' SHAMS MEHMOOD MIRZA, J.---This is a suit filed under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) seeking recovery of Rs.65,500,832 from the defendants on account of finance facilities granted to defendant No.1 and default by it on its payment obligations.
2. Brief facts of the case are that defendant No.1 approached the plaintiff bank vide its letter dated 2-10-2006 and board resolution dated 21-10-2006 for availing a Running Finance facility in the sum of Rs.10 Million and a Letter of Credit (DA basis) facility in the sum of Rs.150 Million, which facilities were sanctioned by the plaintiff by issuing offer letter dated 8-11-2006: The defendants executed the agreements/ documents including the personal guarantees mentioned in paragraph 6 of the plaint. Defendant No.13 also mortgaged its properties in favour of the plaintiff bank to secure the repayment of the finance facilities.
3. Subsequently defendant No.1 again approached the plaintiff bank through its board resolution dated 12-7-2007 for renewal of the said finance facilities, which were renewed by the plaintiff bank by issuing offer letter dated 23-11-2007 with expiry on 30-6-2008. The defendants executed the requisite documents/agreements/securities as well as the personal guarantees and mortgages as mentioned in paragraph 7 of the plaint. The amounts under the said finance facilities were disbursed and letter of credit No.00051/2008 for US $1,320,000 (Rs.94,538,400) was established by the plaintiff bank.
4. Defendant No.1 paid the entire liability under the running finance facility but made a request through letter dated 24-12-2008 and board resolution of the same date for restructuring of the outstanding amount of Rs.94,538,400 under L.C. No.00051/2008 and for making a payment of 10% of the overdue amount. It was further requested that after making the payment of 10% down payment, the balance amount of Rs.85,084,560 be converted into a demand finance payable in 12 equal monthly installments. The plaintiff bank acceded to the said request and issued offer letter dated 12-2-2009 whereby Demand Finance facility in the sum of Rs.85,084,560 was granted. The plaintiff bank and defendants also executed Finance Agreement dated 7-3-2009 and other documents including the personal guarantees as mentioned in paragraph 10 of the plaint.
5. Defendant No.1 after making some payments under the demand finance as are reflected in paragraph 10 of the plaint approached the plaintiff bank through its letter dated 4-6-2010 for further restructuring of the outstanding under the Demand Finance facility. The plaintiff bank granted the said request and created a DF-I account for Rs.70.906 Million and the outstanding markup of Rs.8.232 Million was parked in a DF-II account. In this regard offer letter dated 4-6-2010 together with repayment schedule was issued to defendant No.1 . Amounts of DF-I and DF-II facilities were payable in 12 equal monthly installments. After the payment of 10% as down payment in DF-I account, the balance amount of Rs.60.904 Million was payable in 12 equal monthly installments starting from 30-6-2010 till 31-5-2011. Similarly DF-II account for Rs.8.32 Million was payable in 12 equal monthly installments, starting from 30-6-2010 to 31-5-2011. Defendant No.1 as also the other defendants executed the documents/finance agreements on 21-6-2010 including the personal guarantees mentioned in paragraph 12 of the plaint in respect of DF-I and DF-II facilities. Defendant No.1 also submitted post dated cheques for the amounts of the installments.
Defendant No.1 after making partial payments in both the accounts defaulted in its payment obligations and the cheques submitted by it when presented were also dishonoured, hence this suit.
6. In pursuance of the summons issued by this Court, the defendants entered appearance.
Defendant No.1 filed an application to leave to defend bearing PLA No.7-B of 2012, defendants Nos.2, 3, 4, 7, 8 and 11 to 15 filed PLA No.8-B of 2012 whereas defendants Nos.6, 9 and 10 filed PLA No.5-B of 2012.
7. Today, no one entered appearance on behalf of defendants Nos.6, 9 and 10 so they are proceeded against ex parte. Learned counsel for defendants Nos.1 to 4, 7, 8 and 11 to 15 submitted that the bank had charged and recovered an amount of Rs.11,302,565 from defendant No.1 as mark-up under L.C. No.51 of 2008. It is further submitted that the bank could not have charged any markup on the aforementioned letter of credit without there being any finance agreement. It was also stated that a specific allegation was made in this regard in the PLA and in replication thereto the said fact has not been denied by the plaintiff bank. Learned counsel submitted that the Demand Finance facility for Rs.85.085 Million was not disbursed to defendant No.1 and as such the bank could not have charged any markup on the said account. The same allegation has been made in respect of DF-I and DF-II accounts.
8. The contention that the plaintiff bank could not have charged the markup on the restructuring of the amounts under the letter of credit has no basis in law. Defendant No.1 made a specific request in this regard which is backed up by a board resolution. The plaintiff bank issued offer letter dated 12-2-2009 which was duly accepted by defendant No.1 and the parties also executed a Finance agreement dated 7-3-2009. Similarly, the amounts outstanding under the Demand Finance facility were further bifurcated into DF-I and DF-II accounts at the specific request of defendant No.1 which was again backed by a board resolution. Offer letter dated 4-6-2010 along with the repayment schedule were accepted and acknowledged by defendant No.1 . The plaintiff bank and defendant No.1 also executed finance agreements dated 21-6-2010 in respect of DF-I and DF-II accounts. It is thus clear that not only defendant No.1 made requests for restructuring of its overdue but accepted offer letters in which the rate of mark up on the restructured facilities was clearly mentioned.
Defendant No. 1 also executed finance agreements in respect of the restructured finance facilities undertaking therein to repay the mark-up.
9. Section 2(e) of the Ordinance recognizes restructuring rescheduling/renewal of finance facilities.
The definition of "obligation" as mentioned in section 2(e)(i) of the Ordinance is relevant and clearly shows that fresh disbursement is not necessary. Section 2(e)(i) of the Ordinance is reproduced hereunder.
"(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"
' In Habib Bank Limited v. Service Fabrics Limited etc. 2004 CLD 1117, the scope of renewal/rescheduling/restructuring of finance facilities was discussed with specific reference to section 2(e) of the Ordinance and it was held as follows: "Renewal/rescheduling/restructuring of financial facilities only ensues upon default non-payment, delayed payment or inability, in payment of outstanding liability by a customer who normally seeks such concession upon admission and determination of liability. By soliciting rescheduling or, restructuring, as the case may be, a customer, in essence, either requests postponement of repayment of a finance on renewed terms as agreed between the parties or asks for reorganization/refurbishing of financial basis of a finance and its liquidation. By approving rescheduling/ restructuring/renewal of a financial facility, the bank forgoes its immediate right of recovery and enforcement of securities against the customer. The effect of rescheduling, restructuring and renewal of finance facility is mutually agreed by the parties to absorbed by future interest, markup charges or commissions till the agreed date of liquidation of liability as has been done in the present compromise decree. Rescheduling, restructuring and renewal is also thus a facility or accommodation granted by the bank to a customer. This facility has been recognized as an "Obligation" defined in section 2(e) of Financial Institutions (Recovery of Finances) Ordinance, 2001."
' Similarly in Messrs Dadabhoy Cement Industries Limited and others v. National Development Finance Corporation PLD 2002 SC 500, the argument that the bank could not have charged mark up on rescheduling agreement did not find favour with the Hon'ble Supreme Court which held that the party to an agreement after its execution cannot turn around to say that mark-up was fraudulently charged. It is thus clear that plaintiff bank has lawfully charged mark-up on the Demand Facility as well as DF-I account.
10. It was also stated that in regard to the mortgages created by defendant No.12, Poly Paper and Board Mills (Pvt.) Limited, the said company through its resolution dated 21-10-2006 only authorized the creation of a registered mortgage but the plaintiff got executed an equitable mortgage and a corporate guarantee. The submission made in this regard cannot be accepted in view of board resolution dated 25-7-2007 available on the record which authorizes the said company to execute corporate guarantee and equitable mortgage in favour of the plaintiff bank.
10(sic.) The allegation regarding charging of mark-up amounting to Rs.11,302,565 on letter of credit though has valid basis. This amount is liable to be adjusted from the claim of the plaintiff bank in the suit as mark-up on letter of credit could not have been charged. Besides this, the defendants have failed to raise any factual dispute requiring recording of evidence.
11. The claim of the plaintiff bank is duly substantiated by request letters of defendant No.1, the offer letters, finance agreements as well as the statement of accounts. In the result, the suit of the plaintiff bank is decreed in its favour and against the defendants, jointly and severally, in the sum of Rs.54,198,267 together with costs of funds as contemplated by section 3 of the Ordinance. Costs of the suit are also granted.