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Suit No. 930 of 1985, decided on 5th October, 1986.

‑‑0. XXXVII, Rr. 2 & 3‑‑Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S.6‑‑Banking Companies (Recovery of Loans) Rules, 1980, R. 8‑‑Limitation Act (IX of 1908), S. 5 & Art. 159‑‑Suit for recovery of Bank loans‑‑Application for leave to defend, limitation for‑‑Delay, condonation of‑‑Evidence on record sufficiently proved that summons were served on defendants by three prescribed modes of service i.e. through bailiff of Court, by registered post and through publication‑‑Service of summons through registered post not opened by defendants‑‑Knowledge of proceedings against defendant, held, would be presumed by their non‑denial of service through post‑‑Application for leave to defend suit filed by defendants beyond prescribed period was time‑barred in circumstances.

P L D 1986 Kar. 369 ref.

‑‑‑0. XXXVII, Rr. 2 & 3‑‑Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S. 6‑‑Suit for recovery of Bank loans‑ Partnership in firm‑‑Proof‑‑One of defendants acting as partner of respondent firm had been corresponding with plaintiff bank on behalf of other partners of firm‑‑Such defendant, held, could not later on claim that he was not partner of said firm.

‑‑‑0. XXXVII, Rr. 2 & 3‑‑Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S.6‑‑Limitation Act (IX of 1908), S.19‑‑Suit for recovery of loans‑‑Limitation for‑‑Expiry of period of Promissory Note‑‑Acknowledging liability of loans‑‑Effect‑‑Liability in respect of loans admittedly having been acknowledged by defendants from time to time within period of limitation as contemplated by S. 19, Limitation Act, 1908 and amounts towards partial adjustment of such loan having been deposited by defendants‑‑Claim of plaintiff‑bank towards such loan, held, would be considered in time even after expiry of period of Promissory Note on basis of which such loan was given by plaintiff‑Bank to defendants.

Zahid Hussain Burhani for Plaintiff.

S. Hassan Zafar for Defendants.

Date of hearing: 28th August, 1986.

This suit for recovery of Rs.32,58,485.64 has been filed under the provisions of the Banking Companies (Recovery of Loans) Ordinance, 1979 (hereinafter referred to as "the Ordinance") against the defendant No. 1, a partnership firm and four of its partners, namely defendants Nos. 2, 3, 4 and 5.

The defendants were provided credit facilities by plaintiffs which were utilized by them and the defendants executed and delivered to the plaintiffs amongst other documents, a demand promissory note, dated 31‑3‑1981 in the sum of Rs.1.5 billion, a letter of pro‑note, a letter of continuity, an agreement for hypothecation of goods, a letter of arrangement for bills, letters of guarantee, etc. The defendant No. 2 also created equitable mortgage by deposit of title deeds of his immovable property situated at Kot Samaba, District Rahimyar Khan described in para. 7 of the plaint. The defendant No. 3 also delivered to the plaintiff at Karachi the documents of title of immovable property described in para 8 of the plaint and created an equitable mortgage in respect thereof. The defendants through the defendant No. 1 also acknowledged and admitted their liability to the plaintiff from time to time undertaking and promising to liquidate the same. The defendants however, filed to liquidate and discharge their liabilities and hence the suit .

Application for leave to defend the suit have been filed on behalf of the defendants Nos. 1 to 4 and No. 5 respectively. The defendants have also filed an application under section 5 of the Limitation Act, praying for condonation of delay in filing such applications, inter alia, alleging that they are permanent residents of Rahimyar Khan and Lahore and during December, 1985 and January, 1986 defendant Abdul Haq Rehmani was away from Karachi and when per chance he visited the plaintiff's bank on 10‑3‑1986 he got information in respect of the suit. The said defendant thereafter, appeared before the learned Registrar of this Court and requested his Advocate to receive copy of the plaint on behalf of the defendants. According to the defendant it then transpired that one Rohi had received the summons on behalf of the defendant No. 1 on 4‑1‑1986. It further transpired that the summons were also published in the daily newspaper "Morning News" of Karachi on 10‑1‑1986. It has further been contended that none of the defendants read "Morning News" which does not have any circulation in Rahimyar Khan, therefore, the defendants were not aware of the proceedings pending before this Court.

The first question, therefore, is whether the applications for leave to defend the suit have been filed in time. Needless to say that according to Article 159 of the Limitation Act the period of Limitation provided for filing of such applications is 10 days when the summons is served upon the defendant. The question, therefore, arises as to when the summonses were served on the defendants. The record of the case shows that summons were served on the defendant No. 1 through the bailiff, on 4‑1‑1986. Service was also effected through publication in the newspaper "Morning News", dated 10‑1‑1986. The record of the case further shows that summons by registered post A.D. were also issued which according to postal acknowledgment receipts appear to have been served on the defendants on 7‑1‑1986. The summons returned by the bailiff has been signed on behalf of the defendant firm in token of its receipt and the name of the firm also appears to have been rubber stamped thereon and the postal acknowledgment receipts appear to have been signed by one of the partners namely, Khalid Rehmani on behalf of the other partners of the firm. Admittedly Khalid Rehmani (defendant No. 5) is brother of defendants Nos. 3 and 4 and had in fact entered into correspondence with the bank on behalf of the other partners as indicated by Annexures F/1 and F/2 filed with the plaint. Under such circumstances it is hard to accept that the defendants were not aware of these proceedings. Rule 8 of the Banking Companies (Recovery of Loans) Rules, 1980 which refers to mode of service of summonses and notices provides for three modes of service i.e. through the bailiff of the Court, by registered post A.D. and by publication and the summonses were in fact issued accordingly. Therefore, even assuming that the assertion made by defendant Abdul Haq Rehmani that the defendants did not receive summons through bailiff is correct, then the defendants received summons through registered post as is evident from the postal acknowledgment receipts purported to have been signed by one of the defendants. Since it has not been denied that summons were not received by the defendants by registered post, the assertion of the defendants that they had learned for the first time about the instant case on 10‑3‑1986 cannot be accepted. However, as pointed out above, there is sufficient proof on record to indicate that summons was served on the defendants through bailiff as well as by registered post. As regards publication of notice in Morning News, a controversy has been raised that such service is not proper vice and in this connection reliance has been placed on P L D 1986 Kar. 369. However, since the defendants were served through bailiff of the Court as well as registered post, A.D. before the publication of notice in the newspaper, even if service on the defendants by publication be held as improper, the same had become redundant even otherwise. Therefore, no useful purpose would be served by going into the question now. 1, therefore, hold that the applications for leave to defend the suit were time‑barred.

Even on merits the case of the defendants does not appear to me strong. The main contentions raised by the defendants are:‑

(i) That the defendant No. 5 is not a partner of defendant No. 1.

(ii) That the claim of the plaintiffs was time‑barred as the same was based on pronote, dated 31‑3‑1981, and

(iii) That the various amounts of money deposited by defendants in their account were not deposited towards partial adjustment of loan but .the same represented packing credits drawn by the plaintiff without the consent or knowledge of the defendants.

As against the first contention the plaintiffs have relied on documents marked as Annexures 'C', C‑3 and E‑2" filed with the plaint. All these documents clearly establish that the defendant No.5 hart been holding himself out as partner 'of the defendant No. 1 and was corresponding with the plaintiff on behalf of the other partners of the firm. Therefore, it has been rightly contended by the plaintiff that he is estopped from now claiming otherwise. As to the next plea regarding the case being time‑barred, the plaintiff has relied upon documents Annexures C‑3, E‑1, E‑2, E‑3, E‑4, E‑5, F‑1 and F‑2 which clearly support their contention that the defendants had been edging their liability in respect of the debt from time to time, therefore, even if the promissory note was executed by the defendants, on 31‑3‑1981, the claim of the plaintiff was still in time since liability was acknowledged by the defendants each time. The dates on these documents clearly indicate that liability was acknowledged by the defendants within the period of limitation as contemplated by section 19 of the Limitation Act. Similarly the various deposits made by the defendants in the re‑finance account of the defendants from time to time have been claimed by the plaintiff , as having been made towards partial adjustment of the loan in the re‑finance account. Although the same has been contested by the defendants but nothing has been produced by them to Aantiate their contention. Since various amounts were admittedly deposited by the defendants in re‑finance account, the claim by the plaintiff in this respect stands unrebutted. The defendants have, therefore, failed to substantiate their assertions even on merits.

For the aforesaid reasons all these applications are dismissed and the suit of the plaintiffs is decreed as prayed in the sum of Rs.32,58,485.64 together with costs and interest at the rate of 14% per annum with quarterly rests from the date of the suit till realisation of the decretal amount.

H. B. T. Suit decreed.

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