MIAN SAQIB NISAR, J.---The suit filed by the appellant-Bank against the respondent No. 1, as the principal borrower, a partnership concern; respondents Nos.2 to 4, as the partners of the said firm and respondents Nos.5 and 6 as mortgagors/ guarantors of the finance, has been partly allowed by the learned Banking Court vide judgment and decree dated 20-2-2003.
2. Brief facts of the case are that on 14-11-2002, the appellant brought a suit for the recovery of Rs.66,80,300 against the respondents and except respondent No.3, who did not file the leave application and was proceeded ex party, all the other respondents moved such applications, which were dismissed. Yet, the learned Banking Court has awarded a decree for an amount of Rs.37,71,984.83: the decree for the remaining suit amount has been refused for the reason that after the expiry of the finance agreement, the appellant-Bank could not charge the mark-up, which amount was added in the suit, but excluded by the Banking Court. Besides, the Banking Court, has also refused the decree for an amount of Rs.1,32,460, which was claimed in the suit, but was not an amount towards the finance, rather was imposed upon the principal borrower as penalty by the State Bank of Pakistan, for lack of exports of the goods, for which the finance was awarded; furthermore, the Banking Court has also refused to grant the decree, against respondent No.6, the guarantor/mortgagor, on the ground that there had been some variation in the original agreements between the plaintiff-Bank and the principal borrower, therefore, the said respondent has been discharged as a surety in terms of sections 133 and 135 of the Contract Act.
3. Learned counsel for the appellant has argued that as the respondents/defendants had been availing the finance even after the terminal date of the agreements, therefore, they are required under the law to pay the mark-up on the principal amount even thereafter.
4. We are not convinced to subscribe to the above plea, as in number of precedents, it has been held that- the markup/interest can only be charged under the agreement between the parties or if permissible under the law and not otherwise. From the record, it transpires that there, is no such agreement and the learned counsel for the appellant has failed to cite any law before us, under which the mark-up beyond the contract' period can be charged. Therefore, the decree of the Banking Court in this behalf is valid and needs no interference.
5. As regards the amount of penalty is concerned, obviously, the principal borrower has failed to export the goods, on the basis of the FAPE finance, which it had availed from the plaintiff, the State Bank under the rule and scheme had the authority to impose the penalty upon the borrower. This has been so done by the State Bank and it is the borrower, who has to incur the burden of the penalty and therefore, the bank is well within its right to claim and recovery' the said amount.
Therefore, the decree of the Banking Court refusing the amount is set aside and the plaintiff is granted the decree of the above amount as well.
6. The argument of the learned counsel for the appellant that the learned Banking Court has wrongly calculated the amount, while granting the decree, because two FAPE facilities were given to the borrower, one for an amount of Rs.2 Million and while charging the mark-up upon this amount, till the agreed period i.e. 30-6-1999, it comes to Rs.17,77,747; under the second facility for Rs.3 Million, by charging of the mark-up for the period under the agreement, the amount comes to Rs.26,84,500; this total amount due to the appellant-Bank was Rs.44,62,247, resultantly short grant of decree to the tune of Rs.37.78 Million is illegal and wrong.
7. Confronted with the above, the learned counsel for the respondents except respondents Nos.6 and 7, by defending the decree states that under the agreement only 8% per annum could have been charged by the bank and the Banking Court while applying the said percentage upon the mark-up, has granted the above decree to the appellant.
8. As far as the refusal of the decree against respondent No.6 is concerned, this appeal was admitted to consider the point that while refusing leave to the defendants, the learned Court could not have reduced the suit amount or discharged respondent No.6, and at the most, leave could have been granted to the respondents. Today, reliance has been placed upon the judgment reported as Mian Aftab A. Sheikh and 2 others v. Messrs Trust Leasing Corporation Limited and others 2003 CLD 702 and the same submission has been made; besides, it is argued that the said respondent has never refused or controverted the execution of being surety, in the execution of the guaranteed documents, therefore, in such circumstances, the provision of sections 133 and 135, were inapplicable and the said respondent could not be discharged.
9. We have heard learned counsel for the appellants. Respondent No.6 is not present, therefore, ex parte proceedings were initiated against her. The learned Court below about respondent No.6, has held "Admittedly, the defendant No.6, executed surety for the facility allowed by the plaintiff for a specific limit, which was adjusted accordingly. The plaintiff was under legal obligation to fix the liabilities against the surety with frequent express consent from defendant No.6 for further successive period. I feel it proper and appropriate that the present suit against defendant No.6 is not under the Contract Act and as such surety tendered by her stands discharged'.
In the above situation, the learned Banking Court should have granted the leave to the respondent No.6 and should have ascertained, whether the documents on the basis of which, she was sued by the plaintiff' and was claimed to be the surety/guarantor were/are executed by her with regard to the loan facility for the recovery of which, the suit was brought by the appellant; the Court also should have determined in positive and unequivocal manner,, if the limit, for which respondent No.6 was a surety had been adjusted, and thus she was discharged as the guarantor. But the Court has not decided these propositions and has dismissed the suit qua her. To this extent, we find that the judgment and decree of the Court below cannot sustain, which is hereby set aside; the matter is remanded to the Banking Court, Faisalabad with the direction to summon respondent No.6, her application for leave to appear shall be deemed pending; it shall be re-considered by the Court in view of the latest pronouncement of this Court made in the above referred judgment i.e. 2003 CLD 702 and if the Court finds that there are substantial, questions of law or facts in respect of which evidence needs to be recorded, shall grant the relief and decide the suit in accordance with law.