MTYy MDE3 Y2 Ztcy 1 K Yzgz
MTYy MDE3 Y2 Ztcy 1 K Yzgz
MTYy MDE3 Y2 Ztcy 1 K Yzgz
Present:
Mr. Justice Irfan Saadat Khan
Justice Mrs. Kausar Sultana Hussain
JUDGMENT
IRFAN SAADAT KHAN, J. The instant Special High Court Appeal has
been filed against the judgment and decree dated 09.06.2015 and
2. Briefly stated the facts of the case are that the appellant obtained
appellant through Facility Offer Letter dated 07.11.2007 on the basis of six
month Kibor + 2% with Floor Rate 12% and SBP ERF Rate + 1%, which
was valid for one year. Necessary documents were prepared in this behalf,
which were duly signed by the appellant and the respondent bank. The
/renewed finance facility on the basis of three months Kibor + 3.5% and
SBP ERF Rate + 1%. However, when allegedly the appellant failed to
discharge finance facility availed by him, the respondent bank filed a suit
for recovery of Rs.58,282,490/-, being the principle plus markup and other
charges including cost of suit, against the present appellant, which matter
proceeded before the learned Single Judge, who after hearing the parties
dissatisfied with the said judgment and decree the present Special High
4. Mr. Ali Raza Habb Advocate has appeared on behalf of the appellant
and stated that the learned Single Judge was not justified in allowing the
produced before him. He stated that the learned Single Judge without
considering the fact that higher quality of stock of rice was pledged with
the respondent bank against finance facility has decided the suit on
technical grounds only. He further stated that the appellant pledged his best
quality Super Kernal Basmati Rice with the respondent as security however
somehow or the other the same rice, as per the respondent, turned out to be
that of lower quality i.e. Aree-6, Aree-9 and D-90 in the custody of the
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goods were in the custody of the bank and if there was a difference in the
quality, as alleged by the bank, it was the bank who was responsible for the
same and not the appellant, since, as stated above, the stock of rice
hypothecated with the bank was in the custody of the bank being monitored
reports were also presented and produced before the learned Single Judge
but the same were not considered. He in this regard invited our attention to
various documents annexed with the instant appeal to show that the
hypothecated /pledged stock was in the custody of the bank and it was the
bank who was the custodian of that stock of rice. He further submitted that
if there was a misappropriation in the stock of rice the same was due to the
negligence of the respondent bank and the appellant has got nothing to do
in this behalf. He further stated that the learned Single Judge dismissed the
/survey report also the stock of rice has been mentioned as Super Kernal
Basmati Rice, which was not at all considered. He stated that the dispute
arose between the parties when the auction purchaser wrote a letter dated
21.09.2010 to the bank that the pledged stock is not Super Kernal Basmati
Rice rather the same was Aree-6, Aree-9 and D-90. He also stated that
under Sections 151 and 152 of the Contract Act, since hypothecated goods
were lying under the custody of the bank, it was the responsibility of the
bank to care for the quality and the quantity of the hypothecated goods and
if there was any disparity, it was only the respondent bank who was to be
blamed and not the appellant. He further stated that the learned Single
Judge has not considered the fact that the respondent bank has failed to
has breached the trust between the appellant and the bank. He stated that
even the amounts mentioned in the suit were exaggerated, which were not
at all considered by the learned Single Judge. He further stated that the
learned Single Judge has also relied upon such documents which have no
relevancy with the issue in hand and has decided the matter on mere
and the decree passed by the learned Single Judge may be set-aside. In
support of his above contentions, the learned counsel has relied upon the
following decisions:
1) Habib Bank Limited Vs. Messrs Medina Rice and Ice Mills
and others (2015 CLC 1808)
5) A.M. Burq and others Vs. Central Exchange Ltd. and others
(1966 PLD (W.P) 1)
6) Apollo Textile Mills Ltd. and others Vs. Soneri Bank Ltd.
(2012 CLD 337)
Advocate has appeared on behalf the respondent bank and stated that this
to them the judgment was passed on 09.06.2015 and the appeal was to be
filed within 20 days, whereas the same was filed on 22.07.2015 hence,
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limine. They further submitted that the appellant has miserably failed to
demonstrate that they have not availed the finance facility granted to them
and even during the course of the arguments before the learned Single
Judge and before this Bench also the appellant has not denied availing of
the loans and the finance facility. According to them the manner in which
the various finance facilities were availed by the appellant has elaborately
They stated that the appellant has breached the trust of the bank by
misstating about the quality and the quantity of the stock of the rice pledged
by him with the bank, which prompted the respondent bank to take
appropriate action against him. They also stated that though the appellant
has stated that the quality of the pledged /hypothecated stock to be Super
Kernal Basmati, which rice is of superior quality, but in fact pledged with
the bank lower quality of rice being Aree-6, Aree-9 and D-90 which aspect,
by the learned Single Judge, when the matter was being agitated before
him. They stated that the learned Single Judge was quite justified in
declining the leave to defend application on the basis of the facts obtaining
in the instant matter. They stated that it was the appellant who approached
the bank for availing the finance facilities, which were duly granted, but the
appellant has failed to fulfill his financial legal obligations towards the
bank and thereafter the suit was filed against him. The learned counsel
stated that when the appellant had failed to adjust the finance facilities
granted to him it was only thereafter that the suit was filed. They stated that
the bank. They further stated that even certain cheques issued by the
appellant to the bank were dishonoured. They also invited our attention to
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Section 10(6) of the FIO 2001 and stated that the case of the appellant
squarely falls under the said provision of the law. They vehemently refuted
the contention of the learned counsel for the appellant that if there was a
disparity in the quality and quantity of the stock of goods why no action
was taken by the bank in this behalf. They submitted that it should have
been the appellant rather than the bank to lodge FIR if there was some
disparity in the quality and quantity of the pledged stock. They further
submitted that when the appellant has not questioned the various finance
facility agreements entered between him and the bank, he now is legally
restrained and barred from agitating the instant matter when he has duly
the parties and the bank is fully authorized to take appropriate legal action
against the appellant in case of any default. They invited our attention to
various clauses of the agreements and other documents to prove and show
the liability of the appellant towards the bank and his failure in clearing out
the debts of the bank. They in the end supported the order of the learned
Single Judge and stated that this appeal being meritless is liable to be
1) Habib Bank Limited Vs. Orient Rice Mills Ltd. and others 2004
CLD 1289
2) Messrs World Trans Logistics and others Vs. Silk Bank Limited
and others (2016 SCMR 800)
6) Zeeshan Energy Ltd. and 2 others Vs. Faisal Bank Ltd. (2004
CLD 1741)
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7) Apollo Textile Mills Ltd. and others Vs. Soneri Bank Ltd. (2012
CLD 337)
12) Siddique Woollen Mills and others Vs. Allied Bank of Pakistan
(2003 SCMR 1156)
6. Mr. Ali Raza Habb in his rebuttal stated that he has two main
objections against the judgment of the learned Single Judge firstly the
learned Single Judge has not considered the fact that the respondent bank
has not disbursed the finance facilities to the appellant as per the
quality of the pledged rice was due to the negligence of the respondent
bank, hence the order may be set-aside and the matter may be remanded to
have also perused the record and the various decisions relied upon by them.
evident that primarily he has agitated and argued two main points in the
instant Special High Court Appeal. The learned counsel for the appellant
only:-
9. We will take-up the first objection of the appellant with regard to the
bank. The record reveals that in the year 2007 the appellant approached the
legal and codal formalities and evaluating the collateral offered as security
already been given at page 1 of the present judgment. Thereafter, the parties
entered into agreements with each other and several documents were
utilized the above said finance facilities, which he was under legal
pay out the liabilities in respect of the finances availed by him, he made a
pursuance to this facility of the letter the parties entered into the following
10. The appellant, as noted above, fully utilized the above finance
facilities, however, he failed to adjust and clear out the bank’s liability on
facility offer dated 6.12.2008 after duly signing the same. The details of the
11. The above finance facilities thereafter were made available to the
appellant, who as per the record availed the same also in full. The details of
revised finance facilities are available on the record, as per bank facility
offer letter dated December 06, 2008 (Annexure ‘P/14’ of the file) and the
‘P/15’ to ‘P/22’ of the file). The appellant in order to utilize the finance
stored at Khawaja Godown. The dispute arose between the parties when the
appellant after fully availing the finance facilities did not pay out the bank’s
liabilities towards the bank inspite of various requests and it was thereafter
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that the suit was filed on behalf of the bank for recovery of the outstanding
on the record, between the parties it could be seen that the appellant had
promised to clear out the bank liabilities and has asked the bank to give him
some time due to the some shipment problems. The appellant has even
promised to clear out the entire markup if some time is given to him due to
bad market position and has clearly stated in his letters about bad market
realized to him, that he is in contact with the buyers however as noted from
the record the appellant has failed to clear out the bank liabilities in due
time. The assertion now taken by the learned counsel for the appellant, in
our view, appears to be an afterthought that he has not fully utilized the
finance offered by the bank as per the agreements entered between the
parties; whereas from the facts noted from the record the bank had duly
made available to the appellant all the finance facilities as per the
agreements entered between the parties, which were as per the offer letters.
The appellant before the learned Single Judge as well as before this Court
has failed to demonstrate as to which finance facilities have not been fully
availed or were not made available by the bank to him. The facility offer
letters of November 7, 2007 and 6.12.2008 cleary show the details and
description of the finance facilities being offered by the bank, which have
fully been utilized by the appellant. Hence, the assertion of the learned
counsel for the appellant that the finance facilities offered by the bank were
not fully utilized or made available by them is not borne out of the records
and is found to be contrary on the basis of the facts obtaining in the instant
High Court Appeal. We, therefore, find no merit in this submission made
by the learned counsel for the appellant and reject the same accordingly.
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12. We will now dilate upon the second issue raised by the learned
counsel for the appellant that if there was any change in the quality of the
pledged rice, the bank was responsible for the same since they were the
custodian of it. It is seen from the record that the appellant initially
collaterals, which were fully utilized. However when the appellant failed to
clear out the liabilities of the respondent-bank in due time they again
liabilities and for renewal of the finance facilities and then pledged their
and duly executed a letter of pledge dated 18.12.2008 in this behalf. It was
only when the appellant failed to pay-out his liabilities in due time, he
dated 22.1.2009 (Annexure ‘R/34 of the file) wherein promise to pay out
13. It is a matter of record that the pledged stock of rice was sold either
appellant himself with the permission of the Court and with the consent of
the respondent-bank. It is noted that when the order was made by the Court
with regard to the sale of the pledged rice it transpired that only a portion of
was other variety of rice. The portion of the rice comprising of Basmati
Rice was sold out and sale proceeds were paid to the respondent-bank.
Since there was a dispute with regard to the remaining portion of the rice
whether the same was Basmati or not M/s. K.G. Traders (Pvt.) Limited was
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appointed for examination of the rice, who after examining the same
furnished a report dated July 12, 2011 (Annexure ‘G’ at page 459 of the
file) and at page 465 of the file complete description of the stock available
at the Khawaja Godowns was mentioned, which clearly reveals that Super
Basmati was only 7.7% of the entire stock available at the said godown. It
was under those circumstances that auction purchaser refused to lift the rice
at the given price and then reauction proceedings were initiated and the
remaining rice was sold out which interestingly was purchased by the
14. Now here a question would arise, if the quality of the rice was
initiated by the appellant against the bank. This question perhaps remained
unanswered on the part of the appellant as it has been averred quite strongly
that since the respondent-bank was the custodian of the pledged rice and if
there was a change in the quality, it was the bank who was responsible for
it. It is also noted from the record that it was the duty of the appellant to
secure the pledged stock so far as the quality and quantity is concerned as
the various clauses of the pledge agreement between the parties also clearly
reveal that it was the duty of the appellant to maintain the pledged stock
and keep the respondent-bank informed about the same; keep the register of
the pledged goods for the time being and from time to time pledged with
the respondent-bank, duly and punctually enter particulars of the sold goods
deposited, pay all rents, rates, taxes other imposition and charges in respect
of the pledged stock, will insure the stock and pay the premium etc. From
the valuation /inspection report dated 17.10.2009 it is noted that the keys of
the godown were lying jointly with the Muqaddam and the appellant. It was
also observed in the survey report that the pledged stock was stored in the
godown since long without any movement. Though, it has been averred by
the appellant that the stock was in the custody of the bank but it was the
appellant who had arranged the godown and placed the goods over there. In
the undertaking given by the appellant it has clearly been mentioned that
they would give a free access on the premises to the representative of the
bank and provide them necessary assistance for conducting quarterly site
visits and stock inspections. Hence the assertion of the appellant with
regard to the custody of the pledged stock rice with the bank does not seem
to be borne out of the records. It is noted that the appellant informed the
respondent-bank that the pledged stock was Super Kernal Basmati Rice,
which according to them in 2009 was worth Rs.8,600/- per 100 kgs. and if
the same was found out subsequently to be Aree-6, Aree-9 and D-90 by an
himself subsequently, it was the appellant who appears to have not given
the correct factual position about the quality of rice to the respondent bank.
This also goes against the appellant. Had this being the case, the appellant
would definitely have taken some legal action against the respondent-bank
not been done till date rather it was the other way round as it was the
pledged goods. Moreover even the auction purchaser refused to lift the rice,
which was not Super Kernal Basmati, it was then the appellant himself
changed the quality of rice. It is noted that it was with consent of the parties
that M/s. K.G. Traders was appointed for inspection /survey who submitted
their report, which has been discussed in the above paragraphs. It is also
interesting to note that no reply in respect of the shortfall with regard to the
15. Therefore keeping in view all the above facts, we have reached to
the conclusion that the appellant has miserably failed to demonstrate that
the shortfall with regard to the quality of the stock was upon the
raised by the learned counsel for the respondent need not be addressed in
relied upon by the learned counsel for the appellant and the respondent are
16. In the light of what has been stated above, we do not find any
judgment and decree dated 9.6.2015 passed by the learned Single Judge by
certified by the State Bank of Pakistan from time to time w.e.f. 1.11.2009
till realization of the decretal amount. The judgment and decree thus is
hereby up-held and affirmed and this High Court Appeal is dismissed
JUDGE
JUDGE
Karachi:
Dated: .04.2019.