UMAR ATA BANDIAL, J.---The plaintiff advanced an amount of Rs,78 million under Murabaha finance agreement dated 10-10-2005 to the defendant No,1 company. The purchase price of the goods transacted was fixed at Rs,90 million payable on 15-1-2006. The disbursement of the principal amount is admitted at page 8 of the PLA. After expiry of the facility an amount of Rs,32.074 million has been repaid until 11-2-2008. The plaintiff entered into a rescheduling agreement which extended term of finance till 30-6-2010 but levied service charges @ Rs,16.88 per cent for the extended term. On the foregoing basis the plaintiff claims Rs,78 million as principal amount and Rs,54.592 million on account of mark-up the balance whereof after adjustment of repayments made in the amount of Rs,22.518 million, is stated to be outstanding.
2. The defendants filed their PLA wherein the only substantial plea taken is that markup has been charged beyond contract period in the suit. After filing their PLA the learned counsel for the defendants stopped appearing in these proceedings. Accordingly, the defendants were proceeded against ex parte on 26-11-2009. Nevertheless on the touchstone of AU Khan's case (PLD 1995 SC 362), the pleas taken in the PLA are examined below.
3. The Murabaha facility agreement has purchase price of Rs,90 million payable on 15-1-2006. The rescheduling agreement dated 10-9-2007 claims service charges @ Rs,16.88% per annum till 30-6- 2010. Such charge is clearly in the nature of interest and cannot accrue either under law or on the terms of the Murabaha facility. Consequently, the rescheduling agreement is not enforceable with respect to service charges. On the other hand, from the date of default, namely, 15-1-2006 until date of realization, the FIO 2001 creates for unpaid creditor/financial institutions an entitlement to compensation through cost of funds as determined under the provisions of section 3 of the said Ordinance.
4. Accordingly, the plea taken in the PLA with respect to accrual of mark up under the rescheduling agreement is upheld. As a result, this suit is decreed in the amount of Rs,57.926 million against the defendants jointly and severally along with payment of cost of funds w,e,f,