ORDER
(i) C.M.A. No, 13089 of 2010
(ii) C.M.A. No, 693 of 2012 AZIZ-UR-REHMAN, J.---The plaintiff Financial Institution has filed the present suit, inter alia, for recovery of Rs,632,816,653 with cost of funds and attachment and sale of hypothecated assets under the provisions of Financial Institutions 'Recovery of Finances] Ordinance, 2001 [In short F.I.O., 2001], with the following prayers:- "(a) For payment of Rs,632,16,653 along with cost of funds for the period from the date of default till realization at the prevalent rate certified by the State Bank of Pakistan.
(b) For attachment and sale of the hypothecated assets as specified in paragraphs 8, 11 and 16 hereinabove.
(c) Costs of the suit.
(d) Any other relief or reliefs that this Hon able Court may deem fit and appropriate in the circumstances of the present case."
2. The facts giving rise to the filing of this suit, as gleaned from the plaint are as follows:
3. The plaintiff is a banking company incorporated under the Companies Ordinance, 1984 [ORDINANCE NO.XLVII OF 1984], having its' registered office at the address mentioned in the title of the suit and for the purpose of this suit, a branch known as Jinnah Avenue, Blue Area Islamabad, is a Financial Institution within the meaning of section 2(a) of F.I.O., 2001 [ORDINANCE XLVI OF 2001].
The defendant, as averred in the plaint, has availed various finance facilities from the plaintiff Bank i,e, from time to time, as such the defendant, is a Customer of the plaintiff Bank, within the meaning of section 2[c] of the F.I.O., 2001.
4. In consideration of the finance facilities granted to and availed by defendant, a 'hypothecation charge' over all movable assets belonging to the defendant was created, obviously, for securing the repayment of all dues owing to the plaintiff from the defendants. For and regarding creation of such charge, various documents [annexed with the plaint] including, letters of 'Hypothecation', Acknowledgments, Charge Registration Certificates, No Objection Certificates, First Supplementary Letters of Hypothecation and Supplementary Letters of Hypothecation, were also signed and executed by the defendant in favour of the plaintiff between 11th September, 2003 and March 1, 2008;
5. Per defendant's request, the plaintiff, inter alia renewed the following finance facilities vide its' offer letters dated July 19, 2007 and January 4, 2008 respectively. The offer letters, of course, were duly signed and accepted by the defendant. Details of the Facilities are given as below:- Sr.
No,Nature of FacilityLimited [PKR]Mark-up [%] A Short Term Finance Facility ["STF Facility No,1"]200 Million3-Months KIBOR + 3.00% p.a.
B Running Finance Facility ["RF Facility"]99.75 Million3-Months KIBOR + 3.00% p.a.
C Short Term Finance Facility ["STF Facility No,2"]100 Million6-Months KIBOR + 2.50% p.a.
D Letter of Credit/Over Due Acceptance ['LC Facility']250 MillionAs per BOP SOC
6. Accordingly, on account of 'STF FACILITY NO.1', a sum of Rs,200 million was granted to and availed by the defendant. The plaintiff and the defendant thus voluntarily entered into an Agreement of Financing on a mark-up basis of December 27, 2007 [Annexure 'C' to the Plaint] in which the 'marked up price' mutually settled is Rs,232,000,000. In consideration of and as a security for the STF Facility No, 1', the defendant apart from execution of Finance Agreement of 27th December, 2007, also executed, a Demand Promissory Note for a sum of Rs,232,000,000, Letter of Authority and Undertaking for Appropriate Utilization of Loan Proceeds all dated December 27, 2007.
7. Likewise, in consideration of the RF FACILITY and repayment thereof, the defendant besides executing Agreement for Financing, Demand Promissory Note both dated 5th January, 2008, [Annexures 'E' and 'F' to the Plaint] in favour of the plaintiff in the sum of 'Marked-up Price' of Rs, 115,710,000 also created a hypothecation charge in favour of the plaintiff over its' stocks and book debts upto a maximum amount of Rs,133,000,000 by executing a Letter of Hypothecation dated January 5, 2008. Besides, a Letter of Continuity for Rs,115,710,000 and Letter of Authority both dated 5th January, 2008 were also executed by the defendant.
8. Apart from the above, at the defendant's requests, the plaintiff also made available 'STF FACILITY NO.2' to the defendant, in the sum of Rs,100 million. Regarding such Facility, the plaintiff and the defendant voluntarily entered into an Agreement of Financing of January 5, 2008. Per this agreement of Finance, marked-up price mutually fixed is Rs,116 Million. In consideration of 'STF FACILITY NO.2', and as security for repayment thereof, the defendant signed a letter of hypothecation dated January 5, 2008 whereby, a charge in the shape of hypothecation was also created over its 'stocks' and 'book debts', upto a maximum limit of Rs,143,000,000. Moreover, the defendant also undertook and agreed to create a lien over 'TERM FINANCE CERTIFICATES' of Pakland Cement Limited, [now called Dewan Cement Limited] valuing Rs,138.877 Million. The 'Term Finance certificates' were handed over to the plaintiff Bank by Messrs Saudi Pak Leasing, Company but the said 'TERMS FINANCE CERTIFICATES' contrary to the claim of the defendant, were not found in its' name. The plaintiff nonetheless, sent the said 'TERM FINANCE CERTIFICATES' to the issuer Company, for getting it transferred in the name of defendant but in breach of promises made by the defendant towards the plaintiff, the defendant, however, failed to get the process of transfer complete. Nonetheless, a letter of lien, in favour of the plaintiff was also issued/executed by the defendant. Besides, in consideration of and as a security for the 'STF FACILITY NO.2', granted to and availed by the defendant, the defendant, inter alia, also signed and executed a Demand Promissory Note, in the sum of Rs,116,000,000 and Letter of Authority both dated January 5, 2008.
9. Besides, the plaintiff also granted a 'LC FACILITY', wherefor, the defendant signed and executed APPLICATION-CUM-AGREEMENT(S) OF IRREVOCABLE DOCUMENTARY CREDIT dated 12-2-2008, 1-3- 2008 and 6-3-2008. As requested, the plaintiff accordingly established letter of credits [In short LCs.] as follows:- L/CDate of OpeningFavouringOverdue acceptanceForeign/LocalDue dateService ChargesMark-up Accrued Account 30-6-2010 [PKR] 2008/02519-2-2008Hyundai 99,647,940Foreign 19-8- 2008119,577.5344,109,160.60 Motor Company. Seoul.
Korea 2008/0291-3-2008 Dewan 39,960,000Local 2-7- 200839,960.0018,035,046.00 Automotive Engineering Ltd. Karachi 2008/0315-3-2008 Hyundai 109,008,163Foreign 29-10- 200810,428.3543,221,736.59 Motor Company Seoul Korea 2008/0326-3-2008KCC 8,690,293 Foreign 16-6- 2008130,809.804,208,274.36 Corporation Seoul, Korea Total Acceptance 257,306,396 300,775.67110,474,217.55 Overdue
10. In terms of the aforesaid LCs., the beneficiary thereof made shipments and the 'goods' imported, thus were received by the defendant. In respect of the said LCs., later on, 'TRUST RECEIPTS' of 21-3- 2008, 5-3-2008, 6-3-2008 and 2-4-2008, were also signed and executed by the defendant: whereby undertakings to the effect, that the goods are received by the defendant in trust for the plaintiffs and that it shall duly make payment to the plaintiff at the relevant maturity dates.
11. Nonetheless, at the maturity, [i,e, at the time of payment to the beneficiary], the defendant however, failed and/or avoided to make payment to the plaintiff Bank whereupon, the plaintiff having been compelled to, make payment to the 'beneficiary'/'drawee bank' per commitments from its own funds. The bills drawn by the BENEFICIARIES under the said LCs, were retired by creating Past Due Acceptances. The details of which are as follows:-- Date of PDA A/c No, L/C No, Amount [Rs,] 16-6-2008 PAOA10000110872008/032 8,690,293 2-7-2008 PAO10000111952008/029 39,960,000 19-8-2008 PAOA10000116242008/025 99,647,940 20-10-2008 PAOA10000119112008/031, 109,008,163 Total: 257,306,396
12. Needless to say, each of the Finance Facilities as described in the preceding paragraphs, were fully availed and utilized by the defendant, however, the defendant in its wisdom failed to make payment under the `RF FACILITY' on 31-8-2008, the `STF FACILITY NO.1' on 31-12-2008, `STF FACILITY NO.2' on 1-4-2009 and 'LC FACILITY', on the respective due dates. Despite, requests and reminders for making payment of the outstanding dues under each of the aforesaid Finance Facilities, the defendant however, failed and/or ignored to fulfill its contractual obligations thus it committed clear-cut default.
13. The particulars of the due amounts 'facility-wise', are as follows:-- A.FACILITY-WISE PRINCIPAL AVAILEDAMOUNT [PAK RS.] RF Facility 98,946,883 STF Facility No,1 200,000,000 STF Facility No,2 100,000,000 LC Facility/Overdue Acceptances257,306,396 Total Availed Amount 656,253,279 B. FACILITY-WISE PRINCIPAL AMOUNT REPAID RF Facility Nil STF Facility No,1 200,000,000 STF Facility No,2 Nil LC Facility Overdue AcceptancesNil C. FACILITY-WISE PRINCIPAL OUTSTANDING RF Facility 98,946,883 STF Facility No,1 Nil STF Facility No,2 100,000,000 LC Facility 257,306,396 D. TOTAL OUTSTANDING PRINCIPAL456,253,279.
E. FACILITY-WISE MARK PAYABLE RF Facility 36,079,158 STF Facility No,1 1,171,397 STF Facility No,2 28,537,825 LC Facility/Overdue Acceptances110,474,218 Service Charges 300,776 F.FACILITY-WISE MARK-UP REPAID RF Facility Nil STF Facility No,1 Nil STF Facility No,2 Nil LC Facility/Overdue AcceptancesNil G.FACILITY-WISE MARK-UP OUTSTANDING RF Facility 36,079,158 STF Facility No,1 1,171,397 STF Facility No,2 28,537,825 LC Facility/Overdue Acceptance110,474;218 Service Charges 300,776 TOTAL FACILITY-WISE OUTSTANDING MARK-UP176,563,374 TOTAL OUTSTANDING AMOUNT AS PER,D,+H,632,816,653
14. Per plaintiff's version, the defendant at present, is truly liable to pay to the plaintiff Bank, a sum of Rs,632,816,653 in respect of the aforementioned Finance Facilities, which the defendant however, has failed, avoided and/or neglected to pay the same despite its promises and assurances.
15. Upon filing of the suit, process under section 9[5] of F.I.O., 2001, was issued to the defendant by all requisite modes including publications in two Newspapers i,e, Daily 'Dawn' English and Daily 'Jang' Karachi, both dated 24th September, 2010. In response, the defendant filed its Leave to Defend Application under section 10 of the F.I.O., 2001 bearing C.M.A. No,13089 of 2010 and in reply thereto, the plaintiff has also filed its' Replication under section 10[7] of the F.I.O., 2010 on 2nd June, 2011.
16. Lastly, on 13th September, 2010, when the above matter came-up before me for hearing of C.M.A.
No,13089 of 2010 being an application under section 10 of F.I.O., 2001, filed by the defendant and C.M.A. No,639 of 2012 being an application under section 39, Rules 1 and 2, C.P.C., filed by the plaintiff Bank, then I heard Mr. K. K. Agha, learned counsel for the plaintiff Bank and Mr. Adnan I. Chaudhry, learned counsel for the defendant and with their valuable assistance also gone through the available record before me.
17. Mr. Adnan I. Chaudhry, learned counsel for the defendant, forcefully argued that initially the Finance Facilities were extended in the year, 2005 but thereafter on the expiry of each facility, the amount then due including 'markup' was 'rolled over' into the principal sum, clearly in violation of State Bank's directives. Nonetheless, the 'markup upon markup' as was claimed by the plaintiff Bank has also been paid by the defendant. Per Mr. Adnan stand, the amount though not being lawfully payable was, however, paid. But, in any event, the defendant is entitled to seek refund/adjustment of the paid amount, however, after complete and proper calculations of the lawfully payable markup. Mr. Adnan, further contended that amount of principal and 'mark-up' already due, in no event could be capitalized and that too without any actual disbursement. By doing so, the Bank in actual fact, has compounded 'mark-up' upon 'mark-up' manifestly, in clear violation of the directives of State Bank of Pakistan [In short SBP]. Charging of mark-up over mark- up amounts to 'Ribas as such is 'Haram' in Islam.
18. Mr. Adnan I. Chaudhry, learned counsel for the defendant further argued that 'roll over' of the principal and mark-up into a new finance facility and thereafter, charging of further mark-up thereon, does constitute a case of charging of 'mark-up' over 'mark-up' which, of course, is prohibited under SBP's Circulars i,e, BPD's Circular 13 and 32 issued by SBP in the year, 1984 as well by provisions of F.I.O., 2001. Mr. Adnan, next contended that most of the documents annexed with the plaint were got signed in blank and now in these documents incorrect figures have been inserted. The execution of such documents, per Mr. Adnan, have been obtained/procured, by the plaintiff Bank, in violation of the mandatory provisions of section 18 of F.I.O., 2001 [ORDINANCE, XLVI of 2001].
19. Per Mr. Adnan I. Chaudhry, learned counsel for the defendant also argued in vehemence that the information as provided in terms of section 9(3) of F.I.O., 2001 by the plaintiff-Bank is in- sufficient compliance of subsection (3) of section 9 of F.I.O., 2001. Moreover, all the 'debit entries' made in the statement of accounts are incorrect, therefore, are denied by the defendant.
According to Mr. Adnan I. Chaudhry, learned counsel for the defendant, no any amounts, as claimed, are due or otherwise, payable by the defendant. It is next contended by Mr. Adnan, learned counsel for the defendant that the outstanding amounts of LC's could have been converted into funded forced PAD facilities, of course, without any consent of defendant. In any event no 'mark-up' on L/C facility/overdue acceptances i,e, Rs,257,306,396 is payable as 'clause-2' of the Application and Agreement for Irrevocable Documentary Credit mentions no rate of 'markup' that is to say is blank. As far as 20% liquidated damages as stipulated in 'clause 4' of the conditions, APPLICATION-CUMAGREEMENT FOR IRREVOCABLE CREDIT is concerned, the same under law cannot be granted without putting the Bank to the condition to lead evidence.
20. Mr. Adnan I. Chaudhry, learned counsel for the defendant in support of his contentions, placed reliance on the following case-laws:-
(a) Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others [2011 CLD 408]
(b) Pakistan Kuwait Investment Company (Pvt.) Limited through Authorized Representative v.
Messrs Active Apparels International and 6 others [2012 CLD 1036[
(c) United Bank Limited v. Mehmood Ilyas Khan and another [2012 CLD 1372]
(d) Apollo Textile Mills Ltd. And others v. Soneri Bank Ltd. [2012 CLD 337]
(e) Habib Bank Ltd. v. Karachi Pipe Mills Ltd. [2006 CLD 842]
(f) Messrs Saudi Pak Commercial Bank v. Messrs Lucky Textile (Pvt.) Ltd. And others [2007 CLD 1005]
(g) HBL v. Al-Jalal Textile Mills Ltd. [2003 CLD 1007]
(h) Mushtaq Ahmed Vohra v. Crescent Investment Bank Limited [2005 CLD 444]
(i) Habib Bank Limited v. Messrs Qayyum Spinning Limited and others [2001 MLD 1351] (j)
(j) United Bank Ltd., Karachi v. Messrs Gravure Packaging (Pvt.) Ltd. And 4 others [2001 YLR 1549]
21. In contra, Mr. K. K. Agha, learned counsel for the plaintiff Bank vehemently argued that the so- called 'substantial questions' of law and facts, as claimed by the defendant are not only mis- conceived, false, and baseless but also seem a mala fide attempt; on the part of the defendant to delay and/or frustrate the recovery process of lawful dues of the plaintiff. Per learned counsel, it is a very sorry state of affairs that for the last about 5 years, the LEAVE TO DEFEND APPLICATION is pending without any progress. The evasive and pseudo pleas as raised by the defendant, per Mr. K.
K. Agha, need no consideration and the LEAVE TO DEFEND APPLICATION straight away is liable to be rejected. Mr. K. K. Agha, learned counsel for the plaintiff, further contended that by not denying PARAS 1 to 3, 5 and 9 to 14 OF THE PLAINT, the defendant actually besides admitting the execution of the financing documents has also admitted the availment of STF FACILITY NO.1., RF FACILITY, STF FACILITY NO.2, and LC. FACILITY. The defendant's clear admission of the availment/renewals of the aforementioned finance facilities and execution of the financing documents, indeed, dis-entitles the defendant for grant of 'Leave-to-Defend' the suit.
22. Per Mr. K. K. Agha, learned counsel for the plaintiff Bank, the 'Running Finance facility', was initially granted to and availed by the defendant in the end of the year, 2003, however, it was renewed subsequently, at the request of the defendant i,e, from time to time under Facility Offer Letters of 14- 12-2004, 25-8-2005, 26-12-2006, 19-7-2007 and 4-1-2008. According to the learned counsel, all the 'Facility Offer Letters', have been duly accepted by the defendant through signing; sealing and thereafter returning duplicates thereof to the plaintiff. Moreover, per defendant's request vide letter dated 8-9-2003, the plaintiff in turn vide its' letter of 20-9-2003 duly 'disbursed' a sum of Rs,100,000,000 [One Hundred Million only] to the defendant by enclosing a Demand Draft No,60055393 dated 20-9-2003 in favour of the defendant. Evidently, per Mr. Agha, a sum of Rs,100 million was disbursed to the defendant instead of Rs,99.750 million [Rs,250,000 in excess], however, at the request of the defendant, the plaintiff Bank, no doubt, subsequently, wrote an internal Memo No,BOP/ID/BA/CR/2003/1049 dated 25-9-2003 to its' SVP/Chief Manager, whereby, ratification/confirmation with regard to disbursing Rs,250,000 in excess, was sought from him.
23. Per Mr. K. K. Agha, the plaintiff Bank had also written a letter dated 25-9-2003 to the defendant regarding deposit of excess amount in the sum of Rs,250,000 with the plaintiff so that the actual position is got regularized. From the above position/documents, it is quite clear rather established, that the Running Finance Facility, was fully disbursed to and availed by the defendant. Like-wise, per Mr. K. K. Agha, the 'STF FACILITY NO.1, 'STF FACILITY NO.2' and 'L/C FACILITY' were also fully disbursed by the plaintiff to the defendant in the manner as below:- A. STF FACILITY NO.1:- This facility was disbursed by the plaintiff to the defendant vide Payment Order No,00411001 dated 27-12-2005 Rs,100,000,000 issued by the plaintiff in favour of the defendant and payable at Bank of Punjab, I.I. Chundrigar road branch, Karachi.
B. STF FACILITY NO.2:- This facility was disbursed by the plaintiff to the defendant vide Payment Order No, 00411041 dated 31-12-2005 Rs . 200 , 000 , 000 issued by the plaintiff in favour of the defendant and payable at Bank of Punjab I.I. Chundrigar road branch, Karachi.
C. LC FACILITY:- Since the defendant failed to make payment to the plaintiff upon maturity dates as mentioned in para 16 of the plaint, therefore, the plaintiff made payment to the beneficiaries of LCs from its own funds vide the following swift messages and demand draft:-
(a) Swift Message dated 14-6-2008 for Japanese Yen JPY 13,978,274 sent to the National Bank of Pakistan, Tokyo Japan relating to LC No,2008/032.
(b) Swift Message dated 28-5-2008 for $ 1334224/24 sent to the National Bank of Pakistan, Seoul Branch Korea, relating to LC No,2008/031.
(c) Swift Message dated 18-3-2008 for $ 1332166/71 sent to the National Bank of Pakistan, Seoul Branch Korea relating to LC No,2008/025.
(d) Demand Draft No,00595248 dated 2-7-2008 for Rs,39,960,000 sent to Mybank Ltd., Foreign Trade Processing Centre I.I. Chundrigar road branch, Karachi through the plaintiffs letter No,BOP/BA/ISD/2008/757 dated 2-7-2008.
24. Mr. K. K. Agha, learned counsel for the plaintiff Bank, next contended that it is absolutely incorrect and mis-leading to say that the outstanding principal amounts and 'mark-up' in respect of each of the aforesaid facilities granted to be availed by the defendant, as alleged was repaid or otherwise, it was capitalized in any manner which as alleged had/has resulted in, 'mark-up over mark-up'. Indeed, per Mr. K. K. Agha, after 'initial disbursement' of the facilities, the same have also been renewed but of course, with consent and at the request of the defendant as on expiry dates of facilities, the defendant was unable to pay the outstanding dues. Needless to say, upon renewal the amount of each facility[ies], was placed at disposal of the defendant. The defendant, no doubt, was at liberty to utilize the same from time to time as per its' need, which in the present has been done. Under such circumstances, the allegation of any capitalization of the outstanding balances, besides, misconceived mis-leading, is after-thought and seems an attempt to gain time.
25. Mr. K. K. Agha, without admitting the signing of blank documents, further submitted that the so- called signing of blank documents by the defendant, is absolutely incorrect. Besides, it makes no ground for grant of Leave to Defend the suit. The defendant, it is worth to mention, has never before denied and/or challenged the correctness and genuineness of any of the financing documents that is to say in any of its' letters or correspondence from the date of grant to and availing of the facilities by the defendant. The defendant, at this belated stage in its' own wisdom has chosen to allege the signing of documents in blank. Such frivolous pleas obviously, are being raised by the defendant with a view to forestall and/or and frustrate the recovery of the plaintiff's lawful dues.
26. Per Mr. K. K. Agha, the defendant by way of raising false and hyper-technical pleas, could not become entitled for grant of any leave to defend the suit. The pleas raised by the defendant beside dishonest seem the outcome' of mala fide intention of defendant to usurp the plaintiff s lawful dues. The defendant, it is worth to note, has also admitted its' liability in various letters addressed to the plaintiff, particularly letter dated 16-6-2006, 27-6-2006, 5-7-2007, two letters both dated 11-10- 2006 and two letters dated nil. Moreover, signing of 'Finance Agreements' coupled with 'Promissory Notes' is due acknowledgment of the liabilities. The 'evasive' and baseless denials of the defendant, much-less, at this stage is meaningless. No doubt, the defendant is fully liable to pay the outstanding amounts owed to the plaintiff Bank. By inserting true details and particulars of the transactions in Para 19 of the plaint, the plaintiff, to the knowledge of the defendant, has fully complied with the statutory requirements of section 9[3] of the F.I.O., 2001. Moreover, all the debit entries appearing in the statements of accounts are genuine, true and conclusive proof of the outstanding liabilities of the defendant. Needless to say, that the Finance Agreements and 'Promissory Notes' have been duly signed and executed by the defendant that is to say voluntarily.
Per Mr. K. K. Agha, the so-called details and statements submitted by the defendant are incorrect and baseless.
27. Per Mr. Agha, the requirements of section 10 of F.I.O., 2001, have not been complied with by the defendant itself. As such, under the afore-said circumstances, the defendant has not only failed to raise any substantial question of law but also failed to raise substantial questions of facts, which may need evidence. Lastly, Mr. K. K. Agha contended in vehemence, that the application for Leave- to-Defend bearing C.M.A. No,13089 of 2010, is liable to be dismissed as the defendant has badly failed to raise any substantial questions of law and facts. The application for Leave-to-Defend the suit thus merits no consideration and as such is liable to be dismissed with costs. The plaintiffs suit consequently deserves to be decreed as prayed.
28. Heard.
29. Before proceeding further, I would like to briefly discuss the various facilities in the light of respective Finance Agreements as follows:
(a) RF-Facility: It is significant to note that in the year, 2008, the 'RF Facility', granted to and availed by the defendant was renewed on the terms and conditions mutually agreed between the parties.
For the purpose of renewal, inter alia an Agreement for Finance [Annexure 'E' to the Plaint], was duly signed and executed by the defendant. Per this Finance of January 5, 2008, the 'Sale Price' and 'Purchase Price' as having mutually agreed between the parties; is Rs,99,750,000] and Rs,115,710,000 respectively. For the 'Purchase Price' i,e, Rs,115,710,000, a 'Demand Promissory Note' [Annexure 'F' to the Plaint] was also signed by the defendant, whereby, the defendant promised to pay the sum of Rs,115,710,000 to the plaintiff on demand. The 'mark-up' as per the aforesaid Finance Agreement is Rs,15,960,000.
(b) STF Facility-1: As far as, STF Facility No,1 is concerned, per Finance Agreement of December, 27, 2007 [Annexure 'C' to the plaint], the 'Sale Price' and Purchase Price mutually fixed between the parties is Rs,200,000,000 and Rs,232,000,000 respectively. The 'Purchase Price' under this agreement is/was payable on or before 20-12-2008 in terms of the agreement the 'mark-up' amount is Rs,32,000,000. For the purchase price of Rs,32,000,000 a Demand Promissory Note of 5th January, 2008 was also signed by the defendant. STF Facility-2: Regarding STF Facility-2, the 'Sale Price' and 'Purchase-Price' mutually fixed under the Agreement of Finance dated January, 5, 2008 [Annexure 'H' to the Plaint] is Rs,100,000,000 and Rs,116,000,000 respectively. In terms of the aforesaid Finance Agreement, the 'Purchase Price' is payable by defendant on or before 26th December, 2008. Upon deducting 'Sale Price' from 'Purchase Price' the 'mark-up' amount comes to Rs,16,000,000 only.
(c) Letter of Credit Facility [In short L/C Facility]:- Apart from and in addition to the aforesaid facilities, at the request of defendant, the plaintiff Bank also granted a L/C facility after the defendant duly signed and executed four APPLICATIONS AND AGREEMENTS FOR IRREVOCABLE DOCUMENTARY CREDITS on 19th February, 2008, 1st March, 2008, 5th March, 2008 and 6th March, 2008. Accordingly, thereafter the following Letters of Credits were established by the plaintiff:- L/C #Date of OpeningFavouringOverdue acceptanceForeign/ LocalDue date.Service ChargesMark-up Accrued Account 30-6-2010 [PKR] 2008/02519-2- 2008Hyundai99,647,940Foreign19-8- 2008119,577.5344,109,160.60 Motor Company, Seoul, Korea 2008/0291-3-2008Dewan39,960,000Local 2-7- 200839,960.0018,035,046.00 Automotive Engineering Ltd. Karachi 2008/0315-3-2008Hyundai109,008,163Foreign29-10- 200810,428.3543,221,736.59 Motor Company Seoul Korea 2008/0326-3-2008KCC8,690,293 Foreign16-6- 2008130,809.804,208,274.36 Corporation Seoul, Korea Total 257,306,396 300,775.67110,474,217.55 Overdue
30. At this juncture, I would like to reproduce herein from the APPLICATION AND AGREEMENT FOR IRREVOCABLE DOMENTARY CREDITS, the last 'common' paragraph under the head of 'Declaration' as well as Clauses 1, 2, 3, 4 and 14 from the conditions thereto as under:- DECLARATION: IN CONSIDERATION OF YOUR AGREEING TO OUR REQUEST FOR OPENING AN IRREVOCABLE DOCUMENTARY CREDIT AS PER OUR ABOVE MENTIONED INSTRUCTIONS THE SIGNATORY UNCONDITONALLY AGREE(S) AS PER TERMS AND CONDITIONS MENTIONED ON PAGES 3 and 4 CONDITIONS "(1) On lodgment of documents negotiated under this credit the same will be deemed to have been sold by me/us to you for the amount due under the draft(s) plus all charges of advising/confirming/ negotiating bank and your foreign correspondents all converted into Pakistan Currency at the rate of exchange prevailing on the date of lodgment or the contracted rate if fixed under clause 8 hereof plus any of your outstanding charges for opening of this credit or any amendments thereto. PROVIDED that if this credit calls for usance drafts the rate of exchange application shall be that prevailing on the maturity date of each draft drawn under the credit or the contracted rate if fixed under clause 8 hereof.
(2) I/we shall be deemed to have simultaneously bought back from you the said documents at the aforesaid sale price less the amount of margin if any; deposited by me/us with you plus a mark-up on the net amount at the rate of Rs, paisas for every Rs,1,000 per day or part thereof of the sale price (the total being referred to hereinafter as the buy back price) payable on demand or if this credit calls for usance drafts the rate of markup would be, &&&, paisas for every Rs,1,000 per day or part thereof and the marked up amount will be payable on demand. No further act on my/our part will be necessary to complete above mentioned sale and Buy back transaction.
The actual amount of sale and Buy back price shall be such as may be advised to me/us by the Bank.
Provided that in the event of my/our making payment on demand or on the due date of each draft as aforesaid the Bank may give us rebate in the Buy back price at such rate as the Bank may from time to time prescribe. I/we confirm, agree and undertake to pay the Bank the total amount worked out in accordance with clause I above plus mark up and all costs, charges and expenses referred to us under clause-2 above all of which shall constitute the Buy-Back Price.
(3) In the event of the ship carrying goods covered by the said documents arriving before I/we have paid to you the buy back price I/we undertake to have the goods cleared through a clearing agent nominated by you and pay customs duty, sales tax, port charges and all other expenses in connection with its clearance from customs and place the same under your pledge as security for the unpaid Buy back price, I further confirm that I shall also liable to pay the markup @ plus the aforesaid cost and charges in addition to unpaid Buy back price.
(4) In the event of my/our failure to fulfill our obligation under condition 3 above I/we hereby irrevocably authorize you at your option without being obliged to do so to clear the said goods and undertake to pay you all amount paid or liability incurred by you on account of customs duty, sales tax, port charges and all other expenses in connection with its clearance from customs plus an addition of 20% thereto as liquidated damages over and above the Buy back price as aforesaid. [Underlining is mine].
(14) I/we further agree and confirm that if this credit calls for usance draft(s) the same shall be accepted by me/us within 2 working days of receipt of the same from your end if documents are clear and I/we undertake to pay the amount of the drafts. In the event of my/our failure to acceptf the draft(s) and make payment thereof on the due date(s) I/we hereby irrevocably authorize you to convey maturity date to beneficiary through your correspondent and make such payment on due date to the debit of my/our account with you and I/we undertake to reimburse the entire amount to you on demand along with markup @ paisa per thousand per day from the date of offered payment to date of payment by me/us."
31. Before taking-up the point of roll-over, and renewal etc. At this point of time, I would like to mention herein that F.I.O., 200I, is a special law and in terms of section 4 of F.I.O., 2001, the provisions of F.I.O., 2001 shall have effect notwithstanding any inconsistence contained in any other law in force. Needless to say, the SBP' s Circulars I3 and 32 etc. Are subordinate legislature, cannot over- ride the provisions of law including provisions of F.I.O., 2001 which in any event have to take effect.
Keeping in view this legal position, I would like to refer to section 2(e) of the F.I.O., 2001 [Ordinance No,DLVI of 2001], which reads as follows:- "2. Definitions. - In this Ordinance, unless there is anything repugnant in the subject or context -
(b) ..............
(c) ..............
(d) .............
(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 fulfillment of a promise; and [Underlining is mine].
(iii) all duties imposed on the customer under this Ordinance; and
32. From clause (e) of section 2 of F.I.O., 2001, it is quite clear that all the Bank's customers [in the present case defendant] besides under legal obligation, are duty bound to perform and fulfill its' undertaking's and promises regarding repayment of dues and all other amounts relating to a finance. Significantly, in the case in hand, the various Finance Agreements are coupled with Promissory Note[s] under which the defendant herein in any event, is liable to pay the 'Sale Price' plus mark-up/' Purchase Price' to the plaintiff Bank. The defendants, in view of this position, are duty bound to fulfill all their obligations and repay the 'Purchase Price' as mutually settled between the parties. Importantly a Promissory Note under section I18 of Negotiable Instruments Act, 1881 [XXVI of 188] attaches itself the presumption of truth. Being relevant section I18 of Negotiable Instrument Act, 1881 [XXVI of 188I is reproduced hereinbelow:- "18. Presumption as to negotiable instrument of consideration. Until the contrary is proved, the following presumptions shall be made:--
(a) that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;
(b) as to date: that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance: that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer: that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsement: that the indorsements appearing upon a negotiable were made in the order in which they appear thereon; as to stamp: that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course: that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been obtained from its lawful owner; or from any person in lawful custody thereof by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
33. From the above, it is crystal clear that a negotiable instrument, under section 118 of Negotiable Instrument Act, 1881 [XXVI of 1881], attaches itself statutory presumption that is to say, as to consideration, date, time of acceptance, time of transfer, order of endorsement, stamping and also as to holder of a negotiable instrument in due course. Moreover, a promissory note, being regulated under Section 118 of Negotiable Instrument Act, 1881 [XXVI of 1881], attracts special rules of evidence to the following effect:- 'Until the contrary is proved, the following presumption shall be made:---
(a) Of consideration. ---that every Negotiable Instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;
34. No doubt, the presumption attached to a negotiable Instrument besides statutory in nature is also mandatory. No, person shall dispel such presumption without furnishing solid proofs and evidence. It is worth to note that the defendant herein admits the execution of all documents. The court while, dilating upon, the presumption attached to a Negotiable Instrument under section 118 of the Negotiable Instruments Act, 1881 [XXVI of 1881], has observed in the case of Muhammad Sabir v. Khalilur-Rehman [2002 CLD 1545] as follows:- "The contention of the learned counsel for the appellant that the Promissory Note, was not executed on 24-5-1982 but on a date 6-10-1981. Such contentions cannot be sustained for more than one reason, firstly under section 118 of the Negotiable Instruments Act, presumption is attached to a Negotiable Instrument, as to receipt of consideration, date of execution, time of receipt of consideration, date of execution, time of acceptance, time of transfer, order of endorsement, as to stamp and holder in due course are presumed unless, contrary is proved. It is settled position in law, where statutory presumption is attached as to existence of any fact, then any person setting up a plea in rebuttal, takes upon himself to prove such plea in rebuttal.
Defendant/appellant challenged such presumption, placing reliance that ,the Promissory Note, was executed along with alleged agreement executed between the parties on 6-10-1981....
Contention of the learned counsel for the appellant that once the consideration has been denied by him, burden was shifted on the plaintiff/respondent to have proved the consideration. Such arguments are fallacious in relation to inchoate instrument. Section 118(a) of the Act lays down a special rule of evidence contrary to the general rule of burden of proof as already discussed above. Burden to dispel statutory presumption is always on a party seeking to negotiate or rebut the presumption as to existence of consideration. Once the execution is admitted then it was for the defendant/appellant to disprove consideration. For reference see Mst. Sughran Begum and 11 others v. Haji Mir Qadir Bukhsh and 2 others (PLD 1986 Quetta 232 DB) and United Bank Ltd. v. Mrs. Bilquees Begum and 3 others (1988 CLC 1613) and S.K. Abdul Aziz v. Mahmoodul Hassan and 3 others (1988 CLC 337)." [Underlining is mine].
35. Per Mr. Adnan 'I. Chaudhry, the various documents including the last Finance Agreements and Promissory Notes both pertaining to facilities as referred to hereinabove are for renewal/re- scheduled amounts as such could not be enforced under law because it involves the factor of 'roll- over' of mark-up over mark-up.. The contention of Mr. Adnan so raised on the face of record is without any force. In the present case renewal/re-scheduling of finance was done at the request of defendant as such now the defendant cannot approbate and reprobate. Moreover, all the relevant documents [annexed with the plaint], are duly signed and executed by the defendant. The contention of Mr. Adnan that the financial documents were taken in blank seem after-thought and unbelievable. All the financial documents available on record are duly filled and if any document contains any blanks then surely the Bank and not the defendant is to face the consequences, if any under law. On account of the defendant's default, the renewal/rescheduling was not only requested by the defendant but also accepted by the plaintiff Bank. The defendant, now under the 'doctrine of promissory estoppel' could be permitted to allege that the documents, duly signed and executed are void and/or otherwise, not enforceable under the law. The contention of Mr. Adnan that the plaintiff Bank, cannot recover the 'Purchase Price' [mark-up price] as mark-up has been charged on the 'outstanding due amount' which includes mark-up as such the 'Sale Price' and 'Purchase Price', both are polluted one. According to learned counsel, the renewed/rescheduled amounts have also not been actually disbursed. The 'Purchase Price' of the subject Finance Agreements, per Mr. Adnan, is not recoverable. This contention of Mr. Adnan besides finis- conceived is mis-leading as such rejected. In rescheduling/renewal, the purpose thereunder is not liquidation of the liability of the outstanding amounts. Otherwise, also, under law, the outstanding amounts need to be disbursed again. Nonetheless, in the present case, the various 'debits' and 'credit' entries also belie the defendant in its' version. Reliance in this regard can be placed on the case of Muhammad Arshad and another v. Citibank N.A., Lahore [2006 SCM R 1347], wherein it observed as follows:- "(4). ... We are not at all impressed by the contention raised on behalf of the petitioners that the genuineness and authenticity of the agreement, dated 26-6-1999 is not above board as the relevant columns were left blank and filled in subsequently by the Bank. For the sake of argument even if it is admitted then why the agreement dated 26-6-1999 was acted upon and pursuant whereof ten installments had been paid and the outstanding liability was reduced from Rs,21,05,280 (mark-up price) to Rs,17,95,176. In fact the above installments were made as per repayment schedule which was inseparable part of the agreement dated 26-6-1999. It must not be lost sight of that the main object to get the renewed agreement was restructuring of the finance facility and not liquidation of the liability. We have no hesitation in our mind to hold that agreement dated 26-6-1999 was authentic, genuine and executed between the parties and acted upon. A careful perusal of the agreement dated 26-6-1999 would reveal that mark-up was charged in accordance with the terms and conditions and stipulated therein. It is to be noted that in the agreement dated 26-6-1999 it has been stipulated in a categoric manner that the petitioners had also entered into mark-up agreement which was executed on 21-6-1995 and thus, it stood admitted by the petitioners. It would not be out of place to mention here that an amount of Rs,21,05,280 was mentioned as markup in the last agreement... It is well-settled by now that Negotiable Instruments Act provides that where one person signs and delivers to another paper stamped in accordance with law, either wholly blank or having written thereon incomplete negotiable instrument, in order that it may be made, or completed into negotiable instrument, he thereby gives prima facie authority to person who C receives that paper to make or complete it as case may be into negotiable instrument for any amount. Furthermore, section 118 of Negotiable.
Instrument Act, provides that presumptions are attached to negotiable instruments, which, inter alia includes that negotiable instrument was made or drawn for consideration and that every instrument bearing date was made or drawn on such date. Held: Documents were given blank as canvassed by appellants even then appellants are estopped to challenge legality, validity and genuineness of said documents. M.P. R.M. Irulandi Mudaliar v. Syed Ibrahim AIR 1962 Mad. 326; National Bank of Pakistan v. Azizullah Hassan 1984 MLD 1035; Messrs Mach Knitters (Pvt.) Ltd. v.
A.B.P. 2004 CLD 535; Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation PLD 1971 SC. 550; United Bank v. Business Investment Ltd. 1982 CLC 1101; Karim v. Zikar Abdullah 1973 SCMR 100...
Presumption, held, would arise under section 118(b) regarding a negotiable instrument bearing a date as having been made or drawn on such date". National Commercial Bank Ltd. v. Muhammad Younus Butt 1980 CLC 90. We are conscious of the fact that "party to proceedings" could discharge burden of proof placed upon him under provisions of section 118 of Negotiable Instruments Act either by producing definite evidence showing that consideration had not been passed or by relying upon facts and circumstances of case and also by referring to flaws in evidence of plaintiff and then contending that presumption had been rebutted". Chandan Lal v. Messrs Amin Chand Mohan Lal AIR 1960 Punjab 500; Sundar Singh v. Khushi Ram AIR 1927 Lah. 864 which could not be done." [Underlining is mine].
36. With regard to the contention of Mr. Adnan I. Chaudhry, that under various. First Finance Agreements the amounts were not fully disbursed, it is suffice to say that in cases of renewal/rescheduling/restructuring, the 'outstanding amounts' against a customer are not disbursed rather the same are brought forward. The stand of Mr. Adnan regarding 'non- disbursement' of the amounts already remained outstanding against the defendant besides, mis- conceived is a result of mis-understanding as such rejected. At this juncture, I would like to refer to the case of Habib Bank Ltd. v. Taj Textile Mills Ltd. Through Chief Executive and 5 others [2009 CLD 1143], wherein it has been observed as under:- "(7) ... It is quite a simple case of rescheduling and restructuring of a previous finance; when liability of the borrower company Became overdue, a request was made by it for the renewal/restructuring thereof; in this behalf the resolution of the company dated 21-9-2002, the offer of the Bank award 23-10-2002 and the agreement dated 11-12-2002, are sufficient to prove the case of the plaintiff. Obviously, in the cases pertaining to restructuring the amount is not disbursed, rather is brought forward envisaging as liability of the customer, and therefore, to argue that as no physical disbursement of the amount was made, resultantly, the claim of the Bank is false or unfounded, is a submission which is misconceived and without merit. I am also not convinced if there has been any fraud or misrepresentation on the part of the Bank in inducing the defendants (except defendant No,6) asking for rescheduling or the execution of all the relevant documents in that regard including the guarantees and the finance agreement. The bald and baseless allegations of fraud cannot be termed as the substantial questions of facts, in the light of admittedly executed documents on account of which the leave can be solicited or granted. I am also not convinced that the plaint lacks in fulfilling the requirements of section 9 of the Financial Institutions. (Recovery of Finances) Ordinance, 2001. The relevant backdrop of the finance arrangement 'between the plaintiff and the defendants has been appropriately given in the plaint, which is supported by the requisite documents. In view of the above restructuring/rescheduling, it was not obligatory and incumbent upon the Bank to have brought on record the statements of accounts prior to the agreement dated 30-9-2001, through which the restructuring has been made as this was/is an admitted amount duly acknowledged by the defendants. There is no question of the disbursement of the amount involved in the matter, as it is a case of restructuring and not in the nature of a fresh finance, in which the disbursement may become relevant. No vice, illegality or error has been pointed out in the statements of accounts appended with the plaint in support thereof either in view of the provisions of the Ordinance or Bankers' Books of Evidence Act.
[Underlining is mine].
37. Moreover, in terms of section 2(e) read with section 3 of F.I.O., 2001, the defendant as being customer of the plaintiff Bank, is under legal obligation and duty bound to fulfill its' promises and also to discharge its' duties regarding liquidating of the outstanding dues faithfully. Manifestly, the defendant has not denied its' signatures on various documents which are duly filled. The un- escapable conclusion would be that the claim of the plaintiff Bank is genuine and based on valid and authentic documents. Moreover, F.I.O., 2001, is a special law and over-rides all other laws as per section 4 of F.I.O., 2001 [XLVI of 2001]. Under section 2[e] of F.I.O., 2001, it is the un-escapable obligations of a customer to fulfill its' obligations, and commitments vis-a-vis repayment of the outstanding dues and all other amounts relating to a finance facilities. Significantly, re-scheduling, restructuring and renewal of finance[s] are nothing but a facility or accommodation granted to a customer on its' request. In rescheduling/renewal etc., the outstanding amounts, need to be disbursed rather the amounts remained outstanding are brought forward. Prior to the last Finance Agreements of reschedulings/renewals, the certified statement of accounts, as alleged, need not be filed with the plaint for the obvious reason that the outstanding amount(s) is usually acknowledged by a customer. In this regard reliance can be placed on the case of Citibank N.A.
Through Branch Manager v. Ameer Alam [2015 CLD 429 DB], wherein it was observed as follows:- "(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." [Underlining is mine].
38. Likewise, in the case of Habib Bank Ltd v. Taj. Textile Mills Ltd., through Chief Executive and 5 others [2009 CLD 1143], inter alia it was held that in restructuring, the outstanding amounts need not to be disbursed. The relevant observation from the aforesaid reads as under:- "(7) ... Obviously, in the cases pertaining to restructuring the amount is not disbursed, rather is brought forward envisaging as liability of the customer, and therefore, to argue that as no physical disbursement of the amount was made, resultantly, the claim of the Bank is false or unfounded, is a submission which is misconceived and without merit "....
39. On the amounts rescheduled, as held, in the case of Messrs Dadabhoy Cement Industries Ltd.
And 6 others v. National Development Finance Corporation Karachi [PLD 2002 SC 500], the mutually agreed mark-up is permissible and can validly be recovered under the law. From the case of Dadabhoy Cement Industries Ltd. And 6 others v. NDFC Karachi, the relevant observation reads as follows:- "(7) ... The argument that the respondent by adding further interest/mark-up on the amount on which interest/mark-up had already been paid, played fraud, has no substance for, this fact was already in the knowledge of the petitioners as they had agreed to pay the same on rescheduling of the outstanding amount, which has been admitted by the petitioners in their Suit No,416 of 1996, as such, they being the privy to the rescheduling of the loan, cannot turn around to say that further mark-up was fraudulently charged. It is settled law that where allegation of fraud is levelled, it must be specified and details thereof should be given. The contents of MOU were mutually agreed upon between the parties and there is nothing to suggest that the same as executed by fraud, misrepresentation or under duress or coercion." [Underlining is mine].
40. From all the above, the arguments of Mr. Adnan I. Chaudhry, regarding non-disbursement of the amounts as alleged by the defendant and non-charging of any mark-up thereon, as per last Finance Agreements, is without any substance and/or lawful force, as such could not be accepted.
All the agreements of financing involved in the case have been executed voluntarily as such the defendant under the facts and circumstances of the case is liable to pay the 'Purchase Price' as mutually agreed to plaintiff Bank without making/alleging false excuses. All the Agreements coupled with 'Promissory Note' for the 'Purchase Price', are valid binding and enforceable under the law.
41. As far as the L/C facility is concerned, Mr. Adnan argued in vehemence that no 'mark-up' on the sum of Rs,257,306,396 can be charged by the plaintiff Bank in absence of any Finance Agreement except service charges. In so far as this contention of Mr. Adnan is concerned, of course, it is settled law that no 'mark-up' in absence of Finance Agreement(s) or beyond expiry of Finance Agreement(s) can be charged. Reliance in this regard can be placed on the case of United Bank Ltd. v. Golden Textile Mills Ltd. And 7 others [2000 CLC 819], wherein it was observed as follows:- "(a) ... "The learned counsel for the plaintiff in reply, has referred to the Schedule of Bank charges notified by the bank on the basis of B. C.D. Circular No,31, dated 24-12-1980 issued by the State Bank of Pakistan and the judgment in Muslim Commercial Bank Ltd. v. Messrs Over lmpex 1994 CLC
1. The judgment cited by Mr. Ijaz Ahmed is primarily based on the ground that the customer had not disputed the claim of the bank for mark-up and had rather requested for grant of time to make payment. In the present case, however, the plaintiffs claim for mark-up has been disputed.
The plaintiff can claim mark-up only on the basis of mutual agreement which is lacking in the present case. The plaintiff could have instituted proceedings for recovery immediately upon maturity and discharge of the first Bill. The plaintiff cannot take premium out of its own in-action.
The cited judgment in the case of Muslim Commercial Bank (supra) is distinguishable from the present case. The observations, as above, do not entitle the defendants to grant of leave for the reason that the amount of mark-up claimed by the plaintiff can conveniently be segregated from the suit amount."
(h) ..."it is found that the plaintiff had paid a sum of Rs, 182,741,984 in relation to the 7 Bills of Exchange till filing of present suit. The plaintiff cannot claim any mark-up on the amount of bills which have rightly been converted into Pak currency on the respective dates of maturity"...
[Underlining is mine].
42. In view of the above, and particularly when 'clause 2' of the condition to the 'APPLICATION AND AGREEMENT FOR IRREVOCABLE DOCUMENTARY CREDIT ' lefts 'the rate of markup' as 'blank' and the rate of 'mark-up' otherwise also is not established from any other documents, available on record.
I, under circumstances, have no alternative but to decline the grant of any 'mark-up' on Rs,257,306,396, however, service charges in the sum of Rs,300,776 only is allowed.
43. As far as the claim of 20% liquidated in terms of 'clause 4' of the conditions of the 'APPLICATION AND AGREEMENT FOR IRREVOCABLE DOCUMENTARY CREDIT', is concerned, the same under law cannot be allowed in absence of any evidence. In the regard 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].
44. Ex facie, the defendant in the case in hand seems in a drill to forestall the repayment of all the outstanding amounts and lawful markup payable thereon, in terms of the last Finance Agreements coupled with Promissory Notes and that too without any lawful justification. Almost all the pleas urged by Mr. Adnan besides, mis-conceived, afterthought are based on technicalities. Besides, the same are beyond the stand taken in the Leave to Defend Application [C.M.A. No,13089 of 2010]. In the Contract Act, 1872 [ID of 18721 and/or any other law/SBP's circular there seems nothing to prohibit the parties from varying or altering the terms and conditions of the original contact that is to say mutually. All the documents of finance facilities annexed with the plaint including Finance Agreements are valid and absolutely binding inter alia on the basis of 'doctrine of promissory estoppel'. On this aspect of the matter, if, any case-law needs to be cited then I would like to quote the case of Arfan Hameed, S.D.O. Mirpur and 42 others v. Secretary, Education, AJ&K Government Civil Secretariat, Muzaffarabad and 3 others [2005 CLC 564], wherein it was held as under:-
10. ... The rule of promissory estoppel is that where one party has, by his word or conduct made to the other party, a clear promise which is intended to create a legal relationship or effect a legal relationship to arise in future knowing or intending that it would be acted upon by the other party to whom promise is made and it is, in fact so acted upon by the other party; that promise would be binding on the party making it and he is not entitled to resile from it."
45. As far the objections of Mr. Adnan regarding certified statements of accounts [annexed with the plaint] are concerned, the same besides general are vague. Needless to say, that certified statement(s) of accounts attaches itself, the statutory presumption of F truth. In the case in hand, the 'debits and 'credits' entries made in the statement of accounts have not been specifically denied and/or challenged. The evasive, bald and general denials of the defendant are no denials in the eyes of law. The defendant always periodically collected the statements of account from the Bank but never raised any objections thereto or otherwise challenged its' veracities. On this aspect of the matter reliance can be placed on the case of Muhammad Ramzan -v. Citibank N.A. [2001 CLC 1581, wherein it has been observed as follows:- "...The respondent-Bank filed suit for recovery of loan on 2-4-1999 which was on the basis of the statement of accounts and the statement of accounts was attached with the plaint which was duly verified by bank authorities in accordance with Bankers' Book Evidence Act, 1891. The statement of accounts of the bank has presumption of truth by virtue of section 4 of the aforesaid Act and the same was not rebutted by appellant with 'cogent reasons orally or through document.
The appellant failed to deny the other documents executed between the appellant and respondent-Bank. The Banking Court has rightly come to the conclusion that the appellant has failed to make out any plausible case for the grant of leave to defend and the suit of the respondent-Bank was rightly accepted/decreed by the Banking Court and the Banking Court was justified to reject the application for leave to defend and consequently decreed the suit of the respondent-Bank, in terms of the principle of the Honourable Supreme Court laid in the reported judgment PLD 1990 SC 497 (Munir Ahmad Autos v. Allied Bank of Pakistan)." [Underlining is mine].
46. Mr. Adnan also contended that charging of mark-up on the rolled over/renewed/rescheduled amounts besides 'HARAM' is prohibited under the SBP's Circulars [i,e, Circular BPD 13 and BPD 32 issued by SBP on 30-4-1984 and 30-11-1984 respectively], whereby, all interest based transactions have been prohibited w,e,f, 1-1-1985. In so far as the charging of mark-up on renewed/rescheduled amount is concerned, the same besides, mis-leading, mis-conceived is after-thought and calls for the wisdom of defendant. The defendant herein it is significant to note was fully aware of charging the 'mark-up' on renewed/rescheduled amounts. Despite such knowledge and awareness, the defendant, however, not only executed the Finance Agreements but also got itself benefitted therefrom. The defendant, now cannot be permitted to allege that the 'mark-up ' in terms of Finance Agreements are 'HARAM or otherwise, is prohibited. The defendant, if really did not want to pay the mark-up on the renewed/rescheduled amounts then, it should have not requested for renewal/rescheduling of the subject facilities.
47. Regarding the case-laws cited by Mr. Adnan, learned counsel for the defendant, it is suffice to say, the same besides irrelevant are not applicable to the facts/circumstances as pleaded particularly, when the defendant has not denied the signing and execution of various documents including Finance Agreements and Promissory Notes. As far as, the case of Dr. M. Aslam Khaki v.
Syed Muhammad Hashmi [PLD 2000 SC 225] is concerned, admittedly the same has not yet attained 'finality'. To some extent, 'clauses 2 and 3' to Article 203D and 'clause 2' to Article 203F of the Constitution of Islamic Republic of Pakistan, 1973 in the stated scenario are relevant as such reproduced here-in-below:- "Article 203D. Powers, jurisdiction and functions of the Court. --(2) If the Court decides that any law or provision of law is repugnant to the Injunctions of Islam, it shall set out in its decision-
(a) the reasons for its holding that opinion; and
(b) the extent to which such law or provision is so repugnant; specify the day on which the decision shall take effect 4[: [Provided that no such decision shall be deemed to take effect before the expiration of the period within which an appeal therefrom may be preferred to the Supreme Court or, where an appeal has been so preferred, before the disposal of such appeal.]
(3) If any law or provision of law is held by the Court to be repugnant to the Injunctions of Islam, -
(a) the President in the case of a law with respect to a matter in the Federal Legislative List or the .Concurrent Legislative List, or the Governor in the case of a law with respect to a matter not enumerated in either of those Lists, shall take steps to amend the law so as to bring such law or provision into conformity with the Injunctions of Islam; and
(b) such law or provision shall, to the extent to which it is held to be so repugnant, cease to have effect on the day on which the decision of the Court takes effect. [Underlining is mine].
Article: 203F Appeal to Supreme Court. -- (2) The provisions of clauses (2) and (3) of Article 203D and clauses (4) to (8) of Article 203E shall apply to and in relation to the Supreme Court as if reference in those provisions to Court were a reference to the Supreme Court."
48. Under the subject Finance Agreements etc., it is needless to say, the plaintiff Bank has acquired vested rights which, in my view, cannot be disturbed and/or taken away on the strength of false and concocted pleas. The vested rights, created in favour of the plaintiff Bank, are based on the 'doctrine of promissory estoppel'. The circulars of SBP, no doubt, have the force of law but in actual fact, the same are notifications issued by the SBP under the strength of powers derived from the State Bank of Pakistan Act/Banking Companies Ordinance, 1962. These circulars, nevertheless, could not curtail the vested rights of the creditors. Besides, SBP's circulars could not override the provisions of law. Reliance in this regard can be placed on the case of Hala Spinning Mills Ltd. v.
International Finance Corporation [2002 SCM R 450], wherein it was observed as under:- "27. Learned counsel contended that the winding-up petition against appellant was premature in view of Circular No, 19 (Banking Policy and Regulation Department) because under the Scheme introduced through this Circular appellant had an opportunity to settle its outstanding dues with interference of State Bank of Pakistan, therefore, for this reason the process of winding-up of the company was liable to be deferred for a considerable time. Suffice it to observe that conditions of Circular No, 19 legally cannot be considered a document to override the provisions of section 305 of the Ordinance and on account of issuance of Scheme under the Circular the proceedings under section 305 of the Ordinance initiated by respondent-Corporation (IFC) against the appellant were not liable to be postponed"
49. For all the above discussion and reasons reached upon after due consideration of the plaint, Application for Leave to Defend [C.M.A. No,13089 of 2010] and Replication, the defendant has failed to raise any substantial questions of facts and law which may need recording of evidence. Under circumstances, while, refusing leave to defend the suit, the LEAVE TO DEFEND APPLICATION bearing C.M.A. No,13089/2010 filed by defendant, is rejected and consequently, the plaintiff s suit is decreed in the sum of Rs,521,317,172 [Rupees Five Hundred Twenty One Million Three Hundred Seventeen Thousand One Hundred Seventy Two only] plus cost of funds in terms of section 3 of F.I.O., 2001 from the date of default in respect of all facilities till realization of the amounts. Besides, attaching the hypothecated goods/assets and restraining the defendant, in terms of section 17(2) of F.I.O., 2001 from creating any 3rd charge/interest on the hypothecated assets/goods, a final decree for the sale of hypothecated assets/goods, as per prayer clause (b), is also passed..
50. C.M.A. No,639 of 2012 being an application under Order XXXIX, Rules 1 and 2, C.P.C. Also stands disposed of in view of the restraining passed hereinabove.
51. Cost of the suit is also awarded.
52. Suit stands decreed.