' M. SOHAIL IQBAL BHATTI, J.---This appeal is directed against the judgment and decree dated 2- 4-2004 passed by learned Judge Banking Court-I, Faisalabad.
2. The facts of the case are that the appellant-bank filed a suit for recovery of Rs, 15,59,693 against the respondent on 22-9-2003. According to the averments made in the plaint the respondent being customer availed a finance facility amounting to Rs,23,04,000 in the year 1995. The respondent kept on availing the above mentioned running finance facility till the year 1999.
Thereafter, the running finance facility which was being availed by the respondent was converted into a long term demand finance facility on the basis of mark up upon the request of the respondent. In consideration to availing of long term demand finance facility an agreement was executed and according to Schedule-B the respondent was allowed to repay the principal outstanding amount of Rs,23,04,000 in five years in sixty monthly instalments. The marked up price agreed to be repaid by the respondent was Rs,37,39,860. The monthly instalment agreed to be paid by the respondent was Rs,62,331 with a prompt payment bonus of Rs, 12,089. Meaning thereby that if the instalment was paid on its due date the net instalment amount would have been Rs,61,042.
According to the terms and conditions of the agreement respondent paid an amount of Rs,20,81,004 in 34 instalments and thereafter committed default. Therefore bank filed a Suit for Recovery of Rs, 15,59,693. In response to the summons issued by the Banking Court the respondent filed an application for leave to defend the suit raising the objections that the claim of the bank is in violation to Islamic system of finance. It was further averred in the application forleave to defend the suit that respondent being defendant had paid an amount of Rs,36,84,124 from 11-12-1995 to March 2002. This also included the payments during period commencing from December 1995 to January 1999. The learned Judge Banking Court through impugned judgment and decree held that the appellant entitled to recover an amount of Rs,2,82,996 instead of the claimed amount of Rs,15,59,693. The learned Judge Banking Court while passing the impugned judgment and decree held that a subsequent agreement dated 11-1-1999 was an attempt to charge mark up over mark up and thus the agreement entered into between the parties was in violation of section 23 of the Contract Act, 1872 and was, therefore, void and could not be implemented. The judgment and decree of Rs,2,82,996 with costs of the suit was passed in favour of the appellant Bank.
3. Learned counsel for the appellant argued that while passing the impugned judgment and decree the learned Judge Banking Court has wrongly observed that mark up over mark up had been charged by the appellant-bank. In fact the running finance facility was availed by the respondent from December 1995 till January 1999; which was rolled over and renewed on yearly basis; and lastly the principal amount of Rs,23,04,000 was allowed to be repaid in sixty monthly instalments. It has been further argued that the learned Judge Banking Court-I, Faisalabad failed to appreciate this fact according to the schedule attached with the agreement dated 11-1-1999.
The respondent was under an obligation to pay a marked up price of Rs,37,39,860 but the learned Judge Banking Court excluded an amount of Rs,20,81,004 from the principal outstanding amount of Rs,23,04,000. It has thus been prayed that the judgment and decree passed by learned Judge Banking Court No,1, Faisalabad be set aside and decree for an amount of Rs,15,59,693 may be passed in favour of the appellant-bank.
4. The respondent was served through a publication made in the daily "Nawa-i-waqat" but he has not turned up, therefore he was proceeded against ex parte on 27-5-2013.
5. We have considered the arguments advanced by the learned counsel for the appellant and perused the available record.
6. There is no denial to the fact that respondent had availed a running finance facility in the year 1995 which was in fact a revolving credit facility. In this kind of finance customer is allowed to borrow money from a banker up to a certain limit either at once or as and when it is required. The mark up is charged by the bank upon the outstanding amount drawn by the borrower.
7. It is admitted by the respondent in his application for leave to defend the suit that the appellant- bank created a new finance facility and re-scheduled the payment of principal outstanding amount of Rs,23,04,000 in sixty monthly instalments with a marked up price of Rs,37,39,860; however it has been submitted in the application for leave to defend that this rescheduling was against system of Islamic Banking. Thus, the respondent has not denied the renewal/rescheduling/ restructuring of the financial facility.
8. The concept behind Renewal/Restructuring/Rescheduling is that the renewal /rescheduling/restructuring of financial facility only ensues upon default, non-payment or inability in payment of outstanding liability by the customer who normally seeks such concession and upon admission of liability. By soliciting rescheduling or restructuring, a customer in a sense requests postponement of repayment of finance on renewed terms as agreed between the parties. By approving rescheduling/restructuring of a financial facility the bank (as in the present case) foregoes its immediate right of recovery and enforcement of securities against the customer. The effect of rescheduling or restructuring of finance facility is mutually agreed by the parties to be absorbed by future interest or mark up till the agreed date of liquidation of liability. Thus, we are of the opinion that rescheduling, restructuring and renewal is also a facility or accommodation granted by bank to the customer. This facility has been recognized as "obligation" defined in section 2(e) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Reliance is placed on Habib Bank Limited v. Service Fabrics Ltd. And others (2004 CLD 1117) {Lahore}.
9. As far as the observation by Judge Banking Court No,1, Faisalabad that the appellant-bank had not attached the statement of accounts w,e,f, 1995; it is suffice to observe that in the cases pertaining to restructuring the amount is not disbursed, it is brought forwarded in case of restructuring/rescheduling of previous finance; bank is not obliged to have brought on record the statement of accounts prior to the agreement through which restructuring has been made as this is an admitted amount duly acknowledged by the borrower.
10. In the present case after restructuring an agreement was executed by respondent Ameer Alam and according to Schedule-B the respondent agreed to pay an amount of Rs,37,39,860 i,e, marked up price to be paid in sixty monthly instalments of Rs,62,331. The agreement is duly executed by the respondent and Schedule-B of the Agreement which provides the repayment schedule is also signed by the respondent. Even otherwise the statement showing the repayment made by respondent in pursuance to rescheduling is attached with the plaint. Relevant backdrop of finance arrangement between the appellant/plaintiff bank and the respondent/defendant had been appropriately given in the plaint. Reliance is placed on Habib Bank Ltd. v. Taj Textile Mills Ltd.
Through Chief Executive and 5 others (2009 CLD 1143) {Lahore}. Had the dispute been raised that the respondent had signed some blank documents in that case this Court would have considered the illegality attached to that agreement on grounds of un-conscionability, in equality of bargaining power as well as economic duress but we have observed that this has not been the case of the respondent that he had not executed the agreement dated 11-1-1999 or his signatures were obtained on some blank documents which were subsequently filled by the appellant-bank without notice to the respondent. The respondent admitted the contents of the agreement by making payment in pursuance to agreement dated 11-1-1999 till 13-2-2002 i,e, 34 installments. Thus, we are of the considered view that the learned Judge Banking Court has erred in law while passing a decree of an amount of Rs,2,82,996.
11. For what has been discussed above, this appeal is allowed. The impugned judgment and decree dated 2-4-2004 passed by learned Judge Banking Court No-1, Faisalabad is set aside. The suit filed by the appellant is decreed for recovery of Rs, 15,59,693 along with costs. The appellant is entitled to recover the decretal amount by the sale and auction of the mortgaged property and if the claim remains unsatisfied the decree may be enforced against the person of the respondent-defendant.