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P.L.A. No. 10/B of 1986 in C.O.S. 23 of 1985, heard on 11th November, 1986.

‑‑‑Ss. 6 & 8‑‑Civil Procedure Code (V of 1908), O.XXXVII, Rr.2 & 3‑‑Limitation Act (IX of 1908), Art. 85‑‑Suit for recovery of loan‑ Defendant raising objection about suit having been filed beyond period of limitation‑‑Documents produced by plaintiff‑Bank as well as date of last acknowledgment placing suit of plaintiff well within time‑‑Signature of defendant on letter of acknowledgment stated by defendant to be forged, not substantiated by proof‑‑Defendants neither denying availing of loan facility nor raising any dispute to correctness of statement of account‑‑Defendants failing to make out any case which might show even a prima facie plausible defence that could be set up by them against suit of plaintiff‑‑Defendants application for leave to appear and defend suit dismissed and suit of plaintiff decreed with costs and interests.

Syed Mahboob Ali Naqvi v. Australasia Bank Ltd., Quetta PLD 1976 Quetta 99 rel.

M.A.Zafar for Plaintiff.

Raja Muhammad Anwar for Respondents.

Date of hearing: 11th November, 1986.

This suit for recovery of Rs.10,66,951.07 with future interest at the rate of 14 per annum with quarterly rests from the date of institution of the suit has been instituted by Messrs Allied Bank of Pakistan Limited, the plaintiff, against Messrs Karsaz Corporation and two others, defendants, under the Banking Companies (Recovery of Loans) Ordinance, 1979. It has beep asserted in the plaint that defendant No.1 is a partnership concern of which defendants Nos. 2 and 3 are the partners; that they were maintaining a current account with the plaintiff‑Bank under the name and style Messrs Karsaz Corporation; that they obtained a cash credit limit (pledge) to the extent of Rs.75,000 in June 1975 and had already been afforded the overdraft facility; that in order to secure loan the defendants executed agreement for cash credit, general form of loan, and letter of pledge; that as on 19‑8‑1975 the defendants availed of overdraft of Rs.2,06,500 and as already there was an outstanding balance against them amounting to Rs.36,995.54 the debit balance in their account increased to Rs.2, 43, 495.54 whereupon demand promissory note in the aforesaid sum, letter of continuity, letter of interest, letter of waiver were executed by the defendants in favour of the plaintiff; that after 19‑8‑1975 the defendants continued operation in their aforementioned account by deposit and withdrawals; that the defendants also pledged goods as mentioned in para. 5 of the plaint; that the defendants have been confirming the debit balance against them from time to time and executed fresh charge documents on 10‑10‑1979, viz. demand promissory note for Rs.4,78,978.81, letter of continuity and a letter of interest that the defendant No.3 confirmed the debit balance of Rs.6,92,261.65 as on 30‑6‑1982; that a sum of Rs.2,757.38 was thereafter adjusted in the credit of the account through clearing of a cheque deposited by the defendants; that despite confirmation of the balances and re‑acknowledgments by defendants through their letters dated 28‑6‑1978, 5‑1‑1980, 3‑8‑1981, 26‑1‑1982, 26‑9‑1982, the defendants did not clear their liability whereupon a legal notice was served upon them; that defendant No.2 as managing partner of defendant No.l again acknowledged the liability on 8‑10‑1983 and undertook to clear the same within 2/3 months; that the defendants did not abide their promises and as the amount outstanding against them had accumulated to Rs.10,66,951.07 as on 25‑7‑1985 the plaintiff was left with no alternative except to institute the present suit for recovery of the amount due.

Summonses in Form 4 of Appendix B of the Code of Civil Procedure were issued to the defendants by order dated 11‑3‑1986. The defendants filed a petition for leave to appear and defend the suit (P.L.A. No.10‑B of 1986). This petition has been resisted by the plaintiff‑Bank.

The learned counsel for the applicants‑defendants contended:

1. That letter dated 8‑10‑1983 from defendant No.2 acknowledging the liability as Rs.7,62,378.07 as on the above date is a forged and fictitious letter inasmuch as the said defendant No.2 had ceased to be a partner of defendant No. l as far back as 1‑7‑1979 of which fact the plaintiff‑Bank had also been informed and, therefore, the said letter cannot be taken as a re‑acknowledgment by the defendants to pay the loan;

2. That if the said letter dated 8‑10‑1983 is taken out of the field the suit of the plaintiff against the defendants having been filed on 25‑7‑1985 is barred by time in that there is no acknowledgment of liability by the defendants after 18‑7‑1982;

3. That the above contentions give rise to triable issues and since the amount claimed is secured by pledge of goods unconditional leave to defend the suit should be granted.

On the contrary, the learned counsel for the plaintiff contended;

First, that the defendant No. 2 was admittedly a partner of the firm at the time of obtaining the overdraft facility and loan and as such without the explicit consent of the Bank about his exit from the partnership the joint and several liability of the defendants as to the loan in dispute remained intact and could not be shed away by a unilateral act of the defendants about alleged exit of defendant No.2 from the partnership.

Secondly, that without prejudice to the above contention that the allegation of forged and fictitious nature of letter dated 8‑10‑1983 is a bald assertion only which has not been substantiated in any manner whatsoever in that not only no affidavit of Ghulam Hussain, defendant No.2 to that effect has been placed on record, he has also not filed any petition for leave to appear and defend the suit as the Vakalatnama alongwith the only petition filed has been executed by defendant No.3 alone, and therefore, the contents of the plaint against defendants Nos.l and 3 shall be deemed to be correct as the said defendants have not applied for leave to appear and defend the suit.

Thirdly, that there is an acknowledgment dated 25‑9‑1982 by defendant No.3 duly placed on record which has not been in any manner controverted or denied by the defendants and, therefore, the suit having been admittedly filed on 25‑7‑1985 is within three years from the date of the said acknowledgment and thus, in any case within time.

Fourthly, that without prejudice to the above contentions the defendants were maintaining an open mutual current account with the plaintiff and, therefore, the limitation for a suit for recovery of amount due under such an account is governed by Article 85 of the Schedule to the Limitation Act, 1908 which prescribes a period of three years from the close of the year in which the last item is admitted or proved or entered in the account and the last admitted entry in the account by way of deposit of cheque being dated 27‑7‑1982 the suit could be filed within three years from 31‑12‑1982, i.e. upto 31‑12‑1985. Reliance in this regard has been placed on Syed Mahboob Ali Naqvi v. Australasia Bank Ltd. Quetta reported as P L D 1976 Quetta 99.

Fifthly, that in case of hypothecation and pledge of goods Article 120 of the Limitation Act would be applicable which gives a limitation of six years from the date when the right to sue accrues; and

Lastly, that the availing of the facility of loan having not been denied in any manner and the correctness of account having also not been disputed, there is no case made out by the defendants for grant of leave to appear and defend the suit.

In reply the learned counsel for the plaintiff only contended that Article 64 of the Schedule to the Limitation Act is applicable to such cases whereby the limitation prescribed is three years from the date when the accounts are stated in writing.

Having given consideration to the controversy I find that the contentions raised on behalf of the applicants‑defendants have no force.

The only worth consideration point raised on behalf of the defendants in support of their request for grant of leave to appear and defend the suit is that the suit is barred by time. This contention apart from the fact that it has been squarely met with by the learned counsel for the plaintiff on the legal plain is not well‑founded even on facts of the case. The reasons for arriving at the above conclusion are two‑fold:

First, that the alleged exit of Ghulam Hussain, defendant No.2 from the partnership in no manner can be said to be binding on the plaintiff qua its claim for the loan in dispute. It is the admitted position that the said defendant Ghulam Hussain was a partner of the firm at the time of obtaining of the loan and the Bank having not agreed to discharge his joint and several liability regarding the loan facility which was obtained by the defendants conjointly, acts of the said defendant shall be binding on them so far as the transaction of loan in dispute is concerned. The acknowledgment, dated 8‑10‑1983, can, therefore, be not taken out of consideration while determining whether the suit of the plaintiff is within time or not. The suit having been instituted on 25‑7‑1985 is still within time if the period of limitation is computed with effect from the date of the said acknowledgment, viz. 8‑10‑1983.

Second, that even if the aforementioned letter is kept out of consideration the suit against the defendants is still within three years from the last uncontroverted acknowledgment of the loan. This acknowledgment of the loan has been placed on record in original by the plaintiff. It is Letter No. KSZ/ABL‑25‑118, dated 25‑9‑1982 addressed by defendant No. 1 firm under the signature of defendant No.3 wherein the loan as outstanding in the account in dispute has been acknowledged as Rs.6,24,566.65 as on 31‑8‑1981 and a request has been made for furnishing the defendants with details of the account for the period 1‑9‑1981 to 30‑6‑1982. Now computing the period of three years from 25‑9‑1982 the suit having been instituted on 25‑7‑1982 is within three years from the date of the acknowledgment, viz. 25‑9‑1982.

Apart altogether from the above conclusion that the suit of the plaintiff is within three years from the date of last acknowledgment, the contention raised by the learned counsel for the plaintiff that limitation for the suit shall be governed by Article 85 of the Schedule to the Limitation Act has also force and on this score as well the suit of the plaintiff in any case is well within time.

Adverting now to the only other contention raised on behalf of the defendants that the letter of acknowledgement of loan, dated 8‑10‑1983 addressed by defendant No.2 as managing partner of the defendant‑firm is bogus and forged, I suffice by observing that Ghulam Hussain, the signatory of the letter, has not only not applied for leave to appear and defend the suit but no affidavit of the said defendant has even been annexed by the defendants with the only application for leave to appear and defend the suit filed in the matter. The assertion, therefore, is just a vague allegation unsubstantiated by any proof whatsoever and, therefore, of no consequence.

Before parting with the case I may also observe that it has, been correctly pointed out by the learned counsel for the plaintiff that there is neither any denial of the availing of the loan facility nor there is any dispute raised by the defendants to the correctness of the statement of account. The above discussion, therefore, leads to the irresistible conclusion that the defendants have failed to make out any, case which may show even a prima facie plausible defence that could be set up by them to the suit of the plaintiff. The application of the defendants for leave to appear and defend the suit, is, therefore' dismissed.

The application for leave to appear and defend the suit (P.L. A. No.10‑B of 1986) which could at best be considered as application on behalf of defendants Nos.l and 3 as defendant No.2 has neither signed the application nor the Vakalatnama, having been dismissed and defendant No. 2 having not applied for leave to appear and defend the suit, the contents of the plaint shall be deemed to be admitted and correct Resultantly, a decree with costs for recovery of the sum of Rs.10,66,951.07 is hereby passed in favour of the plaintiff and against the defendants who shall be jointly and severally liable therefor. The plaintiff shall also be entitled to recover interest at the rate of 14% per annum from the date of the institution of the suit, viz. 25‑7‑1985 till realization of the decretal amount.

M.Y.H./630/2 Suit decreed.

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