SYED HAMID ALI SHAH, J.--- Claim of the plaintiff, in this suit, is based on two letters of credit established at the instance of defendant No. 1 . First Letter of Credit No.0180015600843204 was established on 7-8-2004, for an amount of Rs.51,779,547. Corresponding Bank i.e. Commerz Bank (Germany), debited the value of Letter of Credit to the tune of 75,373,650 Euros. The debited amount at the relevant time was equal to Pak rupees 53,527,400. The transaction finds its mention in the letter dated 24-8-2004, addressed to the plaintiff by, the corresponding bank. Plaintiff adjusted its outstanding dues subsequently from cash margin to the tune of Rs.2,516,200, on 31-8-2004, while a sum of Rs.11,100,000 was adjusted on 15-9-2004, from another account of defendant No.1 maintained with the plaintiff-Bank, leaving balance of Rs.39,911,200, against defendant No.1, in the books and accounts of plaintiff-Bank. Plaintiff in addition to the outstanding amount, claims service charges at a rate of 0.1% amounting to Rs.53,527, commission on import bill handling at 0:30% amounting to Rs.127,282 and mark-up from 24-8-2004 to 9-11-2004 to the tune of Rs..1,620,530. Plaintiffs total claim with regard to the aforementioned Letter of Credit, is Rs.41,712,539.
2. Second Letter of Credit No.018001005600753204, of the value of Euro 25,125 was established on 19-7-2004. The corresponding bank, (Cornmerz Bank) debited the value of letter of credit on 24- 8:2004. The debited amount pertaining to second letter of credit, is equivalent to. Pak Rs.17,771,382.
The plaintiff, out of outstanding balance in respect of said letter of credit, adjusted an amount of Rs.1,673,000.00 from cash margin, leaving a balance of Rs.16,098,382.00. Plaintiff has claimed balance outstanding and also the service charges, mark-up from 24-8-2004 to 9-11-2004' and commission. An amount of Rs.3,883,378.00 was adjusted through debit entry, from the Running Finance Acbount of defendant No.
1. Defendant No.1 signed agreement for finance (IB-6) dated 31-8-2004 and a trust receipt of even date. Besides these documents, Promissory Note. Dated 31-8-2004 was executed and signed, which is witnessed 'by two witnesses to comply with the provisions of Article 17(2) of the Qanun-e- Shahadat Order, 1984.
3. Disbursement of loan amount stands proved through letters of defendants addressed to the plaintiff dated 12-12-2003, 21-5-2004 and 5-8-2004. Defendant No.1 acknowledged the existence of finance facilities and their sanction through signing the Letters of Accommodation dated 18-12- 2003 and 6-8-2004, in its due acceptance. Plaintiff has placed on record two statements of account, separately for each letter of credit. Various other documents are also available on record. Additionally the defendants have not denied the execution of the documents.
4. Defendants in response to notices entered appearance and filed the petition for leave to defend the suit. The leave was refused, on failure of the defendants to establish that questions raised in petition for leave to defend the suit, require determination through recording of evidence. Mere dismissal of petition for leave to defend the suit, does not entitle the plaintiff of decree, as prayed for in the plaint. Plaintiff on dismissal of petition for leave to defend the suit, is not absolved of its responsibility to prove its case. Thus the original documents of case were called and compared with the photocopies, placed on record. The original documents were returned after comparison.
5. The documents placed on record were examined, and the assertions of the plaint were perused.
Against the Letter of Credit No.5600843204 dated 7-8-2004. The plaintiff with regard to first Letter of Credit (L.C.No.5600843204 dated 7-8-2004) has claimed service charges at a rate of Rs.0.1 per cent, import bill handling charges at 0.30%; and mark-up from 24-8-2004 to 9-11-2004. These amounts/claims are not based on any agreement. Agreement of Finance (IB-6) is the paramount document, which nowhere signifies the assent of the defendants, for their obligation to pay these claims. NO other document is available on record to show the consent of the defendants, pertaining to payment of service charges, import bill-handling charges or ,mark up. Law is settled that in a banking transaction, based on Islamic Mode of financing, only those claims of creditor are permissible, which are expressly stipulated in the agreement. The claim of mark-up, based on agreement, can be levied, and charged only for the period of agreement/contract. Any mark-up beyond the period of transaction is not legal. Plaintiff is, therefore, held entitled-to Rs.39,911,200 in respect of letter of credit dated 7-8-2004. So far as the claim of the plaintiff regarding mark-up, service charges and import bill handling charges, is concerned, the same is hereby refused being not legally tenable and not backed by any agreement.
6. Adverting to second letter of credit dated 19-7-2004, the plaintiffs claim of mark-up, for the period of transaction is based on Agreement of Finance dated 31-8-2004. Claim of mark-up stands established and the same is accordingly allowed. The claim of the plaintiff regarding service charges and the commission is not supported or based on any agreement and is thus disallowed.
7. The amount outstanding in respect of Letter of Credit dated 19-8-2004, is Rs.9,953,693. The mark up for the period of transaction (from 31-8-2004 to 29-10-2004) on outstanding amount, is Rs.2'33,289. Total amount payable by the defendants pertaining to second Letter of Credit comes to the tune of Rs.9,953,693.
8. Permissible claim of the plaintiff in respect of first Letter of Credit dated 31-8-2004, is to the tune of Rs.39,911,200 while in respect of second Letter of Credit, is Rs.9,953,693. Putting these amounts together a sum of Rs.49,864,893 remains payable by the defendant No. 1.
9. The letters of personal guarantee as is reflected from the contents thereof are signed in pursuance of agreement dated 18-12-2003 and 10-9-2004. Both the agreements are not placed on file. Thus the plaintiff has failed to prove through its pleadings or through the documents (appended with the suit) that the letters of guarantee pertain to the loans subject-matter of the suit.
10. The contract of surety ship/guarantee is to be construed according to the terms mentioned therein and must be construed strictly so that no liability is imposed on the surety, which is 'not clearly and distinctively covered by the terms of agreement. Case of "Blest v. Brown" 1862 4De GF&J 367, can be referred in this respect. Further the contract of guarantee, is required under law to be specific identifiable, devoid of uncertainty and must refer to a particular transaction or transactions. I may refer here to a passage from the book "Law of Guarantees" (Second Edition) by Geraldine Mary Andrews and Richard Millett, where at pages 164 and 165, it has been expressed:- "It is possible for the guarantee to be limited as to 'the type of principal transaction guaranteed. If the principal transaction intended to be the subject of the guarantee is not clearly identified, the guarantee may be void for uncertainty, such as where a guarantee for the performance of the lessee's obligations under a lease could reasonably refer to two leases. Where the guarantee refers to a particular transaction, the surety will not be liable for a different transaction or one outside the scope of that guaranteed, such as where the guarantee relates to a transaction or a given amount but the transaction proceeds for a larger amount, or where the creditor advances monies to the principal under a different facility to the one identified in the guarantee, or where the guarantee is limited to banking transactions and facilities and the creditor owed money in respect of . Debt discounting goods."
11. Letters of guarantee placed on record, do not cover the loans subject-matter of the suit, for various reasons: firstly the agreements referred in the letters of guarantee are neither the subject- matter of this suit nor the same are placed on record; secondly the execution letters of personal guarantee and establishment of letters of credit is at different periods of time; thirdly the amounts mentioned in the guarantee are altogether different from the one subject-matter of the letters of credit and; lastly the guarantee agreement finds no support from the plaint. Therefore, no liability can be imposed upon defendants Nos.2 to 5 on the basis of these letters of guarantee.
12. For the foregoing, the suit of the plaintiff is decreed for a sum of Rs.49,864,893 along with costs and costs of fund against defendant No.1 only. The suit against defendants Nos.2 to 5 stands dismissed. This suit shall automatically stand converted into execution proceedings, without the need to file a separate application and no fresh notice need be issued to the judgment-debtor in this regard. The proceedings for execution will commence if defendant No.1, fails to pay the decretal amount within a period of one month. Re-list on 1-6-2007.