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Petitioner: DR. SHAKEEL AHMED SIDDIQUI & ANOTHER VS Respondent: PAK LIBYA HOLDING COMPANY
Court Name: Sindh High Court Judge(s): Aziz-ur-Rehman Title:DR. SHAKEEL AHMED SIDDIQUI & ANOTHER vs PAK LIBYA HOLDING COMPANY
JUDGMENT
Reported As: NLR 2016 Civil 81 Result: Suit Decreed. Judgment JUDGMENT AZIZ-UR-REHMAN, J.---The Plaintiffs have filed the instant suit against the Defendant for Declaration, Permanent Injunction, Rendition of Accounts, Redemption of the Mortgaged Property, Cancellation of Cheques, Documents, Deletion of the name of Plaintiffs from CIB of SBP, Set-off of Counter-claim in the sum of PKR 392,353/- plus award of Damages in the sum of PKR 60 Million[s] and other Consequential Relief[s] under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 [In short: FIO, 2001] with following prayers:--- "(i) Declaration[s] that the defendant is not entitled to increase the amount of monthly installment(s) on subject suit's property bearing House No. 7/11, 22nd Street, Off Khayaban-e- Tanzeem, Phase V, DHA, Karachi ad measuring 500 square yards and/ or that the plaintiff's property is liable to be released/redeemed upon payment of schedule amount. (iii) Declaration that the -increased monthly installments amount of a sum of PKR 86601/- only per month as demanded by the defendant/bank towards alleged liability is illegal exaggerated, exorbitant unwarranted, hence not liable to be paid by the plaintiffs. ' Declaration(s) that Suit's Financing is based on 'Marked-up Price' [or 'Buy Back Price' or "Repurchased Price"} as per Article 4.1 of the Agreement which cannot be changed/enhanced as per law. (iv) (iv) Declaration(s) that according to the Demand Promissory Notes and Personal Guarantees and other documents in which the amount mentioned is blank, the liability arising from the instant Documents is 'Nil' or Blank or 'Zero' under the law.
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(v) Declaration(s) that the defendant/Bank has violated the SBPs BPD's Circular No. 1 of 2004 and Section 18 sub-sections (1) & (2) of FIO, 2001. (vi) Declaration(s) that the plaintiffs have paid excess amount of PKR 392,353/- in addition to the amount of monthly installment to the defendant bank which should , 5677498 and 5677499 dated 15th of every above months have been stopped and/or cancelled with immediate effect as the excess payment(s) has already been made. (vii) Award a decree of accounts with the direction(s) to the defendant/bank to render the proper accounts and/or statement of accounts to determine Outstanding Mortgaged Money with documentary evidence, and other statement including all related documents. (viii)To direct the defendant to the plaintiff to settle the account accordingly to the repayment schedule of finance agreement dated 12.03.2005 and allow the plaintiff to deposit remaining installment from February, 2009 in the Court and in view of above decree of cancellation of cheques, which are the subject-matter of the suit be awarded especially the cheque Nbe adjusted towards the future installments of August, September, October, November and December, 2008 and January, 2009. Hence the Cheque Nos. 5677494, 5677495, 5677496,5677497os. 5677494, 5677495, 5677496, 5677497, 5677498 and 5677499 in view of Para VI of the Prayers. (ix) Grant Permanent Injunction[s] to restrain the defendant, their Agents, Representatives, Attorneys, Workers, Managements, Officers, acting for and on their behalf, from charging increased amount of monthly installment on the subject mortgaged property bearing House No.' 7/11, 22nd Street, Off khayaban-e-Tanzeem, Phase V, DHA, Karachi, ad measuring 500 square yards and/or restrain them from harassing, torturing and humiliating the plaintiffs permanently, and at the first instance interim order[s] are solicited. (x) Award decree of accounts. (xi) A decree for damages [s] in favour of the plaintiffs against the defendant/bank of PKR 60 Million[s] only on account of damages and/or compensation as per the break-up stated in the instant plaint. ii) Decree of redemption of names of the Plaintiffs from the SBP's CIB as defaulters. (xiv) Award cost of the suit to the plaintiffs. xv) Any other further relief[s] and/or order[s] and/or decree[s] and/or declaration[s] as may be just and appropriate in the facts of the instant case in favour of the plaintiffs. 2. The relevant brief facts in the background are as follows:--- 3. The Plaintiffs No. 1 & 2 besides brothers are Doctors and running their clinic. Both in terms of Section 2(d) of FIO, 2001, are also customers of the Defendant Financial. Institution, as they have availed financial facility from the Defendant Financial Institution as defined under Section 2(a) of FIO, 2001. 4. The defendant, is a Holding Company [Pvt] Ltd. Incorporated under the laws of Pakistan and falls within the meaning of Section 2(a) of FIO, 2001 and having its principalplace of business at 5th Floor, Block 'C', Finance & Trade Centre, Shahrah-e-Faisal, Karachi. 5. The Plaintiff No. 1, as averred, is the sole owner of the 'mortgaged property', bearing House No. 7/11, 22nd. Street, Off Khayaban-e-Tanzeem, Phase V[G+ 1], measuring 500 sq.Yds, DHA, Karachi [hereinafter means 'mortgaged property]. 6. Per bereavements, the Plaintiffs entered into a 'PROPERTY FINANCING AGREEMENT ON MARK-UP BASIS' dated 12th March, 2005 with the Defendant Holding Company [Pvt] Ltd. For availing a finance facility in the sum of Rs. 7 Million only for the purchase of house costing to PKR 16.4 Millions with the 'debt equity ratio' of 49/51%. 7. The financial facility so availed was/is payable within 15 years and 2 months comprising of 182 equal monthly installments in the sum of Rs. 58,551/- plus Mortgage Insurance Premium of Rs. 2100/- and Property Insurance Premium of PKR 875/- which on summing up comes to Rs. 61,526/-
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for the first year. The 2nd last installment per the 'REPAYMENT SCHEDULE' to the property financing agreement on mark-up basis of 12th March, 2005 comes to Rs. 58,576/- and the last one comes to Rs. 25,184/- on account of gradual decrease in the insurance premium. 8. Under Article 4.1 of the Property Finance Agreement on marked-up basis dated 12.3.2005, the Plaintiffs were/are bound to pay the 'marked-up price' to Defendant company viz. PAK Libya in monthly installments in accordance with the 're-payment schedule' as contained in Schedule 'B' of the aforesaid agreement. According to the Plaintiffs' assertions, the monthly installments are being regularly paid through post-dated cheques quite in accordance with the 'REPAYMENT SCHEDULE' along with 'BALLOON PAYMENTS'. Of Rs. 50,000/- [Rupees Fifty Thousand only)' every 6 months [i.e. In March and September every year] till date. The Plaintiffs, per bereavements, did not commit any default in payment of any monthly installment. Rather, the plaintiffs have paid Rs. 392,353/- in addition to the amount of monthly installments which amount nonetheless, is adjustable against and towards the future installments. The six cheques [i.e. Cheque Nos. 5677494, 5677495, 5677496, 5677497, 5677498 and 5677499, already handed over to the Defendant towards monthly installments of August, September, October, November, December, 2008 & January, 2009], in view of the already excess payment of Rs. 392,353/-, need not be encased by the Defendant financial institution. 9. Towards and for securing the financial facility, the Defendant No. 1 also mortgaged his immovable property bearing No. 7/11, 22nd Street, Phase V, [G. 1], ad measuring 500 sq.Yds. [per layout map] with Defendant Company/Financial Institution. 10. In consideration of the aforesaid facility, the documents executed by the Plaintiffs either jointly and/or severally in favour of the Defendant are as follows:--- (a) Property Financing Agreement on Mark-up Basis. (b) Memorandum of Deposit of Title Deeds (c) Irrevocable General Power of Attorney (d) Guarantee, (e) Personal Guarantee, (t) Undertaking (g) Affidavit (h) Promissory Notes [undated] All the aforesaid documents are dated 12.3.2005. 11. Per assertion, some of the documents were got signed in blank in clear cut violation of the Section 18(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 [Ordinance No. XLVI of 2001]. According to the Plaintiff's version, the sanction Letter dated 12.3.2005 is not only contradictory to the Schedule '13' [Repayment Schedule] of the 'PROPERTY FINANCING AGREEMENT ON MARK-UP BASIS' dated 12.03.2005 but also inter alia is in violation of the State Bank's Circulars i.e:--- (a) BPD CirCular No. 1, dated 21st January, 2004, (b) Circular No. 13, dated 20.08.1984 (c) Circular No. 32, dated 26.1,1.1984. 12. The Marked-up Price', per Plaintiff's stand, once settled cannot be varied/modified much-less unilaterally and without execution of fresh agreement[s] between the parties. The same otherwise would be against the very concept of Islamic Banking-'buy back' system. Under law, no mark-up over mark-up can be charged. In the plaint, it was also averred that the letter dated 07,03.2007 for increasing the monthly installment[s] from Rs. 61526/- to Rs. 86601/- by linking the same to KIBOR is not only contrary to the Article 22.1 of the Finance Agreement dated 12.03.2005 but as well of the circulars issued by the State Bank of Pakistan from time to time. Moreover, the Defendant also failed to consider and/or properly reply, the Plaintiffs protest regarding and against the increase of monthly installments from Rs. 61,526/- Pak Rs. 86,601/-. In response of letter dated 7th March, 2001,
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the Plaintiffs beside raising several objections had also requested for the provision of the following documents:--- (i) Account statement for the years [2005, 2006 and 2007 to-date], (ii) Letter of outstanding balance [pay-off]. 13. The Plaintiffs, per their commitments were/are no doubt, paying the monthly installments regularly. Rather to say, the Defendant Company received 'EXCESS AMOUNT' under the garb of UN- warranted increase of the monthly installment]. The Defendant in its own wisdom is continuously demanding increased amount of monthly installments from the Plaintiffs, of course, without any justification and/or in violation of 'REPAYMENT SCHEDULE' dated 12.03.2005. The Defendant FINANCIAL INSTITUTION has also failed and/or ignored to render proper accounts to the Plaintiffs. On account of the Defendant's failure to honour its contractual obligations/commitments, the Plaintiffs, have thus suffered heavy losses and damages. 14. The Defendant, indeed, with mala fide intention has not only reported the Plaintiffs' names to State Bank of Pakistan as 'defaulters' but also became source of placing their names on the defaulters list of SBP [CIB]. On account of such illegality, the Plaintiffs could not avail any finance facility from other banks to increase their business. As such, on this ground as well, the Plaintiffs, suffered huge losses and damages, which, no doubt, the Defendant is liable to pay the same to the Plaintiffs. On account of illegal demand of the increased amount of monthly installments [i.e. In clear violation of the 'FINANCE AGREEMENT' & 'REPAYMENT SCHEDULE'], the Plaintiffs have not only suffered mental torture but also lost their physical health and reputation. 15. The break-up/quantum of damages as claimed in the suit is as under:--- (a) Loss/damages on account - PKR 24 Millions of Mental torture/agony suffered by the plaintiffs (b) Loss of reputation due to - PKR 10 Millions defendant/bank (c) Financial losses due to - PKR 25 Millions non-professional attitude of bank (d) Cost accrued on litigation - PKR 01 Millions paid by the plaintiffs Total damages - PKR 60 Million 16. The cause[s] of action, per bereavements, has/have been arisen against the Defendant on various dates as stated in paras 24 to 26 of the plaint. Hence this suit. 17. Upon filing of the suit on 27.03.2008, process under Section 9(5) of the FIO, 2001 was issued to defendant by all modes. In response, the Defendant filed their 'Leave to Defend Application-cum- written statement' [CMA No. 9275 of 2008] on 01.09.2008 under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (XLVI of 2001), wherein the contents of the plaint were denied to some extent categorically. 18. On 10.10.2008, the Addl. Registrar [0.S.], issued notice on Leave to Defend Application bearing CMA No. 9275 of 2008 to the Plaintiffs, who on service, filed their replication to Leave to Defend Application. Inter alia in the Leave to Defend Application [CMA No. 9275 of 2008], the following objections were also raised:--- (a) The suit is not maintainable. (b) The Plaintiffs have no cause of action against the Defendant. (c) The suit is barred under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. (d) The prayers for declaration and injunction are not tenable and legally hit by the provisions of Sections 48 and 56 of the Specific Relief Act. (e) The Plaintiffs have not come to the Court with clean hands. It has suppressed true facts and made misrepresentation with mala fide intentions. (f) The suit is not maintainable as the Plaintiffs have not alleged any default by the Defendant fulfillment of any obligation with regard to the finance. (g) The suit is deliberately false, frivolous and vexatious. The Plaintiffs have not provided an iota of evidence for the damages or any damages whatsoever. As such, the suit is liable to be dismissed
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with compensatory costs. (h) The Plaintiffs themselves are defaulters and have filed this mala fife suit to avoid payment and preempt recovery proceedings. 19. In the Leave to Defend Application [CMA No. 9275 of 2008] regarding paras 5, 6 & 7 it was averred, that the Plaintiffs in fact, have accepted the execution of mortgage of immovable property bearing No. House No. 7/11, 22nd Street, Off Khayaban-e-Tanzeem, Phase V, DHA, Karachi as security against the FINANCIAL FACILITY availed by the Plaintiffs from the Defendant. Per Defendant's stand, the documents were, no doubt, got executed by the Plaintiffs voluntarily. The allegation of forcing the Plaintiff to sign in blanks is nothing but a blatant lie. All the documents were properly filled-in and witnessed as well. The SANCTION LETTER [Annex `D' to the plaint] and terms & conditions thereof, are binding on the Plaintiffs as the SANCTION LETTER is/was a part of CONTRACTUAL ARRANGEMENT between the parties. 20. The Defendant has not 'violated, any circular[s] of SBP as alleged or otherwise. The Plaintiffs are 'wilful defaulter' and want to shield their 'default' by way of filing the present frivolous suit. The Plaintiffs are not required to pay mar .-up at the rate as being linked with KIBOR. The statement of account, no doubt, was provided to the Plaintiff as per prevailing procedure. 21. Per bereavements, the Defendant immediately reported the matter of 'OVER-DUES' to GIB in accordance with law and directions/guidelines issued by the State Bank of Pakistan. The Defendant, has thus acted in accordance with law and procedure. The plaintiffs have not provided any evidence regarding damages as claimed. It was denied that the Plaintiffs have suffered any damages in the sum of Rs. 60 Million or otherwise. It is preposterous to claim damages particularly when the Plaintiffs are themselves 'wilful defaulters'. The Plaintiffs, under the Finance Agreement, beside bound are liable to pay monthly installments at the greed rate of mark-up. It is denied that any 'cause of action' as alleged or otherwise, has been arisen in favour of the Plaintiffs. The Plaintiffs besides having wasted money on 'Court-fee' have also abused the 'due process' of Court. The suit besides being false and frivolous has been filed with a mala fide intention to avoid repayment of just legal dues payable by the Plaintiffs to Defendant Financial Institution. 22. In the Leave to Defend Application [CMA No. 9275 of 2008], it was denied that the plaintiffs are entitled to any of relief[s] as claimed. The declaration sought is legally barred. The prayers for accounts is only a camouflage to preempt the recovery suit. The plaintiffs are liable to be proceeded in the Banking Court for payment of loan and issuing of the cheques dishonestly. The plaintiffs are not entitled to seek any cancellation of the cheques having been given against the payment of the 'FINANCIAL FACILITY'. Regarding redemption of the mortgage property, it was asserted that the Plaintiffs in the first place are required to deposit the outstanding amounts. The prayers for permanent injunction and deletion of the plaintiffs' names from the defaulters' list of State Bank of Pakistan [CIB] being not tenable in law as such cannot be granted. 23. Finally, the Defendant has prayed for rejection of under the provisions of the Financial Institutions [Recovery of Finances] Ordinance, 2001 [Ordinance No. XLVI of 2001], Banking Companies Ordinance, 1962 as well as under Sections 42 & 56 of the Specific Relief Act, 1877 [I of 1877]. 24. On 20.10.2008 when the aforesaid Leave to Defend Application [CMA No. 9275 of 2008] came-up before the Court then, the following order was passed:- "20.10.2008 The learned counsel for the plaint under Order VII, Rule 11, CPC with cost/compensatory cost. According to the Defendant, the suit as framed and filed is without any 'cause of actions' and also barred he Plaintiff states that this application for grant of leave to defend is barred by eight days. The learned counsel for the Defendant on the other hand states that he has calculated time from the date of publication and according to him the application is within time. In fact there are four
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different dates upon which the Defendant was served and the period in-between do not run in months, but in days therefore this issue can also be framed because the Plaintiff either could not lay hands on any judgment in either way except the. Judgment of lion'ble Supreme Court reported in 2002 SCMR page 476 relevant at Page 478-A. Additionally in the suit, damages have been claimed, which are required to be quantified by leading evidence. There are other questions, which are raised in the leave to defend application. Since the parties have to lead evidence on the Question inclusive of the issue of buxback price I therefore, allow this application for the aforesaid reasons. Matter is pasted for issues. [Emphasis &underlining are mind. 25. Subsequently, on 06.02.2008, when again the case cattle-up before the Court then, upon hearing the following issues were settled:--- (1) Whether the instant suit is Maintainable? (2) Whether the Application for Leave to Defend/ Written Statement filed by the Defendant is time- barred and/or whether defence taken by the Defendant in application for Leave to Defend/Writtert Statement can be taken into consideration in view of time-barred Written Statement/Application for Leave to Defend? (3) Whether the Plaintiffs have duly paid the outstanding dues of the Defendant upto date in accordance with the agreement of the finance? (4) Whether the Plaintiffs have filed the suit mala fide to shield their own default? (5) Whether the Plaintiffs were not bound to pay markup at KIBOR+350 basic points revisable every year in accordance with the sanction letter, annexure to the plaint duly accepted by them? (6) Whether the 'filly Back Price' or 'Marked-up Price' or 'Repurchase Price' can be enhanced? (7) What damages the Plaintiffs have suffered at the hands of Defendant? (8) Whether the Defendant bank is responsible or the State Bank of Pakistan for circulation of the CIB list of defaulters? (9) What should the decree be? 26. On 08.04.2009 at the joint request, Mr. Asghar N. Faruqui, Advocate was appointed as Commissioner for recording evidence of the parties. Order dated 08.04.2009 being relevant reads as follows:- "At joint request Mr. Asghar Farooqui, advocate is appointed Commissioner, for recording evidence of the respective parties. Both the counsel are allowed to lead evidence by filing affidavit-in- evidence with the right to cross-examine and to the documents before the Commissioner. Commissioner is expected to conclude recording of evidence within 4 months from today. Fee of the Commissioner in the sum of Rs. 10,000/- per witness shall be borne by the parties who produce such witnesses. Office is directed to issue notice to Mr. Farooqui. Mr. Lakhani undertakes to inform the Commissioner." 27. In 'pro' and 'contra' of the aforesaid issues, the Plaintiffs and Defendant led their evidence. DR. BULAND IQBAL SIDDIQUI S/O H.A. SIDDIQUI [Plaintiff No. 2] in support of the Plaintiffs' contentions 'examined' himself. The said witness [TW-11 besides producing his 'affidavit-in evidence' as Exh.P/1 also produced in his 'examination-in chief other documents as Exh. 'PR' to Exh. T/17'. The said witness [PW-11 was duly 'cross-examined' by Mr. Abdul Sattar Lakhani, learned counsel for Defendant Company. 28. On behalf of Defendant, Mr. Minhaj Farooqui s/o Muhammad Jamil-ur-Rehman Farooqui, ['DW- l') filed his 'affidavit-in-evidence' before the learned Commissioner. The same was produced in his 'examination-in-chief' as Exh. 'D'. Besides, other documents produced in his 'examination-inchief' are as Exh. 'D/1' to 'D-7/1'. The said witness rDW-11 was also 'cross-examined' by Mr. Saalim Salam Ansari, learned counsel for the Plaintiffs on two occasions. 29. Upon conclusion of evidence, the learned Commissioner [viz. Mr. Asghar Faruqui] submitted his 'REPORT' dated 6.8.2010, which thereafter was taken on record vide order dated 6.12.2010.
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30. On 14.5.2014 and 30.5.2014 heard Mr. Zeeshan Abdullah alongwith Mr. Saalim Salam Ansari, learned counsel for the Plaintiffs and Mr. Abdul Sattar Lakhani, learned counsel for the Defendant and with their valuable assistance also gone through the record of the case minutely. My finding on the issues are as follows:--- 31. ISSUE NO. 1: Whether the instant suit is maintainable? The burden of proof of this issue is on the Plaintiffs. Mr. Zeeshan Abdullah, learned Counsel for the Plaintiffs argued that admittedly the Plaintiffs are 'customers' and Defendant is a 'financial institution' as such falls within the meanings of clauses (c)&(a) of Section 2 of FIO, 2001 respectively. The facility granted to and availed by the Plaintiffs under the 'PROPERTY FINANCING AGREEMENT ON MARK-UP BASIS' [Exh. P/1] is also a 'finance' within the meaning of Section 2(d) of FIO, 2001 (XLVI Of 2001). Per learned counsel, in view of this position the relationship between the parties is that of 'customers' and 'financial institution'. Mr. Zeeshan Abdullah, learned Counsel for the Plaintiffs while, continuing his arguments next contended that if, a 'customer' or a 'financial institution' commits default in fulfillment of any obligation with regard to the 'finance' then in such eventuality any of them, as the case may be, of course, can competently institute a suit under Section 9 of FIO, 2001 in a Banking Court as defined under Section 2 (b) of FIO, 2001 (XLVI of 2001). The Defendant as far as the case in hand is concerned, is demanding/has charged mark-up over mark-up which, per learned counsel, besides being illegal, tantamount to default of legal and contractual Obligations as such has been competently challenged through the present suit. 32. Conversely, Mr. Abdul Sattar Lakhani, learned counsel for the Defendant without disputing the existence of the relationship of a 'customer', 'financial institution' and 'finance', contended that since the Plaintiffs inter alia are seeking enforce ability or violation of the SBP's Circulars and Prudential Regulation but the State Bank of Pakistan as being ,necessary party has not been joined in the suit. As such the instant suit, in the present form, is not maintainable. He further contended that the present suit besides incompetent in law, is without any 'cause of action'. Moreover, the prayers for declaration and injunction, as sought, are not permissible/tenable under the provisions of Sections 48 & 56 of the Specific Relief Act, 1877 [I of 1877]. Mr. Lakhani next contended that the suit as framed and filed is also barred under Section 9 of FIO, 2001 [XLVI of 2001]. 33. For proper appreciation of the contentions of the learned counsel for the parties, I would like to reproduce herein Section 9(1) of the Ordinance, 2001 which reads as follows:-- "9. Procedure of Banking Courts. (1) Where a customer or a financial institution commits a default in fulfilment of any' obligation with regard to any finance, the financial institution or, as the case may be, the customer, may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath in the case of a financial institution 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." [Underlining is mine]. 34. From the bare reading of Section…
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