Askari Bank Limited v. Siraj Ali Unar

Background

Askari Bank Limited filed a recovery suit under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the 2001 Ordinance). The bank said it had granted the defendant a personal finance facility of Rs. 150,000, which he fully availed but did not repay. It claimed Rs. 207,381.51, together with cost of funds, liquidated damages and costs.

The plaint was presented on 06.01.2024 and admitted on 20.07.2024. Notice was issued through every mode: bailiff, registered post, courier, and publication in the newspapers Jang and The News on 29.07.2024. The bailiff reported service, and the Court treated service by publication as valid under section 9(5) of the Ordinance. The defendant did not apply for leave to defend within the 30-day statutory period, so the suit proceeded ex parte.

The bank's figures

As required by section 9(3), the bank filed a breakup of the liability. Rs. 150,000 had been disbursed. Of the Rs. 53,351.97 repaid, Rs. 18,583.13 went to principal and the rest to markup and insurance. That left Rs. 131,416.87 of principal, Rs. 75,365.66 of markup and Rs. 598.98 of insurance outstanding, a total of Rs. 207,381.51.

Issue before the Court

What amount was the bank entitled to recover on the documents it had produced?

The Court's reasoning

The Court found that the plaint, the annexed documents and the statement of account clearly proved that the bank had sanctioned the facility and that, after adjusting repayments, Rs. 131,416.87 of principal remained due. The bank was held entitled to cost of funds from the date of default. However, the markup and insurance charges had not been specifically pleaded, so the Court considered them unjustified and did not allow them.

Outcome

The suit was decreed against the defendant for Rs. 131,416.87, with cost of funds from the date of default until full payment, and costs of the suit. The decree gave the judgment debtor 30 days to pay. After that, under section 19(1) of the 2001 Ordinance, the decree converts automatically into execution proceedings without a separate application or fresh notice.

Why it matters

The decision shows how Banking Court recovery suits run when a borrower does not seek leave to defend. It also shows that ex parte proceedings do not mean every head of claim is allowed. The outstanding principal was decreed with cost of funds, but charges that were not specifically pleaded were refused. Financial institutions should plead and support each component of the claim in the plaint itself.