AZIZ-UR-REHMAN, J.---The present suit has been filed by the plaintiff Bank, inter alia, for Recovery of US $ 1,775,977.28 and Rs .55,734 ,637.20 against defendants Nos.1 to 9 under Banking Companies [Recovery of Loans, Advances, Credits and Finances] Act, 1997 [Act No.XV of 19971 with the following prayers:-
(a) a sum of Rs. 151,585,019 together with interest and/or mark-up pendente lite until realization;
(b) interest and additional interest on the FCY from 30th June, 2000 to the date of suit, pendente lite and until realization;
(c) against the defendant No.1 for sale of the mortgaged property bearing No. C/133, SITE Area, Nooriabad, SITE, Survey Sheet No. 35P11-35 L/23, admeasuring 3 acres or thereabouts, together with building, structure, fixture, fittings, plant, machinery and other equipment situated thereon, situated at Industrial Estates Trading Area, Nooriabad, with the Registration District, Sub-District and City of Dadu, for the realization of the amounts due under prayer clauses [a] to [e] above.
(d) against the defendants 2 to 9 for the sale of the shares of the defendant No.1 held or owned by them and under pledge with the plaintiff for sale, for the realization of the amounts due under prayer clauses [a] to [e];
(e) granting costs of the suit to the plaintiff and; granting such other relief[s] as may be appropriate in the circumstances of the case.
2. The defendant No.1 in the suit has been joined in its dual capacity as principal borrower/customer in terms of section 2[c] and [d] in respect of Foreign Currency Loans i.e. First and 2nd Foreign Currency Loans which were later-on mutually agreed to be merged by means of a Supplementary Credit Agreement dated 26-2-1990] and finance facilities as defined in section 2[e] and [f] of Act No.XV of 1997. The Finance Facilities granted to and availed by defendant No.1 are duly mentioned in paras 1, 3(i), 5(i), 6(i), 7(i) and 9(i) of the plaint. Besides, principal borrower/customer, the defendant No.1 is a mortgagor while, defendants Nos.2 to 9 have been joined in their dual capacities as guarantors and pledgers in respect of the finance facilities availed by the defendant No.1. The defendant No.10 [ICP now IDBP] as being a 'pari passu charge' holder has been joined in the suit in pursuant to and in compliance with order dated 29-9-2011, by way of filing an 'AMENDED TITLE' on 30-10-2011.
3. In consideration of various finance facilities i.e. Foreign currency loans and mark-up based facilities granted to and availed by the defendant No.1, the defendant No.1 besides financial agreements, promissory notes also signed and executed Undertakings, Memoranda, Deeds of floating charge, Letters of hypothecation, Irrevocable general power of attorney[s], Charge certificates etc. Of various dates. Likewise, defendants Nos.2 to 9 signed and executed letters of personal guarantees, pledged letters/supplemental agreements for pledge of shares of different dates. All the aforesaid documents are annexed with the plaint as Annexures 'A' to 'X'. Besides, Certified Statement of Accounts are also enclosed as Annexures 'Y-1' to ' Y-25'.
4. The original plaint, as appears, was presented on 17-1-2001. Upon filing of the suit, process under section 9 of the Banking Companies [Recovery of Loans, Credits and Finances] Act, 1997 [Act No.XV of 1997], was issued to the defendants by all four [4] modes. In response, only on behalf of the defendants Nos.1 to 6, Leave to Defend Application bearing C.M.A. No.2029 of 2001 was filed, however, without any supporting affidavit[s] thereof. Nonetheless, later on, in support of the Leave to Defend Application bearing C.M.A. No.2029 of 2001 filed on 21-1-2001, 'five affidavits' were also filed on behalf of the defendants Nos.1 to 6 on 26-1-2001. As far as other defendants [i.e. Defendants Nos.7, 8 and 9] are concerned, they in their own wisdom did not file any Leave to Defend Application. The case of defendants Nos.7, 8 and 9 is fully covered under section 9[4] of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 [Act XV of 1997].
Subsection (4) of section 9 of Act XV of 1997 reads as follows:- "(9) Procedure of Banking Courts.-- (1).......
(2).......
(3).......
(4) In any case in which the summons has been served on the defendant as provided for in subsection (3) the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court as hereinafter provided so to defend the same; and, in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff on the basis thereof or such other material as the Court may require in the interests of justice.
5. From the record, it reveals that by consent application under Order VI, Rule 17, C.P.C. Bearing C.M.A. No.7858 of 2001, filed by the plaintiff was granted on 26th April, 2002, and resultantly, the plaintiff was allowed to file amended plaint. Pursuant to and in compliance with aforesaid order of 26-4-2002, the amended plaint was filed on 10-5-2002. Per the aforesaid order, the defendants in order to meet the 'amended facts' if any, in the plaint were also permitted to file their 'Additional Leave to Defend Application'. For convenience and ready reference order dated 26-4-2002 is reproduced as under:- "26-4-2002 Mr. Adnan lqbal, Advocate Mrs. Seema Waseem, Advocate
(1) C.M.A. No.7858/01 is granted by consent. Consequently, the plaintiff is allowed to file amended/plaint within two weeks. After filing of the amended plaint, the defendant is allowed to file additional leave to defend application to meet the amended facts introduced through amendment of plaint.
(2) Deferred."
6. Subsequently, and after filing of the amended plaint on 10-5-2002, when above case came-up before the Court then, on 3-9-2002 the following order was passed:- "3-9-2002 Copy of additional leave to defend application has been supplied to the plaintiff's counsel, who may take any plea against such additional leave to defend, which has been filed in view of the amendment of the pleadings by the plaintiff. No leave to defend application has been filed on behalf of the defendants Nos. 7 to 9, the period for filing such application expired.
The plaintiff granted two foreign currency facilities to the defendant No.1 in US Dollar $ 1.25 million vide agreement dated 15-3-1987, second in US Dollar $ 318,000 vide agreement dated 14-9-1988.
Both foreign currency loans were merged in one loan in US Dollar $ 1,479,981.07. The defendant No.8 created charge over his share owned by him of defendant No.1 and also guaranteed its repayment by personal guarantee through annexure-H. The defendant No.1 also availed four local facilities on different dates and under different agreement [I] in the sum of Rs.9,450, [2] 1,544,252/0 sale price, [3] Rs.3,096,526 purchase price, [4] Rs.1,455,748/0 sale price and Rs.3,37,944 purchase price. The above three facilities were guaranteed by the defendant No.8 namely, Sikandar Ali by creating additional charge of share owned by him in defendant No.1 as well as personal guarantees. The local currency facility was also restructured by an agreement dated 26-10-1998.
The payment under the restructuring of loan was not guaranteed by defendant No.8. The restructuring/consolidation of foreign currency account except the defendant No.8.
The question which requires consideration is whether the defendants Nos. 7 and 9 stand discharged from their liability in view of the subsequent agreement in respect of the foreign currency and the defendants Nos. 7 to 9 in like manner in respect of the local currency facility. The counsel contends that the same question is involved in leave to defend application filed on behalf bf the defendants Nos.1 to 6 and he wants to argue this point while arguing replication for leave to defend." [Underlining is mine].
7. From the record it further transpires, that in compliance with another order of 29-9-2011, an 'amended title' was also filed by the plaintiff Bank on 3-10-2011. The relevant part of order dated 29th September, 2011 reads as follows:- 29-9-2011 (3)
(4) This is application by the intervener named therein seeking to be impleaded as co-plaintiff Learned counsel for the plaintiff states that he has no objection if the intervener is joined as defendant, to which learned counsel who has filed this CMA agrees, accordingly by consent this application is allowed in terms that the intervener may be impleaded as a defendant. Amended plaint to be filed within one week. Learned counsel now putting in appearance on behalf of defendants state that his Vakalatnama is under some sort of office objection, he undertakes to remove the same within one week. By consent adjourned. (Underlining is mine].
8. Earlier on 29-11-2002, the application under Order XXXIX, Rule 7 read with section 151, C.P.C.
Bearing C.M.A. No.8027 of 2002, filed by the plaintiff was also allowed and by consent 'Official Assignee' was appointed as Commissioner to carry out the inspection of properties of defendant No.1 and also to prepare an inventory of the available assets/properties by either personally or through some other responsible officer/representative nominated by him. In terms of the afore- said order, the parties were at liberty to join the concerned officer appointed for the purpose of inspection and preparation of the inventory. The relevant report of Official Assignee dated 27-1- 2003 is available on record. Paras Nos.3, 4 and 5 therefrom, being relevant are reproduced as follows:- "(3) That on 12-12-2002 Mr. Naseem, Engineer of plaintiff and Mr. Nisar Ahmed from defendant attended. Official Assignee deputed his staff member Ali Raza with them for preparation of inventory. They reached at the factory known as Cast N-Links Products situated at plot No. C/133, SITE Nooriabad. Mr. Naseem Engineer for plaintiff bank took some photographs and told that inventory has been already prepared by another Engineer of the Bank who was on leave. As soon as he resumes duty, the inventory will be verified but thereafter no one attended from plom plaintiff Therefore Official Assignee sent notice dated 6-1-2002 to Mr. Tariq Ansari, AVP, National Bank of Pakistan and also copies of notice to plaintiff through Mr. Adnan Iqbal, advocate and defendants through Mr. Khalid Jawaid advocate to attend on 14-1-2003 for preparation/verification of inventory.
(4) That on 14-1-2003 Mr. Asif Ali Shah, advocate representing Mr. Khalid Jawaid, advocate for plaintiff attended and requested for adjournment. At his request matter was adjourned to 21-1- 2003, such intimation was sent to Mr. Tariq Ansari, AVP, National Bank of Pakistan and also plaintiff and defendant through their advocates under letter dated 15-1-2003. However, on 21-1-2003 no one from plaintiff and defendant attended inspite of service of notice.
(5) The Official Assignee respectfully submits that in view of above facts it appear that parties have lost interest in the case, matter may be consigned to record." [Underlining is mine].
9. Later on, upon promulgation of Financial Institutions [Recovery of Finances] Ordinance, 2001 [In short FIO, 2001], two fresh Leave to Defend Applications under section 10 of F.I.O., 2001 bearing C.M.A.
No.8356 of 2001 [Pg - 147] and C.M.A. No.6422 of 2002 [Pg - 253] both filed on behalf of defendants Nos.1 to 6 are available on record.
10. Being relevant section 10[12] of F.I.O., 2001 is reproduced as under:- "10. Leave to defend.-- 'Where an application for leave to defend has been filed before the coming into force of this Ordinance, the defendant shall be allowed a period of twenty-one days from the date of coming into force of this Ordinance, or from the date of first hearing thereafter, whichever is later, for filing an amended application for leave to defend in accordance with the provisions of this Ordinance."
11. In response to the fresh LEAVE TO DEFEND APPLICATION[S], filed on behalf of defendants Nos.1 to 6, "REPLICATION', as required, under section 10[7] of F.I.O., 2001, was also filed by the plaintiff Bank. On 8-10-2003, when the above case came-up before the Court, then the following order was passed:- "C.M.As. No.8356/01 and 8357/02 are listed today. C.M.A. No.8356/01 is an application under section 10 of the Ordinance 2001 whereas C.M.A. No.8357/02 is not traceable in record. Both the Counsel submitted that in fact C.M.A. No.6442/02 [correct No.6422 of 2002] should have been listed for hearing. By consent of both, this application is taken and heard.
2. Mr. Javaid raised number of questions pertaining to the conduct of the plaintiff while disbursing the amount to the defendants. The main ground is that it was due to the default of disbursement of the required amount by the plaintiff that caused the failure of the project.
Otherwise the project was ready for all practical purposes. He further submitted that at present the factory is closed and the defendants are not in position to run the same due to absence of the finances. He also informed that the inventory has been prepared by the officials of the plaintiff and the same is with them. Mr. Javaid further submitted that though the factory is not in running position, his clients are still having their chowkidars at their cost posted there to secure the assets of the factory. He submitted that in these circumstances, the plaintiff be directed to take the factory and place their chowkidars at their own cost to secure their assets and save the defendantS incurring the salaries of the chowkidars. He also submitted that he will be satisfied, if he is allowed to participate into the proceedings to examine the statement of account submitted by the plaintiff at the time of determination the quantum of amount actually due and payable by the defendant to the plaintiff. Mr. Adnan has no objection to the above proposal. Order accordingly. All applications under section 10 of the Ordinance filed by the defendants are disposed off in terms of the above.
3. The plaintiffs to file a fresh statement of account on oath with break-up of the amounts disbursed and the amount payable in accordance with law. Mr. Javaid submitted that Mrs. Seema Waseem is no more appearing in this case, therefore, her name may be deleted from the file.
Office to do needful and delete the name of Mrs. Seema Waseem from the file as well as from the cause list." [Underlining is mine].
12. Pursuant to and in compliance with the aforesaid order of 8-10-2003 the plaintiff Bank viz. NBP [NDFC Unit], filed 'FRESH STATEMENT OF ACCOUNTS' made upto 31-10-2003 along with affidavit of one Syed Adnan Hasan on 6-12-2003 [Pg - 315]. Needless to observe, that the 'Statement of Accounts tiled along with the Plaint was only upto 30th June, 2000. The 'FRESH STATEMENT OF ACCOUNTS', as submitted by the plaintiff Bank are based on the agreements for finance facilities having been signed and executed between the parties. Per plaintiffs version the 'Statement of Accounts' accurately reflect all disbursement made, payments received and amounts charged.
From the 'Fresh Statement of Accounts', the claim of liquidated damages, however, has been omitted. In the plaint, nonetheless in para 15, it has been averred that the plaintiff Bank is claiming liquidated damages in the sum of Rs.25,264,169 being 20% Rs.126,320.850.
13. The Summary of AGREEMENTS [i.e. 'INTEREST BEARING FACILITIES' AND 'MARKUP BEARING FACILITIES'
[Pg - 553] and 'SUMMARY OF BREAK-UP' of the claim of the plaintiffs Bank in respect of both kind of facilities [Pg - 357] duly signed and executed between the parties are as follows:- A. SUMMARY OF AGREEMENTS PERTAINING TO INTEREST BEARING FACILITIES
(i) AGREEMENT # 1: First Foreign Currency Loan For US$ 1.25 million Agreement dated 15-7-1987 Annexure "A", page 79.
(ii) AGREEMENT # 2: Second Foreign Currency Loan For US $ 3,18,000 Agreement dated 14,9-1988 Annexure "E", page 483
(iii) AGREEMENT # 3: First Foreign Currency Supplemental Agreement For US $ 1,479,981.07 (being the amount actually disbursed under Agreement # 1 and Agreement # 1 and Agreement # 2)
Agreement dated 26-2-1990 Annexure "1-1", page 637
(iv) AGREEMENT # 4: Second Foreign Currency Supplemental Agreement (for re-scheduling Agreement # 3)
Agreement dated 24-6-1998 Annexure "S-1, page 1247 B. SUMMARY OF AGREEMENTS PERTAINING TO MARKUP BEARING FACILITIES
(i) AGREEMENT # 5: LCY Finance Sale price = Rs.9,450,000; Marked-up price Rs.19,620,000 (Disbursed in full)
Agreement dated 18/10/1988; Annexure "J-1", page 657 Restructuring Agreement dated 26-2-1990; Annexure "R1", page 1225
(ii) AGREEMENT # 6: TL LCY Loan Sale price = Rs.1,544,252; Marked-up price = Rs.3,096,526 (Disbursed in full)
Agreement dated 28-7-1991 Annexure "L-1", page 831
(iii) AGREEMENT # 7; LMM Finance Sale price =Rs.1,455,748; Marked-up price = Rs.3,373,944 (Disbursed in full)
Agreement dated 28-7-1991 Annexure "0-1", page 1027
(iv) AGREEMENT # 8 Consolidated Local Currency Facility (Whereby Principal sum of Agreement Nos. 5, 6 and 7 (Rs.12.45 mil) was converted into equity, and
[ii] mark-up of Agreement Nos. 5, 6 and 7 (Rs.
10.7 mil) was rescheduled) Agreement dated 24-6-1998 Annexure "T-1", page. 1269
(v) AGREEMENT # 9; Term Loan Sale price = Rs.10,000,000; Marked-up price = Rs.18,121,788 (Amount disbursed = Rs.2,372,000; Marked-up = Rs.4,298,488)
Agreement dated 10-2-1999 Annexure "V-1", page 1297
14. The 'break-up' of the Disbursed Amounts of both kind of facilities interest/mark-up, charged thereon and other charges filed by the plaintiff is as follows:-- Disbursement: Under Agreement # 1, 2 and 3 28,008,084 Under Agreement # 5 9,450,000 Under Agreement # 6 1,544,252 Under Agreement # 7 1,455,748 Sub-total 12,450,00 40,458,084 Under Agreement # 9 2,372,000 Total disbursement 42,830,084 Interest charged Deferred dues 33,500,000 Interest from 24-6-1998 to 31-10-200317,808,474.49 Additional interest till 31-10- 200385,467,580.33 Additional interest in US$ (converted a Rs.18.9)156 978.83 Total interest charged 136,933,033.65 Mark-up charged Under Agreement # 8 10,700.000 Under Agreement # 9 1,926,488 Total mark-up charged 12,626,488 Other charges 1,039,452.34 Total charges 193,429,058 Less Repayments ( - ) 1,596,453.53 Less equity ( - ) 12,450,000 Total claim 179,382,604.47
15. Like-wise the 'STATEMENT OF BREAK-UP' of the Outstanding. Amounts vis-a-vis the Agreements filed on behalf of the defendants Nos.1 to 6 filed on 13-5-2004 [Pages - 363 and 565] reads as follows:
1. Credit Agreement dated 15-3- 1987 in foreign currency equivalent toUS$ 1,250,000.00
2. Credit Agreement dated 14-9- 1988 in foreign currency equivalent toUS$ 318,000.00
3. Supplementary Credit Agreement Dated 26-2-1990 showing actual disbursement i,e, Agreement Nos.1 and 2 mentioned above.US$ 1,479,981.00
4. Second Supplementary Credit Agreement dated 24-6-1998 showing the repayment schedule ending on 15 October, 2007. The above amount is equivalent toRs . 28,008,084 .00
5. Supplementary Credit Agreement dated 26th February, 1990 forRs,9,450,000.00 6.Agreement dated 28th July, 1991 forRs,1,544,252.00 7.Agreement dated 28th July, 1991Rs,1,455,748.00
8. Supplement Agreement dated 24 June, 1998 whereby the principal sum of aforesaid agreements at serial Nos.5, 6 and 7 has been converted into equity.
9. Agreement dated 10 February, 1999 regarding Working Capital Loan. However, the only amount disbursed wasRs,2,372,000.00 Total Rs,42,830.084
16. Since, there was no dispute regarding the Principal Amounts availed by defendant No,1 i,e, in the sum of Rs,42,830,084, a 'Preliminary Decree' [correct word - Interim Decree] in favour of the plaintiff Bank was consequently passed on 13-5-2004. As far as the amount of 'INTEREST and 'MARK-UP' is concerned, for calculation thereof, by consent, Chartered Accountants, Messrs Punjawani & Co.th th th Were appointed as Commissioner to ascertain the amounts payable by the defendants on account of 'INTEREST' and 'MARK-UP' etc. In the light of terms and conditions of the relevant Agreements duly signed and executed between the parties. Being relevant Order dated 13-5-2004 is reproduced hereinbelow:- "A statement of break-up of outstanding amount with reference to the agreements has been filed by the learned counsel for the defendants. The same is taken on record and a copy thereof has been supplied to the learned counsel for the plaintiffs. The defendants have admitted the claim of the plaintiff to the extent of principal amount of Rs,42,830,084. Accordingly a preliminary decree is granted to the plaintiff in the sum of Rs,42,830,084. However so far as calculation of interest, mark- u and other char es is concerned with the consent o the parties Messrs Punjwani & Co: Chartered Accountants 213 214, Second Floor, Burhani Chamber, Abdullah Haroon Road, Saddar, Karachi are appointed as Commission to ascertain the amount payable by the defendants in light of the terms and conditions stipulated in the relevant a reements executed between the parties. Such exercise shall be completed within four weeks, and report submitted in due course. Parties or their representatives shall appear before the commission, and submit the relevant documents within one week. The fees of the commissioner shall be negotiated by the plaintiffs and be paid to the commission which shall be included in the costs. To come up after summer vacations."
[Underlining is mine].
17. Nevertheless, MESSRS PUNJWANI & CO. CHARTERED ACCOUNTANTS, Second Floor, Burhani Chamber, Abdullah Haroon Road, Saddar, Karachi, appointed as Commissioner to ascertain amounts payable by the defendants in light of the terms and conditions stipulated in the relevant financial agreements duly signed and executed between the parties did not find themselves willing to proceed with the matter. Consequently, on their failure to take interest in the matter, on 11th October, 2004, by consent MESSRS FEROZ AZIZ & CO., CHARTERED ACCOUNTANTS having their office at Room No,211, second floor, Business Arcade, Block-6, P.E.C.H.S., Karachi, were appointed as Commissioner to carry out the exercise as per terms of the Order dated 13-5-2004. Being relevant Order dated 11-10-2004 is also reproduced as under:- "By order dated 13-5-2004 Messrs Panjwani & Co. Chartered Accountants were appointed Commissioner to ascertain the amount payable by the defendants in the light of the agreements executed between the parties. The exercise was to be concluded within four months. However, till date Commissioner has not submitted his report. Both the learned counsel submit that Chartered Accountant appointed Commissioner is not willing to proceed with the matter and has not initiated the exercise so far. The notices have been sent to the learned Commissioner from time to time, such notice issued for today has been served, however, none appeared on their behalf. It appears that Messrs Panjwani & Co. Are not willing to proceed, conclude the exercise.
' In the circumstances and with consent of the learned counsel Messrs Feroze Aziz & Co., Chartered Accountants, having their office at Room No,211, 2nd floor, Business Arcade, Block-6, P.E.C.S., Karachi are appointed Commissioner to carry out the exercise as per terms of the order dated 13-5-2004.
The Commissioner after examining the record and the accounts shall submit his report within six weeks. As ordered earlier the fee of the Commissioner shall be paid by the plaintiff: The amount so paid shall be calculated towards the cost of the proceedings". [Underlining is mine].
18. The 2nd Chartered Accountants, appointed as Commissioner after extension of time twicely submitted their 'FIRST REPORT' dated May 2, 2005 [Pg - 379]. Per Chartered Accountants' report of 2nd May, 2005, the parties WERE/ARE NOT IN DISPUTE OVER THE 'NUMBERS' AND 'AMOUNTS OF AGREEMENTS' having been duly signed and executed between the parties. The dispute between the parties only remained as to the payable due amounts of 'INTEREST' AND 'MARK-UP'. According to the report of Chartered Accountants, the calculations have been done from the respective dates of the Finance Agreements till October 31, 2003. From perusal of the REPORT of Chartered Accountants of 2nd May 2005 it appears, that on behalf of defendants Nos.1 to 6 though some objections vis-a-vis interest, 'markup over markup' have been raised but practically defendants Nos.1 to 6 did void to file their 'own calculations' in respect of the so-called, charging of interest, 'markup over markup' and other charges in excess. The defendants Nos.1 to 6, nonetheless, badly failed to pin-point any particular entry in the statements of accounts as being wrong or otherwise, questionable. The allegations of charging 'interest' and 'mark-up over mark-up' beside evasive, un-specific is mis- conceived.
19. Before proceeding further, I like to refer to the objections raised by the defendants Nos.1 to 6 on the reports of Chartered Accountants. The 'FIRST OBJECTION' raised on behalf of the defendants on the report[s] of Chartered Accountants read as follows:- "That in clause 4.1 read with clause 4.5 of the Report submitted by the learned Commissioner interest amounting to Rs, 55,895,943 has been shown as due and payable on account of interest, breakup whereof has been provided in annexure 'J' of the report. It is submitted that the aforesaid amount has been calculated from 31st March 1988 till 31' October, 2003 whereas interest should have only been calculated from 31st March till 16th January, 2001 i,e, the date when the above suit was instituted and not beyond that period. As such Rs,821, 776 has been charged/calculated in excess." [Underlining is mine].
20. As far as the aforesaid objection, is concerned, it is needless to observe that the scope of work of Chartered Accountants, in terms of the consent Order dated 13-5-2004 read with order dated 11- 10-2004 in fact was to ascertain the amount[s] due and payable by the defendants under the terms and conditions as stipulated in the relevant agreements executed between the parties [i,e, the plaintiff and defendant No,1]. In view of the assigned scope of work, the interest, markup, charges and other costs, as appears from the REPORTS themselves have been rightly and accurately calculated by the Chartered Accountants, of course, quite in accordance with the terms and conditions of the agreements mutually executed between the plaintiff Financial Institutions and defendant No,1 Company. For ready reference and convenience purposes the relevant Clauses i,e, 2.03 and 2.03[a] of the agreements dated July 15, 1987 [Annexure 'A' Page 79] and September 14, 1998 [Annexure 'E' Page 483] respectively, are reproduced as under:-
(a) Clause 2.03: The borrower shall make the following payments to the Corporation at the time mentioned hereunder:-
(b) Clause 2.03[a/: Interest on the amount of the credit drawn and remaining unpaid by the Borrower and on cost, charges and expenses at the rate of Fourteen Percent (14%) per annum computed on daily basis using a 360 days factor. Such interest shall accrue on the appropriate amount in Pakistan Rupees of the Credit withdrawn as determined by the Corporation in accordance with the provision of section 2.04 hereof and shall be paid in Pakistan Rupees on the First day of March and First day of September in each year.
21. Keeping in view the calculation of interest amounting to Rs,55,895,943 [as per Annexure 'J' to the report of Chartered Accountants dated May 2, 2005] , is not only correct but also seems in accordance with the terms and conditions of the agreements having been duly signed and executed between the parties. As far as, the contentions/objections of the defendants Nos.1 to 6 to the effect that 'interest' should have only been calculated from 31-3-1988 till 16-1-2001 [i,e, upto the institution of the above suit only] and not up-till 31st October, 2003 are concerned, the same would not cause any prejudice to the interest of defendants.
22. The second objection raised by the defendants Nos.1 to 6 reads as follows: "That in clause 4.1 read with clause 4.7 of the report submitted by the learned Commissioner, interest amount to Rs, 998,139 has been shown as due and payable on account of Loan Administration fee, breakup whereof has been provided in annexure "L" of the report. It is the submitted that the aforesaid amount has been calculated from 31st March, 1988 till 31st October, 2003, whereas interest should have been calculated from 31st March, 1988 till 16th January, 2001 i,e, the date when the above suit was instituted and not beyond that period. As such Rs,145,031 has been charged calculated in excess." [Underlining is mine].
23. The 2nd objection, of the defendants Nos.1 to 6, ex-facie, pertains to the charging of 'INTEREST ON LOAN ADMINISTRATION FEE' from date of loan till October 31, 2003. The defendants Nos.1 to 6's objection to the effect that interest on 'Loan Administration Fee' ought to have been charged/calculated UPTO JANUARY 16, 2001, [correct date is 17th January, 2001], when the above suit was instituted and not beyond that date. As far as the calculations of the Chartered Accountants are concerned, the same, no doubt, has been done in accordance with the scope of work assigned to them under order dated 13-5-2004 read with order dated 11-10-2004. The Chartered Accountants, evidently, in terms of the aforesaid orders are/were required to calculate interest, markup, charges and other costs in accordance with the terms of agreements between the parties and not otherwise as claimed upto a specific date. The relevant 'common clauses' [i,e, 2.03 and 2.03(0] of the Agreements dated March 15, 1987 [Annexure 'A' Page 79] and September 14, 1998 [Annexure 'E' Page 483] are reproduced as follows:-
(a) Clause 2.03: The borrower shall make the following payments to the Corporation at the time mentioned hereunder:-
(b) Clause 2.03[f]: "Loan Administration Fee on the amount of the Credit drawn and remaining unpaid by the Borrower at the rate of 1/4% (one quarter of one percent) per annum computed on daily basis using a 360 days factor. Such Loan Administration Fee shall accrue on the appropriate amount in Pakistan Rupees of the Credit withdrawn as determined by the Corporation in accordance with the provisions of section 2.04 hereof and shall be paid in Pakistan Rupees quarterly in each year."
[Underlining is mine].
24. Manifestly, interest @ 1/4 % per annum computed on daily using 360 days factor is stated to be payable on the amount of credit withdrawn and remaining unpaid by the borrower. The calculations of the Chartered Accountants of the 'Interest', on 'LOAN ADMINISTRATION FEE' is amounting to Rs,998,139 [as per Annexure to the report of the Chartered Accountants dated May 2, 2005] thus seems correct and in accordance with the terms and conditions of the 'SUBJECT AGREEMENTS' between the parties.
25. The 3rd objection raised on behalf of defendants Nos.1 to 6 runs as under:- "That in clause 4.1 read with clause 4.8 of the report submitted by the learned Commissioner interest amount to Rs,2,661,805 has been shown as due and payable on account of Additional interest on principal Overdue, breakup whereof has been provided in annexure "M" of the report. It is submitted that the aforesaid amount has been calculated from 15th October, 2000 till 31st October, 2003, whereas interest should have been calculated from 15th October, 2000 till 16th January, 2001 i,e, the date when the above suit was instituted and not beyond that period. As such Rs,2,498,343 have been charged/calculated in excess." [Underlining is mine].
26. As far as, the 3rd objection regarding 'ADDITIONAL INTEREST' is concerned, the relevant 'common Clause' 2.03[b] of the Agreements dated July 15, 1987 [Annexure 'A' Page 79] and September, 14, 1988 [Annexure 'E' Page 483] respectively reads as follows:- "Additional interest in Pakistan Rupees at the rate of 6% per annum above the State Bank of Pakistan rate of interest ("the Bank Rate") computed on daily basis using a 360 days factor for the period of default on all amounts due to the Corporation by way of principal interest, or costs, charges and expenses which remain unpaid beyond the due date which shall be paid at the same time and in the same manner as interest." [Underlining is mine].
27. As per the aforesaid 'common clause' 2.03[b], the Chartered Accountants have rightly calculated the 'Additional Interest' on all amounts due to the plaintiff Bank by way of principal, interest cost, charges and expenses in the sum of Rs,2,661,805 [As per Annexure 'M' to the Chartered Accountants' Report of May 2, 2005]. The calculations of the Chartered Accountants much-less in the light of scope of their work seems correct and also in accordance with the terms and conditions of the agreement between the plaintiff and defendant No,1. Per report of the Chartered Accountants, the 'additional interest' [As per Annexure 'N' to the Chartered Accountants' Report of May 2, 2005] is Rs,35,164,162 which amount is stated to be due and payable. Per Chartered Accountants, pursuant to execution of second Foreign Currency Supplemental Credit Agreement dated June 24, 1988 [Annexure 'S-1' at Page 1247], the amount of interest and other charges were made frozen and also made 'additional interest free'. In this connection a Memorandum of Understanding, per Bank's Letter dated 10th October 1997, was also signed between the parties.
According to defendants Nos.1 to 6's stand, NO ANY ADDITIONAL INTEREST on the amount of total interest, other charges accrued could be charged. Be that as it may, only an amount of Rs,3,934,216 seems justified. The remaining amount in the sum of Rs,31,229,946, per Chartered Accountants' report of 22nd January, 2007, has been charged in excess.
28. The Fifth and Sixth objections raised by the defendants respectively read as follows:-
(1) That in clause 4.1 read with clause 4.10 of the report submitted by the learned Commissioner interest amounting to Rs,3,884,906 has been shown as due and payable on account of Additional interest on Commitment charges, breakup whereof has been provided in annexure "0" of the report. According to clause 4.10.3 this amount should have not been charged. Moreover the interest has been charged/calculated upto 1st June, 1998.
(ii) That in clause 4.1 read with clause 4.11 of the report submitted by the learned commissioner interest amounting to Rs,640,474 has been shown as due and payable on account of Additional Interest on Loan Administration Fee, breakup whereof has been provided in annexure "P" of the report. In clause 4.11.3 of the report it has been clearly mentioned that in pursuant to execution of second supplemental credit agreement dated June 24, 1998, the amount of interest and other charges were made frozen and made additional interest free. In this regard a Memorandum of Understanding was signed between the parties vide Bank's Letter dated 10th October, 1997. In view of the above any Additional Interest on the amount of total interest, other charges accrued till 30th September, 1997 should have not been charged. Hence such additional interest should have only been calculated from 30th September, 1997 till 16th January, 2001 amount to Rs,70,254 as such Rs,5,70,220 is being charged in excess. [Underlining is mine].
29. Going through the report[s] of Chartered Accountants and the objections raised by defendants Nos.1 to 6 vis-a-vis charging of Additional Interest on 'Commitment Charges' and 'Loan Administration Fee', the only objection of defendants is to the effect that additional interest should have been charged only from 30th September, 1997 up-till January 16, 2001 when the above suit was instituted. Mere perusal of order dated 8-10-2003 read with orders dated 13-5-2004 and 11-10- 2004 would show that the drill of calculation of 'interest', 'mark-up', 'charges' and other 'costs' has to be carried out by the Chartered Accountants absolutely in accordance with the terms of the Agreements having been signed and executed between the plaintiff and defendant No,
1. The calculation of 'additional interest' on account of principal, interest etc that remained unpaid beyond the due date, however, is correct and within the scope of the assigned work.
30. The Second Supplemental Agreement dated June 24, 1998 apart from providing that the amount of interest accrued upto September 30, 1997 is to be liquidated in equal monthly installment of Rs,0.8 million vide Clause 'vi' of Annexure 'II' to NDFC letter bearing reference number SAMD-S/CNL/156/97 dated October 10, 1997 [i,e, Annexure II to the Chartered Accountants' Report of May, 2006] also provides that no additional interest/markup will be charged. Notwithstanding the above, however, 'clause ii' of the above referred letter provides that all 'penal interest' may be frozen and kept separate for subsequent waiver in proportion to the 'debt servicing on time done', by the company. Being relevant, the relevant clauses `ii' and 'vi' of Annexure-II of NDFC's ' Letter No,SAMD-S/CNL/156/97 dated 10th October, 1997 are reproduced as under: "(ii) All the penal interest on NDFC loans amounting to Rs,23.19 billion may be frozen and kept separate for subsequent waiver in proportion to the debt servicing on time done by the company."
"(vi) Interest already accrued (including the deferred interest portion) on the foreign currency loan (Rs,35.61 million) and also the interest which may accrue during the grace period (estimated at Rs, 7.03 million) may be liquidated in monthly installments of Rs, 0.8 million each starting from January 15, 2000. No additional interest/mark-up (interest/mark-up on interest/markup) will be charges." [Underlining is mine].
31. Indeed, waiver of penal interest etc. Was allowed but it was subject to on time debt servicing and fulfillment of other conditions. In the present case, however, it is quite apparent from the record that defendant No,1 Company did not fulfill and honour its' commitments faithfully. Nevertheless, the Chartered Accountants did not calculate the 'additional interest' on interest frozen' from October 1, 1997'. The calculations of Additional Interest on Interest Overdue, Commitment Charges and Loan Administration Fee amounting to Rs,35,164,162, Rs,3,384,906 and Rs,640,474 respectively are as per Annexures 'N', '0' and 'P' to the Chartered Accountants' Report of May 2, 2005. As such the calculation of the Chartered Accountants besides correct are quite in accordance with the terms and conditions of agreements.
32. The Seventh objection raised by the defendants Nos.1 to 6 runs as follows:- "That in clause 4.1 read with clause 4.12 of the report submitted by the learned Commissioner interest amounting to Rs,2,439,135 has been shown as due and payable on account of other charges namely Central Excise Duty. The Central Excise Duty cannot be charged as held by various judgment of this Hon'ble Court." [Underlining is mine].
33. Inter alia, regarding the above the agreed terms between the parties as per 'common Clause 2.03(g)' of the Agreements dated July 15, 1987. [Annexure 'A' Page 79] and 14th September, 1998 [Annexure 'E' Page 483] read as under: "All costs, charges and expenses that the Corporation may from time to time incur or pay to any legal or technical consultant or advisor or any other person or persons for securing any opinion or report or for furnishing guarantees or indemnities or for rendering any other service in connection with the Credit which the Corporation may desire or be required to secure or arrange all of which costs, charges and expenses shall be paid at such time or times and in such manner as the Corporation may determined."
34. According to Chartered Accountants' the 'Excise Duty' having been paid as per plaintiff's calculation is also reimbursable to the plaintiff Bank. The 'Excise Duty' in the sum of Rs,2,439,135 thus calculated by Chartered Accountants is correct and payable by defendants.
35. The objection No,8. Raised by the defendants Nos.1 to 6 on the Chartered Accountants' Report of May 2, 2005 [Pg -- 379] is to the effect that details of payment of Rs,521,400 appearing at typed page 11 of the report dated May 2, 2005 [Relevant Pg 403] has not been provided by the Chartered Accountants. The objection of defendants so raised is reproduced as follows:- "That on page No,11 of the Report amount Rs,521,400 has been shown under the head of Payment made, however, no detail of aforesaid amount has been mentioned in the Report."
36. With regard to the afore-said objection, it is worth to mention herein, that the plaintiff Bank has duly acknowledged the receipt of Rs,521,400 in its statement. By paying this amount by defendants, the liability has accordingly reduced, however, if the defendant No,1 deems it otherwise then the liability of defendants stand further increased by Rs,521,400. Nevertheless, the stand so taken calls for the wisdom of defendants.
37. The 9th objection raised on behalf of the defendants Nos.1 to 6 is that, the interest/mark-up cannot be charged beyond the maximum limit fixed by SBP. The objection so raised runs as follows:- "That the mark-up/interest cannot be charged beyond the maximum limit fixed by the State Bank of Pakistan from time to time whereas in the Report in question the Bank has charged illegal markup/interest on a very high side and beyond maximum limit fixed by. The State Bank of Pakistan."
38. As far as, the above objection is concerned, apparently, the same falls beyond the scope of the work assigned to the Chartered Accountants in terms of orders dated 13th May, 2004 and 11th October, 2004. Evidently, under the mandate of the Chartered Accountants, the scope of work of the Chartered Accountants is/was to the effect to only calculate interest, markup, charges etc. And that too in accordance with the terms of the agreements executed between the parties. Seemingly, the Chartered Accountants were not mandated to determine that the interest/mark-up charged is beyond the so-called 'maximum limit' fixed by the State Bank of Pakistan. [In short SBPJ. Ex facie, the Chartered Accountants were only required to ascertain 'interest', 'markup' and other charges payable by the defendants to the plaintiff Bank in accordance with the Financial Agreements between the parties. From the record including the Reports of Chartered Accountants it appears, that the plaintiff Bank in compliance with order dated 13-5-2004 read with order dated 11-10-2004 did furnish the 'requisite information' to the Chartered Accountants immediately while, the defendants in their own wisdom and perhaps with a view to delay/halt the progress of proceedings before the Chartered Accountants did avoid the furnishing of requisite information. Rather repeatedly sought time for submitting the necessary documents/information. The report prepared and submitted by the Chartered Accountants under the aforesaid scenario was nonetheless, taken on record by order dated 22-8-2005.
39. In efforts to get the matter properly and accurately resolved, and to ascertain the actual amount of 'interest' and 'markup' as due and payable by the defendants, the matter was again referred to Messrs Feroz Aziz Co. For 're-appraisals and 're-adjusting' purposes. The relevant portions of orders dated 23-8-2006 and 10-1-2007 are respectively reproduced here-in-below respectively:- " (a) 23-8-2006: In pursuance to the order of this Court Messrs Feroz Aziz Chartered Accountants were required to scrutinize the accounts as directed through order dated 8-3-2006. On the report being submitted objections were filed. Time was extended vide Order dated 20-4-2006 with clear observation that the exercise shall be carried out in terms of Court's order dated 8-3-2006 subject to notice to all the concerned parties including the Bank.
Chartered Accountants Report dated 17-5-2006 is now available on record. Objections are filed to the same. Mr. Khalid Javed, advocate appearing for the defendants' states that no notice was given so as to afford the defendants an opportunity to point out the discrepancies in the entries of accounts. Mr. Adnan Chaudhry, advocate for the plaintiff states that no notice was required for that purpose, however, after going through the aforesaid order, I am of the opinion that same has not been complied with in terms. Parties are directed to appear before the Commissioner at his office on 17-9-2006 at 4-00 p.m. The report would not be prepared afresh, however, all the parties present would have an opportunity to raise their respective objections to all specific entries disputed. The Commissioner shall thereupon consider the objections according to the settled practice of accounting and to give their views thereto, if any objection is up held, the report would he modified accordingly. This exercise is to be completed by 25th September, 2006. Application is disposed of accordingly. [Underlining is mine].
(b) 10-1-2007: "It appears that Chartered Accountant was appointed to verify the statement of accounts as per objection of the defendant. Mr. Adnan Chaudhry, learned counsel for plaintiff submits that by referring the matter to the Chartered Accountant, it appears that he is adjudicating the controversy. Mr. Khalid Javed, learned counsel for the defendant refutes the allegations. According to him, certain valid objections raised were required to be examined by the Chartered Accountant as mark-up on mark-up was alleged charged. It seems that the Chartered Accountant has raised queries from the defendant as reflected from their letter dated 29 November, 2006. Mr.. Khalid Javed, Advocate states. That defendant has replied the queries. Let the Chartered Accountants file the final report without any further delay preferably within 10 days. Let copy of this order be sent to the Chartered Accountants for compliance"... [Underlining is mine].
40. Pursuant to and compliance with aforesaid orders the Chartered Accountants thereafter, filed their final reports in the shape of replies to the objections raised on behalf of defendants Nos.1 to 6.
All the three [3] reports of Chartered Accountants being comprehensive and well speaking i,e, May 15, 2006, January 22, 2006 and January 22, 2007 are available on record. It is quite significant to observe that all representations. Warranties and covenants made by or on behalf of customers/borrowers to .a Financial Institutions at any stage inter alia with regard to repayment of finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfillment of a promise besides binding upon the borrowers/customers, the customer[s] is/are duty bound to faithfully perform the same as being a duty imposed under F.I.O., 2001. At this point of time, I would like to refer to section 2[e] of F.I.O., 2001, which reads as under: "(2) Definitions.
(e) "obligation" includes--
(i) any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment or extension of time in payment of any other amounts relating to a finance or liquidated damages; and
(ii) any and all representations, warranties and covenants made by or on behalf of the customer to a financial institution at any stage, including representations, warranties and covenants with regard to the ownership, mortgage, pledge, hypothecation or assignment of, or other charge on assets or properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfilment of a promise; and [Underlining is mine].
(iii) all duties imposed on the customer under this Ordinance; and"
41. On 20-4-2015, when the above case came-up before me, Mr. Adnan Chaudhry, at the very out- set while, waiving giving-up the plaintiffs objections to the 'REPORTS of Chartered Accountants forcefully submitted that the Chartered Accountants"REPORT', since long, are available on record but the case is being adjourned without any positive result. Per Mr. Adnan, after passing of a 'PRELIMINARY DECREE' on 13-5-2004 [In fact INTERIM DECREE] till date no 'FINAL DECREE' in the light of the REPORTS of Chartered Accountants has passed so far. Mr. Adnan Chaudhry learned counsel for plaintiff in the backdrop of the case submitted that all Leave to Defend Applications filed by the defendants Nos. 1 to 6 was disposed off on 8-10-2003 and consequently, an 'INTERIM DECREE'
[wrongly mentioned as PRELIMINARY DECREE] to the extent of 'PRINCIPAL AMOUNTS' in the sum of Rs,42,830,048 was passed on 13-5-2004. Per Mr. Adnan Chaudhry, as far as the 'INTEREST' and 'MARK-UP' amounts are concerned, the defendants jointly and severally are liable to pay the same as per calculations of the Chartered Accountants. According to Mr. Adnan, the defendants with a view to linger-on the case for years are not only still raising objections on the Chartered Accountants Reports but are also in habit of changing their counsel. Messrs Muslim Shamim & Co., Advocates, now engaged by the defendants though comprising many advocates are not attending the Court to proceed with the case.
42. Heard.
43. The scope of work of the 'Chartered Accountants' as evident from orders dated of May 13, 2004 and 11th October, 2004 respectively, is as under:- "However so far as calculation of interest, mark-up and other charges is concerned, with the consent of parties Messrs Punjawani & Co. Chartered Accountants 213-214, Second Floor, Burhani Chamber, Abdullah Haro]on Road, Saddar, Karachi are appointed as Commission to ascertain the amount payable by the defendants in light of the terms and conditions stipulated in the relevant agreements executed between the parties". [Underlining is mine]. ... "It appears that Messrs Panjwani & Co. Are not willing to conduct the exercise. In the circumstances, and with consent of the learned counsel Messrs Feroz Aziz & Co., Chartered Accountants, having their office at Room No,211, 2nd Floor, Business Arcade, Bloc 6, P.E.C.H.S., Karachi are appointed Commissioner to carry out the exercise as per terms of the Order dated 13- 5-2004. The Commissioner after examining the record and accounts shall submit his report."...
[Underlining is mine].
44. Per report [s]submitted by Messrs Feroz Aziz Co. Chartered Accountants the total amounts facility-wise, worked out on account of interest', 'additional interest', 'commitment charges', 'loan administration fee', 'central excise duty', 'charges', `mark-up' etc. As on October 31, 2003 are as follows:--
(a) Loan US$ 1.480 Million Interest 55,895,943 Commitments Charges 1,983,072 Loan Administration Fee 998,139 Additional Interest on Principal Overdue2,661,805 Additional Interest on Interest Overdue35,164,162 Additional interest on Commitment Charges3,384,906 Additional Interest on Loan Administration Fee640,474 Other Charges - Central Excise Duty2,439,235 103,167,636
(b) Facility of Pak Rs, 9.450 Million Mark-up 10,170,000 Commitments Charges 313,832 Project Monitoring Fee 860,741 Professional Assistance Fee 47,250 Legal Documentation Fee 23,625 Other Charges - Central Excise Duty822,973 Payment made 521,400 Total 11,717,021
(c) Facility of Pak Rs, 1.544 Mark-up 1,552,274 Commitments Charges 11,460 Project Monitoring Fee 97,202 Legal Documentation Fee 3,861 Other Charges - Central Excise Duty107,765 Total 1,772,562
(d) Facility of Pak Rs,1.456 Million A breakup of total amount due is as follows:-- Mark-up 3,632,818 Commitments Charges 10,867 Project Monitoring. Fee 91,628 Legal Documentation Fee 3,639 Professional Assistance Fee 7,279 Other Charges - Central Excise Duty126,768 Total 3,872,999
(e) Facility of Pak Rs, 10 Million: Out of this facility in the sum of Rs, 10 million, per Chartered Accountants report(s), only Rs,2,372,000 have been disbursed by the plaintiff Bank. As such, in the opinion of Chartered Accountant, plaintiff is not entitled to charge any `mark-up' and/or other charges even on the disbursed amount of Rs,2,372,000.
45. As far as non-allowing of any mark-up and/other charges on Rs,2,372,000 is concerned, it is significant to note, that the plaintiff Financial Institution has already waived/given up its objection on the `Chartered Accountants' report[s], therefore, I am also not inclined to grant any mark-up on Rs,2,372,000 already disbursed to and availed by the defendant No,1 company. The BREAK-UP of total amounts of BOTH KINDS OF FACILITIES is as follows:-- PER AGREEMENTS TOTAL AMOUNT DUE PAK RUPEES US$ 1.480 million [Interest based] 103,167,636 Pak Rs,9.450 million [Mark-up based] 11,717,021 Pak Rs,1.544 million [Mark-up based] 1,772,562 Pak Rs,1.456 million [Mark-up based] 3,872,999 Pak Rs,10.00 million [Mark-up based] Nil Total 120,530,218
46. The 'subject finance facilities' manifestly are of two kinds: i,e, INTEREST BASED FOREIGN CURRENCY LOAN AND LOCAL CURRENCY MARK-UP BASED FACILITIES. The present suit, it is significant to note, was filed on 17-1-2001 when Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 [Act XV of 1997] was in field. In terms of subsection (6) of section 7 thereof all proceedings pending in the Banking Courts constituted under the Act XV of 1997, including 'suits for recovery of loans' stand transferred to or be deemed to be transferred to and "HEARD' AND 'DISPOSED OFF' BY THE BANKING COURT HAVING JURISDICTION UNDER F.1.0., 2001. To appreciate the situation properly, it would be appropriate to reproduce herein subsections (6) and (7) of sections 7 of F.I.O., 2001 respectively as below:-- "(7) Powers of Banking Courts.-
(1) .............
(2) ..............
(3) ..........
(4) .........
(5) ...............
(6) All proceedings pending in any Banking Court constituted under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (XV of 1997), including suits for recovery of "loans" as defined under that Act shall stand transferred to, or be deemed to be transferred to, and heard and disposed of by the Banking Court having jurisdiction under this Ordinance. On transfer of proceedings under this subsection, the parties shall appear before the Banking Court concerned on the date previously fixed.
(7) In respect of proceedings transferred to a Banking Court under subsection (6), the Banking Court shall proceed from the stage which the proceedings had reached immediately prior to the transfer and shall not be bound to recall and re-hear any witness and may act on the evidence already recorded or produced before the Court from which the proceedings were transferred.
[Underlining is mine]
47. Like-wise, section 29 of F.I.O., 2001 being relevant as far as the interest based facility is concerned, is reproduced hereinbelow: "29. Repeal.---The Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (Act XV of 1997) is hereby repealed.
(2) Notwithstanding the repeal of the (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (Act XV of 1997) and the provisions of this Ordinance, decrees in cases relating to interest- bearing loans which have not been converted into finance shall be passed in accordance with the provisions of section 15 of the said Act. [Underlining is mind.
48. Significantly, as far as the mark-up based facilities are concerned, the 'final decree' to be passed under F.I.O., 2001 shall provide for the cost of funds from the date of default to be certified by the State Bank of Pakistan from time to time in terms of section 3 of F.I.O., 2001. Both sections 3 and 17 of F.I.O., 2001 respectively read as follows:-
(a) "3. Duty of a customer.---(1) It shall be the duty of a customer to fulfil his obligations to the financial institution.
(2) Where the customer defaults in the discharge of his obligation, he shall be liable to pay, for the period from the date of his default till realization of the cost of funds of the financial institution as certified by the State Bank of Pakistan from time to time, apart from such other civil and criminal liabilities that he may incur under the contract or rules or any other law for the time being in force.
(3) For purposes of this section a judgment against a customer under this Ordinance shall mean that he is in default of his duty under subsection (1), and the ensuing decree shall provide for payment of the cost of unds as determined under subsection (2).
(b)
17. Final Decree.---(1) The final decree passed by a Banking Court shall provide for payment from the date of default of the amounts found to be payable on account of the default in fulfillment of the obligation, and for costs including, in the case of a suit filed by a financial institution cost of funds determined under section 3.
(2) The Banking Court may, at the time of passing a final decree, also pass an order of the nature contemplated by subsection (1) of section 16 to the extent of the decretal amount.
49. From bare perusal of section 29(2) of F.1.0., 2001, it becomes quite clear that notwithstanding REPEAL OF THE BANKING COMPANIES [RECOVERY OF LOANS, ADVANCES, CREDITS AND FINANCES] Act 1997, and promulgation of Financial Institutions [Recovery of Finances] Ordinance, 2001 [In short F.I.O., 2001] decrees in the cases relating to interest bearing loans [which have not been converted into finances], shall be passed in accordance with the provision of section 15 of Act XV of 1997.
Subsections 1[a] and [b] of section 15 of Act XV of 1997 read as under:- "15. Decree.---(1) The decree shall provide for interest or markup, as the case may be, on the judgment debt from the date of institution of suit to payment--
(a) in the case of a loan, for interest at the contracted rate or at the rate of two per cent above the State Bank Repo rate whichever is higher; and [Underlining is mine].
(b) in the case of finance under a system, not based on interest, for mark-up at the contracted rate or at the latest rate of the banking company for similar finance whichever is higher.
Explanation.---In clause (a) "State Bank Repo rate" means the Repo rate fixed by the State Bank of Pakistan.
50. Evidently, on the 'judgment debt' interest in the case of loans is to be granted from the institution of the suit till payment. In view of this position, the calculation of interest etc. By the Chartered Accountants UPTO OCTOBER 31, 2003, would make no difference and the objections of defendants shall also be appropriately re-dressed if, interest is allowed w,e,f, 1-11-2003 onwards instead allowing the same from the date of institution of the suit i,e, 17-1-2001. Like-wise, the cost of funds on Markup based facilities is concerned, the same in view of calculations of the CHARTERED ACCOUNTANTS UPTO 31-10-2003, in the case in hand, can only be granted w,e,f, 1-11-2003 and not from the date of default as provided in terms of section 3 of F.I.O., 2001. Accordingly, keeping in view the objections of the defendants to the effect that Chartered Accountants should have calculated interest/markup up-till institution of the suit i,e, 16-1-2001 [correct date is 17-1-2001], further interest on the outstanding amounts loan and cost of funds on the outstanding amounts of finance as on 31-10-2003 are granted only w,e,f, 1-11-2003. The objections of the defendants reproduced hereinabove are answered accordingly.
51. In so far as the claim of 'penal'/'additional interest' is concerned the same is dis-allowed because it is in the nature of penalty and being so is opposed to the provision contained in section 73 of the Contract Act, 1872. In this regard reliance can be placed on the case of N.D.F. C. v. Anwar Zaib White Cement Ltd. And others [1999 M LD 1888, rel. Pages 1991 - 1915], wherein it was held as follows:- ..." Under the Islamic System of banking in the event of grant of finance agreed between the parties but imposition of any penalty upon the borrower, who is a needy person, is not permissible.
The command to the creditor is either to forgive or to grant time. In no case, a. Borrower can be burdened with additional liability in the form of penalty or liquidated damages. Even otherwise, imposition of penalty or damages at a fixed rate is opposed to the provision contained in section 73 of the Contract Act. For claiming penalty or damages, a party is required to plead and prove actual loss or damages"....
In relation to the facilities granted against ADB-564 and ADB678, I have already found that the agreement dated 21-11-1983 did not provide for charging Loan Administration Fee and the claim for such charge being unwarranted, is disallowed. The plaintiff is entitled to the principal amount claimed as outstanding. Under the above-referred Credit Agreement dated 21-11-1983, the plaintiff could charge 11% interest per annum besides 3% foreign exchange risk fee. The amount under the two heads, cumulatively worked at the rate of 14 %per annum, being the agreed rate, is allowed.
The claim for recovery of Central Excise Duty, paid on behalf of the defendant No, 1 having remained uncontroverted, is also granted. The Commitment Fee amounting to Rs,253,588.88 cannot be granted for the reasons stated in the discussion of leave application. Likewise, the plaintiff's claim is accepted to the extent of principal amount outstanding under ADB-878 with interest at the rate of 14% per annum and the Central Excise Duty. The claim for Loan Administration Fee pertaining to APB-878 is also allowed since the parties had agreed for such payment. Coming to the claim for Additional Interest, under that two Credit Agreement, such charge could be levied under clause 2.03(b) at the rate of 6% per annum above, the bank rate. The above referred clause which is identically incorporated in the two Credit Agreements is as follows:-- "2.03(b). Additional interest in Pakistan Rupees at the rate of 6% per annum above the State Bank of Pakistan rate of interest (`the Bank Rate') computed on daily basis using a 360 days factor for the period of default on all amounts due to the Corporation by way of principal, interest, or costs, charges and expenses which remain unpaid beyond the due date which shall be paid at the same time and in the same manner as interest."
Evidently the Agreements stipulate imposition of Additional Interest in the nature of penalty. Quite often it is referred in the loan agreements as penal interest. The law pertaining to imposition of penalty liquidated damages, is now well settled and is clearly laid down in the case of HBL v.
Farooq Compost Fertilizer Corporation and 4 others 1993 MLD 1571. I may also refer here to five judgments which are relevant to the issue. Such judgments are reported as National Bank of Pakistan v. Messrs Ch. Ilamdin & Co. And others PLD 1985 Lahore 117, United Bank Limited v. Nishat Chemical Industries Limited and others NLR 1986 Civil 580, United Bank Limited v. Kurnool Muhammad Muneer 1991 CLC 1758, Allied Bank of Pakistan v. Masood Ahmed Khan 1994 MLD 1557 and United Bank Limited v. Messrs Sartaj Industries PLD 1990 Lahore 99. In all the said judgments it is held that penal interest cannot be charged if the parties have not specifically agreed for such payment. In the last mentioned case, penal interest was awarded at the agreed rate. The position, in my view, has undergone change with introduction of Islamic System of Banking and above referred Division Bench judgment in the case of HBL v. Farooq Compost Fertilizer Corporation (supra). The Additional interest, in the present case, as already observed, was intended to be levied by way of penalty upon default in making repayment on due dates. The imposition of penalty, in my humble view, is opposed to the provision contained in section 73 of the Contract Act and in the absence of any pleading about an loss having been suffered by the plaintiff, cannot be awarded being too remote. In the present case, another factor which needs to be noted is that the penalty, referred as additional interest in the two Credit agreements, is too exorbitant rather unconscionable. In a way, it is even uncertain since the bank rate referred in the above quoted clause of the Credit agreements always keeps varying. In the circumstances, I am not inclined to enforce the clause which in my view is void for being uncertain and voidable for being unconscionable, hence, against the Public policy. The claim for additional interest in relation to the three lines of credit covered by the two Credit Agreements, in the circumstances, is disallowed. [Underlining is mine].
52. Like-wise, no 'INTEREST' OR 'PENAL INTEREST' could be charged on the amount of 'commitment charges' otherwise, the same would amount to compounding the interest. The penal interest it is significant to note, quite often referred to in the loan agreements as 'additional interest'. Reliance is placed on the case of Pakistan Industrial Credit and Investment v. Messrs Bawany Industries Limited [PLD 1998 Kar. 400], wherein it was observed as follows:- ..."No interest or penal interest can be charged on the amount of commitment charges for such would amount to compounding the interest. It may be noted that the learned counsel for the plaintiff while taking me through the detailed Statement of Account, Exh.5/15, has shown certain entries which appear to be those of interest and penal interest. Indeed, despite the agreements between the parties for payment of penal interest at the rate of 2 % per annum in addition to the agreed rate of interest on the unpaid amount, the levy cannot be justified. In view of the provisions contained in section 73 of the Contract Act. The plaintiff is required to prove that it has suffered any further or additional damages which ought to be compensated. The amount lent to the defendant No, 1 carries interest agreed between the parties and any additional levy or charge in the form of liquidated damages or penalty cannot be claimed unless actual damages are shown to have been sustained'... The plaintiff is also entitled to commitment charges the specified rate mentioned in the three agreements. However, no further interest or penal interest can be charged on the said amount or on the commitment charges." [Underlining is mine].
53. In so far as the 'CENTRAL EXCISE DUTY' is concerned, in view of the law laid down by superior courts, the bank is entitled to recover the excise duty. In this regard reliance is placed on the case of Federation of Pakistan through Secretary Ministry of Finance and others v. Haji Muhammad Sadiq and others [PLD 2007 SC 133], wherein, it was held that loans/advances which are not finally adjusted or otherwise, have not been determined through judicial process, the bank, nonetheless, shall continue the extending of excisable services and would be entitled to recovery Central Excise Duty [In short CED] on the services rendered. The relevant portions i,e, paras 41 and 42 from the aforesaid case read as follows:-
(41) ....That after the promulgation of Finance Act, 1991 in pursuance whereof item 14.14 First Schedule part-II was inserted and respondents were called upon to pay excise duty on excisable services, therefore, being aggrieved from such demand they instituted writ petitions before the High Court of Sindh and Lahore High Court, Lahore which have been disposed of vide impugned .Judgments expressing opinion against each other. Thus it is held that when the Banking Institutions are continuously providing/rendering excisable services including facilities, accommodation and utilities to the persons who have obtained the loan and same have not been adjusted so far, and cause of action continues to favour of Banking Institutions etc. Till such loan/advance is not finally adjudicated or it has not been recovered through judicial process by invoking jurisdiction of a Court of law, the Bank shall continue extending excisable services and shall be liable to recover CED.
(42) At this juncture it is important to point out that the excisable service is covered under section 3-C(1)(b) according to which in the case of services on the day on which services are provided or rendered. As per Column No,II item 14.14 of the First Schedule Part-II of the Act, 1944 has laid down conditions far excise levy whereas Column No,III provides the rate of duty as it has been noted hereinabove that the person who has obtained less loan, shall be charged with less amount of excise levy and person having obtained greater loan has to be charged with higher amount of levy. Column-III in fact is the transaction of section 3-C(I)(b) which deals in respect of rate of levy on the date on which services are rendered/provided. As we are of the opinion that until the adjustment of the loans the financing companies enjoy recurring cause of action therefore, the day on which the excisable service is rendered/provided that would be the date for the determination of excise levy. Column III had fixed on the last working day of each calendar month.
Meaning thereby that during the month's period whatever services had been provided or rendered the excise duty will be levied upon the same on the last day of month keeping in view the amount of advances against the petitioner. It may be noted that unless such a measure is not adopted the provision of section 3-C(1)(b) read with item 14.14 of the Act, 1944 would be rendered unworkable. It may be noted that the rate of levy I.E. 1/12th of 1% of the amount as per Column-Ill was enhanced to I/12th of 2% of the amount as per Finance Act, 1992. Question arises that what is the criteria for fixation of levy of excise at different rates as per Column-Ill. In this behalf it may be noted that the lawgivers before imposing the tax ordinarily undertake an a exercise during the process whereof the tax payers are also examined and keeping in view their acceptable consensus the rate of tax is fixed. Besides at the same time it becomes very difficult to quantify the excise tax, therefore, a reasonable/moderate rate of tax is fixed keeping in view the suggestion of the tax payers and other person who matters in this behalf. This Court faced identical situation while dealing with the presumptive tax under section 80-CC and minimum tax under section 80-D of the Income Tax Ordinance, 1979 in the case of Elahi Cotton Mills Ltd., wherein it was observed:- "The rate of half per cent of minimum tax adopted under section 80-D seems to be on the basis of minimum rate of tax suggested by Export Enhancement Committee."
' Therefore, we are of the opinion that the rate of excise levy, as it stood finally incorporated, is just.
And proper thus free from any arbitrariness. As far as the respondents are concerned in they whatever mentioned in Column-Ill because it being an indirect tax has to be passed on by the respondent companies to their clients. In this behalf circular, dated 26th September, 1991 which has already been discussed hereinabove, is a clear demonstration of the factum of passing on the tax to the borrowers etc. [Underlining is mine].
54. Regarding the claim of liquidated damages, the plaintiff in the plaint has, no doubt, averred as follows:- "The plaintiff is a company engaged in the business of extending finance and its profits are dependent upon re-lending to various customers amounts repaid by other customers against loan taken. Under relevant regulations of the State Bank of Pakistan, to which the plaintiff is subjected, it can only lend such sums as bear a particular ratio to its reserves. The failure of the defendant to repay on a timely basis, the amounts advanced to them, has seriously hampered and impeded in making new loans to other customers, thereby causing monetary loss to the plaintiff. The plaintiff therefore, claims liquidated damages under the agreements. The rate of liquidated damages has been fixed by the plaintiff at 20% of the total amount and such rate is consistent with the practice followed by other banks and DFIs. The plaintiff therefore claims Rs,25,264,169 being 20% of Rs,126,320,850 making a total of Rs,151,585,019." [Underlining is mine].
55. In so far the claim of 20% liquidated damages in the sum of Rs,25,264,169 is concerned the same cannot be allowed in absence of evidence. Moreover, as held in the case of NDFC v. Anwar Zaib White Cement Ltd. And others [1999 MLD 1988], the imposition of penalty or damages even at a fixed rate is opposed to the provision confined in section 73 of the Contract Act, 1872. Besides, for claiming penalty or damages a party under law is required to plead and prove the actual losses or damages. Apart from the above, reliance can be placed on the case of Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Ltd., Islamabad v. Messrs Allied Bank of Pakistan and another [2003 CLD 596] wherein, it was held as follows:- ... "Liquidated damages, as a rule, require the positive evidence to show the actual loss was suffered by the party claiming the damages. Even fixed amount stipulated for liquidated damages cannot be recovered if the quantum of actual loss is not proved. Under the circumstances, the plaintiff is neither entitled to any interest nor to any amount as liquidated damages." [Underlining is mine].
56. With regard to the liability of guarantors [i,e, defendants Nos.2 to 9] quite significantly, the liability of the guarantors is co-extensive with that of the Principal Debtor, unless in the letter of guarantee itself, provides otherwise. Moreover, anything done or E promise made for the benefit of the principal debtor, is sufficient consideration as far as the surety is concerned. The contract of guarantee, indeed, is a contract to perform the promise or discharge the liability of third person in case of his default. Being relevant sections 126, 127 and 128 of the Contract Act, 1872 [Act No,IX of 1872] respectively, are reproduced as under:- "(a)
126. "Contract of guarantee", "surety", "principal debtor" and "creditor". A "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the "surety"; the persons in respect of whose default the guarantee is given is called the "principal debtor" and the person to whom the guarantee is given is called the "creditor". A guarantee may be either oral or written.
(b)
127. Consideration for guarantee. Anything done, or any promise made, for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee.
(c)
128. Surety's liability. The liability of the surely is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract."
57. Needless to say, the letters of guarantee duly signed and executed by the defendants Nos.1 to 9 in the case in hand are not only for the due payment and discharge of the loans/finances and interest/markup etc. Accrued thereon but also ensure due observance and performance of all the terms, conditions and obligations imposed under the loan/finance agreements. Being relevant some of the clauses i,e, 1, 2, 5, 10, 11, 13 and 14 of the letters of guarantee are reproduced hereinbelow:-
(1) Our liability to you hereunder shall be that of principal debtor and that you may at your option treat us a primarily liable for the aforesaid loan together with interest thereon, additional interest, commitment charges, commissions and all costs, charges and expenses payable thereon or connected therewith, or the balance from time to time due to in respect thereof.
(2) The amount at any time and from time to time payable by the Borrower or by us to you shall be as may be advised by you to the Borrower or to us shall be conclusive and binding against us, and we shall not question its correctness or delay its payment on any ground whatsoever but shall pay the same without any reference or recourse to the Borrower and inspite of any request by it to the contrary and notwithstanding any dispute of any nature between the Borrower/yourself/ourselves as also without any protest or representation of any kind whatsoever all of which are hereby expressly waived by us.
(5) You may as you think fit with or without reference or noticed to us at all times without prejudice to this Guarantee and without discharging or in any way affecting our liability hereunder, grant time or other indulgence to, or accept or make any composition or arrangement with the Borrower or any person or persons liable in respect of the indebtedness and liability here discharge, realize, release, enforce and deal with any securities, guarantees, obligations, decrees, or other contracts, or the proceeds of sale thereof now or hereafter held by you in respect thereof in such manner as you may think fit without thereby affecting your rights under this Guarantee and without affecting our liability hereunder.
(10) That our liability hereunder shall be joined and several, and each of our undertakings contained herein shall be construed accordingly, and you shall have the right to release or discharge or vary the liability of any of us without prejudicing your rights against the reminder of us.
(11) This Guarantee shall be enforceable, notwithstanding any change in the constitution of the Borrower by its absorption or amalgamation with any other body or bodies corporate or by operation of law or notwithstanding the winding-up, dissolution or bankruptcy of the Borrower, or the condemnation or seizure of the property or business of the Borrower by any authority or court or the appointment of any receiver or liquidator in respect of any or all property business or affairs of the Borrower or cessation of business by the Borrower for whatsoever reason.
(13) We agree and undertake that this Guarantee is unconditional and irrevocable and shall continue to be in full force and shall be operative and binding on us until the entire amount of the Loan with interest thereon additional interest, commitment charges, commission and all other costs, charges and expenses as stipulated above are repaid in full by the Borrower in terms of Loan Agreement and you have notified the same to us in writing. [Underlining is mine].
(14) That this Guarantee shall be binding on us and on our heirs, executors, administrators and legal representatives and shall ensure to the benefit of you successors-in-interest and assigns.
58. Keeping in view the aforesaid provision of law and terms and conditions of letters of guarantee I am of the view that defendants Nos.1 to 9 as being guarantors are also liable to liquidate the outstanding dues in terms of the letters of guarantee because the liability of the principal and guarantors under law is co-extensive. Further in an action[s], having been initiated by a creditor against the principal borrower/customer and guarantor[s], the creditor, is only required to establish the liability of the principal debtor and the occurrence of default. In this regard the rule pronounced in the case of Bank of Baroda [AIR 1992 Karnataka 108], reads as follows:- "10.1.' In City-bank N.A., New Delhi v. Jugilal Kamalapat Jute Mills Co. Limited, Kanpur, AIR 1982 Delhi 487, differing from the view expressed in the aforesaid Pearl Hosiery Mills case (AIR 1961 Punj. 281), it has been held that it was not necessary for the Legislature to provide the words in the absence of any contract in section 133 or 135 or 141, because the sections themselves speak of consent of the surety regarding variance in the terms of the contract between the principal debtor and the creditor and composition with the principal etc. It has also been further held that in the presence of the words without the surety's consent', the words 'in the absence of any contract to the contrary, would have been surplus. Therefore, following a decision of the Privy Council in Hodges v.
Delhi and London Bank Ltd. (1900) 27 Ind. App. 168 and A.R. Krishnaswami Ayyer v. Travancore National Bank Ltd. (AIR 1940 Mad. 437), it has been held that the rights conferred on the surety under sections 133, 135 or 141 of the Act could be waived by specific agreement in the deed of guarantee, that as a matter of fact, such an agreement would amount to consent within the meaning of the aforesaid sections of the Act. [Underlining is mine].
11. The words 'unless it is otherwise provided in the contract' occurring in section 128 of the Act will also govern the other provisions contained in the Chapter VIII of the Act and enable the surety to give up the rights available to him under sections 133, 134, 135 and 141 of the Act. It is a settled legal position of law that a legal right can be given up provided such giving up of a legal right under any contract is not hit by section 23 of the Act. Section 133 of the Act makes it clear that any variance made in the contract between the principal debtor and the creditor without the consent of the surety, discharges the surety as to transactions subsequent to variance. This consent of the surety can be obtained either at the time of the contract is made between the principal debtor and the creditor to which the surety gives the guarantee, for making any change or alteration in the contract to be made or not to claim any right or benefit under Chapter VIII of the Act. In other words, in the suretybond/guarantee-bond itself the surety can agree to waive his rights available to him under the various provisions contained in Chapter VIII of the Act. Such waiving of his right by the surety is permissible under section 133 read with section 128 of the Act.
11.1 ... The rights available to the surety under Chapter VIII of the Act, as already pointed out, can be waived by the surety. Therefore, such waiving of right by the surety is neither intended to defeat nor does it defeat any provisions of law. Therefore it is also not possible to hold that the consideration and the object of the agreement of guarantee have the effect of defeating any provisions of law. A recital in the surety bond in question that surety will not be entitled to any of the rights conferred by sections 133, 134, 135, 139 and 141 of the Act cannot be held to defeat the provisions of Chapter VIII of the Act. The rights conferred on the surety under Chapter VIII are not inalienable rights nor those rights have anything to do with the public policy as such. Those rights relate to the contracts entered into by individuals. It is not the case of defendant-3 that the aforesaid recital in the surety bond has been obtained either fraudulently or it involves or implies injury to the person or property of another. It is also not possible to view such a recital as immoral or opposed to pubic policy.
Public policy is not to defeat the debt of the creditor, it is to ensure that the money of the creditor, is secured and is recoverable in accordance with law; and the debtor or the surety is not absolved from his liability to discharge the debt except in accordance with law. Therefore, we are of the view that it is not possible to agree with the view as extracted above, expressed in Pearl Hosiery Mills' case AIR 196) Punj. 281 by the High Court of Punjab. We agree with the aforesaid view expressed in City-bank's case AIR 1982 Delhi 487 by the High Court of Delhi and also approve the view expressed by Kulkarni, J. In R. Lilavati's case AIR 1987 Kant.
2." [Underlining is mine].
59. Besides, the mortgage and pledge created by defendant No,1 and defendants Nos.2 to 9 respectively over the immovable property and shares of defendant No,1, well described and referred to in various paras of the plaint, are also valid and enforceable under the law.
60. The plaintiff in the case in hand has not only given-up their objections on the Reports of Chartered Accountants but also waived its' right to claim any mark-up etc. On Rs,2,372,000 which was disbursed and availed by the defendant No,1 out of the finance facility of Rs,10 million.
61. For all the above, and after deduction of the amounts of additional interest on [i]. Additional interest on principal due, [ii]. Additional interest on interest over-due, [iii]. Additional interest on commitment charges [iv]. Additional interest on loan administration fee, the plaintiffs suit regarding interest-based portion of finance facility is decreed in the sum of Rs,61,316,389 plus 14% interest on the entire amounts of Rs,89,324,473 [i,e, Rs,28,008,084 (+) Rs,61,316,389] w,e,f, 1-11-2003 till realization. Like-wise, the plaintiffs suit as far as the mark-up-based portion of facilities is concerned, decreed in the sum of 'Rs,17,362,582 plus cost of funds on the entire amount of Rs,32,184,582 [i,e, Rs,17,362,582 (+) 14,822,000/-] w,e,f, 1-11-2003 till realization as certified by State Bank of Pakistan from time to time. The INTERIM DECREE dated 13-5-2004 [wrongly mentioned. As PRELIMINARY DECREE] stand modified/varied and consequently, the suit is decreed against the defendants Nos.1 to 9, jointly and severally. The liability of the guarantors, however, is limited only to the extent of guaranteed amount in terms of the letters of guarantee[s] executed by the defendants Nos.2 to 9. A final decree for sale of the mortgaged property and sale of the pledged shares, per clauses 'c' and 'd' of the prayer clauses is also passed.
62. As far as the interest of IDBP [ICP]/defendant No,10, in its' capacity as 'pari passu charge' holder is concerned, their interest will be looked into and considered at the time of distribution of sale proceeds on merits and in accordance with law. IDBP/defendant No,10 will also be entitled to have a notice of the Execution Proceedings filed by the plaintiff Bank.
63. Accordingly, the suit stands decreed with costs.