Nbp vs M/S Naseem Enterprises & Tradeing Pvt Ltd etc.

Stereo. H C J D A-38.

JUDGMENT SHEET

IN THE LAHORE HIGH COURT, MULTAN

BENCH, MULTAN

JUDICIAL DEPARTMENT

COS No.16 of 2022 National Bank of Pakistan

Versus

Messrs Naseem Enterprises & Trading Pvt. Limited & others

JUDGMENT

Date of hearing: 15.04.2026.

Plaintiff by: M/s. Ambreen Moin and Javeria Latif, Advocates.

Defendants by: M/s. Zohaib Hassan and Akif Majeed, Advocates.

MUHAMMAD SAJID MEHMOOD SETHI, J.- Through the instant suit instituted under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the plaintiff-bank seeks recovery of an amount aggregating to Rs.148,903,898/- along with markup, cost of funds (where applicable under the contract), and other ancillary charges till realization, through sale of mortgaged and charged properties, from the defendants on account of persistent default in repayment of Running Finance facility.

2.The case of the plaintiff Bank, as borne out from the record, is that the defendants No.1 to 4 availed multiple credit facilities, including Running Finance facility initially sanctioned at Rs. 132,000,000/-, which, upon accrual of agreed markup, service charges, and other contractual liabilities, increased to Rs. 148,903,898/-. The said facility was extended and regulated through a comprehensive set of banking instruments duly executed by the defendants, including Finance Agreement, Offer Letters, Borrowers’ Basic Fact Sheet, Loan Application Forms, Demand Promissory Notes, Undertakings, Memorandum of Deposit of Title Deeds, as well as continuing personal and corporate guarantees, thereby creating secured contractual obligations binding upon all defendants. Despite repeated renewals,

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restructuring arrangements, and concessions extended by the plaintiff Bank from time to time, the defendants failed to honour their repayment commitments and remained in persistent default, thereby triggering cause of action in favour of the plaintiff-bank for recovery of the outstanding dues. The defendants, while contesting the claim, primarily raised technical and factual objections including alleged lack of proper authorization for institution of the suit, alleged discrepancies in the statement of account, denial of liability qua principal borrower, mortgagor and guarantors, as well as challenges to the validity and enforceability of mortgage and guarantee documents. However, the defendants failed to produce any substantive documentary evidence to rebut or dislodge the duly certified banking record and contemporaneous financial documents placed on the file by the plaintiff-bank, which carry a statutory presumption of correctness under the applicable law.

3.Learned counsel for the plaintiff-bank submits that the suit has been validly instituted by a duly authorized officer of the bank, which is a financial institution within the meaning of the Financial Institutions (Recovery of Finances) Ordinance, 2001. She contends that defendant No.1, being the principal borrower, availed and utilized running finance facility duly sanctioned and secured through execution of finance agreements, promissory notes, mortgage of immovable properties, and continuing personal and corporate guarantees furnished by defendants No.2 to 4, thereby rendering them jointly and severally bound and liable. Learned counsel argues that despite repeated renewals and restructuring, the defendants committed default, and an amount of Rs.148,903,898/- remains outstanding, as reflected in the duly certified statement of account carrying a statutory presumption of correctness. She maintains that the said liability stands corroborated by unequivocal admissions of the defendants in their loan documents, audited accounts and restructuring requests. She further submits that the plaintiff-bank has fully complied with the requirements of the Ordinance, 2001, whereas the defendants have failed to produce any cogent rebuttal, and their defence consists of mere bald denials and

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legally untenable objections. Lastly, she prays that the suit be decreed as prayed against all defendants jointly and severally. In support of her submissions, she has referred to CITIBANK N.A. through Duly Authorized Attorney v. Sana Ullah (Pvt.) Limited and 4 others (2016 CLD 1448) and First Dawood Investment Bank Limited v. New Allied Electronics (Pvt.) Limited and another (2018 CLD 250).

4.Conversely, learned counsel for the defendants No.1 to 4 contends that the suit is wholly misconceived, non-maintainable and liable to be dismissed for non-compliance with mandatory provisions of the Financial Institutions (Recovery of Finances) Ordinance, 2001. He reiterates that the suit has not been instituted through a duly authorized person, pointing out material contradictions in the designation of the signatory of the plaint vis-à-vis the power of attorney, and further submits that the foundational board resolution authorizing execution of such power of attorney has not been produced, thereby rendering the institution of the suit legally defective. He further argues that the plaint does not fulfill the requirements of Sections 9(2) and 9(3) of the Ordinance, as the amounts of finance, markup charged, markup adjusted, and repayments have not been correctly and fully disclosed, and the statement of account is incomplete, inconsistent, and based on selective entries. Learned counsel submits that the statements of account placed on record are unreliable, being mere computer printouts lacking necessary particulars, proper certification, continuity, and nexus with the branch which allegedly sanctioned the facility, and thus do not qualify as legally admissible banking records. He further contends that the alleged disbursements, particularly major debit entries, have neither been substantiated through primary evidence such as pay orders, cheques, or corresponding current account statements, nor supported by valid documentary trail, rendering the claim doubtful to a substantial extent. He also challenges the legality of markup claimed by the plaintiff-bank, asserting that substantial amounts have been charged and adjusted without contractual basis, including markup for periods not covered by any valid finance agreement and even post-

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default period in violation of statutory provisions, thus making a significant portion of the claim liable to exclusion. He further submits that the execution of personal guarantees by defendants No.2 and 3 is specifically denied, alleging forgery and fabrication, and it is argued that in such circumstances the burden squarely lies upon the plaintiff- bank to prove execution through legally admissible evidence, including expert opinion, which has not been done. Learned counsel contends that certain alleged admissions relied upon by the plaintiff-bank, including those contained in offer letters and audited accounts, are either denied or stated to have been made under mistaken belief and without full knowledge of facts, and therefore do not constitute binding admissions in law, particularly when the underlying liability itself is disputed. He maintains that the defendants have raised substantial and bona fide questions of law and fact, including disputed disbursements, defective accounts, invalid markup calculations, and lack of proper authorization, which necessitate recording of evidence and entitle them to unconditional leave to defend the suit under Section 10 of the Ordinance. In support of his submissions, he has relied upon Mst. Akhtar Begum v. Muslim Commercial Bank Ltd. (2009 CLD 189), National Bank of Pakistan and others v. Karachi Development Authority and others (PLD 1999 Karachi 260), Habib Bank Limited v. Al-Jalal Textile Mills Ltd. (2003 CLD 1007), Muhammad Nafees v. Allied Bank of Pakistan Limited through Manager and another (2004 CLD 937), United Bank Limited v. Messrs Ilyas Enterprises through Proprietor Mr. Ilyas Malik and 2 others (2004 CLD 1338), Messrs United Dairies Farms (Pvt.) Limited and 4 others v. United Bank Limited (2005 CLD 569), Mst. Riffat Jehan and another v. Habib Bank Limited and 10 others (2005 CLD 941), Gul-e-Rana and 4 others v. CITIBANK N.A., Lahore through Manager and another (2005 CLD 1126), Messrs ICEPAC Limited and 2 others v. Messrs Pakistan Industrial Leasing Corporation Ltd. (2005 CLD 1186), Habib-ur- Rehman and another v. Judge Banking Court No.4, Lahore and another (2006 CLD 217), PICIC Commercial Bank Limited v. Spectrum Fisheries Limited (2006 CLD 440), Al-Madina Electric

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Store, Daharki, through Proprietor v. Habib Bank Limited (2006 CLD 734), Mashreq Bank PSC through Constituted Attorney v. Farooq Habib Textile Mills Ltd. through Director / Chief Executive and 8 others (2007 CLD 320), United Bank Limited v. Pak Leather Grafts Limited and 3 others (2010 CLD 701), Bank of Punjab through Authorised Officer v. Messrs KNK Infrastructure (Pvt.) Ltd. through Chief Executive Officer and 2 others (2012 CLD 961) and Messrs DHRALA Oil Mills through Partners / Guarantors and 4 others v. The Bank of Punjab through Branch Manager (2014 CLD 153).

5.Arguments heard. Available record perused.

6.At the very outset, learned counsel for the defendants was confronted with application C.M. No.3073 of 2024, moved for settlement of the matter, wherein certain admissions regarding the outstanding liability appear to have been made. In response, he contended that such admissions were qualified and made without prejudice. When further confronted with the fact that the record independently reflects acknowledgment of liability through various documents, including board resolutions, audited financial statements, and other financial instruments, learned counsel submitted that such admissions are not binding and may be withdrawn at any stage. When specifically asked whether the admissions reflected in the aforesaid documents had ever been withdrawn or corrected, particularly through revised or amended audited financial statements, learned counsel was unable to demonstrate that any such corrective exercise had been undertaken. Undoubtedly, a judicial admission may, in exceptional circumstances, be withdrawn if shown to be contrary to the record; however, the present admissions are embodied in the defendants’ own contemporaneous documents, remain undisputed, and have neither been retracted nor corrected. Accordingly, such admissions retain their full evidentiary value and cannot be lightly brushed aside.

7.It is re-emphasized that the defendants, in their own audited financial statements placed on record at page 283, have expressly acknowledged the outstanding liability, which constitutes a clear and binding admission against their interest. Such admission, having been

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made in audited accounts, carries substantial evidentiary weight and cannot be lightly disregarded. The law is well settled that a party is precluded from disputing a liability which it has itself admitted in its audited financial reports; reliance in this regard is placed on Allied Bank Limited through Principal Officers v. Messrs S.G. Polypropylene Pvt. Limited through Directors / Chief Executive and 5 others (2018 CLD 199). In the present case, the defendants have failed to offer any plausible explanation or rebuttal to such admission; therefore, the acknowledged liability stands conclusively established and requires no further proof.

8.Even otherwise, the objections raised by the defendants, including the foundational objection regarding the competency and authorization for institution of the suit, go to the root of its maintainability. The law in this regard is well settled that proceedings under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 can validly be instituted by a Branch Manager, an officer holding a valid power of attorney, or any duly authorized officer of the financial institution, reflecting the legislative intent to avoid hyper-technical objections and ensure expeditious adjudication and recovery of public money. The superior Courts, in judgments reported as The Bank of Punjab v. Messrs Magic River Services and 4 others (2016 CLD 171), Messrs RAVI Medical Supplies (Pvt.) Limited through Chief Executive and 4 others v. Messrs First Women Bank Limited through Branch Manager (2016 CLD 1726) and Bank of Punjab v. Poly Pack Pvt. Limited and others (2017 CLD 1285) have consistently held that a duly executed or registered power of attorney is, by itself, sufficient proof of lawful authority and does not require any further corroboration such as a board resolution, and even a Branch Manager alone is competent to institute such proceedings. Applying these settled principles to the present case, it is observed that the suit has been instituted by the Vice President/Chief Manager of the plaintiff-bank on the strength of a valid and subsisting power of attorney placed on record, which fulfills all legal requirements and has not been shown to suffer from any infirmity. Consequently, the

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objection raised by the defendants regarding lack of proper authorization is misconceived, devoid of merit and is hereby repelled. Reliance in this regard is placed upon First Dawood Investment Bank Ltd. v. Bank Islami Pakistan Ltd. (2019 SCMR 1925), Messrs Bahawalpur Cotton Company v. United Bank Limited (2021 CLD 434) and The Bank of Khyber through Branch Manager v. Messrs Kashmir Sugar Mills Limited through Chief Executive and others (2021 CLD

9.The next objection pertains to alleged non-compliance with Section 9(3)(a)(b) of the Ordinance, 2001 and alleged incorrect reflection of the outstanding amount in para 14 of the plaint. This Court, upon careful examination of the record, finds that the contention of the defendants is based on a selective and fragmented reading of the financial documentation, which is impermissible in law. The certified statement of account placed on record at page 256 clearly demonstrates that total debit entries amount to Rs. 153,000,580/-, whereas total credits, including both principal repayments and markup adjustments, amount to Rs. 65,960,000/-. It is an admitted position on record that the defendants repaid Rs. 21 million towards the facility. Upon proper reconciliation of the accounts, and after adjusting the admitted repayments against the principal liability, the outstanding principal amount correctly stands at Rs. 132,000,000/-, which is precisely the amount claimed by the plaintiff-bank and after inclusion of agreed markup amount, the outstanding liability as reflected in the duly certified statement of account, is as under:-

Sr. No. Nature Principal Mark-up Total Outstanding

1.Running Rs.132,000,000/- Rs. Rs.

Finance Facility 16,903,898/- 148,903,898/-

10.The attempt of the defendants to isolate selective entries while ignoring the complete transactional chain is legally untenable. It is well settled that banking transactions cannot be dissected in isolation but

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must be examined in their entirety as reflected in the continuous running account maintained in the ordinary course of business. The plea of incorrect computation is therefore rejected.

11.On the issue of compliance with Section 9(2) of the Ordinance, 2001, this Court finds that the plaintiff-bank has strictly complied with all mandatory legal requirements by placing on record complete set of financing documents along with duly certified statements of account. The financial facility was initially sanctioned and thereafter repeatedly renewed, with the final renewal extended up to 31.12.2020 through the Finance Agreement dated 01.10.2018 and Offer Letter dated

12.It is further established from the record that the defendants themselves, in their Loan Application Form dated 14.12.2018, unequivocally acknowledged an outstanding liability of Rs. 147 million. This admission is further corroborated by the certified statement of account, which reflects the continuity and subsistence of the liability. It is a settled principle that admitted liability requires no further proof, and such admission binds the maker unless successfully rebutted, which has not been done in the present case.

13.The defendants’ attempt to dispute the correctness of the statement of account is also devoid of legal force. The doctrine of financial estoppel, as crystallized in National Bank of Pakistan v. Chenab Limited and others (2017 CLD 1539) and Messrs Naeem Zafar Industries and others v. Bank of Punjab (2017 CLD 397), squarely applies to the present case. It has been consistently held that where banking customers receive periodic statements of account and fail to raise timely objections, they are estopped from subsequently disputing their correctness. In the present case, the defendants neither raised any contemporaneous objection nor produced any counter statement to dislodge the entries reflected in the plaintiff’s record. Consequently, they are legally precluded from challenging the veracity of the accounts at this belated stage.

14.The plea that the statements of account are fake, inadmissible, or unreliable is equally misconceived. The record shows that the

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statements in question are duly certified in strict compliance with Section 2(8) of the Bankers’ Books Evidence Act, 1891, which requires certification by a competent bank officer confirming that the entries are true copies made in the ordinary course of banking business. The certification appearing on the record fully satisfies statutory requirements, and the law is well settled that duly certified bank statements carry a statutory presumption of correctness and constitute prima facie evidence of liability. In the absence of any effective rebuttal, such statements are sufficient to establish the outstanding dues. The defendants have failed to produce any credible material to displace this presumption. Reference is made to Muhammad Saleem Khan v. MCB Bank Limited (2020 SCMR 984), Messrs Habib Metropolitan Bank Limited v. Messrs Faizan Ali and Company (Pvt.) Ltd. through Chief Executive Officer and others (2017 CLD 1583), First Dawood Investment Bank Limited v. New Allied Electronics (PVT.) Limited and another (2018 CLD 250), Trust Investment Bank Limited v. The Bank of Punjab (2021 CLD 1430) and MCB Bank Limited through Authorized Officer v. Messrs City Steel UAE Mills (Pvt.) Ltd. through Chief Executive and others (2024 CLD 387).

15.The plea regarding alleged non-disbursement or disputed entries is without substance. The record clearly reflects that disbursements were made strictly in accordance with the written requests of the defendants and are duly supported by debit vouchers and contemporaneous banking record forming part of regularly maintained accounts. It is well settled that entries made in banking books maintained in the ordinary course of business carry inherent reliability, and mere oral denial cannot override the statutory presumption attached thereto.

16.The objection regarding alleged non-disclosure of breakup of markup and incomplete compliance with Sections 9(2) and 9(3) of the Ordinance, 2001 is misconceived. The statement of account placed on record is a running and integrated account reflecting all debit and credit entries, including disbursements, repayments, and markup adjustments, in chronological sequence. The law does not require a fragmented or

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separately tabulated disclosure once the entire transactional history is available through a duly certified statement maintained in the ordinary course of banking business. Likewise, the alleged discrepancy in closing dates of certain statements or non-filing of a separate current account statement does not vitiate the claim, as the running finance account itself provides complete continuity of transactions and no prejudice has been shown to have been caused to the defendants.

17.The contention that the statements of account are unreliable on account of their format, alleged branch discrepancy, or absence of certain particulars is also without substance. Once a statement of account is duly certified in terms of the Bankers’ Books Evidence Act, 1891, it carries a statutory presumption of correctness, and mere objections as to format, mode of printout, or internal branch reference do not render it inadmissible or unreliable. No material has been produced by the defendants to demonstrate that the entries recorded therein are fabricated or do not pertain to the subject facility. Accordingly, such technical objections are rejected.

18.The challenge to the legality of markup claimed by the plaintiff- bank is equally untenable. The markup charged is governed by the finance agreements and subsequent renewals/restructuring arrangements, and no specific contractual violation or illegality has been established by the defendants. The contention that certain markup entries relate to periods beyond the facility or post-default is not borne out from the record and, in any case, remains unsubstantiated. Insofar as disbursements are concerned, the same stand already established from the duly maintained and certified banking record. Consequently, the objections regarding excessive or unlawful markup are hereby repelled.

19.With regard to liability of defendant No.1 as principal borrower, the documentary record is overwhelming and unambiguous. The Finance Agreement, Offer Letter, Borrowers Basic Fact Sheet, and Board Resolution collectively establish execution, availment, acknowledgment, and continuation of liability. The conduct of the defendants, including restructuring negotiations, partial repayments,

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and repeated requests for extension, further reinforces the subsistence of liability. Defendant No.1 is, therefore, fully and squarely liable. As regards defendant No.2, the record reflects execution of a valid mortgage through Memorandum of Deposit of Title Deeds. Clauses 9 and 12 of the mortgage deed clearly establish that the mortgage was of a continuing nature and was intended to secure all present and future liabilities until full satisfaction of dues. The mortgage thus created is valid, subsisting, and enforceable in law. Defendant No.2, apart from being mortgagor, remains liable to the extent of mortgaged security. Defendants No.2 (apart from being mortgagor) and defendant No.3 are continuing guarantors under duly executed personal guarantees. The settled principle of law, reiterated in Qalab Hussain v. Faysal Bank and others (2017 CLD 215), is that the liability of a guarantor is coextensive with that of the principal debtor and remains enforceable so long as the principal liability subsists. A bare plea of forgery, unsupported by any legal proceedings or evidence, is insufficient to dislodge contractual liability. The burden to prove forgery lies heavily upon the party alleging it, which the defendants have failed to discharge. Defendant No.4, being a corporate guarantor, executed valid corporate guarantees pursuant to board resolution and contractual arrangements. Despite filing pleadings, it has failed to effectively contest the proceedings or produce any material rebuttal.

20.The contention that the suit is based on inadmissible documents or that replication evidence cannot be read is also without merit. The law is settled that replication under Section 10(8) of the Ordinance, 2001 forms part of pleadings for the purposes of clarification and rebuttal. Documents appended thereto, particularly where they explain or support already pleaded facts, are admissible and can be read in evidence, as held in Silk Bank Limited (Formerly Saudi Pak Commercial Bank Limited) through Attorney v. Al-Khan Constructions Company (Pvt.) Ltd. and others (2017 CLD 496) and The Bank of Punjab through Branch / Chief Manager v. Messrs Khan Unique Developers Pvt. Ltd. through Chief Executive Officer and 9 others

(2016 CLD 29).

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21.The doctrine of financial estoppel further fortifies the plaintiff’s case. The defendants, having enjoyed benefits under restructuring arrangements, including extension of time, settlement of markup, withdrawal of their own litigation, and removal from ECIB, are legally estopped from resiling from their admissions or taking contradictory positions. The principle of approbation and reprobation squarely bars such conduct. Reliance is placed upon Messrs Naeem Zafar Industries and others v. Bank of Punjab (2017 CLD 397).

22.From an overall appreciation of the record, this Court is of the considered view that the plaintiff-bank has successfully established its claim through voluminous and duly certified documentary evidence forming a coherent and consistent record, carrying statutory presumption of correctness. The liability of the defendants is not only contractual but also admitted in material parts. In contrast, the defence raised is vague, unsupported, and contradictory, and thus falls short of the standard required in proceedings under the Financial Institutions (Recovery of Finances) Ordinance, 2001, which are summary in nature and intended for expeditious recovery of financial liabilities.

23.A careful examination of the defendants’ application for leave to defend the suit reveals non-compliance with the mandatory requirements of Sections 10(4) and 10(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The law obligates a defendant to specifically traverse the statements of account filed by the financial institution and to disclose precise amounts disputed, supported by relevant documents and a statement of their own account. In the present case, the defendants have failed to provide any such detailed rebuttal or to annex the requisite documents as mandated by law. Their defence remains general, evasive and unsupported by any independent material. Such failure attracts the consequences contemplated under Sections 10(1) and 10(6) of the Ordinance, 2001, disentitling them from the grant of leave to defend. Reliance in this regard may be placed on Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. (PLD 2012 Supreme Court 268), Habib Metropolitan Bank Limited through Attorney v. Century 21 Textile and Sportswear (Pvt.)

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Limited and 3 others (2014 CLD 729), Silk Bank Limited through Authorized Persons v. Messrs AZM Chemical Company through Proprietor and 5 others (2014 CLD 1526) and Al-Madina Aluminium Work and others v. Habib Metropolitan Bank (2020 CLD 892).

24.From the overall tenor of the defence, it is evident that no substantial question of law or fact has been raised which would necessitate the recording of evidence. The objections taken are either purely technical, already addressed hereinabove, or unsupported by any cogent material. It is well settled that leave to defend cannot be granted as a matter of course and must be founded upon a bona fide and substantial defence, which is conspicuously absent in the present case. Consequently, the application for leave to defend is hereby dismissed.

The case law relied upon by learned counsel for the defendants, being distinguishable on facts and context, is not attracted to the peculiar circumstances of the present case.

25.Accordingly, this Court holds that the plaintiff-bank has successfully proved its entitlement to recover the suit amount along with agreed markup till realization. The defendants are jointly and severally liable to satisfy the decree.

26.For the foregoing reasons, the suit is decreed in favour of the plaintiff-bank and against the defendants jointly and severally for a sum of Rs. 148,903,898/- (Rupees One Hundred Forty-Eight Million Nine Hundred Three Thousand Eight Hundred Ninety-Eight Only) along with costs of the suit and cost of funds as envisaged in Section 3 of the Ordinance, 2001, from the date of default till the date of actual realization of the decretal amount. The decretal amount shall be recoverable through the sale of mortgaged, pledged and hypothecated properties of the defendants, strictly in accordance with law. Decree sheet be drawn accordingly.

27.The decree is now converted into execution proceedings under section 19 of the Ordinance, 2001. The decree holder will submit Fard Taleeqa / list of mortgaged, pledged and hypothecated properties of the

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judgment debtors within a period of thirty days. Execution petition shall be fixed for hearing on 28.05.2026.

(Muhammad Sajid Mehmood Sethi) Judge

APPROVED FOR REPORTING

Judge

*A.H.S.*