Legal Principle & Question Decided

Ruling Summary: This decision was rendered by the Lahore High Court (Honorable Mr. Justice Muhammad Sajid Mehmood Sethi), officially reported as 2026 LHC 2676. In this matter between M/S NASEEM ENTERPRISES & TRADING PVT LTD ETC and NATIONAL BANK OF PAKISTAN, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.

Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.

Full Judgment Text & Judicial Ruling

COURT: Lahore High Court (Honorable Mr. Justice Muhammad Sajid Mehmood Sethi) DECISION DATE: 25-03-2026 CASE DETAILS: Civil Original Suit (C.O.S) 13-25 ============================================================ Stereo. H C J D A-38. JUDGMENT SHEET IN THE LAHORE HIGH COURT, MULTAN BENCH, MULTAN JUDICIAL DEPARTMENT

COS No.13 of 2025 M/s Naseem Enterprises & Trading (Pvt.) Limited & others Versus National Bank of Pakistan J U D G M E N T Date of hearing: 15.04.2026. Plaintiffs by: M/s. Zohaib Hassan and Akif Majeed, Advocates. Defendant by: M/s. Ambreen Moin and Javeria Latif, Advocates. MUHAMMAD SAJID MEHMOOD SETHI, J .- The instant suit has been instituted by M/s Naseem Enterprises & Trading (Pvt.) Limited and others against National Bank of Pakistan under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, whereby multiple declaratory, injunctive and monetary reliefs have been sought, including declaration of alleged finance documents as fake and forged, declaration of bank’s claimed securities as illegal, rendition of accounts, recovery of damages amounting to Rs. 550 million, and consequential injunctive relief restraining the defendant bank from enforcing its alleged charge or recovering its claimed dues. 2. The defendant bank, on the other hand, has filed an application for leave to appear and defend the suit under Section 10 of the Financial Institutions (Recovery of F inances) Ordinance, 2001, which has been accepted vide separate order of even date. It, inter-alia, raises objections under Order VII Rule 11 CPC, seeking rejection of the plaint at the threshold on the grounds that the suit discloses no cause of action, is barred by law, and is founded on concealment, misrepresentation and admitted liability. 3. The brief but material facts emerging from the record are that the defendant bank sanctioned running finance facilities to the plaintiff company through a series of offer letters and finance agreements 2 COS No.13 of 2025 executed betwe en 2016 to 2018, subsequently renewed up to 31.12.2020. The plaintiff company executed financial documents, demand promissory notes, undertakings, and also created mortgage and other securities over immovable properties in favour of the bank. The bank asserts that substantial amounts remain outstanding, whereas the plaintiffs dispute both the liability and the manner of disbursement, alleging non-disbursement of finance, illegal marking of markup, and fabrication of documents. 4. The plaintiffs’ case is pri ncipally founded on the plea that no valid disbursement was made and that the bank is unlawfully maintaining accounts and claiming recovery on the basis of fictitious entries. They also allege that securities are forged and that the bank is liable to pay d amages on account of alleged breach of contract and non-release of funds. 5. The defendant bank has opposed the suit on multiple grounds, inter alia, that the plaintiffs have repeatedly acknowledged their liability, including filing applications for settle ment of outstanding dues in earlier recovery proceedings; that the finance facilities were duly availed, renewed, and operated through executed agreements; that the plaintiffs have mortgaged properties and furnished guarantees; and that a prior suit betwee n the parties was withdrawn after settlement/renewal arrangements, which clearly demonstrates acknowledgment of liability. It is further contended that the present suit is a counterblast to ongoing recovery proceedings initiated by the bank. It is also asserted that the plaintiffs have concealed material facts including prior litigation, admission of liability in earlier proceedings, and execution of financial documents. The bank has further taken the plea that the suit is not maintainable for non -compliance of mandatory provisions of Section 9 and Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, as no proper reconciliation or specific denial of account entries has been made. 6. Arguments heard. Record perused. 7. The plea of forgery and fabrication has been raised in a vague and omnibus manner, bereft of the particulars required by law. No 3 COS No.13 of 2025 specific document has been identified, nor has any supporting material been produced to substantiate the allegation of forgery. The plainti ffs have also not initiated any independent proceedings for cancellation of the impugned documents on the ground of fraud. It is settled that a bald assertion of forgery, without specific pleadings, particulars and prima facie evidence, is legally insuffic ient to dislodge duly executed contractual obligations or to shift the burden of proof. Reliance is placed upon Messrs Lanvin Traders, Karachi v. Presiding Officer, Banking Court No.2, Karachi and others (2013 SCMR 1419) , Aamir Afzal and another v. S. Akma l (deceased) through L.Rs. and 2 others (2024 SCMR 1649) and Taj Wali Khan v. Hukam Khan (dead) through L.Rs. (2025 SCMR 231). 8. The plea of non -disbursement is equally misconceived. The defendant bank has placed on record certified statements of account under the Bankers’ Books Evidence Act, which reflect utilization, repayments, renewals and outstanding balances. In the context of running finance facilities, continuous operation and adjustment entries are part of settled banking practice. The assertion t hat no disbursement took place is not supported by any contemporaneous documentary rebuttal. The allegations regarding illegal markup and violation of regulatory instructions also require strict proof; however, even prima facie, the pleadings remain vague and unparticularized. No specific computational error, independent account statement, or legally cognizable reconciliation has been furnished as mandated under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. 9. A significan t aspect of the matter is concealment of material facts. The record reveals that earlier litigation between the parties was withdrawn after settlement and renewal of financial facilities. The non- disclosure of such material developments in a suit of this n ature strikes at the root of the plaintiffs’ case and disentitles them from equitable relief. The present proceedings thus appear to be an attempt to reopen settled financial transactions despite execution of binding contractual instruments and acknowledgment of liability in prior dealings. 4 COS No.13 of 2025 10. It is pertinent to note that the connected suit i.e. COS No.16 of 2022 titled National Bank of Pakistan v. Messrs Naseem Enterprises & Trading Pvt. Limited & others , arising out of the same set of transactions and financial facilities, has been decreed vide judgment of even date whe reby the claim of the defendant -bank has been accepted and the plaintiffs of the present suit have been held jointly and severally liable to pay the outstanding amount of Rs.148,903,898/ - along with costs of the suit and cost of funds . It has been categorically held therein that the financial liability is duly established through certified banking record carrying statutory presumption of correctness and that the defence raised by the present plaintiffs was found to be vague, unsupported and legally untenable. The findings recorded in the said judgment clearly negate the stance taken in the present proceedings regarding non -disbursement, alleged forgery and invalidity of financial documents, t hereby rendering the foundation of the present suit untenable. It would be advantageous to reproduce the relevant portion of the aforesaid judgment passed in COS No.16 of 2022, which is as under:- “22. From an overall appreciation of the record, this Court is of the considered view that the plaintiff -bank has successfully established its claim through voluminous and duly certified documentary evidence forming a coherent and consistent record , carrying statutory presumption of correctness. The liability of t he defendants is not only contractual but also admitted in material parts. In contrast, the defence raised is vague, unsupported, and contradictory, and thus falls short of the standard required in proceedings under the Financial Institutions (Recovery of Finances) Ordinance, 2001, which are summary in nature and intended for expeditious recovery of financial liabilities. 23. … 24. … 25. Accordingly, this Court holds that the plaintiff -bank has successfully proved its entitlement to recover the suit amount along with agreed markup till realization. The defendants are jointly and severally liable to satisfy the decree. 26. For the foregoing reasons, the suit is decreed in favour of the plaintiff -bank and against the defendants jointly and severally for a sum of Rs. 148,903,898/ - Rupees One Hundred Forty -Eight Million Nine Hundred Three Thousand Eight Hundred Ninety-Eight Only) along with costs of the suit and cost of funds as envisaged in Section 3 of the Ordinance, 2001, from the date of default till the date of 5 COS No.13 of 2025 actual realization of the decretal amount. The decretal amount shall be recoverable through the sale of mortgaged, pledged and hypothecated properties of the defendants, strictly in accordance with law. Decree sheet be drawn accordingly.” 11. A careful perusal of the plaint further reveals that it is inherently self-contradictory. On one hand, the plaintiffs deny availing any valid disbursement, while on the other, they admit execution of financial documents, renewal agreements, and selectively challeng e certain entries of the running account. Such inconsistent and selective denial, in the face of an admitted contractual relationship, does not constitute a legally recognizable cause of action and attracts the settled principle that a party cannot approba te and reprobate simultaneously. The conduct of the plaintiffs further reinforces the application of estoppel. The record reflects that they have previously engaged with the bank in recovery proceedings and have even expressed willingness to settle or deposit outstanding amounts. Having acknowledged liability in prior proceedings, they are estopped from now challenging the very existence of such liability. 12. Before adverting to the final conclusion, it is apposite to examine the matter on a broader jurisp rudential plane in the context of the scheme of the Financial Institutions (Recovery of Finances) Ordinance, 2001 . The said law constitutes a special statutory regime designed to ensure expeditious recovery of finances advanced by financial institutions and to maintain stability, certainty, and discipline in commercial and banking transactions. The proceedings contemplated thereunder are summary in nature, and the legislative intent is to discourage dilatory tactics, frivolous defences, and parallel proceedings aimed at frustrating lawful recovery. It is a settled principle of banking jurisprudence that once a financial liability is established through duly executed finance documents and certified statements of account carrying statutory presumption of corre ctness, the borrower cannot be permitted to defeat such liability through vague, inconsistent, or unsubstantiated pleas. The sanctity of financial instruments, particularly those executed in the ordinary course of 6 COS No.13 of 2025 banking business, forms the backbone of co mmercial confidence. Any attempt to unsettle concluded transactions through generalized allegations of forgery or non-disbursement, without strict proof, strikes at the very foundation of financial discipline and cannot be countenanced by a Court exercising jurisdiction under a special statute. 13. The present suit, in substance, is nothing but a counterblast to recovery proceedings initiated by the defendant bank, which have already culminated in a decree in COS No.16 of 2022. The findings recorded therein, whereby the liability of the present plaintiffs stands conclusively determined on the basis of cogent documentary evidence, carry significant legal effect. Although strict principles of res judicata may not apply in their technical sense, the doctrine of issue estoppel and the rule against multiplicity of proceedings fully operate in such circumstances, precluding re -agitation of issues already adjudicated between the same parties arising out of the same transaction. It is equally well established that a party cannot be permitted to approbate and reprobate simultaneously. The plaintiffs, having admittedly entered into finance arrangements, executed security documents, and even engaged in settlement negotiations in prior proceedings, are estopped from turni ng around to challenge the very foundation of those transactions. Such conduct not only attracts the doctrine of estoppel but also undermines the principle of good faith, which is intrinsic to equitable and commercial dealings. 14. The requirement under Se ction 9 of the Ordinance, 2001, obligates a customer to clearly, specifically, and precisely dispute the entries in the statement of account, supported by a proper reconciliation. This requirement is not a mere procedural formality but a substantive obligation intended to crystallize the real controversy. In the absence of such compliance, the plaint fails to disclose a triable issue within the meaning of the special law. The plaintiffs, in the present case, have failed to meet this statutory threshold, as their pleadings are vague, self -contradictory, and devoid of any meaningful reconciliation. The jurisprudence developed by the august Supreme Court of Pakistan consistently emphasizes that summary banking 7 COS No.13 of 2025 proceedings cannot be converted into protracted civil trials by allowing speculative and unparticularized claims to proceed. The object of the law would stand defeated if borrowers are permitted to institute independent suits raising identical or overlapping issues merely to delay or obstruct recovery. The Courts, therefore, are under a duty to sift genuine disputes from sham litigation at the earliest stage. Reference is made to Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. (PLD 2012 Supreme Court 268) , Gulistan Textile Mills Ltd. v . Askari Bank Ltd. and others (2013 CLD 2005), Imran Hussain v. Banker’s Equity Limited through Authorized Representative of the Official Liquidator and 13 others (2019 CLD 272) and Muhammad Saee Khan v. Judge Banking Court and 3 others (2021 CLD 536). 15. The object of Order VII Rule 11 C.P.C. is primarily to save the parties from rigours of frivolous litigation at the very inception of the proceedings and if the Court, on the basis of averments made in the plaint and documents available comes to the precise conclusio n that no cause of action is disclosed or the suit is barred by law, then the Court would be justified to reject the plaint in exercise of powers under the Order VII Rule 11 C.P.C., without embarking upon a full-fledged trial. Reference can be made to Raja Ali Shah v. Messrs Essem Hotel Limited and others (2007 SCMR 741) , Pakistan Agricultural Storage and Services Corporation Ltd. v. Mian Abdul Latif and others (PLD 2008 Supreme Court 371) , President, Zarai Taraqiati Bank Limited, Head Offfice, Islamabad v. Kishwar Khan and others (2022 SCMR 1598) and Muhammad Riaz v . Muhammad Ramzan and others (2023 SCMR 1305). 16. In the peculiar facts of the present case, where the liability of the plaintiffs has already been adjudicated and decreed in connected proceedings, and where the present suit is founded on mutually destructive pleas lacking legal substance, permitting the suit to proceed would amount to an abuse of the process of the Court. The law does not countenance multiplicity of litigation over the same sub ject matter, particularly when such litigation is designed to circumvent or undermine a valid decree. Viewed from any angle , whether on the 8 COS No.13 of 2025 touchstone of statutory compliance, principles of estoppel, evidentiary burden, or the overarching objectives of the special law, the plaint is devoid of any legally sustainable cause of acti on and is clearly barred by law and is hit by the principles underlying Order VII Rule 11 CPC. Consequently, the plaint is rejected under Order VII Rule 11 CPC.

(Muhammad Sajid Mehmood Sethi) Judge

APPROVED FOR REPORTING

Judge

*Sultan / A.H.S.*

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