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Petitioner: SILKBANK LIMITED VS Respondent: Messrs DEWAN SUGAR MILLS LIMITED
Court Name: Sindh High Court Judge(s): Muhammad Tasnim Title: SILKBANK LIMITED vs Messrs DEWAN SUGAR MILLS LIMITED Case No.:Suit No,56 of 2010 and C.M.As. Nos.7887, 11741 and 12085 of 2010C.M.As.
Nos.7887, 11741 and 12085 of 2010M.As. Nos.7887, 11741 and 12085 of 2010 Date of Judgment:2010-12-14 Reported As: 2011 CLD 436 Result: Suit decreed Judgment ORDER ' MUHAMMAD TASNIM, J.--- This is an application (C.M.A. No,7887 of 2010) 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 this case, as per plaint, are that defendant Messrs Dewan Sugar Mills Limited is a company incorporated under the Companies Ordinance and it has registered office at Karachi. At the request of defendant, plaintiff-Bank provided a cash finance facility for an amount of Rs,250,000,000 and such facility was sanctioned under letter, dated 28-9-2006. Defendant executed finance agreement dated 5-10-2006 containing the purchase price as Rs,250,000,000 and by bank value amounting to Rs,312,500,000. Defendant also executed letter of pledge, letter of set-off dated 29-9-2006, promissory note for Rs,312,500,000, letter of continuity dated 5-10-2006. Entire amount was disbursed and was utilized by the defendant in full, but defendant failed to discharge its obligation and did not pay the financed amount along with mark-upto the plaintiff- Bank as agreed. Accordingly demand notice letter, dated 10-9-2009 was served upon the defendant, but to no avail. Finally plaintiff filed present suit claiming the following: (a) Principal amount of finance availed:Rs.250,000,000.00 (b) Principal amount repaid Rs.72,482,403.86 (c) Balance principal amount Outstanding (a - b)Rs. 177,517,596.14
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(d) Mark-up payable till 31-12- 2009 Rs.46,735,732.55 (e) Amount of mark-up paidNIL (f) Mark-up outstanding as on 31-12-2009 (d - e)Rs.46,735,732.55
Total Outstanding AmountRs.224,253,328.69" 3. After service of summons, in accordance with provisions of Ordinance, 2001, defendant filed leave to defend application admitting the availment of facility and also execution of all documents annexed along with plaint. After receipt of copy of counter-affidavit plaintiff-Bank filed replication maintaining its stand in the pliant and denied the allegations of the defendant in the leave to defend application. 4. Mr. Saalim Salam Ansari, learned counsel for defendant in support of leave to defend application has submitted that suit has not been filed by the authorized persons hence the suit is liable to be dismissed. He further submitted that mark-up has been charged over mark-up which is not permissible under the law. He further argued that plaint is not in conformity with the provision of section 9 of the Ordinance, 2001 hence same is liable to be rejected. Learned counsel for defendant further submitted that defendant has made excess payment to the plaintiff-Bank hence nothing is payable by defendant to plaintiff, on the contrary defendant has to recover substantial amount for which counter-claim has been filed by the defendant and even court-fee on the counter-claim has been affixed. Learned counsel further argued that statement of accounts filed by the plaintiff- Bank does not contain entries of payments made by the defendant hence defendant has challenged the same through its statement filed as annexure-D to the leave to defend application which has been quoted in paragraph-7 of the leave to defend application. He further argued that mark-up has been wrongly adjusted in violation of law. He further argued that rate of mark-up was wrongly applied. Learned counsel for defendant further argued that cheques given by the defendant to the plaintiff-Bank do not reflect in the statement of accounts and details of such cheques have been given by the defendant in Annexu re "D" to the leave to defendant application. Learned counsel for defendant further submitted that points raised by the defendant in leave to defend application raise substantial question of law and facts and evidence is to be recorded in the matter. Learned counsel further prayed that a Chartered Accountant be appointed as Commissioner so that he may examine the accounts of the parties and determine the liabilities of the parties. Learned counsel further challenged the legality of the statement of account filed by the plaintiff-Bank along with plaint. He further submitted that facility granted to the defendant was running finance facility hence Bank was not legally allowed to fix the by back price at the time of execution of agreement for the reason that in case of running finance, mark-up is to be applied on daily product basis as per bank practice which has not been followed by the plaintiff-Bank hence entries of statement of accounts require thorough examination which can only be carried out by an expert i.e. Chartered Accountant. Learned counsel for defendant in the end submitted that leave to defend application be granted and defendant be allowed to contest the suit on merits. 5. In support of aforesaid contentions learned counsel for defendant has placed reliance on the following case-law:--- (1) Pakistan Industrial Credit and Investment v. Messrs Bawany Industries Limited PLD 1998 Kar. 400, (2) The Australasia Bank Ltd. v. Messrs H.S. Mahmood I lassan Akbar and others PLD 1983 Kar. 431, (3) Habib Bank Limited v. Messrs Ahmed Food Industries (Pvt.) Ltd. And others 2002 CLD 668, (4) Nazimuddin v. Messrs the Bank of Khyber and another 2005 CLD 647, (5) Gul Habib v. Habib Bank Ltd. PLD 1983 Pesh, 31, (6) Industrial Development Bank of Pakistan v. Al-Mansoor Ltd. And others PLD 1989 Pesh. 191,
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(7) Allied Bank of Pakistan v. Masood Ahmad Khan 1994 MW 1557, (8) Citibank N.A., a Banking Company v. Riaz Ahmed 2000 CLC 847, (9) Habib-ur-Rehman and another v. Judge Banking Court No,4, Lahore and another 2006 CLD 217, (10) Messrs United Dairies Farms (Pvt.) Limited and others v. United Bank Limited 2005 CLD 569, (11) Messrs C.M. Textile Mills (Pvt,) Limited and others v. Investment Corporation of Pakistan 2004 CLD 587, (12) Muhammad Nafees v. Allied Bank of Paksitan Limited and another 2004 CLD 937, (13) United Bank Limited v. Messrs Ilyas Enterprises and others 2004 CLD 1338, (14) The Central Bank of India, Ltd., Lahore v. Messrs Tajud-Din Abdur Rauf and others 1992 SCMR 846, (15) PICIC Commercial Bank Limited v. Spectrum Fisheries Limited 2006 CLD 440, (16) Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931, (17) United Bank Limited v. Pak. Leather Grafts Limited and 3 others 2010 CLC 701, (18) Al-Madina Electric Store v. Habib Bank Limited 2006 CLD 734, (19) Habib Bank Limited v. A.B.M. Graner (Pvt.) Limited and others PLD 2001 Kar. 264, (20) Nusrat Textile Mills Ltd. And others v. United Bank Ltd. 2005 CLD 1421, (21) Qamaruzaaman Khan v. Industrial Development Bank of Pakistan and others 2009 CLD 460, (22) Umar Hayat v. Agricultural Development Bank of Pakistan 2003 CLD 204, (23) Abdul Razzaq v. A,D.B,P. 2002 CLD 1707, (24) Bhatt Export Private Ltd. v. United Bank Ltd. 2004 CLD 389, (25) Messrs Mohib Exports Ltd. And others v. Trust Leasing Corporation Ltd. 2005 CLD 581, (26) Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation PLD 1971 SC 550. 6. On the other hand Mr. Arshad Tayebally, learned counsel for plaintiff argued that facility availed by the defendant was not a running finance facility and has invited my attention to the facility advice letter dated 28-9-2006, which shows that finance facility in the nature of "cash finance facility" amounting to Rs,250,000,000 was allowed to the defendant. He has further invited my attention to the other documents executed by the defendant in consideration of above cash finance facility. Learned counsel also invited my attention to annexure-E to the plaint (page-59 of the record), which is the statement of accounts dealing with the principal amount. It clearly shows that in consequence to the facility advice letter dated 28-9-2006 cash finance facility was disbursed to the defendant in the sum of Rs,250,000,000 on 30-9-2006, such statement of accounts also shows all debit and credit entries and at the end of the statement of accounts principal amount recoverable from the defendant has been shown to Rs, 177.517.596.14. Learned counsel for plaintiff has also invited my attention to Annexurc "E/1", (page-63 of the record) which deals with the mark-up charged by the plaintiff-Bank over the cash finance facility granted to the defendant, such mark-up starts from 18-12-2008 to 26-4-2010, which shows an amount of Rs,46,735.732.55 being mark-up recoverable from the defendant. Learned counsel for plaintiff has further submitted that Deewan Group of Companies has number of companies and such other companies were maintaining, number of accounts with the plaintiff-Bank, but the subject-matter of the suit in this case is only the finance facility granted to the defendant by the plaintiff-Bank on account of "cash finance facility" amounting to Rs,250,000,000. He further submitted that for the aforesaid facility fresh documents were executed and such execution has not been denied by the defendant. He further argued that there is no discrepancy, whatsoever, which requires any evidence to be record or needs any probe by the Chartered Accountant. Learned counsel for plaintiff further submitted that leave to defend application filed by defendant is not in conformity of provisions of subsection (4) of section 10 of the Ordinance, 2001. He further argued that claim set out by the plaintiff-Bank in the plaint is in accordance with provisions of section 9(3) of the
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Ordinance, 2001. He further submitted that claim of plaintiffs has not been denied by the defendant in its leave to defend application. Learned counsel further argued that in the leave to defend application in pares-7 thereof, it has been stated by the defendant that it has made payment of Rs,25 Millions between the periods commencing from October 2005 to September 2006. He submitted that this position is not correct and is not relatable to the finance facility which is subject-matter of this case. Learned counsel for plaintiff further submitted that present cash finance facility was allowed to the defendant on 30 September, 2006 hence no payment should have been made by the defendant from October 2005 till September 2006. He further submitted that the defendant might have made payment of the aforesaid amount, but in some other accounts, but not relating to the finance facility which is subject-matter of this case. Learned counsel for plaintiff submitted that cheques mentioned in annexure-D to the leave to defend application were not deposited by the defendant in the present account that is why they are not reflecting in the statement of account. He further submitted that defendant has deliberately not given the details of the cheques just to misguide the Court and to seek relief. Learned counsel further submitted that leave to defend application merits no consideration and the same be dismissed. In support of his contention learned counsel for the plaintiff has placed reliance on the following case-law:-- (1) Industrial Development Bank of Pakistan, Karachi v. Messrs Zamco (Pvt.) Ltd. And others 2007 CLD 217, (2) National Bank of Pakistan v. Messrs A.I. Brothers (Private) Limited and others 2007 CLD 1356, (3) Haji All Khan & Company, Abbottabad and others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362, (4) United Bank Limited v. Ch. Ghulam Hussain 1998 CLC 816, (5) Messrs Saudi Pak Commercial Bank Limited v. Messrs Marvi Agrochem (Private) Ltd. And others 2007 CLD 1374, (6) Industrial Development Bank of Pakistan v. Muhammad Ayub and others 2009 CLD 346, (7) Shahid Farooq Sheikh v. Allied Bank of Pakistan Limited 2005 CLD 1489, (8) Zeeshan Energy Ltd. And others v. Faisal Bank Ltd. 2004 CLD 1741, (9) Bank of Khyber v. Messrs Spencer Distribution Ltd. And others 20Q3 CLD 1406, (10)Messrs U.B.L. v. Messrs Sindh Tech. Industries Ltd. And others 1998 CLD 1152, (11)Messrs Malik & Company and others v. Muslim Commercial Bank and others 2002 CLD 1621, (12)Habib Bank Limited v. Messrs Sabcos (Pvt.) Ltd. 2006 CLD 244, (13)Banque Indosuez v. Jet Travels Limited and others 1991 CLC 446, (14)National Bank of Pakistan v. Muhammad Ashraf Sanik and another PLD 1987 Lah. 17, (15)Khyam Films and another v. Bank of Bahawalpur Ltd. 1982 CLC 1275, (IQ) Muhammad Arshad and another v. Citibank N.A., Al Fallah Building, Lahore 2006 CLD 1011, OM National Bank of Pakistan v. Messrs A.I. Brothers (Private) Limited and others 2007 CLD 1356, (18) American Express Bank Ltd. v. Adamjee Industries Limited 1995 CLC 880, (19) Messrs Razzaq & Company v. Messrs Riazeda (Pvt.) Ltd. 1990 CLC 1243, (20) Siddique Woollen Mills and others v. Allied Bank of Pakistan 2003 CLD 1033. 7. 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, 8. 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 Mr. Minhajuddin Shaikh son of Kamaruddin Shaikh and Mr. Nazimuddin Soomro son of Mir Muhammad Soomro. Learned counsel for defendant 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 bear perusal of power of attorneys would show that these power of attorneys
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have been issued by the plaintiff-Bank itself under its common seal and has been executed by President of the Bank 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." 9. The last paragraph of the power of attorneys reads as under:-- "In witness whereof, the Common Seal of Saudi Pak Commercial Bank Limited, is hereunto affixed at the Central Office of the Bank at Karachi on this 19th Day of November, 2002 in the presence of Mr. Muhammad Rashid Zahir, President, the person duly authorized by the Board of Directors for the purpose, who has hereunto signed in the presence of." 10. 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. 11. From the examination of the concluding para of the power of attorney quoted hereinabove, it will be seen that plaintiff-Bank had issued power of attorneys under the common seal of the Bank and the signatories of the plaint were appointed attorneys by President of the Bank, who was duly authorized by Board of Directors for the aforesaid purpose. 12. 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 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, who was authorized by the Board of Directors for such purpose and was notarized in accordance with law. In this view of the matter the judgment cited by the learned counsel quoted above has no application or relevance with the present case. 13. 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.M. 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 Associations 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
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were equipped with power of attorneys in their favour by the bank issued under the common seal of the batik hence judgment in the case of The Central Bank of India is distinguishable on facts and does not improve the case of the defendants. 14. The other judgment in the case of PICIC Commercial Bank Limited v. Spectrum Fisheries Limited 2006 CLD 440 wherein 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 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 authorized 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 President of the Bank to execute power of attorney for the purpose of filing case 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 Kar. 264 are concerned all the three judgments are distinguishable on facts and are not applicable to the case in hand. 15.. 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 photo copy 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." 16. In the case of National Bank of Pakistan v. Muhammad Ashraf Sanik PLD 1987 Lah. 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-ud-Din 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 objection. Otherwise also the objection in the light of the case-law cited by the learned counsel for the plaintiff does not appear to have force." 17. In the case of Khyam Films and another v. Bank of Bahawalpur Ltd. 1982 CLC 1275 a learned Single Judge of West Pakistan High Court in the year 1966 while dealing with the point in issue had held that authority of a person who signs the plaint can be questioned by the principal. The learned Judge in the reported judgment has observed as under:--- " In my opinion the fact that the person did or did not have authority can effectively be challenged only by the principal. If in spite of the objections taken the principal continues to recognize the
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authority of the agent to institute the suit I am inclined to think that this would amount to a ratification and the suit would still be a validly instituted suit." 18. The upshot of the above discussion is that since the plaint in the present suit has been presented by the two signatories who are attorneys and were duly authorized by the bank, it is valid presentation and suit is maintainable under the law. Even otherwise, section 9(1) of Ordinance 2001 provides that financial institution 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. A bear reading of above provision would show that plaint can be present by a financial institution before a Banking Court duly signed and verified on oath either by a Branch Manager or such other officer of the bank who holds a power of attorney or has been authorized otherwise. In the present case power of attorney has been brought on record which fulfils the requirement of section 9(1) of Ordinance 2001. Accordingly, I hold that suit has been validly filed and the same is maintainable. 19. With regard to the arguments of the learned counsel for defendant that mark-up over mark-up has been charged by the plaintiff-Bank in this case, which is not permissible under the law. This argument of the learned counsel for defendant is not supported by any material available on record. The statement of accounts filed by plaintiff-Bank along with plaint (appears at page No,59) which deals with the principle amount and other statement of accounts annexure-E/i (appears at page 63 of the record) shows that mark-up has been charged over the amount advanced to the defendant in accordance with agreed terms. Learned counsel for defendant failed to point out any entry in the statement of account to support his arguments hence contention of the learned counsel for defendant is repelled for the aforesaid reasons. 20. Next contention of the learned counsel for defendant that plaint is liable to be rejected as the same has not been filed in conformity with the provisions of section 9 of the Ordinance, 2001. A bare perusal of the…
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