Law:

Section:

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--- ----S. 10(8)---Recovery suit filed by Bank against borrower---Leave to defend suit, grant of---Grounds---Substantial questions of law and fact involved---Opportunity to borrower/defendant to prove documents for establishing the nature of its relationship with the Bank---Simultaneous suits filed by Bank and borrower against each other---Effect---Both suits to be heard and decided together---Defendant-company started a power generation project---Bank had granted a letter of credit facility to the defendant-company---Defendant-company claimed that the power generation project was agreed to be 100% equity based "without any banking finance"---Bank claimed amount from defendant-company on the basis of certain guarantees which were issued by it to secure the lease finance---Single Bench of High Court dismissed application of defendant-company for leave to defend and decreed the suit filed by the Bank---On appeal Division Bench of High Court only reduced the decretal amount---Validity---Documents available on record showed that project in question had been conceived as based entirely in equity---Bank could not explain the circumstances in which its involvement in the project was altered from 100% equity to that of banking finance---Record showed that arrangements between defendant-company and the Bank were prima facie, based on reciprocal promises other than routine/conventional finance---Significant aspects of the dealings between defendant-company and the Bank needed determination on the basis of evidence at regular trial---If defendant-company was given an opportunity to prove the documents on record and the nature of its relationship with the Bank, it would be in accordance with the provisions of the Financial Institutions (Recovery of Finances) Ordinance, 2001 to grant leave to defend to the defendant-company as substantial questions of law and fact required adjudication---Bank did not bring on record certain documents which were crucial for adjudicating the dispute relating to the date of payment under Letter-of-Credit and for determining as to whether the project was conceived as…

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