EQUITY PARTICIPATION FUND vs Messrs ABBRASIVE PRODUCTS CO. LIMITED

' MUSHIR ALAM, C.J.---1. Instant appeal calls in question the judgment dated 10-6-2006 followed by Decree dated 17-6-2006 whereby the suit filed by the appellant/plaintiff Bank was dismissed on the ground reproduced as follows:-- "Since the Statement of Accounts filed by the plaintiff bank purportedly to support the plaint, containing entries, do not truly reflect the entries as per Bankers Books Evidence Act, therefore, the same cannot be held to be Statement of Accounts. I, therefore have no other option but to hold that the plaintiff bank have failed to comply with the strict provisions of section 9(1) and (2) of the Finance Institution (Recovery of Finance) Ordinance, 2001 to support the plaint with statement of account duly certified as per the provisions of Bankers Books Evidence Act, 1891. I, therefore, dismiss the suit of plaintiff with no order as to costs."

2. It is contended by the learned counsel for the appellant that indeed as per section 9(1) and (2) of the Finance Institutions (Recovery of Finance) Ordinance, 2001 (herein after abbreviated as FIO, 2001) the plaintiff/Bank along with plaint is required to file a Statement of Accounts duly certified under the Bankers Books Evidence Act, 1891 and other relevant documents relating to grant of finance. It is contended that the provision is merely directory and not mandatory. It is further urged that no consequences are provided: therefore, plaint could not be rejected.

3. It is further contended by the learned counsel that the provisions regarding leave to defend application, contrary to the provisions of filing the plaint, provide penal consequences for non- compliance with the requirements of subsections (3), (4) of section 10 of F.I.O., 2001 where applicable and subsection (5) of section 10, F.I.O., 2001 and on failure to comply with the requirements thereto, the consequences are provided in subsection (6) of section 10 ibid, which entails consequence of rejection of the leave to defend application.

4. In this case, it appears from the record that the respondents Nos.1, 3 and 4, though served even before the trial Court, remained absent and were proceeded ex parte. As regard respondents Nos.2 and 5 leave to defend was filed, contested and dismissed on 5-12-2005. As an abundant caution, though the Court was not required to affect service on the respondents who were not appearing before the trial court, in terms of Order. XLI, Rule 14-A, C.P.C. (Sindh Amendment) efforts were made to serve the respondents and ultimately service was affected through substituted mode by way of publication.

5. Respondents were called but did not appear. Mr. Khaleeq Ahmed advocate for respondent No,5, who appeared when the order was being dictated, was not able to controvert the above legal proposition. It was however urged by Mr. Khaleeq that in terms of subsection (2) of section 9(1) of the Finance Institutions (Recovery of Finance) Ordinance, 2001 phrase used is "Plaint shall be supported by statement of account, which in case of financial institution shall be duly certified under Bankers books Evidence Act 1891" and in terms of subsection (3) thereof, plaint is required to contain some particulars as regard finance availed, disbursed and repaid. It was urged that irrespective of consequences, use of word shall makes it mandatory for the Bank to file statement of account per provision of FIO 2001.

6. We have heard the arguments and proceeded to examine the contentions raised by the learned counsel for the appellant and respondent No,5.

7. Section 9 of the FIO, 2001 provides a complete procedure for bringing a suit in the Banking Court, which is initiated by presenting a plaint verified on oath. It requires in terms of subsection (2) thereto that the "plaint shall, be supported by a Statement of Accounts which, in the case of a financial institution, shall be duly certified under the Bankers Books Evidence Act, 1891 and other relevant documents relating to the grant of finance". The provision of subsection (3) ibid provides the manner in which fact regarding the finance disbursed by the financial institution, repayment with date made by the customer, and amount payable by customer is also required to be elaborated in the plaint. Subsection (5) of section 9, F.I.O. 2001 provides the manner in which summons in Form No,4 in Appendix 'B' to the Civil Procedure Code, 1908 or such other form is to be served upon the defendants through all modes including publication.

8. Contrary to the provisions of section 9, F.I.O., 2001 as regard Plaint referred to above, correspondingly section 10, F.I.O., 2001 deals with the "leave to defend application" required to be filed by the Defendant may it be customer, guarantors, mortgagors Financial Institution etc. As the case may be provides inter alia, that on service, the defendants could only defend the suit on obtaining leave from the Banking Court in the manner provided therein within 30 days of the date of first service. Subsection (3) provides that the leave to defend application shall be in the form of written statement containing a summary of the substantial questions of law as well as facts, which in the opinion of the defendant call for recording evidence. Leave to defend application in case financial institution is defendant also necessitate to provide details of the finance availed, amount payable up to the date of filing of the suit, amount paid and the amount disputed as payable. The application for leave to defend is also mandated to be accompanied by all such documents which, in the opinion of the Defendant (customer and/or financial institution as the case may be), support the substantial questions of law or fact raised by him.

9. Consequences for non-compliance of the of subsections (3), (4) and (5) of section 10, F.I.O., 2001 is contemplated in subsection (6) thereto which reads as follows; : "(6) An application for leave to defend which does not comply with the requirements of subsections (3), (4) where applicable and (5) shall be rejected, unless the defendant discloses therein sufficient cause for his inability to comply with any such requirement.

10. As could be noted from the above-quoted provision, the consequences for not complying with the requirements of subsections (3), (4) and (5) of section 10. Ibid; unless sufficient cause is shown, is visited by rejection of application for leave to defend, as observed above in the case of provisions of section 9, F.I.O., 2001 no such consequence is provided for non-complying with the requirement prescribed as regard plaint.

11. It is settled in a number of judgments that one of the essential feature of the mandatory provision is not merely use of word "shall" which may be used merely to stress importance of compliance of particular requirement emphasized or prescribed in the enactment. Ordinarily where consequences of failure to comply with the direction or requirement of a statute are not stated, the direction is treated as directory and not mandatory. However there is consensus of judicial opinion where directions to do some thing in a particular manner entail some penalty or consequence, like in the instance case the consequences for not complying with the requirements of subsections (3), (4) and (5) of section 10 ibid; unless sufficient cause is shown, is visited by rejection of application for leave make's a provision mandatory (One may gainfully see PLD 1978 Kar 926, PLD 2001 SC, 499, 2000 SCM R 1305 and 2001 SCM R 1001, PLD 2007 Kar 243 and 2007 CLC 315).

12. In the case of CITIBANK N.A. v. Judge Banking Court IV and 2 others 2001 CLC 171, suit of the Bank was dismissed being incompetent simply on ground that plaint was not accompanied by copy of power of _attorney. The learned Division Bench of the Lahore High Court, noted that though requirement of law was to file plaint along with statement of account and the requirement was fulfilled, it was further observed that plaint though was to be filed by a duly authorized and competent person but section 9 of the FIO, 2001 had not provided that if copy of Power of Attorney was not filed along with the plaint, the plaint would be dismissed. Dismissal of the suit on this ground was not approved and it was ruled that "learned Banking Court could have given time for filing power of attorney and attended the question thereafter by granting necessary opportunity of evidence". In the case of Habib Bank Limited v. English Engineering Co. 2005 CLD 292. Banking Court rejected the plaint on the ground that Bank did not produced the written finance agreement with the plaint learned Division Bench of the Lahore High Court held that the "Banking Court erroneously applied the provisions of Order VII, Rule 11, C.P.C. Thus the order of rejection of plaint was set aside and, the case was remanded to Banking Court for deciding matter afresh".

13. In view of the foregoing, the Judgment and decree impugned herein, negates the principles discussed above, therefore, set aside, appeal is allowed. Case is remanded B back to learned Banking Court and the Court may direct the plaintiff to comply with such requirement, and if not complied with, the Court may proceed with the matter leaving it .To be -decided at trial and court would be well within its competence to draw inference as may be warranted for non filing of any documents required to be filed with the Plaint under section 9 of F.I.O., 2001.