' ABID AZIZ SHEIKH, J.---This appeal has been filed under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 against the interim decree dated 24-2-2009 passed by learned Judge Banking Court No,1, Multan, against the appellants whereby the suit of the bank (respondent No,1) was decreed to the extent of Rs,66,66,347 along with costs of the suit and cost of funds from date of default till complete realization of the decretal amount.
2. Brief facts of the case are that Saudi Pak Commercial Bank Ltd. (respondent No,1) filed a suit for recovery of Rs,71,69,711 against Messrs Pace Pesticides Pvt. Ltd. (appellant No,1) as principal debtor whereas appellants Nos.2 to 4 were sued being the guarantors of the finance facility availed by the appellant No,
1. The appellant No,4 along with defendant No,5 in plaint were also sued in the capacity of the mortgagors of the property to secure the finance. The claim in the plaint was that appellant No,1 opened an account with the respondent bank and applied for finance facility.
Accordingly, various finance facilities were sanctioned by the respondent bank in favour of appellant No,1 vide sanction advice dated 17-6-2003. Subsequently, the following finance facilities were renewed and enhanced vide sanction advice dated 20-7-2004:-- Running Finance Facility Rs, 6.7 Millions LC (S) Renewal Rs, 30.0 Millions FIM Rs,15.0 Millions ' The contention of the respondent bank was that out of the aforesaid three finance facilities, the appellants adjusted two finance facilities i.e, LC(S) and FIM whereas they defaulted to make the outstanding payment of running finance,, facility, which was to be paid on or before the expiry date of the aforesaid facility i.e, 30-6-2005. Hence the suit for recovery of Rs,71,69,711 was filed by the bank.
2(sic.) The appellants contested the suit by filing petition for leave to defend the suit. However, during arguments before the learned Banking Court, only the entries in the Statement of Account were challenged by the appellant. The learned Banking Court after hearing the parties, vide impugned judgment dated 24-2-2009 passed interim decree in favour of bank to the extent of Rs,66,66,347 with costs of suit and cost of funds. Hence this appeal.
3. The learned counsel for the appellants at the very outset argued that he does not dispute the availing of the finance facility, however, his objection is only regarding the amount of mark up charged by the respondent bank. The learned counsel argued that as per contents of the plaint and sanction advice dated 20-7-2004 available on record, it is admitted position that expiry date of finance facility allowed to the appellant was 30-6-2005, whereas in the statement of account, the mark up has been charged till 30-12-2006. He submits that the finance being mark up based, no mark up could be charged beyond the expiry date of the finance facility i.e, 30-6-2005.
4. In response to the aforesaid arguments, the learned counsel for the respondent bank admitted that in plaint as well as in sanction advice dated 20-7-2004, the expiry date for the facilities is 30- 6-2005, however, argued that once the appellants failed to repay the loan amount, the bank was entitled to recover mark up till 30-12-2006 and therefore the decree was lawfully passed for the amount of Rs,66,66,347.
5. Arguments heard. Record perused.
6. We have gone through the contents of Paras Nos. 5 and 6 of the plaint. According to which, running finance facility for Rs,6.7 million was renewed and enhanced vide sanction advice dated 20-7-2004 and admittedly the expiry date for the facility was 30-6-2005. It is also admitted position that the finance availed by the appellants is mark up base, in the shape of by back agreement. It is repeatedly held by this Court that in such finance facilities, the bank cannot charge mark up beyond expiry date of finance facility. Reliance in this regard is placed on case-law Muhammad Taria v. Bank of Punjab and another (2004 CLD 162) in which it is held as under:--
7. "Attending the last submission that the bank has charged mark-up beyond the contract period, we have examined the record; the statement of account and find that the finance agreement was on markup basis and was for a particular period of time i.e, till 23-6-1992, enabling the Bank to charge mark-up. Thereafter, there was no agreement or law under which the mark-up could be charged, thus, the amount in this behalf shown in the statement of accounts and claimed by the bank, is illegal. We, therefore, intend to modify the judgments and decrees to that extent".
7. In view of above discussion, the claim of respondent bank in respect of mark up after 30-6-2005 is f not sustainable. Accordingly, the arnount of mark up for Rs,9,38,512 which is charged after the expiry date of the facility i.e, 30-6-2005 is disallowed. Accordingly the appeal is partly allowed and the decree is modified for an amount of Rs,57,27,834 in favour of the respondent bank against the appellant with cost of the suit and cost of funds from the date of default/expiry i.e, 30-6-2005 till realization of the entire decretal amount.
8. In view of above, this appeal is partly allowed in the aforesaid terms.