GRINDLAYS BANK Versus FANCY INVESTMENT LTD.

The present suit has been filed by the plaintiff‑bank for recovery of Rs.13,06,947.65 against the defendants. According to the plaintiff, defendant No. 1 had been granted overdraft/loan by the Mercantile Bank Ltd. and the overdraft amount of defendant No. 1 was transferred to the plaintiff‑Bank on 2‑9‑1969 upon the taking over by the plaintiff-Bank of the assets and liabilities of Mercantile Bank Ltd. defendant No.2 has been impleaded as a defendant as a guarantor of defendant No.l Civil Miscellaneous Application No. 1824 of 1983 has been filed by the defendants under Order XXXVII, rule 3, C.P.C. seeking leave to defend the present suit. I have heard Mr. J.H. Rehmatullah, learned counsel for the defendants and Mr. K.S. Talati, who has appeared on behalf of the plaintiff‑Bank.

2. In support of the application for leave to defend the following contentions have been raised by the learned counsel for the defendants:‑------------

(a) Initially the loan/overdraft was granted by Mercantile Bank Ltd.; whereas the present suit has been filed by the plaintiff‑Bank which is a different entity and the plaintiff‑Bank, in respect of the loan/overdraft granted by Mercantile Bank Ltd., does hot come within the definition of "borrower" given in the Banking Companies (Recovery of Loans) Ordinance, 1979.

(b) It is an ordinary suit and it is not based on a promissory notes.

(c) The accounts filed with the plaint are not complete as admittedly the account maintained by the defendant No. 1 is much older.

It was argued that in the circumstances the present suit should be treated as an ordinary suit or in any case unconditional leave to defend the suit be granted to the defendants.

3. I find no substance in the aforesaid contentions raised by the learned counsel for the defendants. No doubt the original loan/overdraft had been granted by Mercantile Bank Ltd.; according to para. 4 of the plaint the limit of the facility was subsequently reduced in 1970 to Rs.17,00,000 and again to Rs.12,00,000 and the defendant No. 2 executed guarantees for the said amount on 28‑10‑1975 and again on 27‑3‑1980. The execution of these guarantees has not been denied by defendant No. 2 and the fact that the facility was reduced in 1970 to Rs.17,00,000 and then to Rs.12,00,000 after 2‑9‑1969, has also not been denied by the defendants. Then attested photo copies of 10 letters from 10‑5‑1980 to 31‑10‑1981, all written by defendant No.2 on behalf of defendant No.l addressed to the plaintiff‑Bank which have been filed with the counter affidavit, dated 19‑12‑1982 on behalf of the plaintiff have not been specifically denied by the defendants. In the re‑joinder, dated 10‑5‑1983 of defendant No. 2, writing of these 10 letters, which acknowledge the amount due from defendants to the plaintiff‑Bank, have not been denied. In the circumstances the contention of the learned counsel for the defendants that the defendants are not borrowers as per the definition given in section 2(b) of the Banking Companies (Recovery of Loans) Ordinance, 1979; has no substance. The plaintiff‑Bank is admittedly a "banking company" as per the definition contained in section 2(a) of the 1979 Ordinance and although original loan/overdraft had been given to the defendant No. 1 by Mercantile Bank Ltd.; the transfer of this loan to the plaintiff‑Bank stands admitted by the letters of the defendants and as such the loan/overdraft shall be deemed to be the loan/overdraft provided by the plaintiff‑Bank to the defendant No. 1.

As regards the present suit not being based on promissory note, it may be observed that under the provisions of the Banking Companies (Recovery of Loans) Ordinance, 1979, the Special Court is required to follow the summary procedure provided in Order XXXVII of the Code of Civil Procedure. In such suits, the defendant‑borrower has to file an application under Order XXXVII, rule 3, C.P.C. for seeking leave to defend, and without grant of such application, the defendant‑borrower is not entitled to defend the suit. It is precisely for this reason that the defendant has filed Civil Miscellaneous Application No. 1824 of 1983 for leave to defend this suit. The fact that the suit is not based on a promissory note does not make this suit an ordinary suit as was wrongly contended by the learned counsel for the defendants.

The last contention of the learned counsel for the defendants was that the statement of accounts filed alongwith the plaint is not complete. In this connection reference may be made to the 10 letters of the defendants addressed to the plaintiff‑bank, copies whereof have been filed alongwith the counter‑affidavit of the bank, which acknowledge the amount due to the plaintiff‑bank by the defendants. Specifically reference may be made to the letter, dated 31‑10‑1981 in which the subject is written as follows:‑ -

"RE‑PAYMENT OF DEBIT BALANCE OF OUR

A/C Rs.11,70,622.05 PLUS INTEREST UPTO

DATE OF RE‑PAYMENT."

And as the amount has been admitted in letter, dated 31‑10‑1981 and in various other letters of the defendants which letters have not been denied, the contention of learned counsel that complete statement of accounts has not been filed loses its force.

4. No ground has been made out for grant of leave to defend. The claim is admitted in the correspondence by the defendants. Civil Miscellaneous Application No. 1824 of 1983 filed by the defendants under Order XXXVII, rule 3, C.P.C. is accordingly dismissed. As a result the plaintiff‑Bank is entitled to a decree as prayed.

Suit No. 211 of 1983 is decreed in favour of the plaintiff‑Bank and as against the defendants, jointly and severally, for Rs.13,06,947:65 with interest at the rate of 15% per annum from the date of the filing of the suit till realization. The plaintiff shall also be entitled to the costs.

A.A Suit decreed.