PESHAWAR, July 13: A special banking judge of the Peshawar High Court has decreed a suit of more than Rs50 million in favour of Pakistan Industrial Credit and Investment Corporation (PICIC) against former MPA Taj Mohammad Khanzada and four other guarantors of a company.

The special judge, Dost Muhammad Khan, dismissed leave to appear and defend application of MPA Khanzada and four other defendants in the suit, observing that their application was time barred, therefore they could not be allowed to defend.

The judge observed that no convincing and plausible reason was shown to condone the delay of more than 23 days in filing the leave to appear application.

According to facts of the case, the PICIC had filed a suit in 1996 for recovery of Rs35.87 million and Rs 39.50 million both outstanding against the defendants including Image Corporation (Pvt) Limited, Gadoon Amazai, Taj Mohammad Khanzada, Qaisar Khan, Mumtaz Khan, Mohammad Hussain, Mohammad Ibrahim and Ghazala Jan.

The PICIC, through sanction letter on Dec 15, 1991, extended loan in $865,200 (Rs21.97 million) to the defendant company for purchase of foreign made machinery. Besides the company securities thus executed, the defendants Khanzada and others had also executed personal guarantees on its behalf in favour of the plaintiff (PICIC) to make good the payment in case of default, if any, committed by the company.

Because of the government incentive policy, the State Bank of Pakistan through a circular dated May 3, 1987, pronounced and circulated a scheme for providing finance facilities at concessional rate of 3 per cent mark-up wherein the central bank took upon itself the liability to subsidize the 11 per cent mark- up to the financial institutions and commercial banks.

The foreign currency loan was sanctioned in Dec 1991, in favour of the defendants and the State Bank granted prior approval with a provision of subsidy on the same through a letter on July 23, 1992. The letter of credit was established on Nov 2, 1992, the machinery was received on Dec 31, 1993, and was made operational by or on June 11, 1995.

It was alleged by the PICIC that the defendant company failed to import foreign-made machinery or install locally manufactured equipment within the stipulated time, therefore, the bank due to such violation refused to provide subsidy. The defendant company ran into default following which the suit was filed by the PICIC.

Along with the plaint the statement of account had been enclosed according to which sum of Rs35.87 was outstanding against the defendant company as it stood in 1996.

The defendants including the company and guarantors filed leave to defend the suit. The application was withdrawn later on and the suit was decreed. However, the defendant guarantors filed an application before the court, stating that the lawyer who withdrew the leave to defend application was not their counsel and he only represented the company. The banking judge set aside the decree on Dec 10, 2001.

The defendant guarantors filed fresh leave to appear and defend the suit application, which was time barred and the judge dismissed the application and finally decreed the suit in favour of the PICIC. When the suit was decreed the outstanding amount along with the mark-up was more than Rs50 million.