' JAWWAD S. KHAWAJA, J.---This regular first appeal has been filed by Orix Leasing Pakistan Ltd.
(appellant/plaintiff) to seek modification of the decree dated 4-4-1996 passed in its favour by the Banking Tribunal No,IV, Lahore. The facts of this case are relatively straightforward. The respondent No,1, namely, New Malik Foundry and Engineering Works is a partnership firm, while the respondents Nos,2 to 6 are its partneRs, The respondent firm, through its Managing Partner Malik Muhammad Ramzan (respondent No,2), applied to the appellant/plaintiff for lease finance. The appellant/plaintiff agreed to the request and, as a consequence, entered into two lease finance agreements bearing No,91/M/2868 dated 20-3-1991 and No,91/M/3420 dated 31-10-1991 respectively. The equipment mentioned in the aforesaid lease finance agreements was leased to the respondent-firm on terms set out in the agreements. The amount of lease finance and the monthly rentals is not in dispute between the parties. It is also not in dispute that although the respondent-firm initially was regular in payment of lease rentals, it started committing defaults in the month of March, 1993. It was for this reason that the appellant filed the suit out of which the present appeal arises. In the suit, a sum of Rs,5,47,800 was claimed by the appellant/ plaintiff. The breakdown of the aforesaid amount has been given in para. 11 of the plaint, which, for ease of reference, is reproduced as under:-- "11. That the defendants are obliged and the plaintiff is entitled to recover a total sum of Rs,5,47,800 as on 30-12-1993 in the following manner:-- {{TABLE}}
(a) Overdue lease rental Rs,2,43,250.00
(b) Agreed Loss Value (in the event the machines are not returned). Rs,2,61,400.00
(c) Additional lease rental. Rs, 43,150.00 {{TABLE}}
2. The suit of the appellant/plaintiff was decreed for a sum of Rs, 2,72,560 with costs. In the decree, the learned Banking Tribunal allowed the respondents/ defendants to make payment of the aforesaid sum in four equal instalments. It was also held by the learned Tribunal that upon payment of the aforesaid sum of Rs,2,72,560, the respondents/defendants shall be entitled to retain the leased equipment as exclusive owners thereof.
3. Learned counsel for the appellant/plaintiff has assailed the impugned decree on the ground that the amount of Rs,2,61,400 claimed by the appellant/plaintiff as agreed loss value had not been allowed by the learned Banking Tribunal. Learned counsel for the respondents has argued that the agreed loss value is not an amount claimable by the appellant/plaintiff because the said amount represents any loss or damage which may be caused to the leased equipment while the said equipment is in the custody of the respondent lessee. In support of this contention, learned counsel for the respondents has drawn the attention of the Court to A Article 13(3) and Article 14(2) of the leased finance agreements, referred to above. The submission of learned counsel for the respondents in respect of the agreed loss value is well founded. The said amount is only meant to secure the appellant/plaintiff against any loss or damage to the leased equipment. There is no allegation in the plaint nor is it the case of the appellant argued before us, that there was, in fact, any loss or damage to the leased equipment. As such, it is clear that the amount of Rs,2,61,400 claimed by the appellant/plaintiff as agreed loss value rightly was not decreed in favour of the appellant.
4. We however, note that the sum of Rs,2,43,250 as overdue lease rental and the sum of Rs,43,150 being additional lease rental mentioned in para. 11 of the plaint, reproduced above, was, in fact, recoverable by the appellant. Furthermore, the sum of Rs,1,06,500 being the residual value of the leased equipment, was also recoverable by the appellant in accordance with the terms set out in the two lease finance agreements, referred to above in the event the respondent was desirous of exercising its option to retain the leased equipment.
5. Learned counsel for the respondents argued that the security deposit of Rs,37,500 in the case of first lease agreement and Rs,69,000 in the case of the second lease agreement was to be repaid by the appellant/plaintiff to the respondent-firm. This contention, however, is not well founded. The security deposit was equivalent to the residual value of the leased equipment as set out in the schedule to the leased agreements. The respondent-firm could only have claimed refund of the security deposit if it had opted to return the leased equipment to the appellant. Learned counsel for the respondents has categorically stated that the respondent-firm is entitled to retain the leased equipment in accordance with the impugned decree and has no intention of returning the same to the appellant. In this view of the matter, in accordance with the terms of the lease agreements and, in particular, Item 12(2) of the Schedule to the said agreements, we are not in any doubt that the aforesaid amounts of Rs,37,500 and Rs,69,000 respectively were payable by the respondents to the appellant in consideration of retaining the leased equipment. This amount of Rs,1,06,500 was in addition to the lease rentals and additional leased rentals amounting in aggregate, to Rs,286,400 claimed by the appellant/ plaintiff.
6. The admitted position is that the aforesaid sum of Rs,1,06,500 was deposited by the respondent No,1 by way of security. The amount is equal to the residual value. The statement of account filed by the appellant-plaintiff does not show that the said amount was credited towards the lease rentals.
In the circumstances, it does appear that the sum of Rs,1,06,500 is adjustable against the residual value of the leased equipment. Since the respondent No,1 has already exercised its option to retain the leased equipment, the appellant-plaintiff is entitled to adjust the said amount of Rs,1,06,500 towards the residual value.
7. In view of the foregoing discussion, we find no merit in this appeal, which is, therefore, dismissed.