1. ' ZIA PERWAZ, J.---Plaintiff, a banking company under the Companies Ordinance 1984, has instituted this suit against the defendants for recovery of Rs,66,418,888-38.
2. ' Brief facts of the case are that defendant No,1 requested for finance facility in the sum of Rs,65,490,000 and the same was accorded by the plaintiff at its Peshawar Branch vide agreement, dated 23-12-1999 for Running Finance. Defendant No,1 has also created certain securities to ensure payment/ discharge of the said liability. Defendant No,1 vide judgment, dated 10-4-1996 also secured an amount of Rs,25,000,000 from Peshawar Branch of the plaintiff-Bank against security of all its stocks, present and future, followed by Memorandum of deposit of title deeds, dated 30-10- 1997 for Rs,14,000,000 by defendant No,3 and Memorandum dated 5-11-1997 for Rs,20,000,000 by defendant No,
1. Defendant No,3 has also executed irrevocable general power of attorney (Annexure F-1) in favour of the plaintiff in respect of her property. A promissory Note (Annexure-G) was also executed by defendant No,1 in favour of the plaintiff. Defendants Nos. 2, 3, 4 and 5 have executed guarantees (Annexure H, H-1, H-2 and H-3) in favour of the plaintiff to secure the payment of liabilities of Running Finance. Defendant No,1 has also established 2 LCs equivalent to Rs,1,197,280 out of which only an amount of Rs,1,235,278 has been paid. The loan account of defendant No,1 was subsequently transferred to Karachi Branch of the plaintiff at the request of defendant No,1 vide their letter, dated Nil (Annexure B-1). The plaintiff kept on asking the defendants to discharge their liabilities but in vain and on July 31-7-2002 total outstanding liabilities of the defendants accumulated to Rs,66,418,888.38, hence the plaintiff filed the present suit with following prayer:--
(1) For payment of the sum of Rs,66,418,888.38 together with the mark-up at the rate of 12% from the date of institution of the suit till such date that full pay inent is made.
(2) For granting permanent injunction restraining the defendants jointly and severally, their employees, agents or any other person acting for and on their behalf directly and or indirectly from selling alienating disposing of or creating third party rights in any manner whatsoever in respect of the properties hypothecated to the plaintiff.
(3) For payment of liquidated damages at the rate of 20% of the aforesaid amount of Rs, 13,283,777.67 and cost of funds in terms of section 3 of Financial Ins t I tutions (Recovery of Finances) Ordinance, 2001.
(4) For payment of all other charges and expenses incurred by the plaintiff during the pendency of the suit.
(5) For sale of the mortgaged and hypothecated properties and assets of the defendants and such other assets and properties of the defendants as this Hon'ble Court may deem fit.
(6) Granting any other relief which this Hon'ble Court may deem fit and proper under the circumstances of the case.
3. ' On service of notice, the defendants put in appearance and moved application for leave to defend, however, due to nonappearance of the defendants, the same was dismissed tor non- prosecution. Thereafter the defendants moved application under Order IX, rule 9. C.P.C. Seeking for restoration of leave to defend application. On hearing the restoration application this Court has also examined the claim of the plaintiff on merits and has observed vide order, dated 17-5-2004 that there is no dispute as to availing of the finance facility by the defendants and the only defence is that the amount of claim is highly inflated, exaggerated and also includes mark-up and mark- up on mark-up and other charges and compounding. However, as in support of the same no specific entry from the statement of account was pointed out that suffers from such error, it was observed that setting aside the orders would be of no purpose. The plaintiff was, however, directed as follows:-- "to file fresh statement of account reflecting the amount disbursed and amount that could lawfully be charged in terms of the Finance Agreement. No mark-up on markup or compounding of the mark-up is to be made. All the claims and charges are to be duly supported by the relevant invoices as may be charged by the plaintiff in respect of each account."
4. ' Thereafter the matter came up for final disposal. On 17-8-2004 affidavit in ex parte proof was filed by Karim and Majid Waqar on behalf of the plaintiff who have also exhibited the original documents with their affidavit-in-evidence.
5. ' After hearing learned counsel for the plaintiff at some length, this Court directed the plaintiff to produce some additional documents particularly documents pertaining to sanction, the terms of finance, rate of mark-up etc. In compliance thereto, learned counsel has filed an affidavit to show that no mark-up on mark-up has been charged after the outstanding amount was transferred from Peshawar Branch, with documents i,e, sanction advice/approval of Peshawar Branch, agreement for Running Finance, irrevocable authority to recover accrued mark-up, letter of hypothecation, Certification of Registrar of mortgage. Continuing Guarantee, Promissory Note and statement of accounts.
6. Examination of the statement and the documents reveal that the plaintiffs have claimed amounts beyond mark-up chargeable on the principal over and above the period for which the amount was originally sanctioned, the same are not recoverable.
7. ' Mere transfer of the liability from the Branch to the main account of the defendant at the head office does not constitute a fresh transaction based on appropriate sanction with agreed mark-up but is a mere book entry from one account to another and would not entitle the plaintiff to claim the mark-up accrued at the Peshawar Branch of the Bank beyond the agreed period of the sanction and the claim for recovery of additional amount is not maintainable. On being confronted with this position, Mr. Aijaz Ahmed, learned counsel for the plaintiff, could not explain/point out the relevant ;Ai-tries as mere entry of the mark-up on the outstanding amount, under the circumstances, would not be recoverable and in view of the detailed explanation learned counsel could not justify the claim of the plaintiff beyond the following:--- Outstanding liabilities at Peshawar Branch44,136,986.90 Outstanding liability at Karachi7,713,914-00 Total outstanding liability ---------------------- 51,850.900.90 Repayments at Peshawar Branch1,000.000-00 Repayments at Karachi Branch11,977.481-61 --------------------- Less total repayments 12,977,481.61 Net liability 38,873,419.29 Mark-up for withdrawn amount at Peshawar From 31-12-1996 to 31-12-19974,743,637,30 From 31-12-1997 to 31-12-19981,106,68 From 31-12-1998 to 31-12-199810,422,05 ------------------ Total mark-up at Peshawar 4,755,166,03 Mark-up withdrawn amount at Karachi 1,145,072,79 ------------------ Overall mark-up for withdrawn amount 5,900,238,82 Total liability 44,773,658,11 Add over . due acceptance 2,264,652,00 Grand total 47,037,310,11 ' Mr. Aijaz has further argued that cost of funds may be allowed in pursuance to the provisions of section 3(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 from the date of commencement of the Ordinance. The plaintiff, however filed the certificates, issued by the State Bank of Pakistan for the years 2001 to 2004 after the suit was reserved for judgment, which the plaintiffs filed along with an affidavit on 6-10-2004 showing the rate of cost of funds, the same are taken on record. Plaintiffs have prayed that for the period prior to the promulgation of the Ordinance the mark-up at the agreed rate may be allowed as claimed by the plaintiff as during those years the bank was paying much higher rate of profit to the depositors. I am not inclined to allow the claim pertaining to the previous years on the basis interest or fixed profit. As regards these years covering the period from the date institution of suit till promulgation of Ordinance, 2001, the plaintiff in his affidavit. After examining the affidavit I am of the view that while the plaintiff is not entitled to recover the mark-up/ interest at a fixed rate for the years it will be unjust if they are deprived of the cost of funds and the claim is out rightly rejected. The reason being that cost of funds has been incurred on the amount advanced to the defendants. The cost of funds is to be determined by the State Bank of Pakistan after taking into consideration all the necessary factors involved in this regard. Accordingly the cost of funds for the years before promulgation of Ordinance, 2001 may also be determined by the State Bank of Pakistan. The plaintiff is entitled to recover the amount of cost of funds so determined by the State Bank of Pakistan on the principal amount.
8. ' Accordingly, after perusal of the record and hearing the learned counsel, for the reasons discussed the suit is decreed in favour of the plaintiff as follows:--
(f) The amount of principal and mark-up to the extent of period of facility are allowed and the suit is decreed for an amount of Rs,47,038.310-11.
(ii) The cost of funds on the principal amount from the date of promulgation of the Ordinance, 2001 till the amount is realized will be at the rate as certified by the State Bank of Pakistan in its certificate annexed to the affidavit.
(iii) The amount equal to the cost of funds on the principal amount from the date of institution of this suit up to the date of promulgation of Ordinance, 2001 as determined by the State Bank of Pakistan taking into considerations all the necessary factors involved during the relevant years.
(iv) A decree for the sale of mortgaged properties recovery of the decretal amount.
(v) Cost of this suit.