2026 C L D 102
[Balochistan]
Before Gul Hassan Tareen, J
HABIB BANK LIMITED ---Plaintiff
Versus
Messrs GHAZI STEEL INDUSTRIES (PRIVATE) LIMITED and others ---Defendants
Civil Suit No.04 of 2024, decided on 9th September, 2025.
Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001) ---
----Ss. 3 (2), 9 & 10---Qanun- e-Shahadat (10 of 1984), Art. 114---Bankers’ Books Evidence Act
(XVIII of 1891), S. 4---Suit for recovery of finance ---Estoppel, doctrine of ---Applicability ---
Cost of funds ---Statement of account ---Presumption---Plaintiff / bank filed suit for recovery of
finance but defendant / customer raised the plea of signing of blank documents ---Validity ---
Where executant admis execution of an instrument, he cannot be allowed to plead that he in fact
executed blank papers ---Law of estoppel did not allow defendant / borrower to admit execution
of finance documents and at the same time dispute its contents by stating that at the time of execution of the instruments, they were left blank and were later filled in--- Defendant / borrower
defaulted in discharge of principal sum ---Such default not only incurred cost of funds under S.
3(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 rather was actionable under S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Plaintiff / bank was entitled for cost of funds from pleaded date of default ---Statement of accounts annexed with
plaint were certified in accordance with law, which was prima facie evidence of entries contained there in under S. 4 of Bankers’ Books Evidence Act, 1891--- Application for leave to
defend the suit was rejected ---Suit was decreed in circumstances.
Mohd. Siddiq Mohd. Umar v. Australasia Bank Ltd. PLD 1966 SC 684; Muhammad
Naveed v. Habib Bank Limited 2024 CLD 648; Decent Builders and Developers v. Standard Chartered Bank (Pakistan) Ltd. 2021 CLD 130; Abdul Khaliq v. MCB Bank Limited 2021 CLD 776; Jamal Tube (Pvt.) Ltd. Lahore v. First Punjab Modarba, Lahore 2021 CLD 1372; Bank of Punjab v. Fazal Abbas 2020 CLD 977; Anees -ur-Rehman v. Faysal Bank Limited 2019 CLD
1031; Murshid Ali v. United Bank Limited 2016 CLD 1471; Asia Motor Company v. NIB Bank Limited 2016 CLD 609; Pak Oman Investment Company Ltd. v. Chenab Ltd. 2016 CLD 1903; Haroon Traders v. K.A.S.B. Bank Ltd. 2015 CLD 645; Bank Alfalah Limited v. Presiding Officer 2014 CLD 160; Habib Metropolitan Bank Ltd. v. Abid Nisar 2014 CLD 1367; Elbow Room v. MCB Bank Limited 2014 CLD 985; Telecard Limited v. Pakistan Telecommunication Authority 2014 CLD 415; Apollo Textile Mills Ltd. v. Soneri Bank Ltd. 2012 CLD 337; Shaz Packages v. Bank Alfalah Limited 2011 CLD 790; Bankers Equity Ltd. v. Bentonite Pakistan Ltd. 2010 CLD 651; National Bank of Pakistan v. Mujahid Nawaz 2007 CLD 678; Bank of Punjab v. Mah Tallat Sultan 2006 CLD 773; United Dairies Farms (Pvt.) Ltd. v. United Bank Ltd. 2005 CLD 569; Government of Pakistan v. Premier Sugar Mills PLD 1991 Lah. 381;
Australasia Bank Ltd. v. H.S. Mahmood Hassan PLD 1983 Kar. 431 and SDO, PESCO v. Wadan Sher 2023 SCMR 236 distinguished.
Ajmal Khan Kasi for Plaintiff.
Zayyad Khan Abbasi for Defendants.
Date of hearing: 29th August, 2025.
JUDGMENT
GUL HASSAN TAREEN, J. --- Habib Bank Limited, a financial institution, registered
under the Companies Ordinance, 1984 has instituted this suit under section 9, the Financial Institutions (Recovery of Finances) Ordinance 2001 ('F.I.O') for recovery of Rs.265,616,346.4, together with cost of funds and cost of suit from the defendants on account of financial facilities
extended to the defendant 1 ('company') through its directors (defendants 2 to 4) and defaulted by
it on its payment obligation.
2. Briefly, facts are that at the request of defendants, plaintiff sanctioned financial facilities
to the defendants at the rate of mark -up agreed upon and against the securities furnished by
defendants in 2007. Whereafter, financial facilities were renewed from time to time. Vide facility
offer letter dated 21 July 2023, following financial facilities were extended to the defendants.
(i) Running Finance facility renewed up to Rs.98,000,000/ - to finance the working capital
requirements of the company with mark up at the rate of 03 months kibor plus 2% for a tenor of 01 year expiring on 31 March 2024.
(ii) Short Term Resolving Loan facility with aggregate limit of Rs 26,000,000/ - was renewed
to finance the Company's local purchase of raw material with mark up at the rate 03 months
kibor plus 2% payable in bullet payments with a tenor of 90 days from the date of disbursement
of each term loan expiring on 31 March 2024.
(iii) Cash Finance facility with limit Rs.65,500,000/ - was renewed against pledge of stocks
with mark up at the rate 03 months kibor plus 2% for a tenor of 180 days from the date of disbursement expiring on 31 March 2024 and
(iv) Payment Guarantee facility of Rs.35,772,000/ - utilized for issuance of Guarantee to the
Sui Southern Gas Company to secure gas supply on credit to the company was renewed against commission at the rate 0.45% per quarter, limit expiring on 31 March 2024.
To secure repayment of sanctioned financial facilities, defendants hypothecated stock of
iron and steel scrap etc, with 30% lending margin vide charge certificate of SECP dated 16
September 2020, pledge of steel wire stock of 634.96 M/tons under custodian arrangements with
25% lending margin and pledge charge of Rs.133,330,000/ - registered with SECP., 15% cash
margin on LG facility, legal mortgage of Rs.200,000/ - and equitable mortgage of
Rs.279,300,000/ - over industrial steel mill property land, building plant and machinery, bearing
unit one admeasuring 22500 square meters, located at Phase -IV, Quetta Industrial and Trading
State, Sibi Road Quetta and personal guarantees of the directors/defendants 2, 3 and 4. Defendants also executed and provided to the plaintiff, 12 charge documents as described at para 6 of the plaint. Defendants were failed to pay the agreed quarterly mark up and to adjust the outstanding loans by the expiring date, thus, committed willful default of repayment of loan with mark up. Defendants had committed breach of trust by unauthorized lifting of pledged goods from their factory. As such, the custodian, M/s. Tri -Star Company Limited registered an FIR on
22 July 2024 against one of the director of the company at P.S, New Sariab Quetta, Whereafter, the company expelled out the godown keeper of said custodian from their company on 25 July 2024. Despite lapse of considerable period, the company has failed to discharge its liability towards repayment of loan and the agreed cost of funds. Though, the defendants had admitted their liability vide letters submitted for consideration of compromise which were declined. Hence, this suit.
Plaintiff sought recovery of Rs.265,616,346.41 along with mark up, cost of funds and
cost of suit; perpetual injunction to prevent the defendants from alienating or creating third party
interest against assets and to allow the plaintiff to sale out the all pledged stocks presently available at the factory through Nazir of the Court.
3. In pursuance to the summons issued by this Court, the applicants -defendants made a
common Petition for Leave to Defend 473/2025 ('PLA') under section 10, the FIO for leave to defend the suit. Exercising right of further pleading, plaintiff filed replication.
4. Learned counsel for the applicants submitted that the suit has been instituted in violation
of Order XXIX, Rule 1, the Code of Civil Procedure, 1908 ('Code') for, the plaintiff has not filed
resolution of its Board of Directors, authorizing Sami -ur-Rehman to institute the suit on behalf of
the plaintiff -bank. Thus, the very institution of the suit is without the lawful authority which
defect is not curable. Next submitted that annexures at pages 17 to 34 were executed prior to the offer letter dated 21 J uly 2023, thus, no liability had arisen against the defendants. Further
submitted that documents sued upon are blanks and incomplete and, plaintiff has not furnished a complete statements of account with the plaint, which is violation of the mandatory provision of
sections 9 and 18, the FIO. Furthermore submitted that plaintiff did not make payment to the
SSGC, thus, plaintiff had not paid this facility. Therefore, the bank guarantee had already expired on 25 November 2024. In conclusion submitted that plaintiff has not placed on record copy of agreement based on interest and for these material and substantial questions of law and facts, the defendants are entitled for unconditional leave to appear and defend the suit. Learned counsel
placed reliance on the following case laws: -
Mohd. Siddiq Mohd. Umar v. Australasia Bank Ltd. (PLD 1966 Supreme Court 684)
Muhammad Naveed v. Habib Bank Limited (2024 CLD 648)
Decent Builders and Developers v. Standard Chartered Bank (Pakistan) Ltd. (2021 CLD
130)
Abdul Khaliq v. MCB Bank Limited (2021 CLD 776)
Jamal Tube (Pvt.) Ltd. Lahore v. First Punjab Modarba, Lahore (2021 CLD 1372)
Bank of Punjab v. Fazal Abbas, (2020 CLD 977)
Anees -ur-Rehman v. Faysal Bank Limited, (2019 CLD 1031)
Murshid Ali v. United Bank Limited (2016 CLD 1471)
Asia Motor Company v. NIB Bank Limited (2016 CLD 609)
Pak Oman Investment Company Ltd. v. Chenab Ltd. (2016 CLD 1903)
Haroon Traders v. K.A.S.B. Bank Ltd. (2015 CLD 645)
Bank Alfalah Limited v. Presiding Officer, (2014 CLD 160)
Habib Metropolitan Bank Ltd. v. Abid Nisar, (2014 CLD 1367)
(sic) Habib Metropolitan Bank Ltd. v. Abid Nisar, (2014 CLD 1367)
Elbow Room v. MCB Bank Limited, (2014 CLD 985)
Telecard Limited v. Pakistan Telecommunication Authority, (2014 CLD 415)
Apollo Textile Mills Ltd. v. Soneri Bank Ltd. (2012 CLD 337)
Shaz Packages v. Bank Alfalah Limited, (2011 CLD 790)
Bankers Equity Ltd. v. Bentonite Pakistan Ltd. (2010) CLD 651)
National Bank of Pakistan v. Mujahid Nawaz, (2007 CLD 678)
Bank of Punjab v. Mah Tallat Sultan (2006 CLD 773)
United Dairies Farms (Pvt.) Ltd. v. United Bank Ltd. (2005 CLD 569)
Government of Pakistan v. Premier Sugar Mills, (PLD 1991 Lahore 381)
Australasia Bank Ltd. v. H.S. Mahmood Hassan (PLD 1983 Karachi 431)
5. Plaintiff's learned counsel submitted that, in the PLA under consideration, applicants -
defendants have not disputed, availing of the pleaded financial facilities, the rate of mark up as
they had agreed upon; unconditional payment of loan amount, execution of finance agreement, pledge of stocks and execution of charge documents. Therefore, applicants have failed to raise any substantial question of law and any bona fide claim in their common PLA and for this reason, the PLA is liable to dismissal. Next su bmitted that applicant had admitted the pleaded
liability through various letters by which they had sought compromise on the proposed terms which offer was declined. Thus, applicants are not entitled to appear and defend the suit. He
submitted that plaintiff has authorized its officer to institute, sign and verify the plaint, therefore,
applicants' objection is hyper technical and on this ground, they cannot avoid the liability. In conclusion, the learned counsel referred to the section 10(4)(5) and (7), the FIO and finally prayed for dismissal of PLA and to decree the suit as prayed for.
6. Heard arguments, considered respective contentions of both sides and have gone through
the provisions of FIO as referred to and the case laws cited at bar.
7. Applicants' learned counsel has raised a legal objection, that the plaintiff is a financial
institution incorporated under the Companies Ordinance, 1984 (since repealed), and, as a corporate entity, it could not have instituted the suit without prior resolution of the members of the Board of Directors of the Bank, thereby authorizing the present purported attorney to institute, sign and verify the plaint on behalf of the plaintiff -bank. Learned counsel referred to
the provisions of section 9 subsection (1), the FIO section 173 subsection (3), the Ordinance, 1984 and Order XXIX, Rule 1, the Code. Plaintiff has instituted the suit through Sami -ur-
Rehman Khan officer/attorney who has signed the plaint and, verified the plaint on oath, and has signed the plaint and the affidavit annexed hereto, on behalf of the plaintiff. Plaintiff has annexed a power of attorney dated 29 June 2017 which was executed before, and authenticated by, Syed Nasir Hussain, Advocate and Notary Public. Plaintiff has executed this power of attorney and, vide clause 9, has authorized Sami -ur-Rehman Khan, ‘to commence prosecute, continue and
defend all actions, suit or legal proceedings whether civil, criminal or revenue et cetera’. The attorney has been authorized to appoint Advocates and to make, sign, verify, execute plaint, petitions et cetera for and on behalf of the plaintiff. Thus, plaintiff has duly authorized the said attorney to institute the suit on its behalf and to do all acts as mentioned in clause 9 of the power of attorney. Article 95, the Qanun- e-Shahadat Order 10, 1984 provides, presumption as to power
of attorney, which reads as: -
“The Court shall presume that every document purporting to be a power -of-attorney, and
to have been executed before, and authenticated by, a notary public or any Court, Judge,
Magistrate, Pakistan Counsel or Vice Counsel, or representative of the Federal Government,
was executed and authenticated.”
Applicants' learned counsel could not rebut this mandatory presumption of law by
placing on record any material in support of his contention.
8. On 11 April 2025, plaintiff's learned counsel made an application under Order XIII, Rule
2 read with section 151, the Code for placement on record the extracts, from the minutes of 55th
Board Meeting held on 28 December, 1998 and, from the minutes of 174 Board Meeting held on 21 October 2015. Vide order dated 11 April 2025, the application was allowed subject to all just and legal exceptions and it was held that the applicants' learned counsel would be at liberty to raise objections on these two instruments. Vide minutes of meeting of the Board of Directors of plaintiff dated 28 December 1998, it was resolved that, ‘all such Officers, Managers or Executives of the Bank who are holding power of attorney of Habib Bank Limited (Banking Company) be and are hereby authorized to institute/file suit and to conduct, defend, compound the legal proceedings by or against the Banking Company. It was further resolved that, ‘for the above purpose, the above persons are hereby further authorized to sign jointly with another attorney of the Bank, all plaints, application, compromise, statements and to verify the plaint on Oath before any Court including Banking Courts, High Courts. Supreme Court or before any judicial authority and to Submit documents and produce evidence in any of above Courts and or authority.’
9. Vide minutes of the 174th Board Meeting dated 21 October 2015, it was resolved that
Nauman K Dar (President and CEO), Rizwan Haider (Chief Risk Officer), Tariq Akbar (Head, Global Operations), Jamal Nasir (Head, Human and Organizational Development) and Nausheen Ahmed (Company Secretary) were appointed as bank's attorneys and, had been authorized to sign and execute power of attorney for the Bank. In this case, the annexed Power of attorney has been executed, signed and counter signed by 2 the attorneys, Jamal Nasir and Tariq Akbar. The
plaintiff had passed the resolutions and thereby, authorized all those who were holding power of
attorneys of the bank, to institute and defend the suit by or against the bank. Thus, present attorney was able to institute the suit on the strength of power of attorney executed by said Jamal Nasir and Tariq Akbar who had been authorized to do so vide resolution of the Board of
Directors of plaintiff dated 21 October 2015. Thus, plaintiff has complied the provision of Order
XXIX, Rule 1, the Code which reads as: -
"In suits by or against a corporation, any pleading may be signed and verified on behalf
of the corporation by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case."
10. Though, plaintiff had not filed the afore discussed two resolutions of the Board at the
institution and registration of the suit, however, on 11 April 2025, plaintiff's application for placement on record the two resolutions of the plaintiff -bank was allowed subject to all just and
legal exceptions and it was held that the applicants' learned counsel would be at liberty to raise all objections to these two resolutions. Resolutions were allowed to be placed on record subject to all just and legal exceptions. 'Whether subsequent filing of the resolutions passed by the Board of the plaintiff, after institution of the suit, is a curable defect. The Apex Court, in the case of SDO, PESCO v. Wadan Sher published in 2023 SCMR 236 has held that, absence of a Broad Resolution is not an incurable defect which renders a suit defective. Relevant in the case law reads as: -
"11. Even otherwise, this Court in its pronouncements such as Rahat and Company v.
Trading Corporation of Pakistan Statutory Corporation (2020 CLD 872 Supreme Court) has held that even in the absence of a Board Resolution, pleadings can, either expressly or impliedly, be subsequently ratified. The Court can, therefore, come to the conclusion that the Corporation had ratified the act of signing the pleadings by its Officer(s). As such, it is discernable from the said
pronouncement of this Court that the absence of a Board Resolution is not an incurable defect
which would ipso facto render a plaint/suit defective. Rather, it is a curable defect and, in certain
instances, is not even necessary if subsequently, the plaint/suit is ratified by a person competent
and empowered to do so.”
The power of attorney holder has not sued the applicants -defendants in his individual
capacity rather, on behalf of the plaintiff -bank through duly executed power of attorney by the
authorized two attorneys of the bank vide resolutions of the Board of Directors of the bank dated 28 December 1998 and 21 October 2015.
Therefore, applicants' learned counsel contention is repelled. Case laws cited by the
applicants' learned counsel on this legal proposition are distinguishable.
11. As far as rest of the contentions of applicants' learned counsel are concerned (pleaded in
their PLA) those are without legal substance. Applicants' in their common PLA and the documents annexed thereto, have not denied, the finance facilities they had availed and, the execution of documents, sued upon by the plaintiff and the execution of charge documents, prescribed at para 6 of the plaint. The burden of proof, to plead and raise substantial questions of law and bona fide claim to contest the suit through framing issues and recording evidence, was on the applicants which they have failed to discharge and, for this reason, they are not entitled to appear and defend the suit.
12. In preliminary objection 18, the applicants have pleaded that the guarantees as relied
upon by the plaintiff, were procured without their free will. In preliminary objection 30,
applicants have admitted the documents of finances as relied upon by the plaintiff, however, they have pleaded that plaintiff had procured blank forms and those were later filled in by the plaintiff. In preliminary objection, applicants have admitted their signatures on the finance documents as relied and sued upon by the plaintiff.
13. It is a settled proposition of law that where an executant admits the execution of an
instrument, he cannot be allowed to plead that he had in fact executed a blank paper. Law of
Estoppel would not allow the applicants to admit execution of the finance documents and at the same time, dispute its contents by stating that at the time of execution of these instruments, they were left bank and the bank had later filled in.
14. In preliminary objection 44, applicants have pleaded that, 'the Agreements stated to have
been entered into between the Plaintiff and the Defendants were signed/executed under coercion
and duress’. Applicants had availed the finances from the plaintiff -bank and, for the first time
came up with the plea that finance agreements were result of coercion and duress. In other
words, they have admitted the execution of the finance agreements, however, according to their
claim, their consent to execute them was caused by coercion and duress. Applicants have not given detail of coercion and duress whereby their consent was allegedly obtained by the plaintiff at the time of execution of the finance agreements. (Order VI rule 4, the Code). Applicant had availed the finances and executed the charge documents to secure the repayment of loan without
any objection. On the other hand, in additional plea 11, the applicants have referred to the poor
industrial growth of Pakistan. Relevant is reproduced hereunder:
"Further to above, it is also matter of fact that Province of Balochistan has its own
importance especially as regards to business environment and law and order situation. After
Covid- 19, the business community all over the world has suffered a lot including the Steel sector
in Pakistan is in worst situation. Besides, in Pakistan, due to increase in SSGC, electric tariff as well as other taxes have forced the business community to shut down their businesses as such keeping in view of the entire situation, the defendants bonafidely attempted to negotiate with the bank so as to reach an amicable settlement after reconciliation of amount payable but the bank neither provided any document as requested nor paid heed to offer of the defendant No.1 and has
filed the instant suit in order to create harassment for a forcible solution under financial duress."
Applicants have, thus, raised following inconsistent rather destructive plea in their PLA: -
(i) they had executed/signed the blank finance instruments;
(ii) they were forced by the bank through coercion and duress, to execute the finance
instruments; and
(iii) they had obtained the facilities, however, because of poor industrial growth of steel sector
in Pakistan, they had attempted to negotiate with the plaintiff with regard to the claimed amounts,
15. Applicants had admitted their liability in a letter dated 09 September 2024 which they
have defended upon as annexure (D/1). Relevant in the D/I is reproduced hereunder: -
"We therefore request you to allow us to repay the principal + Markup Facility for the
period expired on 30 -Mar-2024 in 8 years in the monthly sum of Rs.2,500,000/ - without any
Markup or Markup on Markup and that we can begin from 01- Jan-2025 and (accordingly) we
have every reason to believe that you will revise the E -CIB accordingly."
Applicants, vide D/I had offered the plaintiff to allow them to pay the principal and
markup facility in 8 years in the monthly sum of Rs.2,500,000/ -, that is, Rs.2,500,000 x 12
months = Rs.30,000,000/ - x 8 years = Rs.240,000,000/ -. Applicants have relied and referred the
D/1 in their phra -wise reply of para 21 of the plaint. Thus, applicants had admitted liability of
Rs.240,000,000/ - in the letter dated 09 September 2024 (Annex. D/1). Vide letter dated 24
September 2024 (Annex. D/2), plaintiff had rejected applicants this offer of compromise. As applicants had admitted their liability, therefore, the objections raised by the
applicants in PLA are not substantial and bonafide rather mala fide to linger on the case and
postpone their liability for indefinite period.
16. For the foregoing reasons, applicants/defendants are liable to pay the principal amount
and the claimed cost of funds to the plaintiff under section 3 subsection (2), the FIO and, being an actionable claim, plaintiff is entitled to claim it under section 3, the FIO. Section 3 reads: -
"3. Duty of a customer. (1) It shall be the duty of a customer to fulfill his obligation to the
financial institution."
(2) Where the customer defaults in the discharge of his obligation, he shall be liable to pay,
for the period from the date of his default till realization of the cost of funds of the financial institution as certified by the State Bank of Pakistan from time to time, apart from such other civil and criminal liabilities that he may incur under the contract or rules or any other law for the time being in force,
(3) For the purposes of this section, a judgment against a customer under this Ordinance shall
mean that he is in default of his duty under subsection (1), and the ensuing decree shall provide
for payment of the cost of funds as determined under subsection (2)."
17. Undeniably, applicants had defaulted in discharge of principal sum. Such default, not
only incurs the cost of funds under section 3(2), the FIO, rather is actionable under section 9. Plaintiff is entitled for the cost of funds from pleaded date of default, that is, 07 August 2024.
18. Statements of accounts annexed with the plaint have been certified in accordance with the
law which are prima facie evidence of the entries contained therein under section 4, the Bankers'
Books Evidence Act 1891. Section 10 subsection (3), the FIO, provides that the application for leave to defend shall contain a summary of substantial questions of law as well as fact in respect of which, in the opinion of the defendant, evidence needs to be recorded.
19. In the light of the foregoing, the applicants -defendants have not raised any substantial
question of law and fact in their PLA that necessitate recording of evidence, as such, the PLA made by the applicants bearing CMA 473/2025 stands rejected. Case laws cited by the applicants' learned counsel are distinguishable.
20. Consequently, the plaintiff is entitled to have a decree in its favour. The plaintiff's suit is
decreed in the sum of Rs.268,616,346.41 along with mark up w.e.f. institution of suit; that 26
October 2024 till realization of actual repayment against the defendants and cost of funds w.e.f.
07 August 2024. Final decree for sale of mortgaged property mentioned at para 5(iv) of the plaint
and for sale of the hypothecated goods (if available) is also passed for recovery of the decretal
amount including costs of suit.
Suit stands decreed. Office to draw decree sheet.
The suit stands converted into execution proceeding. Case will be heard for execution on
the expiry of thirty days from the date of pronouncement of this judgment and decree.
MH/127/Bal. Suit decreed.This judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
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