1. GULZAR AHMED, J.-- In this appeal, the appellant has challenged the judgment and decree respectively dated 31.7.2002 and 26.8.2002 passed by the Banking Court No. II at Karachi by which respondent suit against the appellant was decreed in the sum of Rs.6,947,027 with future mark-up at the latest rate prescribed by the State Bank of Pakistan from the date of decree till realization and costs. The sale of. Shares was also allowed as prayer.
2. The brief facts are that at the request of the appellant Nasir Mushtaq Vohra, Mushtaq Ahmed Vohra and Mrs. Gulshad Begum, the three sponsor directors of Taha Spinning Mills Ltd. (TSML), the respondent agreed to grant them promissory note discount facility of Rs.10,000,000 to facilitate the said sponsor directors to buy the under written shares as the public issue was not subscribed. On signing of agreement and security documents including pledge of shares by the said sponsorer directors, the respondent disbursed the facility amount as follows:- Nasir Mushtaq Vohra Rs.3,400,000/- Mushtaq Ahmed Vohra Rs.3,400,000/- Mrs. Gulshad Begum Rs.3,200,000/- Total: Rs.10,000,000/- The said sponsorer directors failed to pay the dues and requested for renewal, roll over and extension of the said facility. Ultimately, the sponsorer directors agreed to pay the dues in monthly installments. The payments received, as per understanding, were utilized in full settlement of dues of Mrs. Gulshad Begum and thereafter in partial adjustment of dues of the Mushtaq Ahmed Vohra but no payment was received in respect of dues of the appellant. As the dues were not paid, the respondent filed suit for recovery of Rs.12,095,568/- against the appellant in Banking Court at Karachi. Separate suit was also filed against Mushtaq Ahmed Vohra. The appellant filed application for leave to defend the suit but it was dismissed vide order dated 24.7.2002. Break-up of account were filed by the respondent and the appellant. The Banking Court No. II at Karachi thereupon passed judgment and decree, which is impugned in the appeal.
3. Mr. Faisal Arab, the learned counsel for the appellant has contended that the facility allowed to the said three sponsorer directors was of Rs.10,000,000/- for which the agreement, pronote and guarantees were signed by them in the following sums:- Nasir Mushtaq Vohra Rs.3,759,795/- Mushtaq Ahmed Vohra Rs.3,759,795/- Mrs. Gulshad Begum Rs.3,538,630/- Total: Rs.11,058,220/- He has stated that the said three sponsorer directors have paid an amount of Rs.10,767,480 and only and amount of Rs.290,740/- remains to be paid. He further stated that final date of repayment was in the year 1994 and no mark-up can be charged beyond agreed period. In this respect he relied upon the case of Textile Management (Pvt.) Ltd. v. N.I.T.. (2002 CLD 276). On the other hand Mr. Mahmood Ahmed Khan, the learned counsel for the respondent contended that the three sponsor director shad separate accounts from which they were separately disbursed the amount of facility and that the dues were paid in specific accounts. He supported the impugned judgment and decree.
4. We have considered the arguments of the learned counsel and have gone through the record.
5. The facility was sanctioned by the respondent vide its letter dated 27.5.1993 which provided that the said three sponsorer directors have been granted Promissory Note Discount facility of Rs.10,000,000/- for taking-up shares in case of unsuccessful floatation. In this letter rate of return has been fixed at 20.0% per annum (excluding Central Excise Duty) and period of facility is mentioned as 6 months.
6. All the three sponsor directors separately signed and executed Pronote Discount Agreement Pledge of Marketable Securities. Demand Promissory Note, Personal Guarantees. The three sponsor directors were disbursed by the respondent the amount of facility through their respective loan accounts as follows:- Nasir Mushtaq Vohra Rs.3,400,000/- Mushtaq Ahmed Vohra Rs.3,400,000/- Mrs. Gulshad Begum Rs.3,200,000/- Total Amount Rs.10,000,000/- It seems that the sponsor directors failed to repay the dues of the respondent and requested for renewal of the facility. However, the three sponsor directors wrote letter dated 26.6.1995 by which they started making payment in installments and paid an amount of Rs.300,000/- as initial installment in. Loan account No. 941008-01 of Mrs. Gulshad Begum. Thereafter further installments were paid in the same account under specific letters, copies of which have been filed with the replication of the respondent in the Banking Court. There are also letters showing payment in the loan Account No. 911007-01 of Mushtaq Ahmed Vohra. No payment however is shown in the Loan Account No. 941006-01 of the appellant. The respondent served legal notice on the appellant and then filed the suit. As stated above the appellant application for leave to defend the suit was dismissed. On filing of break-up of account, the suit was decreed by the impugned judgment and decree.
7. The first contention of the learned counsel for the appellant is that the three sponsor directors were given finance facility of Rs.10,000,000/- against which they were required to pay a total amount of Rs.11,058,220/- against which they have paid to the respondent an amount of Rs.10,767,480/- and that only an amount of Rs.290,710' remains to be paid. In other words, the contention of the counsel for the appellant is that all three accounts be considered as one transaction and the payment made against such three transactions be considered as payment of total dues to the respondent.
8. The appellant counsel further submitted that the respondent has received excess amount then was due in settling the account of Mrs. Gulshad Begum and that the appellant is entitled to adjustment from such excess payment in the account of Mrs. Gulshad Begum. The counsel has not cited any law to show in the first place that the three accounts of the sponsor directors can be considered as one transaction and that the appellant is entitled to adjustment from the alleged excess payment in. The account of Mrs. Gulshad Begum. Otherwise too on documents are have been filed before us, they show that three separate loan accounts were being maintained by the three sponsor directors in their respective names and they were separately disbursed the amount of facility by the respondent and that they have also signed and executed separate agreement and security document for the respective facility allowed to them. There is therefore no occasion for creating the three loan accounts as one transaction. Furthermore, there is no substanbe in the submission of the appellant counsel that the appellant be allowed adjustment from the alleged excess payment made in the account of Mrs. Gulshad Begum. The bank has not filed any suit against Mrs. Gulshad Begum and there is no lies before us in respect of her loan account. Even otherwise there is no principle of law on the basis of which the amount in one account can be transferred for the adjustment of another account more so when conscious payments have been made in specific account.
9. The second contention of the learned counsel for the appellant is that the facility granted to the appellant was for six months and that the respondent was not entitled to charge mark-up beyond the agreement period of the facility. In this respect the letter dated 27.5.1998 shows that the facility was granted by the respondent to the appellant for a period of six months on return rate of 20% per annum. The appellant has signed Pronote Discount Agreement. Pronote and also the Guarantee in the sum of Rs.3,759,795. The relevant provision, of the Pronote Discount Agreement is as follows:- "1. The Customer agrees that as long as payment is not received by the Bank, the amount paid to the Customer on a bill of exchange promissory note or other negotiable payment may at the absolute. Discretion of the Bank, be proved as outstanding against the Customer, who hereby expressly covenants and agrees that the said amount shall be repaid to the Bank on demand together with central exercise duty service charges and costs mentioned by the Bank in the amount of Rs.3,759,795 (Rupees Three Million Seven Thousand Fifty Nine thousand Seven Hundred Ninety five only) in seeking payment of the bill of exchange promissory note or other negotiable instrument, together with liquidated damages calculated at the rate of (sic) per amount of the total assistance for the period such repayment as delayed."
10. Similarly, the relevant provision of Guarantee is as follows:- "IN CONSPIRATION of your having at the request of Mr. Nasir Mushtaq Vohra, entered into a Promissory Note Discounting Agreement dated December 8, 1993 thereafter referred to as the said Agreement) with Mr. Nasir Mushtaq. Vohra, thereafter referred to as "the Customer). I/We hereby jointly and severally existence, to you repayment of all sums due and payable to you under the said agreement, provided the total amount recoverable from me (sic) this agreement shall not at any time exceed the sum of Rs.3,759,795 (rupees three million seven Hundred fifty nine thousand seven hundred and ninety five only) plus charges and all other sums chargeable the said agreement.
11. The amount agreed to be repaid by the appellant on the above documents inclusive of rate of return is Rs.3,759,795/-. In terms of paragraph No. 16 of the plaint, the respondent has disbursed the amount of facility to the appellant and showed it to be maturing on 16.6.1991. It is alleged that appellant requested for renewal, roll over and extension of facility to the appellant and showed it to be maturing on 16.6.1991. It is alleged that appellant requested for renewal roll over and extension of facility and correspondence in this respect confirmed between the appellant and the respondent until about 1997 and thereafter on 17th May, 1999 the respondent served legal notice on the appellant . From the document and pleadings, it appears that the respondent continued to charged mark-up on the facility upto the date of filing of the suit. The break-up of account filed by the respondent before Banking Court is as follows:- BREAK-UP OF STATEMENT OF ACCOUNT Principal 4,085,828 ADD: Mark-up [till agreed period i.e. 16.06.1998]2,861,199 6,947,027 ADD: Account for further period [till 20.11.2001]2,807,468 9,754,495 ADD: Liquidated damages 2,341,073 TOTAL AMOUNT RECOVERABLE 12,095,568 The Banking Court has disallowed the respondent claim to accrued mark-up and liquidated damages but has allowed the remaining claim and decreed the suit for Rs.6,947,027 with further relief as already mentioned above. The question therefore is whether the Banking Court was justified in allowing mark-up upto 16.6.1998, as mentioned in the above-quoted break-up of account, filed by the respondent. As noted above the facility was granted for a period of six months which, as per respondents own pleading was maturing on 16.6.1994 and the amount payment on maturity by the appellant to the respondent was to be Rs.3,759,795 inclusive of all charges. It seems from the break-up of account filed by the respondent, that the bank has continued to a charge mark-up beyond the agreement period and it also reflect charging of mark-up over mark-up. The charging of mark-up beyond agreed, period and mark-up over mark-up are not allowed by law.
12. Similarly no extension, roll over or renewal is allowed by law without actual disbursement and such extension, roll over or renewal have been held to be without consideration and void Reference in this regard is made to the case of Agricultural Development Bank of Pakistan v. Jasarat Hussain (2002)
13. CLD 93) Allied Bank of Pakistan Limited, Faisalabad M/s. Aisha Garments, etc. (2002 A.C. 104), Textile Managements (Pvt.) Ltd. v. N.I.T. (2002 CLD 276), National Bank of Pakistan v. Punjab Buildings Products Ltd. (PLD 1998 Kar, 302), United Bank Limited v. Ch. Ghulam Hussain (1998 CLC 816), United Bank Ltd. v. M/s. Gravure Packaging (Pvt.) Ltd. (PLJ 2001 Kar. 321), Habib Bank Limited v. M/s., Qayyum Spinning Limited (PLJ 2001 Kar. 189).
14. On the basis of the above discussion, we are of the considered view that the respondent is entitled to recover from the appellant the amount due as per agreement i.e. Rs.3,759,795/-. Thus the decree to the extent of decrial amount is modified from Rs 6,917,027/- to Rs.3,759,795/-. Except for modification in the amount of decree the rest of the decree is maintained. The appeal therefore stands partly allowed.