2007 C L D 678

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman, JJ

NATIONAL BANK OF PAKISTAN through Manager---Appellant

Versus

Messrs MUJAHID NAWAZ COTTON GINNERS through Partners and 6

others---Respondents

R.F.A. No.128 of 2004, heard on 30th November, 2006.

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

of 2001)---

----Ss. 9 & 18---Suit for recovery of loan---Mortgage of property---

Insurance charges---Mortgage deed clearly stated that in case of failure of
mortgagor to pay any premium of the insurance, the Bank may pay the
same on behalf of mortgagor and recover the same from defendants---
Execution of mortgaged deed having not been denied, Bank, on the
strength of said clause of deed, could recover the insurance charges from
the defendants---Requirement-Bank, however, in addition to the amount
of insurance charges, had also debited the, salary of the staff, inspection
charges and other miscellaneous expenses in the account of the
borrower---Record showed that although the amount of all those charges
was debited in the account of borrowers, yet the Bank did not file any
supporting documents in order to show that such and such amount was
paid by the Bank, to the insurance company as premium, on behalf of the
mortgagors and, that such and such amount was paid as salary---No
document on record even prima facie showed that the said amount was,
in fact, paid to the insurance company/concerned persons---Held, Bank
should have filed the vouchers, receipts or some other documents
manifesting that the said amount was, in fact, paid to the insurance
company---In the absence of any supporting documents, the Bank was
not entitled to recover the said amount merely on the ground that the
same found mention in the statement of accounts, which was not
authenticated by documents/receipts---Banking Court, therefore, had
rightly declined to allow the amount to the Bank.

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

2001)---
----Ss. 9 & 18---Bankers' Books Evidence Act (XVIII of 1891), Ss.2(8) & 4---
Suit for recovery of loan by Bank---Statement of account submitted by
Bank --"Certification" of such statement---Requirements---If the
'certificate' on the 'statement of accounts' by Bank was not in accordance
with the provision of S.2(8), Bankers' Books Evidence Act, 1891 the same
was not 'certified copy' as contemplated by law and such copy of,
statement could not be considered as prima facie evidence of the
existence of entries in the statement of account by the Bank---Such copies
of the 'statement' of the Bank could not be received as evidence of
matters, transaction and accounts as required under S.4, Bankers' Books
Evidence Act. 1891 and on the basis of such statement of accounts, which
was not the 'certified copy', the defendants could not be held liable to pay
the amounts claimed by the Bank.

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

2001)---

---Ss. 89 & 18---Bankers' Books Evidence Act (XVIII of 1891), Ss.2(8) & 4---
Suit for recovery of loan by Bank---Submission of Bank statements, by
Bank---Certificate to be given at the foot of such' statements so as to make
it a 'certified copy'---Requirements enumerated.

It flows from the bare perusal of the provision of section 2(8); Bankers'
Books Evidence Act, 1891 that a certificate, which is to be given at the
foot of copy of statement of account, so as to make it certified copy of the
statement of Accounts, must state the following facts:-

(i) it is true copy of the such entry;

(ii) such entry is contained in one of the ordinary's books of bank;

(iii) it was made in the usual and ordinary course of business:

(iv) such book is still in the custody of the bank;

(v) it must be dated; and

(vi) subscribed by the principal accountant or manager of the bank

with his name and official title.

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

2001)---
----Ss. 9 & 18---Suit for recovery of loan---Finance agreement---Dispute as
to date of expiry of Finance agreement---Finance agreement which bears
cuttings, overwriting, manipulations and interpolation in that behalf, can
be struck down.

Sardar Riaz Kareem for Appellant.

Abdul Majeed Malik for Respondents.

Date of hearing: 30th November, 2006.

JUDGMENT

MIAN HAMID FAROOQ, J.---National Bank of Pakistan, the

appellant/plaintiff, through the present appeal, has called in question
judgment and decree dated 12-5-2004, whereby the learned Judge
Banking Court, Multan, passed a decree, to the tune of Rs.87,387 along
with costs of funds and costs of suit, favouring the appellant-Bank.

2. Precisely stated facts of the case are that the appellant bank/plaintiff
filed the suit for recovery of Rs.10,96,199, against the
respondents/defendants, before the learned Judge Banking Court, inter
alia, pleading that the respondents were granted a cash financial facility
of Rs.5 Million, against securities of pledge stocks and mortgage of
property, belonging to defendants Nos.3, 4 and 7 and the defendants
executed certain documents and availed the facility, however, when they
failed to liquidate the outstanding liability, the appellant bank was
constrained to file the suit for recovery. The respondents, except
respondent No.3, filed the application for leave to defend the suit, which
was resisted by the appellant bank and ultimately the learned Judge
Banking Court, after finding that no serious and bona fide dispute exists
between the parties, dismissed the said leave application and
consequently, after examining the statement of accounts partially
decreed appellant's suit for the sum of Rs.87,387, together with costs of
funds and costs of suit, vide composite judgment and decree dated 12-5-
2004, hence the present appeal.

3. Learned counsel for the appellant has submitted that an amount of

Rs.2,78,757, charged by the appellant Bank, as insurance charges, and
salary of staff etc. in the statement of accounts, has illegally been
deducted, while the appellant Bank is entitled to recover that amount as
per clause (4) of the mortgage deed dated 16-10-1997, thus, the impugned
decree needs modification to that extent. He has further submitted that
the date of the expiry of finance facility was 30-6-1999, while it was
erroneously held that it was 30-4-1999. The learned counsel for the
respondent has submitted that the Bank failed to place on record any
documents showing the alleged payment made to the insurance
company.

4. We have heard the learned counsel and examined the summoned

record. Clause (4) of the said mortgage deed clearly states that in case
mortgagor failed to pay any such premium of the insurance, the bank
may pay the same on behalf of the mortgagor and recover the same from
him. The respondents have not denied the execution of the said mortgage
deed. Thus on the strength of the said clause, the appellant Bank could
recover the insurance charges from the respondents. An amount of
Rs.1,67,459 has been charged as insurance charges, as held by the
learned Court. The appellant bank has also debited the salary of the staff,
inspection charges and other miscellaneous expenses in the account of
respondent No.1, thus, the total amount, as calculated by the appellant,
charged as insurance charges, salary of staff and inspection charges etc.
comes to Rs.2,78,575. We have examined the summoned record and find
that although the said amount was debited in the account of the
respondents, yet the appellant bank did not file any supporting
documents in order to show that such and such amount was paid by the
Bank, to the insurance company as premium, on behalf of the
respondents/mortgagors and that such and such amount was paid as
salary. We are unable to find any document on record even to prima
facie show that the said amount was, in fact, paid to the insurance
company/ concerned persons. The appellant bank should have filed the
vouchers, receipts or some other documents manifesting that the said
amount was, in fact, paid to the insurance company. In the absence of
any supporting documents, the Bank is not entitled to recover the said
amount merely on the ground that the same finds mention in the
statement of accounts, which is not authenticated by documents/receipts.
Thus the learned Judge Banking Court has rightly declined to allow the
said amount of Rs.2,78,757 to the Bank.

5. We have minutely examined the statement of accounts and find that

the same has not been certified as required under the law. The certificate
given at the bottom .of the statement of accounts is reproduced below:

"Certified on oath that all the entries are correct as per ledger
which is still in our custody."

"Certified copy" has been defined under section 2(8) of Bankers'

Books Evidence Act, 1891, which reads as follows:-
 "Certified copy" means a copy of any entry in the books of a bank
together with a certificate written at the foot of such copy that it is
true copy of such entry, that such entry is contained in one of the
ordinary books of the bank and was made in the usual and
ordinary course of business and that such book is still in the
custody of the bank, such certificate being dated and subscribed by
the principal accountant or manager of the Bank with his name
and official title."

It flows from the bare perusal of the said provision of law that a
certificate, which is to be given at the foot of copy of statement of
account, so as to make it certified copy of the statement of Accounts, must
state the following facts:

(i) it is true copy of the such entry;

(ii) such entry is contained in one of the ordinary books of bank;

(iii) it was made in the usual and ordinary course of business;

(iv) such book is still in the custody of the bank;

(v) it must be dated; and

(vi) subscribed by the principal accountant or manager of the bank

with his name and official title.

Placing the definition of "certified copy", as reproduced above, in

juxtaposition with the certificate given by the bank on the copy of the
statement of accounts, one leads to the irresistible conclusion that the
certificate is not in accordance with the aforesaid provision of law. Thus
the statement of accounts is not "certified copy" as contemplated under
section 2(8), ibid. Consequently, the said copy cannot be received as
prima facie, evidence of the existence of such entry and cannot be
admitted as evidence of the matters, transaction and accounts as
required under section 4 of the Bankers' Books Evidence Act, 1891. On
the basis of this statement of accounts, which is not the certified copy, the
respondents cannot be held liable to pay the amounts claimed by the
appellant.

6. As regards next contention of the learned counsel. We find from

sanction letter dated 1-7-1998 that the date of expiry was fixed as 30-4-
1999, but it was struck down by stroke of pen. We have also inspected
finance agreement dated 22-10-1998 which shows the date of expiry as
30-6-1999, however, the same appears to be the result of overwriting. We
find some manipulations and cutting in clauses (1) and (2) of the finance
agreement, so as to make the date of expiry as 30-6-1999. On the basis of
such type of finance agreement which bears cuttings, overwriting,
manipulations and interpolation, it can neither be urged nor held that
the date of expiry is 30-6-1999. We feel that the date of expiry has rightly
been held as 30-4-1999. Contention of the learned counsel has no
substance.

Learned counsel for the appellant has admitted that the respondents
have paid the amount of Rs.51,34,370 after 30-4-1999.

7. In the above perspective, we have examined the impugned judgment

and decree and find that the same do not suffer from any legal infirmity,
those were passed not only in accordance with the record of the case but
also in consonance with the law on the subject. We are not persuaded to
modify the decree, as prayed by the appellant.

8. In view whereof, the present appeal is devoid of merits, hence stands

dismissed with no order as to costs.

M.B.A./N-23/L Appeal dismissed.