NUSRAT TEXTILE MILLS LTD. and 8 others vs UNITED BANK LTD. through Attorney

JAWWAD S. KHAWAJA, J.---This appeal filed by the defendants, impugns the judgment and decree of the learned Banking Court dated 29-9-1998, whereby an application filed by the appellants seeking leave to defend, was dismissed and, as a consequence, the suit filed by United Bank Ltd. (respondent/plaintiff) under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was decreed for a sum of Rs.27.966 million.

2. The facts, necessary for the disposal of this appeal, are simple. The respondent-Bank had filed its suit to recover finance provided to appellant No.1, namely, Nusrat Textile Mills Ltd., under four facilities mentioned in para.5 of the plaint. For ease of reference, para.5 is reproduced as under:-- "That on the request and guarantee of the defendants the plaintiff provided the following finance facilities (together referred to as "Finance Facilities") to the defendant No.1:

(i) Cash finance (CF) for a sum of Rs.21.000 million.

(ii) Cash finance (CF) for a sum of Rs.3.000 million.

(iii) Demand finance (DF fixed) for a sum of Rs.20.323 million.

(iv) Finance Against Packing Export (General) (FAPE) for Rs.6.000 million.

3. The appellants Nos.2 to 9 were arrayed as defendants on the basis that they had guaranteed repayment of the finance provided to the appellant company.

4. As per contents of the plaint, the four facilities, noted above, were given under four separate finance agreements. The cash finance facility, mentioned in para.5(i), is governed by finance agreement dated 16-12-1986 which is at page 52 of the paper book. In the said agreement, a sale price of Rs.21.000 million has been mentioned and the same figure appears as the purchase price.

Referring to the statement of account filed by the Bank in relation to the said finance and a tabulation of credit entries filed by the appellants with their P.L.A., learned counsel has demonstrated that a sum of Rs.15.000 million has been paid by the appellant company to the respondent-Bank in excess of the purchase price of Rs.21.000 million.

5. The second facility, which is mentioned at para.5(ii) of the plaint, is governed by a finance agreement dated 16-12-1986 which is at page 135 of the paper book. In this agreement also, the sale price and the purchase price are mentioned as Rs.3.000 million. Learned counsel has shown from the statement of account relating to this finance that a sum of Rs.0.875 million, in excess of the purchase price, has been paid to the respondent-Bank.

6. The third facility, which is mentioned in para.5(iii) of the plaint, relates to demand finance for a sum of Rs.20.232 million. This facility is governed by an agreement dated 20-5-1986 which is at page 195 of the paper book. In relation to this facility, the respondent-Bank has claimed an outstanding sum of Rs.8.89 million. Learned counsel for the appellants has submitted that even if this claim is accepted as correct, it is more than offset by the excess payments made by the appellant company in respect of the two cash finance facilities mentioned in para.5(i) and para.5(ii) of the plaint.

7. Coming next to the fourth facility, which is mentioned in para.5(iv) of the plaint, we note that it is governed by an agreement dated 3-10-1988 which is at page 225 of the paper book. In this agreement also, the same figure of Rs.6.000 million appears as the sale price and the purchase price. On the basis of the statement of account filed by the respondent-Bank, a sum of Rs.0.5 million approximately is still due and payable by the appellant company to the respondent-Bank.

Learned counsel for the appellants has, however, repeated his submission that this sum is offset by the excess payments noted above.

8. Based on the above, it has been argued that the Bank has no claim against the appellants because the appellant Company has, in fact, paid in aggregate, an amount which is in excess of the liability owed by appellant Company in respect of the four facilities noted in para.5 of the plaint.

This contention of learned counsel appears to be well-founded. The claim of the Bank as set out in the plaint does appear to be in excess of the sum justified by the agreements filed with the plaint.

9. Learned counsel for the respondent-Bank was not in a position to controvert the arguments advanced on behalf of the appellants. He submitted that the appellant Company had, over a period of ten years, paid mark-up which had been credited towards the accounts maintained by the Bank in respect of the four finance facilities. On this basis, he argued that from the course of conduct of the appellant Company, it may be inferred that the mark-up had been paid in accordance with terms accepted by the appellant Company. It is implicit in. this argument that the terms, which learned counsel for the Bank wishes the Court to infer, are different from the terms set out in the financing agreements.

The inference suggested by learned counsel for the respondent, cannot be made without there being any evidence on record to justify the same and nor can such inference be drawn on the basis of the existing agreements which have been considered above.

10. At this point, we would also like to note that the respondent-Bank has filed an application seeking to place on record a host of agreements in the present appeal. We note from the record that the agreements or copies thereof have not been filed with this application although a table, identifying the same, has been annexed to the application. We are afraid, this application cannot be allowed because the agreements mentioned therein were not before the learned Banking Court and, as such, the appellants had no opportunity for controverting or commenting on the same in their P.L.A. We also agree with the submission of learned counsel for the appellants that the very filing of this application indicates that the plaint and the documents filed therewith, were not sufficient to justify the passing of a decree as prayed for in the plaint.

11. In the foregoing circumstances, we find that the appellants had disclosed a bona fide defence in their application seeking leave to appear and were, therefore, entitled to grant of leave to defend the suit. We, therefore, allow this appeal and also allow the application filed by the appellants seeking leave to appear. They shall, within thirty days from today, file their written statement before the learned Banking Court and the Court thereafter shall proceed with the case as a regular long cause. Subject to the demands of its workload, the learned Court shall decide the matter within the period prescribed by law.

12. The office is directed to return the record of the Banking Court forthwith.