given in the title of the suit besides a 'principal customer', is a 'Mortgagor'
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as such, fell within the definition of a 'customer' as per section 2(d) of F.I.O., 2001 [Ordinance XLVI of 2001]. 4. The Plaintiffs Institution upon the Defendant's approach vide his letter dated 28.07.2004 [Annexure 'A' to the Plaint] for the Term Finance Facility in the sum of Rs,250,000,000/-, the Plaintiffs Institution nonetheless, offered [Demand Finance Facility - In short, 'DFF'] to the Defendant vide its' Facility Offer Letter' dated 16.08.2005 [Annexure 'B' to the Plaint]. The 'Defendant-Customer' upon accepting the same thus agreed to the 'terms' and'conditions' of the said Facility Offer Letter of August 16, of 2005. Resultantly, the Plaintiff and Defendant executed 'inter alia' the 'AGREEMENT FOR SHORT/ MEDIUM/LONG TERM FINANCE FACILITY ON MARK-UP BASIS' dated 16.08.2005 [Annexure 'C' to the Plaint]. The amount of Demand Finance in the sum of Rs,250,000,000/- was 'designated' as the 'SALE PRICE', and the amount of Rs,401,250,000/-, payable by the 'Defendant-Customer' to the Plaintiff, was designated as the 'PURCHASE PRICE'. The Defendant, as per 'Agreement of Finance Facility' dated 16.08.2005, was required to pay the 'PURCHASE PRICE' in the sum of Rs,401,250,000/- to the Plaintiff's Institution on or before 15.08.2010. The 'SALE PRICE' in the sum of Rs,250,000,000/- was disbursed/credited in the Defendant's Bank Account bearing No,CD-000255-000-4 maintained at LI. Chundrigar Road Branch, Karachi on 16.08.2005. 5. By way of 'security' and in 'consideration' of the Facility granted to and availed by the Defendant, the Defendant-Customer 'inter alia also signed and executed a 'PROMISSORY NOTE' dated 16.08.2005 [Annexure 'F' to the Plaint] in favour of the Plaintiffs Institution for an amount of Rs,401,250,000/- i.e, the 'PURCHASE PRICE' and thus by this way, he promised to pay the same to the Plaintiffs Institution upon demand. The execution of the said 'PROMISSORY NOTE' was also 'acknowledged' vide Defendant's letter dated 16.08.2005 [Annexure 'E' to the Plaint]. Moreover, for the 'due repayment' of the amount of facility granted to and availed by Defendant, a personal letter of guarantee dated 16.08.2005 [Annexure 'F' to the Plaint] was also executed. 6. Per assertions made in the plaint, the Defendant did not abide by his 'commitments' as such a request for 'Running Finance Facility' [In short RFF] in the sum of Rs,210 million in lieu of DFF of Rs,208.33 million as then outstanding, was made by 'Defendant-Customer' vide his letter dated 12.01.2009 [Annexure 'G' to the Plaint], against the security[ies] already, available with Bank of Punjab [In short BoP]. The request so made, was 'accepted' by the Plaintiff Bank vide its' 'Office Letter' dated 18.04.2009 [Annexure 'H' to the Plaint]. Accordingly, per assertions made in the plaint, at the 'wish' and 'desire' of Defendant, the DFF was not only converted into 'Running Finance Facility' [In short RFF] but subsequently, the RFF was got renewed until 15.08.2011 at Defendant's request/application under and through Bank's 'Facility Letter' dated 14.09.2010 [Annexure 'S to the Plaint]. Besides, the RFF was also got transferred, at the request of Defendant, to 'DFHA's Branch' of the Plaintiffs Institution. 7. Thereupon, the Plaintiff and the Defendant inter alia 'signed' and 'executed' an AGREEMENT FOR FINANCING FOR SHORT/MEDIUM/LONG TERM on MARK-UP BASIS dated 10.08.2009 [Annexure 'I' to the Plaint], wherein, the 'RUNNING FINANCE LIMIT' of Rs,210,000,000/- was 'designated' as 'SALE PRICE' and Rs,262,500,000/- was designated as the 'PURCHASE PRICE'. The said limit of RFF, it is significant to note, was for one year under the 'terms' and 'conditions' of the subsequent Finance Agreement of 1st October, 2010 [Annexure 'I' to the Plaint]. The Defendant in terms of the aforesaid Finance Agreement had to pay the 'PURCHASE PRICE' on or before 09.08.2011. 8. For and by way of 'security' and in 'consideration' of the Running Finance Facility [In short RFF], the Defendant inter alia 'signed' and 'executed' in favour of the Plaintiffs Institution, a 'Promissory Note' dated 01.10.2010 [Annexure 'U' to the Pliant], for an amount of Rs,262,500,000/- whereby, the Defendant, not only 'promised' to pay to the Plaintiff's Institution the said amount upon demand but also 'acknowledged' the execution of the said 'Promissory Note' vide 'Letter of Arrangement', 'Letter of Continuity' both dated 01.10.2010. Besides, two undertakings vis-a-vis abiding by the SBP's
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Prudential Regulations, appropriate utilization of the amounts of facility granted to and availed by the Defendant, were also signed and executed by Defendant No,1 on 01.10.2010. Moreover, Personal Letter of guarantee dated 01.10.2010 was signed and executed by the Defendant. All these documents are annexed with Plaint as 'V', 'W', 'X', 'Y' and 'Z' respectively. 9. The Defendant just before the 'expiry period' of 'one year' of Running Finance Facility [RFF], again approached the Plaintiff's Institution for 'renewal' of the same facility through his application dated 5th July, 2010 [Annexure 'R' to the Plaint] and the Plaintiffs Institution accordingly, offered the 'Renewal' of the limit of RFF until 15.08.2011 vide its Facility Letter dated 14.09.2010 [Annexure 'S' to the Plaint]. An Agreement for Financing on Mark-up Basis dated 01.10.2010 in this regard was also 'signed' and 'executed' between the Defendant and Plaintiffs Institution. Under this Agreement the 'SALE PRICE' is Rs,210,000,000/- and 'PURCHASE PRICE' is Rs,262,500,000/-. The 'PURCHASE PRICE' agreed under this Agreement[Annexure 'T' to the Plaint] was payable on or before 15.08.2011. 10. For and regarding the 'security' for the finances granted to and availed by the Defendant from 'time' to 'time', the Defendant herein also duly 'mortgaged' his 'immovable properties' bearing Com- 2/4 and Com-2/5 both located at Block-I, KDA Scheme :No,5, Clifton, Karachi ['Mortgaged Property'], fully 'mentioned' and 'described in the Annexure 'BB' to 'EE' to this Plaint, by firstly depositing the 'ORIGINAL TITLE DEEDS' comprising inter alia (i) Lease Deed/Indenture of Lease dated 21.05.2005, (ii) Transfer Order dated 08.09.2004 and (iii) Possession. Order dated 22.05.1996 and thereafter, executed 'MEMORANDUM OF DEPOSIT OF TITLE DEEDS' dated 10.08.2009 for Rs,262,000,000/-. [Annexure 'CC' to the Plaint]. 11. For and towards' the 'continuing security' of all and any of the 'amounts, outstanding' and 'payable' in respect of the 'finance facility[ies]' extended to/to be extended to the Defendant by the Plaintiff from time to time, the Defendant also enhanced the 'mortgaged amount' of the 'Mortgaged Properties' by firstly depositing their 'ORIGINAL TITLE DEEDS' and later on by executing the Memorandum of 'Deposit of Title Deeds' dated 01.10.2010 for Rs,262,500,000/- [Annexure 'CC' to the Plaint] and 'Memorandum of Deposit of Title Deeds' dated 01.10.2010 for Rs,262,500,000/-. [Annexure 'DD' to the Plaint]. The 'various Financial' and 'Security documents' duly 'signed' and 'executed' by the 'Defendant-Customer' are annexed with 'plaint' as Annexure 'A' to 'T', 'U' to 'AA', 'BB' to IP including 'Certified Statements of Accounts' as annexures 'HH/1' to 'HH/5' and 'HH/6' to HH/7'. Needless to say, all the documents on the face of it are duly 'signed' and 'filled-up' with 'dates' and 'figures'. 12. The Defendant, nevertheless, 'failed' and/or 'avoided' to make payment of the facility's amounts on or before 15.08.2011 as agreed vide the Running Finance Agreement [Annexure 'T' to the Plaint]. As such, the Defendant committed 'default' in its' discharge of obligations towards' the Plaintiff. The Plaintiff Bank, under such compelling circumstances, served a 'Legal Notice' dated 27.05.2012 [Annexure 'FF' to the Plaint] whereby, the Defendant was 'called upon' to make payment of the 'outstanding amounts' owed to the Plaintiff, within Seven (07) days i.e, from date of receipt of the said Legal Notice. The Plaintiff, however, in absence of any 'positive response', sent another 'Legal Notice' dated 25.10.2013 [Annexure 'GG' to the Plaint] to the Defendant, through its' counsel, whereby, again the then outstanding amount was demanded. Nevertheless, the Defendant 'failed' and/or 'avoided' to pay the outstanding amount owed to the Plaintiff Bank. 13. Per assertions made in the paint, on 10.10.2013, the Defendant owed an amount of Rs,203,132,535.04/- [Rupees Two Hundred Three Million One Hundred Thirty Two Thousand Five Hundred Thirty Five and Paisas Four only] payable to the 'Plaintiff Bank on account of 'RUNNING FINANCE FACILITY'. A 'break-up' of the aforementioned 'outstanding amount' in' terms of section 9[3] of the Financial Institutions (Recovery of Finances) Ordinance, 2001 [In short F.I.O., 20011, is given as follows: Running Finance Facility [RFF]
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Total finance availed by the Defendant from the PlaintiffRs,209,986,168.98(a) The amounts paid by the Defendant to the Plaintiff PrincipalRs,24,981,500.00(b) Mark-up Paid (from 08.09.2009 toRs,103,438,860.80 30.09.2013) Amount of finance and other charges payable by Defendant to the Plaintiff. Rs, 185,004,668.98 Principal: (a) --(b) -- Markup payable (till 30.09.2013) and other charges dueRs, 18,127,866.06 TOTAL Rs,203,132,535.04 14. Hence the above suit for recovery of Rs,203,132,535/04 after accruing of the 'causes of action' in favour of the Plaintiff and against the Defendant as referred to and mentioned in 'Para 23' of the Plaint. 15. Upon service, the Defendant, filed Application for Leave to Defend the suit under section 10 of F.I.O., 2001 [XLVI of 2001] wherein, all the allegations pleaded by the Plaintiffs Institution were denied 'save' and 'except' those which were admitted expressly. According to the Defendant's version, there exists serious disputes as being based on 'mixed questions' of 'law' and 'facts' between the Defendant and Plaintiffs Institution, which per stand taken in the Leaveto-Defend Application [C.M.A. No,116 of 2014], cannot be decided much-less without recording of evidence. The Defendant, in view of this position, has prayed as being deserved for grant of 'un-conditional' leave to defend the above suit. Besides, certain 'PRELIMINARY OBJECTIONS' to the effect of non-maintainability, of the above suit for want of 'proper Resolution', filing of the above suit through incompetent person, charging of 'mark-up' over 'mark-up', invalidity/unenforceability of the documents annexed with plaint, non-approach of the Plaintiff's Institution to this Court with clean hands, inter alia by concealing the material facts, non-filing of the proper statement of account, obtaining of the 'blanks documents by the Plaintiff's Institution, non-maintainability of the suit for want of any 'cause of action' and 'non-compliance' of the mandatory requirement of sections 9(2) and 9(3) of F.I.O., 2001 [XLVI of 2001]. 16. In response to the aforesaid Leave-to-Defend Application [C.M.A. No,116 of 2014], the Plaintiffs Institution also filed its' 'REPLICATION' under section 10[7] of F.I.O., 2001, wherein, all the 'adverse assertions' and 'allegations' leveled by the Defendant in his 'Leave to Defend Application', were vehemently denied and controverted. In the 'Replication' the Plaintiff also raised some 'PRELIMINARY OBJECTIONS' to the effect that the Defendant has not only failed to comply with the 'mandatory requirements' of section 10(4)(5) of F.I.O., 2001 but has also failed and/or avoided to raise any 'substantial questions' of 'law' and 'fact' which may need any recording of evidence in support thereof. 17. On 03-11-2015, when the above suit came-up before me for hearing of C.M.A. No,116 of 2014 being an Application under section 10 of F.I.O., 2001, filed by Defendant, then I heard Syed Wasih Hyder, learned counsel for the Defendant and Mr. M. Jamshed Malik, learned counsel for the Plaintiff and with their valuable assistance, I have also gone through the record available before me minutely. 18. Syed Wasih Hyder, learned counsel for the Defendant vehemently argued that the above suit is not maintainable in law as the same has been filed without a 'proper resolution' passed by the competent authority of the Plaintiff. The purported 'Special Power of Attorney', per learned counsel,
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on the basis of which, the above suit has been filed, is neither properly executed document according to law nor otherwise, it is a valid and proper 'Power of Attorney' hence, the Plaint in the above suit is ab initio nullity in law and thus the above suit is liable to be dismissed on this legal ground alone. Apart from this, according to Syed Wasih Hyder, learned counsel for the Defendant, the said purported 'Special Power of Attorney' has been granted in favour of the signatory to the Plaint by a person who is not authorized to constitute or appoint any 'Special Attorney' or Sub- Attorney. Moreover, per Syed Wasih Hyder, the said purported 'Special Power of Attorney' has not been signed by the 'Board of Directors' or otherwise, any 'Board Resolution' is attached with the said purported 'Special Power of Attorney'. In view of these circumstances, Syed Wasih Hyder, submitted that the above suit has been filed through an unauthorized person, and not by a 'competent person' as required by law, hence, the same is a fit case to be 'dismissed summarily' with cost. 19. Syed Wasih Hyder, learned counsel for the Defendant further argued that the plaintiff's claim is unlawful, fraudulent, exaggerated, arbitrary and based on mis-representation, concocted pleas as such not maintainable in law. In fact, the plaintiffs claim besides being based on mala fide intention, the Plaintiff's Institution has charged 'mark-up' upon 'mark-up' which is not only against the 'injunction of Islam' but also the same is not permissible under the law of land as well. According to Syed Wasih Hyder, all the 'documents' attached with the Plaint are legally not enforceable against the Defendant, as in fact, they have lost their value. Moreover, the Plaintiff's Institution deliberately, malafidely, and with ulterior motive has concealed, suppressed the material facts and 'important documents' as such, the Plaintiff has seemingly not approached this Court with clean hands. In this manner, per learned counsel for the Defendant, the Plaintiff has also committed fraud upon this Court. Hence, the Plaintiff's Institution, per Mr. Syed Wasih Hyder, is not entitled to have any relief whatsoever, in its' favour from this Court. The 'present suit' thus in fact needs to be dismissed with cost. 20. Syed Wasih Hyder, learned counsel for the Defendant while, arguing his case further forcefully submitted that the Plaintiff has also failed to file proper, fair, just, honest and correct 'statements of accounts' [See Annexures 'HH/1' to 'HH/7'] to the Plaint as required under the law. The contents of alleged 'statement of accounts' attached with the suit are vague, false, fraudulent and baseless. According to Syed Wasih Hyder, from perusal of 'statement of account[s]' [Annexure 'HH/1' to 'HH/6' to 'HH/7' to the Plaint], it appears, that the Plaintiff has also charged 'mark-up' upon 'mark-up' which act of the Plaintiff Bank, is not only against the 'injunction of Islam' but also against the prevailing laws. Per learned counsel, this exercise in fact negates the whole claim of the Plaintiff and consequently, on this score as well, the instant suit is liable to be dismissed. Besides, the Plaintiff has also failed to disclose any 'cause of action' in its' favour against the Defendant. The 'unlawful', 'dishonest' and 'fraudulent' statement of account[s]' attached with the instant suit are nothing but only meant to harass the Defendant by forwarding a false 'statement of account[s]' against him. Per learned counsel, it is well established law, that the 'statement of account[s]' is/are not 'conclusive evidence' of the 'entries' made therein and it is/are always rebuttable under the law. The Plaintiffs Institution, in view of challenge of 'statement of account[s]', is legally bound to prove the entries made in the Statement of Accounts in its' evidence. And by mere production of certified copy[ies] of 'statement of accounts' and/or any entry made in the books of accounts of the Plaintiff Bank. Nevertheless, the Plaintiff in case of denials is not absolved to prove the entries made in the 'statement of account[s]' through supporting documents. 21. Syed Wasih Hyder, learned counsel for the Defendant next argued that the Plaintiff's claim in the above suit is actually based on 'various documents' which, in fact, were obtained through misrepresentation, suppression of facts, on the basis of false written and oral promises. Given by the concerned competent/authorized agents and employees of Plaintiff Bank. As such, all these documents, per learned counsel, cannot be treated as legally valid and binding documents.
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Moreover, the 'documents attached with the suit are 'inconsistent', 'self-contradictory' and 'self- conflicting'. These documents by no means even otherwise, support the various entries made in the 'statements of accounts. Per learned counsel for the Defendant, all the said 'documents are neither binding on the Defendant or otherwise, the Plaintiff Bank under the facts and circumstances of the case is entitled to obtain any decree against the Defendant on the basis of the annexed documents with plaint. Full and complete evidence, thus according to Syed Wasih Hyder, learned counsel for the Defendant is required to be produced in the above suit for proper and genuine determination of the claim of the Plaintiff Bank. 22. Moreover, according to Syed Wasih Hyder, learned counsel for the Defendant, the Plaintiff Bank, has no cause of action' in its' favour against the Defendant regarding the alleged claim as pleaded and asserted on behalf of the Plaintiff Bank in the above suit. Merely, on the basis of the statements of accounts and the 'documents annexed with the 'Plaint which are being challenged by the Defendant, the Plaintiff's suit cannot be decreed on the basis thereof. Rather, the above suit is liable to be dismissed against the Defendant with cost inter alia for the reason that the Plaintiff has intentionally concealed the 'material facts' from this Court, that is to say, the 'Restructuring Agreement' signed and executed between the parties to the suit. According to the learned counsel for the Defendant, in view of mutually agreed terms and 'conditions of 'Restructuring Agreement of 3rd August, 2012, all the previous 'documents'/'agreements' have become superseded and unenforceable. Per Syed Wasih Hyder, learned counsel for the Defendant, the said 'Restructuring Agreement' of August 3, 2012 is neither attached nor otherwise, it finds any mention in the 'Plaint', which ex facie reflects the 'mala fide intentions' of the Plaintiff Bank. In view of this position as well, this Court cannot decree the Plaintiff's suit even on the basis of the said 'Restructuring Agreement' of 3rd August, 2012. Apart from this, the Plaintiff Bank has badly failed to fulfill the 'mandatory requirements' of section 9(2) and (3) of the Financial Institutions [Recovery of Finances) Ordinance, 2001 [XLVI of 2001]. For all the above, the Defendant is not only entitled but also deserves for grant of 'unconditional leave to defend' the above suit, otherwise, the Defendant shall be seriously prejudiced. 23. In support of his contentions, Syed Wasih Hyder, learned counsel for the Defendant on the aspects of 'Resolution' and its' 'validity', 'verification' of the plaint and 'institution of the suit', 'suppression of concealment of facts', 'pleas' and 'alleged blank documents' and the 'doctrine of promissory estoppel' has placed reliance on the following case-laws. The relevant portions respectively therefrom read as below:- "In the case of H. M. Ebrahim Sait v. South India Industrials Ltd. (AIR 1938 Mad. 962) it was held that in law a meeting of directors is not duly convened unless due notice has been given to all the directors. On the facts of the present case, I am satisfied that due notice of the meeting was not given to the, deceased appellant and, therefore, the resolution passed in the meeting of 28th September 1951, cannot be said to be a valid one. In my opinion, no valid authority was conferred on Mr. Khurshid Mahmood and, therefore, he was not competent to institute the suit. I would, therefore, hold that the learned trial Judge was prefectly justified in dismissing the suit on this ground." [Underlining is mine]. [a] Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. [PLD 1966 SC rel. Page 684] "It was apparent from the pleadings that the suit was being instituted by a constituted attorney of a public limited company. He could only do so if he was duly authorised in that behalf and occupied one or other of the offices mentioned in Rule 1 of Order XXIX of the Civil Procedure Code. A copy of the powerof-attorney had been produced which showed that Muhammad Khan had been empowered in that behalf but the question still remained to be ascertained as to whether those who gave him that power were competent to do so, as the authority was on behalf of a public
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limited company. For this purpose a reference to the Articles of Association of the company was certainly necessary see whether the Directors were competent to delegate such power. It was not necessary to see whether the Directors; had in fact approved of the giving of such power- ofattorney to the person who presented the plaint. This was, however, proved by the production of the resolution of the Board of Directors as a matter of abundant caution. The additional evidence was to that extent, therefore, in our opinion, rightly admitted. This was all that was required. It was not necessary, to call the Managing Director as the Court calling for the additional evidence itself realized subsequently. Even the production of the resolution could have been dispensed with, as it was not strictly necessary. This brings us to the next question as to whether the suit had been competently filed. As already stated, one of the learned Judges of the High Court had taken the view that since the power-of- attorney had affixed to it the common seal of the company, there was a presumption that the power-of-attorney was lawfully, executed, and then the onus was on the other side which challenged the validity of the power-of-attorney to show that it was ultra vires the powers of the company. The third learned Judge evidently did not agree with this view, for, if he had done so he would not have called for the additional evidence. We are unable to uphold the view that the production of the power-of-attorney bearing the common seal of the company was by itself sufficient. In saying this the learned Judge has evidently overlooked that as a rule the Articles of Association of a company contain special provisions prescribing for the manner in which the seal of the company may be affixed and that those who deal with a company are bound to see that the…
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