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.416,748,192/- from the defendants on account of various finance facilities granted to them and default by them for their payment obligations.
2. Brief facts of the case are that the plaintiff bank granted credit limits/package to the defendants in the sum of Rs.250 Million vide facility offer letter dated 28.12.2005 which included a Demand Finance (DF-I) facility for Rs.200 Million, the proceeds whereof were partially utilized for swapping of loan of Rs.102,160,876/- from National Bank of Pakistan and a Running Finance (RF) facility for a sum of Rs.50 Million. Subsequently the amount of RF facility was enhanced up to Rs.100 Million vide facility offer letter dated 21.08,2006. Similarly, the amounts of the DF-I facility and RF facility were enhanced to Rs.215 and Rs.105 Million respectively through facility offer letter dated 2.1.05.2007. In terms of facility offer letter dated 14.06.2007, a fresh Demand Finance (DF-II) facility in the sum of Rs. 30 Million was granted and the grace period of the existing DF-I facility was also extended. The said facilities (RF and DF-II) continued to be extended through various offer letters up to 31.12.2007.
In consequence of the default committed by the defendants, to repay the amount of loan constrained the plaintiff bank to file the suit.
3. Pursuant to the summons issued by this Court, the defendants entered appearance and filed their application for leave to defend bearing P.L.A. No.83-B of 2011.
4. Learned counsel for the defendants made the following submissions: a. The RF facility granted through finance agreement dated 15.06.2007 expired on 311.12.2007 whereafter an amount of Rs.22,476,210/- was charged and recovered from the defendants as mark-up. b. The plaintiff bank charged and recovered Rs.7,453,524/- as mark-up under DF-II facility for Rs.30 Million after its expiry on 31.12.2007. c. Under DF-I facility, the first finance agreement was executed on 28.12.2005 in which the purchase price was determined as Rs.234 Million whereas after the enhancement in the amount of Rs.215 Million the finance agreement was executed on 15.06.2007, in which the purchase price was mentioned as Rs.430 Million. It was submitted that there was no justification for abnormal increase in the purchase price in the finance agreement executed on 15.06.2007. It was also asserted that the plaintiff bank has till date recovered an amount of Rs.84,527,883/- as mark up and still a further claim of mark up amounting to Rs.55,488,389/- is pressed against the defendants under DF-I facility. d.During the pendency of the suit, the defendants have paid a sum of Rs.80 Million up to 25.04.2016:
5. Learned counsel for the plaintiff submitted that during the pendency of the suit, a settlement was proposed by the defendants in pursuance whereof amounts are unconditionally being paid. He admitted to the fact that the plaintiff bank has till date received an amount of Rs.80 Million from the defendants. It was further submitted that no formal settlement agreement has been arrived at between the parties. He also referred to orders dated 29.10.2013 and 22.10.2015 which reflected agreement between the parties qua the repayment of the principal amount and showed disagreement regarding the mark up claim. In regard to. the mark up charged and recovered beyond the expiry period of RF and DF-II facilities, it was stated that defendants continued to avail amounts under the RF facility up to 30.12.2010. It was also submitted that RF and DF-II finance facilities were continuously extended at the request made by the defendant through various request letters which are pleaded in the plaint. It was stated that acting upon the request made by the defendants, the plaintiff bank from time to time issued facility offer letters which were signed by defendant No.1 in acceptance of the terms and conditions contained therein. The learned, counsel contended that the terms contained in the said offer letters were acted upon as the defendants voluntarily made payments of the mark-up. He, therefore, pleaded estoppel against the defendants from impugning the amount of mark up recovered by the plaintiff Bank. The learned counsel also relied upon the report of amicus curie according to which only 4 to 6 entries of mark- up were charged, illegally by the plaintiff bank.
6. Argument, heard and record perused.
7. It is quite clear that the parties are not at issue with regard to the principal amount, as is apparent from orders dated 29.10.2013 and 22.10.2015 learned counsel for the defendants also did not address any argument in this regard. Learned counsel for the plaintiff informed that a sum of Rs.80 Million received during the pendency of the suit was adjusted in RF and DF-I facilities. It was further stated that an amount of Rs.75 Million was adjusted towards the principal of RF facility and Rs.5. Million towards DF-I facility as against the claim amount of Rs.88,336,340/- and Rs.214,950,075/- respectively under the RF and DF-1 facilities. There is, however, no written agreement between the parties regarding settlement of principal liability. It appears that the defendants are voluntarily making payments which are being adjusted by the plaintiff bank.
8. It is also apparent from the order sheet that in regard to the dispute regarding the levy of mark- up, this Court on 18.02.2014 appointed an amicus curaie in terms of section 5 (8) of the Ordinance for resolving the dispute. The report of the amicus curaie filed in this Court on which objections were also filed by the plaintiff bank. In this regard order dated 22.10.2015 passed by this Court is reproduced hereunder: In this case, an amicus curaie was appointed by this Court, report whereof is available on the record. The parties have settled the matter with regard to the principal amount, however, with regard to a component of mark up claimed an observation has been made in the report of the amicus curaie. Both the counsel submit that a decision of the Court is required on the observation given by the amicus curaie. In this view of the matter, this case is adjourned to 19.11.2015.
Thereafter a number of opportunities were obtained by learned counsel for the defendant regarding possibility of settlement but without any result.
9. Learned counsel for the defendants at the time of arguments did not rely upon the report of amicus curaie and instead made submissions on the basis of documents available on the record.
The learned counsel for the plaintiff bank, on the other hand, is relying upon the report of amicus curaie. The report of amicus curaie is akin to the report of a local commissioner which is not binding on the court and cannot be treated as ipse dixit. It is an admitted fact that defendant No.1 lastly executed finance agreements on 15.06.2007 in respect of RF and DF-II facilities with expiry on 31.12.2007. The plaintiff has, however, claimed mark-up till 31.12.2010 under both the aforementioned finance facilities. The learned counsel for the plaintiff bank furthermore has placed reliance upon various request letters of defendants No.1 seeking extension/renewal of the said finance facilities and the facility offer letters issued by the plaintiff bank acceding to the said request. Although beyond 31.12.2007, the parties did not execute any finance agreement, it is apparent that defendant No.1 continued to avail amounts from the plaintiff bank under the RF facility. Relying upon the said fact as also the repayments made by the defendants under both the finance facilities; the learned counsel for the plaintiff bank alleged that the extensions/ renewals constitute a binding agreement between the parties which has been acted upon. This argument justifying the claim of mark up and recovery of the same without there being a formal finance agreement prima facie appears to be tenuous. In any event, such a claim and the reasons put forth by the plaintiffs counsel cannot be adjudicated without recording of evidence. The defendants have, therefore, made out a case for the grant of leave to the extent of the claim of mark up under RF and DF-II facilities and the amounts recovered by the plaintiff bank as mark up under the aforementioned facilities beyond 31.12.2010. There is also a dispute between the parties regarding the purchase prices mentioned in the two finance agreements executed in respect of DF-I facility, which also requires recording of evidence to ascertain whether the purchase price mentioned in the last finance agreement was correctly worked out.
10. In this view of the matter, a decree is passed in favour of the plaintiffs and against the defendant, jointly and severally, in the sum of Rs. 248,286,415/- together with costs of funds as contemplated by section 3 of the Ordinance. The defendants are granted unconditional leave to defend for the balance suit claim.
It is clarified that any further payments by the defendants to the plaintiff bank for adjusting the claim under the finance facilities will be accounted for either in the present proceedings or in the execution proceedings, as the case may be.
11. Now to come up for hearing on 25.10.2016 for framing of issues.