2011 C L D 436

[Karachi]

Before Muhammad Tasnim, J

SILKBANK LIMITED---Plaintiff

Versus

Messrs DEWAN SUGAR MILLS LIMITED---Defendant

Suit No.56 of 2010 and C.M.As. Nos.7887, 11741 and 12085 of 2010, decided on 14th
December, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 9(1)---Recovery suit, filing of---Locus standi---Contention of defendant was that as no

resolution of Board of Directors was appended with the plaint therefore, suit filed on behalf of
bank was not filed by competent person---Validity--Plaint could be presented by a financial
institution before Banking Court duly signed and verified on oath either by Branch Manager or
such other officer of the bank who held power of attorney or was authorized otherwise---
Plaintiff bank brought on record a power of attorney and the same had fulfilled requirements of
section 9(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Suit was
maintainable in circumstances.

Banque Indosuez v. Jet Travels Limited and others 1991 CLC 446; National Bank of Pakistan v.
Muhammad Ashraf Sanik and another PLD 1987 Lah. 17 and Khyam Films and another v. Bank of
Bahawalpur Ltd. 1982 CLC 1275 ref.

Nazimuddin v. Messrs the Bank of Khyber and another 2005 CLD 647; PICIC Commercial Bank
Limited v. Spectrum Fisheries Limited 2006 CLD 440; United Bank Limited v. Pak. Leather Grafts
Limited and 3 others 2010 CLC 701; Al-Madina Electric Store v. Habib Bank Limited 2006 CLD
734; Habib Bank Limited v. A.B.M. Graner (Pvt.) Limited and others PLD 2001 Kar. 264 and
Nusrat Textile Mills Ltd. and others v. United Bank Ltd. 2005 CLD 1421 distinguished.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---S. 9(3)-Recovery suit---Necessary ingredients---Defendant sought rejection of plaint on the

ground that the same had not been filed in conformity with provisions of section 9 of Financial
Institutions (Recovery of Finances) Ordinance, 2001---Validity---Plaintiff specifically mentioned
principal amount of finance availed by defendant, principal amount repaid, balance principal
amount, outstanding mark-up payable by defendant till filing of suit and total amount
recoverable from the defendant---Plaint fulled requirements of section 9(3) of Financial
Institutions (Recovery of Finances) Ordinance, 2001.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 9 & 10---Recovery of bank loan---Leave to defend the suit, grant of-Principles-Substantial
question of fact and law---Scope---Plea raised by defendant was that he had raised substantial
question of law and facts and the same could not be determined without recording of evidence-
--Validity---There was only one financial facility, which was admittedly disbursed to defendant,
who admitted availing of the same in full and had also admitted execution of documents---
Amount paid by defendant on account of principal reflected in statement of accounts and
nothing had been paid on account of mark-up by defendant to plaintiff bank, as such the same
did not require any inquiry to be made by an expert or recording of evidence---Defendant failed
to raise any substantial question of law or facts, therefore, High Court declined to grant leave to
defend the suit to defendant---Suit was decreed in circumstances.

Page No. 1 of 13
Pakistan Industrial Credit and Investment v. Messrs Bawany Industries Limited PLD 1998 Kar.
400; The Australasia Bank Ltd. v. Messrs H.S. Mahmood Hassan Akbar and others PLD 1983 Kar.
431; Habib Bank Limited v. Messrs Ahmed Food Industries (Pvt.) Ltd. and others 2002 CLD 668;
Nazimuddin v. Messrs the Bank of Khyber and another 2005 CLD 647; Gul I-Iabib v. Habib Bank
Ltd. PLD 1983 Pesh. 31; Industrial Development Bank of Pakistan v. Al-Mansoor Ltd. and others
PLD 1989 Pesh. 191; Allied Bank of Pakistan v. Masood Ahmad Khan 1994 MLD 1557; Citi Bank
N.A., a Banking Company v. Riaz Ahmed 2000 CLC 847; Habib-ur-Rehman and another v. Judge
Banking Court No.4, Lahore and another 2006 CLD 217; Messrs United Dairies Farms (Pvt.)
Limited and others v. United Bank Limited 2005 CLD 569; Messrs C.M. Textile Mills (Pvt.) Limited
and others v. Investment Corporation of Pakistan 2004 CLD 587; Muhammad Nafees v. Allied
Bank of Pakistan Limited and another 2004 CLD 937; United Bank Limited v. Messrs Ilyas
Enterprises and others 2004 CLD 1338; The Central Bank of India, Ltd., Lahore v. Messrs Taj-ud-
Din Abdur Rauf and others 1992 SCMR 846 and Bankers Equity Limited through Principal Law
Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931
distinguished.

National Bank of Pakistan v. Messrs A.I. Brothers (Private) Limited and others 2007 CLD 1356
and Muhammad Arshad and another v. Citibank N.A., Al Fallah Building, Lahore 2006 CLD 1011
rel.

Qamaruzaaman Khan v. Industrial Development Bank of Pakistan and others 2009 CLD 460;
Umar Hayat v. Agricultural Development Bank of Pakistan 2003 CLD 204; Abdul Razzaq v.
A.D.B.P. 2002 CLD 1707; Bhatt Export Private Ltd. v. United Bank Ltd. 2004 CLD 389; Messrs
Mohib Exports Ltd. and others v. Trust Leasing Corporation Ltd. 2005 CLD 581; Khan Iftikhar
Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation PLD 1971 SC 550; Industrial
Development Bank of Pakistan, Karachi v. Messrs Zamco (Pvt.) Ltd. and others 2007 CLD 217;
Haji Ali Khan & Company, Abbottabad and others v. Messrs Allied Bank of Pakistan Limited,
Abbottabad PLD 1995 SC 362; United Bank Limited v. Ch. Ghulam Hussain 1998 CLC 816; Messrs
Saudi Pak Commercial Bank Limited v. Messrs Marvi Agrochem (Private) Ltd. and others 2007
CLD 1374; Industrial Development Bank of Pakistan v. Muhammad Ayub and others 2009 CLD
346; Shahid Farooq sheikh v. Allied Bank of Pakistan Limited 2005 CLD 1489; Zeeshan Energy
Ltd. and others v. Faisal Bank Ltd. 2004 CLD 1741; Bank of Khyber v. Messrs Spencer Distribution
Ltd. and others 2003 CLD 1406; Messrs U.B.L. v. Messrs Sindh Tech. Industries Ltd. and others
1998 CLD 1152; Messrs Malik & Company and others v. Muslim Commercial Bank and others
2002 CLD 1621; Habib Bank Limited v. Messrs Sabcos (Pvt.) Ltd. 2006 CLD 244; National Bank of
Pakistan v. Messrs A.I. Brothers (Private) Limited and others 2007 CLD 1356; American Express
Bank Ltd. v. Adamjee Industries Limited 1995 CLC 880; Messrs Razzaq & Company v. Messrs
Riazeda (Pvt.) Ltd. 1990 CLC 1243 and Siddique Woollen Mills and others v. Allied Bank of
Pakistan 2003 CLD 1033 ref.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 10---Leave to defend the suit, grant of--Claim of set-off or counter-claim--- Scope---By
raising claim of set-off or counter-claim, defendant cannot be entitled to grant of leave---If leave
is granted on such ground alone, the same may change complexion of suit instituted under
special law i.e. Financial Institutions (Recovery of Finances) Ordinance, 2001---Claim, if any,
defendant has against Plaintiff can properly be dealt With by Court of competent Jurisdiction
including Banking Court, in accordance with law through separate proceedings.

Arshad Tayebally and Abdul Sattar Lakhani for Plaintiff.

Saalim Salam Ansari for Defendants.

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.

Page No. 2 of 13
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

(d) Mark-up payable till 31-12-2009 Rs.46,735,732.55

(e) Amount of mark-up paid NIL

(f) Mark-up outstanding as on 31-12-2009 (d - e) Rs.46,735,732.55

Total Outstanding Amount Rs.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 Annexure ‘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
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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 U.S. Mahmood Hassan 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) Gut 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,

(7) Allied Bank of Pakistan v. Masood Ahmed Khan 1994 MLD 1557,

(8) Citibank N.A., a Banking Company v. Diaz 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 Pakistan 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,
Page No. 4 of 13
(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 Annexure ‘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 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 para-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:--

Page No. 5 of 13
 (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 Ali 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 2003 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 Sabeos (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,

(16)Muhammad Arshad and another v. Citibank N.A., Al F'allah Building, Lahore 2006 CLD
1011,

(17) 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 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

Page No. 6 of 13
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 Shams 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 were equipped with power of attorneys in
their favour by the bank issued under the common seal of the bank hence judgment in the case
of The Central Bank of India is distinguishable on facts and does not improve the case of the
defendants.

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
Page No. 7 of 13
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 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

Page No. 8 of 13
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 subsection 3 of section 9 of the Ordinance, 2001 shows that the
plaint, in the case of a suit of recovery instituted by financial institution, shall specifically state
amount of finance availed by the defendant from the financial institution. It further requires
that the amount paid by the defendant to the financial institution be mentioned and the dates
of payments may also be mentioned in the plaint. It further requires that the amount of finance
and another amount relating to the finance payable by the defendant to the financial institution
upto the date of institution of the suit shall also be mentioned in the plaint.

21. Keeping in mind the above provisions of law if plaint of the plaintiff is examined more
particular paragraph-8 of the plaint, which has been quoted in the earlier part of this order, it
will be seen that plaintiff has specifically mentioned principal amount of finance availed by the
defendant, the principal amount repaid, balance principal amount, outstanding mark-up payable
by the defendant till 31-12-2009 and total amount recoverable from the defendant. It fulfils the
requirement of subsection (3) of section 9 of the Ordinance, 2001 hence it is held that provisions
of subsection (3) of section 9 of the Ordinance, 2001 have been complied with by the plaintiff
while presenting the plaint in this suit.

22. Now taking up next contention of learned counsel for defendant that excess payment to the
plaintiff-Bank has been made by the defendant and nothing is payable by the defendant to the
plaintiff-Bank. He further submitted that on the contrary defendant has to recover substantial
amount from the plaintiff Bank for which counter-claim has been filed by the defendant and
even court-fee on such counter-claim has been affixed.

23. To support the above contention, learned counsel for defendant has invited my attention to
paragraph-9 of leave to defend application wherein it has been stated that between the periods
from October, 2005 to September, 2006 defendant has made total payment of Rs.250,000,000.
It has been further stated in this paragraph that from October, 2006 to September, 2007 an
amount of Rs.392,698,936 has been deposited. It is further mentioned that between periods
from October, 2007 to September, 2008 an amount of Rs.8,000,000 has been deposited. Lastly it
is mentioned that from October, 2008 to September, 2009 Rs.80,764/440 have been deposited.
It has further been mentioned by defendant in paragraph-9 of leave to defend application that
total amount withdrawn by defendant was Rs.623,054,945 It further shows that an amount of
Rs.731,463,376 have been deposited by the defendant. It further reflects that an amount of
Rs.108,408,431 is recoverable by the defendant from the plaintiff-Bank. In the same para dates
and cheque numbers of three cheques have been shown, which according to defendant, have
Page No. 9 of 13
been deposited by it with the plaintiff-Bank, but same do not reflect in the statement of
accounts.

24. Learned counsel for plaintiff while rebutting these entries in paragraph 9 to leave to defend
application has submitted that cash finance facility of Rs.250,000,000 was allowed to the
defendant per letter dated 28th September, 2006 (appears at page 21 of record). Learned
counsel for plaintiff has further invited my attention to annexure-E which is statement of
accounts wherein first entry has been shown to have effected on 30th September, 2006
whereby an amount of. Rs.250,000,000 was credited by the plaintiff-Bank in the account of
defendant. Learned counsel for plaintiff has submitted that finance facility was extended to the
defendant on the last day of September, 2006 hence any payment made by defendant prior to
such date are not relatable to present finance facility, which is subject-matter of this case. He
further submitted that defendant is a Group of Companies and their number of companies are
maintaining number of accounts with the plaintiff-Bank. He further submitted that defendant
might have deposited amount mentioned in paragraph-9 of leave to defend application, but in
some other accounts and in relation to some other finance facility, but amount mentioned in
paragraph-9 of the leave to defend application were never deposited by the defendant in the
present account hence they do not find place in the statement of accounts. Similarly learned
counsel for plaintiff has submitted that the cheques mentioned in para under reference, might
have been deposited by the defendant in some other account, but these cheques were never
deposited in the present account from which present proceedings have arisen. In this view of
the matter argument of learned counsel for defendant has no force accordingly same is
repelled.

25. Other submission of the learned counsel for defendant that statement of accounts file by
the plaintiff-Bank does not contain the entries of payment made by the defendant is also not
tenable in view of my findings in the above paras.

26. Now taking up the contention of learned counsel for defendant that substantial question of
law and facts have been raised by defendant which requires evidence to be recorded. He further
submitted that a Chartered Accountant may be appointed to examine the accounts of the
parties and to determine the liabilities of the parties. The examination of the statement of
accounts filed by the plaintiff-Bank clearly shows that entire finance facility was disbursed to the
defendant on 30th September, 2006 and it reflects all payments made by the defendant to the
plaintiff-Bank on account of principal in the statement of accounts. Similarly statement of
accounts relating to mark-up shows that plaintiff-Bank has charged mark-up from 18th
December, 2008 till 26th April, 2010 and present suit was filed on 4-5-2010. In this view of the
matter there is no discrepancy in amount which requires any evidence or necessitates
appointment of any Chartered Accountant for making enquiry in the accounts of the parties.
This case pertains to only one financial facility, which was admittedly disbursed to the
defendant, who has admitted such availment of facility in full and has also admitted the
execution of documents. The amount paid by the defendant on account of principal reflects in
the statement of accounts and nothing has been paid on account of mark-up by the defendant
to the plaintiff-Bank hence in my view it does not require any enquiry to be made by an expert
namely Chartered Accountant or recording of evidence, hence contention of learned counsel
has no force. No substantial question of law or facts has been raised by the defendant in these
proceedings.

27. With regard to the submission of learned counsel for defendant that since defendant has
raised a calim on account of set-off/counter-claim leave be granted to the defendant by
considering the claim of set-off. The argument of learned counsel is opposed to rule laid down
by the superior Courts. To deal with the issue, it will be advantageous to reproduce the
observation of the Superior Courts on the above point.

28. In the case of American Express Bank. Ltd. (supra) while declining with the leave to defend
application learned Single Judge of this Court had observed that defendant is not entitled to
leave' to defend on the ground that he had counter-claim against the plaintiff. The learned
Judge dealt with the above issue in the following words:
Page No. 10 of 13
 ‘The facts of the above case are similar to the facts of the present case; and respectfully
following the judgment of the Division Bench I would hold that the defendant No.1 is not
entitled to leave on the ground that it has a counter-claim against the plaintiff.

In view of the above, it is not necessary to discuss the merits of the defendant's allegation that
the pledged goods were sold for less than their proper value.

The upshot of the above discussion is that the defendant No.1 has failed to disclose any
defence. Consequently, leave to appear and defend the suit cannot be granted to it. That
disposes of C.M.A. 1443/87 insofar as it relates to defendant No.1.’

29. In the case of Messrs Razaq & Company (supra) learned Division Bench of this Court while
dealing with the subject has held as under:---

‘As regards counter-claim of the appellants in respect of damage to the consignment exported,
that is not germane to the point of issue viz. about grant or refusal of the leave to appeal.

(7) If the pleas being raised by the appellants are accepted for the purpose of granting
leave to defend, that would change entire complexion of the suit, making it an ordinary
suit and thus frustrating the very purpose for which Order XXXVII was incorporated in
the Code of Civil Procedure, containing the provisions comparable to similar provisions
in the Rules of the Supreme Court in England. The purpose of legislating the provisions
contained in Order XXXVII of the Code of Civil Procedure, has been explained by the
Supreme Court of Pakistan in the case of Abdul Karim Jafrani v. United Bank Limited
1984 SCMR 568 in the following words:-

‘The overall object envisaged by the legislature was to provide for expeditious disposal
of litigation involving commercial transactions of a particular nature by a summary
procedure so that the defendant does not have the means open to exploitation in the
ordinary procedure for trial of suits to prolong the litigation and prevent the plaintiff
from obtaining an early decision by raising untenable and frivolous defences.

(8) We find that the appellants have not made out a case warranting interference in
exercise of discretion by learned Single Judge. Accordingly this appeal stands dismissed
in limine.’

30. Finally the honourable Supreme Court of Pakistan in the case of Siddique Woollen Mills etc.
(supra) while dealing with the issue has held as under:--

‘(4) In the course of arguments we have perused the written statement filed by the
petitioners before the Banking Court which was in fact treated as an application for
leave to appear and defend wherein liability towards outstanding amount of the
respondent-Bank was not denied except raising the plea that the bank has retained the
goods of the petitioners unauthorizedly. In our opinion it does not constitute a defence
in favour of the petitioners independently nor it give rise to a bona fide dispute between
the parties because in such like cases the Court is required to examine the liability and
its acceptance by the borrower. As far as question of sustaining losses by the borrower
on account of conduct of the Bank is concerned it can be sorted out in some other
forum instead of claim relief on such basis from the Banking Court. A Banking Court in
exercise of its jurisdiction under section 10 of the Banking Companies (Recovery of
Loans, Advances, Credits and Finances) Act, 1997 can only entertain defence of the
borrower if prima, facie a bona fide dispute has been disclosed.’

31. The examination of the above quoted extract from the judgments of the honourable
Supreme Court of Pakistan and the High Court it is crystal clear that by raising claim of set-off or
counter-claim defendant will not be entitled to grant of leave. If leave is granted on this ground

Page No. 11 of 13
alone, it will change the complexion of the suit instituted under a special law i.e. Ordinance
2001. The claim, if any, defendant has against the plaintiff, can properly be dealt with by the
Court of competent jurisdiction including the Banking Court in accordance with law through
separate proceedings.

32. The case of Pakistan Industrial Credit and Investment (supra) cited by learned counsel for
defendant does not deal with leave to defend application, but it is the judgment after recording
of evidence of the parties and in such case there was dispute about over payment hence
Commissioner for taking accounts was appointed. The judgment cited by learned counsel is not
attracted in the circumstances of the case as the same is distinguishable on facts.

33. In the case of The Australasia Bank Ltd. (supra) cited by learned counsel for defendant, once
again it does not pertain to leave to defend application, but it is a judgment by the Court and
while passing preliminary decree Court held that plaintiffs, in the reported judgments, were
holding account and all the documents necessary for rendering account. Considering the facts of
the case and relationship between the parties the plaintiffs were the accounting party. In order
to ascertain the money due to the plaintiffs from the defendants jointly and severally plaintiffs
were directed to render true and' correct account before the Commissioner. The judgment cited
by learned counsel does no apply in the circumstances of the case as the same is distinguishable
on facts.

34. The case mentioned at Serial No.3 (Habib Bank Limited) (supra), no doubt pertains to an
order of disposal of leave to defend application, but such order for appointment of Chartered
Accountant/Commissioner was passed by consent of the parties, but in the present case when
request was made by the defendants' side for appointment of Chartered Accountant to examine
the accounts the learned counsel for plaintiff vehemently opposed the request and submitted
that present case does not require any accounting discrepancy hence leave to defend
application be heard and decided on merits. For these reasons, the judgment referred by
learned counsel for defendant is of no held to him.

35. In the other case (Nazimuddin) (supra) cited by learned counsel for defendant a Chartered
Accountant was appointed to take accounts of the parties and determine the liability, but said
order was also passed by consent of the parties. As submitted earlier no consent was given by
the plaintiff's site in this case hence defendant cannot take advantage of this judgment as well.

36. The other judgments cited by learned counsel for defendant deal with the authenticity and
correctness of statement of accounts, but in the present case there was no such dispute as
pointed out by me in the earlier part of the order that only one finance facility was allowed to
the defendant for which mark-up has been charged as per agreed terms. All the payments made
by the plaintiff on account of principal are reflecting in the statement of accounts so also in
paragraph-8 of the plaint. No amount was paid by the defendant to the plaintiff on account of
mark-up hence judgments cited by learned counsel for the defendant with regard to correctness
or otherwise of the statement of accounts are not attracted in the circumstances of the case.

37. Learned counsel for plaintiff has submitted that ‘cash finance facility’ was availed by the
defendant which has been admitted by the defendant. He also submitted that execution of
documents by the defendant is also admitted. He submitted that since defendant has failed to
repay the amount to the plaintiff-Bank as agreed, defendant is not entitled to leave to
defendant the suit and the application be dismissed. He relied upon the case of National Bank of
Pakistan (2007 CLD 1356), wherein learned Single Judge of this Court finally concluded as
under:---

‘As regards the question, whether defendants in Suit No.1445 of 1999 are entitled for
leave, the defendants have not denied that financial facilities have been granted by the
Bank and or received by them, the execution of document has also not been denied by
the defendants, the defendants are therefore not entitled for leave to defend the suit.
Suit No.B-02 of 2004 is, therefore, dismissed and Suit No.1445 of 1999, is decreed for
Page No. 12 of 13
 the sum of Rs.58,138,577 with cost of funds at the prevailing rate fixed by the State
Bank of Pakistan from the date of filing of the suit till realization.’

38. The learned counsel for the plaintiff-Bank also relied upon the case of Muhammad Arshad
and another (2006 CLD 1011) wherein the honourable Supreme Court of Pakistan while dealing
with issue of terms of agreement entered into between the customer and the Bank has held as
under:

‘We have no hesitation in our mind to hold that agreement dated 26-6-1999 was authentic,
genuine and executed between the parties and acted upon. A careful perusal of the agreement
dated 26-6-1999 would reveal that mark-up was charged in accordance with the terms and
conditions stipulated therein. It is to be noted that in the agreement dated 26-6-1999 it has
been stipulated in a categoric manner that the petitioners had also entered into mark-up
agreement which was executed on 21-6-1995 and thus, it stood admitted by the petitioners. It
would not be out of place to mention here that an amount of Rs.21,05,280 was mentioned as
mark-up in the last agreement. It would be too late in the day to challenge its authenticity on
the pretext of certain blank columns. The question which arises here at this juncture would be
that as to why certain columns were left blank and if it was so done why the incomplete
agreement was signed by the petitioners? No answer could be given by the -learned Advocate
Supreme Court on behalf of the petitioners. In our considered view the plea of ‘blank columns’
would hardly renders any assistance to the case of petitioners. In view of the provisions as
contained in section 20 read with section 118 of the Negotiable Instruments Act, 1881 no
benefit could be given to the petitioner on the ground that the agreement was not completely
filled in when executed as it would have no substantial hearing on the validity of the
agreement.’

39. In the circumstances, leave to defend application filed by defendant is dismissed for the
aforesaid reasons. Consequently the suit of the plaintiff is decreed as prayed with costs against
the defendant along with costs of funds from the date of default till realization.

40. In view of above order applications (C.M.As. Nos. 11741 and 12085 of 2010) have become
infructuous.

M.H./S-113/K Suit decree

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