' The brief facts leading to the filing of the above petition are that on or about 21-4-1965 the petitioner at the request of the respondents granted to respondent No. 1 a foreign currency loan of U. S. $ 1,00,000 in the Japanese Line of Credit equivalent to Yen 3,60,00,000 then equivalent to Rs.
4,76,000 approximately under sanction letter dated 21/27-4-1965 which was repayable in 16 half- yearly equal instalments. In pursuance thereof a credit agreement, dated 13-9-1906 was executed.
As a security for the repayment of the said foreign currency loan, respondent No. 1 executed a demand promissory note in the sum of Yen 3,60,00,000 payable to respondents Nos. 2 to 4 with interest at 71% per annum with six-monthly rests, who in turn jointly and severally endorsed the said promissory note in favour of the petitioner and delivered the same to it. It seems that as a further and additional security respondent No. 1 hypothecated its plant machinery under an agreement of hypothecation, dated 13-9-1966. Respondent No. 1 also agreed to mortgage its future assets in favour of the petitioner. It further seems that respondents Nos. 2 to 4 executed a letter of guarantee, dated 13-9-1966. Messrs Habib Bank Limited, who were impleaded as respondent No. 5, bad executed two letters of guarantee, dated 20-7.1965 and 2-.0 1965. It may be mentioned that in pursuance of an order, dated 28-7-1979 passed on C. M. A. 382/79 the Bank guarantee in the sum of Rs. 5,18,205.66 was furnished on 15-9-1979 by Messrs the Union Bank of the Middle East Ltd. And thereafter three further guarantees of the above bank were furnished on 21-9-1980, 5-3-1981 and 16-11-1981 in the sums of Rs. 19,432 71, Rs. 19,432.71 and Rs. 43,467.02, respectively. In pursuance of the above order, dated 28-7-1979 the attachment of the property mentioned in the petition was vacated upon furnishing of the above first guarantee. It further seems that Messrs Habib Bank Limited were dropped from the array of respondents by an order, dated 7-9-1980. It may be stated that respondent No. 1 regularly paid all the instalments upto 11-5-1972 when Pak rupee was devalued. After that the petitioner demanded repayment of the balance loan amount on the basis of the foreign exchange rate prevalent after the devaluation of Pak rupee, whereas the respondents contended that they were liable to pay on the basis of pre-devaluation foreign exchange rate. It seems that the respondents after committing default, paid certain amount on the basis of the above foreign exchange rate but since there was default, the petitioner filed above petition under section 39 of the Industrial Development Bank of Pakisian Ordinance, 1961 (hereinafter referred to.As the Ordinance) and obtained inter alia attachment of respondent No. 1's factory situated on Plot No.-D/66. S. I.
1. E. Manghopir Road, Karachi including all the plants and -machinery. The above petition was resisted by respondents Nos. I to 4 'and by respondent No. 5 Messrs Habib Bank Limited. After the enforcement of the Foreign Currency Loans (Rate of Exchange) Order, 1982 (President's 4'.0ider No. 3 of 1982) (hereinafter referred to as the Order the petitioner fill an amended petition on 15-3-1984 upon granting of its application for_ amendment. It may be pointed out that in the original petition in the prayer-clause the petitioner had sought attachment and sale of the properties specified therein for the realization of petitioner's dues amounting to Yen 1,08,63,775.22 equivalent to Rs.
4,50,405.28 and rupee charges of R3.
208.38 as on 31-12-1977 with interest at 13% per annum with six-monthly rests, whereas in the amended petition in the prayer clause the above amount for rupee has been deleted and the rate of interest claimed is at 71% per annum with six-monthly rests and costs and other charges and expenses.
2. On the filing of the amended petition respondents Nos. 1, 2 and 3 have filed an amended written statement on 20-3-1984, wherein it has been averred that the repayment of loan was to be made in the sum of Rs. 4,76,000 with interest thereon in Pak currency as guaranteed by respondents Nos.
2 to 4. It has also been averred that according to the loan agreement respondent No. 1 had to pay Rs. 7,59,663 which included the principal loan amount of Rs. 4,76,000 and its interest and foreign exchange risk cover which was payable within the period of 8 years from 1-2-1969 to 1-8-1976. It has also been averred that on 10-5-1972 when Pak rupee was devalued, the respondents were to pay balance sum of Rs, 4,27,447 which included interest and foreign exchange risk cover. It has further been averred that the petitioner started demanding the remaining loan as per post- devaluation rate while respondent No. 1 was not liable to pay according to the above rate but under coercion and threat of recovering as arrears of land revenue, respondent No. 1 continued to pay on the above new basis and had paid a sum of Rs. 10,05,860.45 during the period commencing from 26-5-1967 to 1-3-1977 against the total amount of the principal and interest and foreign exchange risk cover amounting to Rs. 7,59,663. It has been denied that the respondents are liable to pay on the basis of rate of foreign exchange after devaluation of Pale rupee or that they were liable to pay petitioner's share of interest, penal interest and foreign exchange risk and other charges in foreign currency. It has been averred that the respondent No. 1 has in fact paid excess amount.
3. The petitioner in support of the petition examined Mr. Rafaat Ali Siddiqui Exh. 4 and produced documentary evidence namely, Exhs. 4/1 to 4/13, whereas respondent No. 1 examined one of its directors, Abdul Ghani Exh. 5 who produced statement showing the payment made by respondent No. 1 to the petitioner Exh. 5/1.
4. (a) Mr. Syed Ishtiaq Ali assisted by Mr. Syed Muhammad Shabir has urged as follows
(i) That the petitioner has based the cause of action on section 3 of the order and therefore, in order to succeed in its claim, the petitioner will have to fulfil the ingredients'provided for in above section 3.
(ii) That in the alternative all the obligations arising out of credit agreement have been charged in foreign currency by the petitioner, whereas it was entitled to charge only those obligations in foreign currency which were payable by them in foreign currency to its lender.
(iii) That the petitioner is attempting to make profit on the basis of devaluation, which it is not entitled to make under the Ordinance.
(b) On the other hand Mr. A. I. Chundrigar, learned counsel for the petitioner has contended that the petitioner is entitled to charge principal amount, interest, penal interest, foreign exchange risk cover etc. In foreign currency in terms of section 3 of the Order and the terms of the contract.
5. (a) Adverting to the first and second contentions of the learned counsel for the respondents, it may be observed that section 3 of the order provides that notwithstanding anything contained in any other law for the time being in force, the judgment of any Court or any agreement, contract or other instrument that rate of foreign exchange for the purpose of conversion into Pakistan currency for repayment in respect of the outstanding foreign currency loan or part thereof or interest is thereof payable to a financial institution on the day of commencement of the order shall be and shall be deemed at all material times to have been the rate of foreign exchange in force under section 23 of the State Bank of Pakistan Act, 1956. On the day on which the loan, part or interest is actually repaid or paid to the financial institution and all the parties by whom the loan, part or interest is repayable or payable shall make the repayment or payment accordingly.
(b) It was urged by Mr. Syed Ishtiaq Ali that in order to attract the provision of above section 3, the petitioner is obliged to prove inter alia the following ingredients :-
(a) that there is an outstanding foreign currency loan ;
(b) that the outstanding foreign currency loan is payable by the respondents.
' He has referred to the case of Ghulam Nabi v. The State (1), the case of Ocean Industries Limited
(2) and Raza Karim v. Industrial Development Bank (2) and the case of Director, Enforcement Directorate, Ministry of Finance anti another v. Messrs K.
0. Krishnaswa my (3) and sections 31 (3), 32 (2), 33, 39 (2) and 41 of the Ordinance.
(i) In the first case a Full Bench of the erstwhile High Court of West Pakistan, Lahore while considering the words "Government dues outstanding" used in Martial Law Order (M. L. A. Zone B's)
No. 104 E.Id that the dictionary meaning of the word "outstanding" as per Webster's New International Dictionary, Second Edition, is : "undischarged ; uncollected or unpaid ; unsettled ; undetermined" and, therefore, even if a decree has been obtained against the petitioner and has not been executed within the time prescribed by Articles 182 and 183 of the Limitation Act, the amount is still unpaid and therefore, outstanding. It was further held that due is a debt and is not extinguished merely by the period of limitation having run out and though the remedy may be barred, the debt exists. The reliance was placed on the case of Municipal Committee, Sheikhupura v. Punjab Province (4) and the case of Ashfaq-ur-Rehman Khan v. Muhammad Fazal (5). It may be pertinent to point out that the latter case went in appeal before the Hon'ble Supreme Court of Pakistan and was disposed of by a Bench of learned five Judges headed by A. R. Cornelius, C. J.
Reported in PLD 1968 SC 230. In the above case the Supreme Court reversed the judgment of the Full Bench of the Lahore High Court reported in PLD 1965 Lab. 59 and held that under section 13 (6) of the late West Pakistan Urban Rent Restriction Ordinance, a Rent Controller was not entitled to order depositing of arrears of rent for a period of beyond three years. It was pointed out that the word "due" is equivalent to !`due in law." The appeal of the tenant was allowed.
(ii) Reverting to the case reported in PLD 1966 SC 738, it may be observed that before the Hon'ble Supreme Court of Pakistan, it was urged that I. D. B. P. (hereinafter referred to as the Bank) was not entitled .To have recourse to section 39 of the Ordinance as it had not granted any loan directly {{FOOT NOTE}}
(1) PLD 1966 (W. P.) Lab. 131 (2) PLD 1966 SC 738
(3) (1980) 1 SC 280 (4) PLD 1951 Lab. 195
(5) PLD 1965 Lab. 59 {{FOOT NOTE}} ' to the appellant but was claiming amount paid by it under the guarantee furnished to a foreign ship-builders for purchasing a fishing trawler by the appellants Messrs Ocean Industries Limited.
The above contention was repelled and it was held that after the Bank had in fulfilment of its guarantee paid the first two instalments to the ship-builders and the insurance premia, upon the failure of the appellant-company it (bank) became entitled to recover the same from the company, the principal debtor, as money paid to the use of the principal debtor and that to 'that extent the amount paid constituted as advance and the relationship of debtor and creditor arose between the surety and the principal debtor. The above case has no application to the present case as the petitioner has not claimed any amount paid by it to a foreign concern under any guarantee. It is seeking recovery of the balance of loan and the amount of interest and other charges and therefore, the obligations inter se between the parties are to be spelt out from the credit agreement and section 3 of the Order.
(iii) Reverting to the third case, it may be stated that the Supreme Court of India while construing section 12 (2) (b) of the Foreign Exchange Regulation Act, 1947 held that expression "the full amount payable by the foreign buyer in respect of the goods" occurring in clause (b) would mean the total amount which is due from the foreign buyer in respect of the goods actually exported and that what would be due from a foreign buyer is to be merely the price which he has agreed to pay and not any fanciful, unreal or inflated price which the exporter may choose to falsely incorporate in the invoice with any ulterior motives. There cannot be any cavil in the proposition propounded in the above Supreme Court case. As observed by me hereinabove the obligations of the respondents are to be determined with reference to the credit agreement and section 3 of the Order and not on the basis what the petitioner may claim.
(c) Adverting to sections 31 (3), 32 (2), 33, 39 (2) and 41, it may be observed that subsection (3) of section 31 of the Ordinance provides that the Bank may for the purpose of granting loans to industrial concerns in foreign currency with the approval of Government, borrow such currency from the International Bank for Reconstruction and Development or any other agency and may pledge, mortgage, hypothecate or assign to the said International Bank or any other agency all or any part of the security taken by the Bank. Under subsection (2) of section 32, it has been provided that any condition imposed on an industrial concern under subsection (1) by the Bank shall be valid and shall, notwithstanding anything contained in any other law for the time being in force, be enforceable against such concern. It may also be mentioned that section 33 lays down that all loans granted to an industrial concern in foreign currency shall be repaid in accordance with the terms of the C loan or, in the absence of any such terms, as may, in such case, be determined by the Board, either in the currency in which they were granted or in Pakistan currency at the rate of exchange prevailing on the date of repayment.
' It may also be stated that under section 39 (2) the Bank on becoming entitled to require the immediate payment of any loan by reason of the breach of any condition of any agreement between the Bank and an industrial concern may obtain any of the reliefs specified therein, whereas section 41 provides that without prejudice to the provisions of sections 39 and 40 all sums due to the Bank shall be recoverable as arrears of land revenue, but it provides 15. Days prior notice.
' The sections referred to by Mr. Syed Ishtiaq Ali indicate that the Bank can borrow, foreign currency from the foreign agencies for advancing the same to the industrial concerns in Pakistan. It can impose any condition for the repayment of loan by the borrower industrial concern. It can also provide repayment in foreign currency by a borrower industrial concern. They further indicate that the Bank can seek order of the District Court or the High Court for the reliefs mentioned in section 39 upon becoming entitled to claim the repayment of the outstanding entire loan or to recover the same as the arrears of land revenue.
6. (a) In my view the basic question in the present case is, whether the bank is entitled in claim all the items in foreign currency, namely, the balance' of the principal amount, the interest, the penal interest, i% being the charges for foreign currency risk cover and other charges by virtue of the terms of the credit agreement and section 3 of the Order. It may be pertinent to refer to clauses (5) and (6) of the Credit Agreement which read as follows ;-
(5) The Borrower(s) shall pay to the Bank-
(i) commission at such rate as may be prescribed by the Bank from time to time if the Bank is required to open or establish or cause to be opened or established Letter or Letters of Credit.
(ii) interest on the loan at the rate of per cent. Per annum including per annum exchange rate risk which shall be payable bi-annually on the principal amount of the loan/credit drawn and/or availed of by the Borrower(s) from the Bank and outstanding from time to time. The interest shall be computed on a daily basis using a 365 days factor and shall be due and payable on in each year.
(iii) interest by way of liquidated damages at the rate of li% per annum in the event of the Borrower(s) failing to pay, when due, any instalment of the principal of the loan/credit, interest, commission or any other costs, charges and expenses which the Borrower (s) is/are liable to pay under this Agreement. The interest payable under this sub-clause shall be computed for the period of default on the basis stated in sub-clause (ii) hereinabove.
(iv) an initial charge at such time as the Bank may determine at the rate of per cent of the amount of the loan/credit for the purpose of processing the Borrower(s)' application for loan/credit and defraying preliminary legal and other expenses.
(v) all costs, expenses and charges that the Bank may be required to incur or pay to its legal Adviser, any consultant or any other person or persons for obtaining any opinion or report or for furnishing any guarantees or for rendering any other service in connection with this transaction.
These charges shall be payable by the Borrower(s) in Pakistan rupees in the manner prescribed by the Bank from time to time.
(6) if the loan/credit agreed to be given/provided by the Bank to the Borrower(s) under this Agreement, or any portion thereof, is in foreign currency all the obligations of the Borrower(s) to make payment or repayment of the principal and of interest in respect of the loan/ credit or such portion thereof as is in foreign currency shall be computed and stated in Dollars/Yen and such obligations of the Borrower(s) will be discharged by paying to the Bank in legal tender currency of Pakistan of an amount equivalent to the amount of i/Y being the foreign currency obligation of the Borrower(s) calculated at the highest effective selling rate of $/Y (highest amount of rupees for ;/ Y quoted by authorized dealers in foreign exchange in Pakistan on the date of payment or repayment. The Borrower(s) shall bear the risk of fluctuations in the exchange rate of rupee and Dollars/Yen."
' It may be noted that under above clause (5) the bank is entitled to claim commission for opening L. C., interest at 71% including 1% per annum risk, I1 % penal interest by way of liquidated damages, a % initial charges of cost, expenses and charges, whereas above-quoted clause (6) of the Credit Agreement provides that if principal and interest in respect of the loan/credit or such portion thereof is in foreign currency, the same shall be computed and stated in Dollars/Yen. It further provides that such obligations of tie borrower will be discharged by paying to the bank in legal tender currency of Pakistan of an amount equivalent to the amount of Dollars/Yen quoted by authorised dealers in foreign exchange in Pakistan on the date of payment or repayment. In this regard it may also be mentioned that section 3 of the Order referred to hereinabove provides the basis of the recovery of the loan amount and interest namely, only the basis of the rate of foreign exchange in force under section 23 of the State Bank of Pakistan Act, 1956 on the day on which the loan, part or interest is actually repaid or paid to the financial institution.
(b) From perusal of above-quoted clause (6) and section 3 of the Order, it is evident, that the Bank cannot claim the repayment or payment of each and every item mentioned in the above-quoted clause (5) of the Credit Agreement on the basis of working out the amount at the rate of foreign exchange prevalent on the date of repayment or payment but can claim repayment/ payment on the above basis which are referred to in above-quoted clans o (6) and section 3 of the Order. It may be pointed out that above-quoted clause (6) and section 3 of the Order speak of the principal amount and interest in respect of the loan. It was contended by Mr. Syed Ishtiaq Ali on the basis of repayment schedule Exh. 4/11, which has a column of interest giving breakup of 71% i.e. 51% and 11% and on the basis of the statement of P. W. 1, who has deposed that as per repayment schedule 52 % interest was to be retained by the bank an ll% was to be remitted to the foreign lending agency, that the Bank was entitled to receive only 12 % interest in foreign currency and not entire 71%. This contention is devoid of any force as in the credit agreement nor in section 3 of the Order the above bifurcation is admissible. However, I am inclined to agree with the learned counsel for the respondents that the Bank cannot work out its claim for all the items on the basis of the foreign currency involved and to convert the same into Pak rupee on the basis of the foreign exchange rate prevalent on the date of repayment/payment. It may also be observed that section 3 of the Order has retrospective effect and provides a deeming proviso. The Order was promulgated in order to nullify inter alia the judgment in the case of Pakistan Industrial Credit and Investment Corporation Ltd. v. Mahhoob Industries Ltd. Karachi and 10 other (1) and the case of Industrial Development Bank of Pakistan v. Messrs William Son do Co. Ltd. And 2 others (2). In which it was held by Single Judges of this Court after referring to the Pakistani, Indian and English case-law on the subject, that the rate of foreign exchange in case of repayment of a foreign "p currency loan shall be the rate of exchange prevalent on the due date of payment of each instalment. The effect of the above Order is to provide the basis of conversion from foreign currency into Pak rupee different than what was enunciated inter alit: in the above too cases and that too with retrospective effect by providing a deeming clause. Mr. Syed Ishtiaq All has referred to {{FOOT NOTE}}
(1) 1980 C 1r C 249 (2) PLD 1980 Kar. 576 {{FOOT NOTE}} ' the case of Chaudhry Atta Muhammad and 10 others v. Federal Land Commission etc. (1), in order to reinforce his contention that a deeming proviso is to be strictly construed and its scope should not be extended beyond what Was intended or required by the Legislature. In the above case a Division Bench G of the Lahore High Court wnile construing clause (b) (ii) of subsection (4) of section 184 of the Land Revenue Act held that deeming clause in fact further restricted the scope of the application of the Colonization Act. Reference was made to the observation made by James L.
J. In Ex pane ; Walton, In re : Levy (2) and also to the case of Hon'ble Supreme Court of Pakistan, namely, B. H. Syed v. Fazal Jehan Begum and another (3). In the first case James, L. J. Observed that "When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to" whereas in the second case the Hon'ble Supreme Court of Pakistan observed as follows :- ' it is true no doubt that where the statute says that you must imagine the state of affairs ; it does not say that having done so you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. But at the same time it cannot be denied that the Court has to determine the limits within which and the purposes for which the Legislature has created the fiction."
7. (a) As observed hereinabove that above-quoted clause (6) of the, credit Agreement as well as section 3 of the Order refer to the principal and' interest and therefore, the other items are not covered. The only question which requires consideration is, whether the interest by way of liquidated damages at the rate of 14 % provided in above-quoted clause (5) (iii) of the Credit Agreement can be considered as interest for the purnose of section 3. It is apparent from the above-quoted clause (5) (iii) of the Credit Agreement that 14 % interest was provided by way of liquidated damages. This is the amount of liquidated damages expressed in the form of 14% interest. I am inclined to hold that strictly speaking 14 % is the amount of / liquidated damages agreed to and not interest agreed to between the parties. Applying the principle enunciated in the above cases on the question of deeming proviso I am inclined to place strict construction on the word "interest" used in section 3 of the Order. I am of the view that the word "interest" employed in section 3 covers only the agreed interest provided for and not the amount of liquidated damages which may be expressed in terms of percentage of interest. It may also be pertinent to mention that it is a well settled principle of interpretation that where a statute imposes a fiscal burden on the citizens and two interpretations of a proviso are possible, one which favours the citizens should be preferred to the construction which may be more favourable to the State. In the present cas two constructions are possible, namely, one which I am inclined to hold and the other that the word interest will include even liquidated damages expressed in terms of percentage of interest.
Pressing into service the above principle would, therefore, prefer the former construction.
(b) In view of the above discussion I am, therefore, of the view that the Bank is entitled to work out its claim on the basis of foreign exchange rate prevalent in terms of section 3 of the Order only in respect of two items i.e. The balance of the principal amount and the contracted rate of interest 7- 1/2% but the other items were to be paid in Pakistan currency and are to be calculated in Pakistan currency separately. {{FOOT NOTE}}
(1) 1979 CLC 294 (2) 17 Ch. D 756
(3) PLD 1970 SC 29 {{FOOT NOTE}}
8. (a) Mr. Ishtiaq All has also contended that certain payments made by respondent No. 1 on the basis other than, what has been stated hereinabove, cannot constitute an estoppel. He has referred to the case of Zakarla A. Bawany v. City Deputy Collector, Karachi and 2 others (1) and the case of Sultan Mawjee and 3 others v. Federation of Pakistan, Chamber of Commerce and Industry, Karachi and 3 others (2).
(i) In the first case a learned Single Judge of this Court while construing the word "dues" used in Investment Corporation of Pakistan Ordinance, 1966 observed that there is no substance in the contention of the learned counsel for the plaintiff that denial of liability is based on law, namely, frustration of the agreement and any admission contrary to law will not stop the plaintiff from denying from his liability.
(ii) Whereas in the second case, it was contended before the Hon'ble Supreme Court that the impugned directive of the Federal Government was approved by the Managing Committee of the Federation and, therefore, it could not have been assailed. While rejecting the above contention it was observed that "Additionally there can be no estoppel against the statute."
(b) I am inclined to hold that once a petition is filed by the bank under section 39, it is for this Court to adjudicate upon the question of extent of liability of a borrower. Any previous payment by a borrower on a basis contrary to law will not constitute estoppel against him.
9. (a) Adverting to the contention of Mr. Syed Ishtiaq All that the bank was not entitled to make profit on the basis of devaluation it may be observed that he his referred to certain portion of the judgment of this Court reported in PLD 1983 Kar. 576 (at page 594) which reads as follows :- "My attention was also invited to Exhs. 69, 70 and 71 which. Are annual reports of I. D. B. P. For the years 71-72, 72-73 and 73-74 respectively wherein in Exhs. 69 at page 7 the following statement appears : ' 'On the devaluation of the rupee there was an exchange gain of Rs. 20,59,47,690 which has been credited to contingency provision."
In Exh. 70 this contingency amount of gain is shown at page 37 as Rs. 30,28,63,843 whereas in Exh. 71 at page 42 the contingency amount is shown at Rs. 28,01,33,451. It has been urged by Mr Hyder Mota ' that as a matter of fact the I. D. P. B. Is attempting to make profit out of the devaluation which is not permiled under the I. D. B. P. Ordinance, 1961. Reliance has been placed in this regard upon sections 27 and 30 of the said Ordinance. Section 27 defines the scope of business which the I. D. B.
P. Can transact The business defined therein does not contain any authority to transact in foreign exchange for gain and whereas section 30 expressly provides that the Bank shall not undertake or transact any kind of business other than those authorised by or under the Ordinance. The above contention appears to be not without any force."
(b) In the present case the respondents in their written statement have not pleaded that they were entitled to the refund of the penal interest or any other item but their contention was that the said items could not have been worked out on the basis of foreign exchange rate after the devaluation, of Pak rupee. In view of the above state of pleadings, I cannot, hold that the respondents are entitled to claim refund of any of the above items. At the {{FOOT NOTE}}
(1) PLD 1975 Kar, 1008 (2)PLD 1982SC174 {{FOOT NOTE}} ' same time it may also be pointed out that the bank has not claimed any penal interest from the date of the petition till the payment amount claimed. It was contended by. Mr. Chundrigar that in the un-amended petition the interest was claimed at the rate of 13%, whereas in the amended petition P. W. 1 R. A. Siddiqui has substituted 13% by 71% without his knowledge and that this Court had not allowed the amendment of the rate of interest in pursuance of the amendment application and that the Bank was entitled to interest at higher rate of interest than 7 3/4 %. It will suffice to observe that neither in the unamended petition nor the amended petition, it was averred by the Bank that factually it was entitled to recover any interest as liquidated damages. In the absence of any such averment, I am not inclined to allow penal interes from the date of the petition. Even otherwise, for more than one reason it is not a fit case for granting of penal interest from the date of petition, firstly, admittedly on account of devaluation the Bank has made a big profit a reflected in the above-quoted portion of the judgment from the above Karachi case of 1982 and secondly on account of devaluation and delinking of Pak rupee from the Dollar and because of section 3 of the Order the respondents' liability has been increased about three times in respect of the balance due amount. I have disallowed penal interest in my earlier judgment dated 20-3-1984 given in Suit No. 96/1974 from the date of the suit.
10. Further question arises whether the Bank is entitled to claim interest in these proceedings under section 34-B, C. P. C. Which reads as follows :- "34-B. Interest, etc., on dues of a Banking Company.-Where and in so far as a decree is for payment of money due to a banking company in .Repayment of a loan advanced by it, the Court shall, in the decree, provide for interest or return as the case may be, on the judgment debt from the date of decree till payment-
(a) in the case of interest bearing loans, for interest at the contracted rate or at the rate of two per cent. Above the bank rate, whichever is higher ;
(b) in the case of loans given on the basis of mark-up in price, lease, hire, purchase or service charges, for the contracted rate of mark-up, rental, hire or 'service charges, as the case may be, or at the latest rate of the banking company for similar loans, whichever is the higher ; and
(c) in the case of loans given on the basis of participation in profit and loss, for return at such rate, not being less than the annual rate of profit for the preceding six months paid by the banking company on term deposits of six months accepted by it on the basis of participation in profit and loss, as the Court may consider just and reasonable in the circumstances of the case, keeping in view the profit-sharing agreement entered into between the banking company and judgment- debtor when the loan was contracted."
It may be noticed that above-quoted section provides that in so far as the decree is for payment of money due to a banking company, to Court shall in case of interest bearing loan grant interest at the contracted rate or at the rate of 2% above the Bank rate whichever is higher. An order under section 39 of the Ordinance for sale of attached property cannot be equal with a money decree in terms of section 34-B, C. P. C. Though by virtue of subsection (10) of section 39 of the Ordinance it has been provided that t order tinder the above section for the attachment or sale of property is to carried into effect as far as may be in the manner provided in the Code of Civil Procedure, 1908, for the attachment or sale of property in execution of a decree as if the Bank were the decree-holder.
11. The only point which requires further consideration is what should be the order of this Court. In this regard it may be pertinent to quote the above order dated 28-7-1979 whereby respondent No. 1 was allowed to furnish bank guarantee in substitution of the attachment order, which reads as follows :- "28-7-79. Mr. Ishtiaq Hussain for application/defendant.
' Mr. A. I. Chundrigar for opponent/plaintiff.
' The application of the applicant-defendant under section 39 (3) of I. D. B. P. Act is for furnishing security of Rs. 450,613.66. The last prayer in the application is given by applicant's counsel and it is dismissed. In respect of first prayer Mr. Chundrigar wants security of Rs. 450,613/66 plus interest on that amount till decree is granted. He states that the eventual decree should be secured and in view of the number of cases pending in the High Court it is not certain as to when this case would be likely to be decided.
' The application is supported by an affidavit which has not been controverted on facts but Mr. Chundrigar has argued on legal aspect.
' I am of the view that the interests of the plaintiff would be substantially safeguarded if the defendants provide a Bank guarantee in the sum of Rs. 450,613.66 plus interest on the said amount at 74 % per annum with six-monthly rests payable upto 31-12-1979, amounting Rs. 66,592 as interest from 1-1-1978 to 31-12-1979, the total guarantee would therefore be provided for R. 5,18,205.66. The defendant would also provide a bank guarantee after every six months for the interest accruing on the amount of Rs. 5,18,205 for 6 months in the month of July, 1980 and would continue to provide such fresh bank guarantees for the next 6 months' interest at the same rate of interest with 6- monthly rests till the case is decided. In case the defendant fails to furnish the guarantee for any of the next six months interest then all the guarantees provided by the defendant under this order shall become encashable and the amount so realized would be deposited by the Nazir of the High Court in Habib Bank Court Road branch in fixed deposit in the name of the Nazir. The guarantees would be provided in the name of the Nazir of the High Court.
' On the furnishing the bank guarantee of Rs. 5,18,205.66 in the name of. Nazir by the defendant the attachment respecting the property of the defendant mentioned in para. 17 (a) (1) of the petition will stand vacated.
(Sd.) Zahoorul Haq"
' In pursuance of the above order as observed hereinabove the respondent No. 1 has furnished four Bank guarantees of the amount referred to herein-above, but have not furnished any further Bank guarantee after 16.11-1981 in terms of the above-quoted order and therefore, the above Bank guarantees have become encashable. I would direct the Nazir of this Court to encash the above guarantees and to make a reference to this Court after encashing the same.
12. The amount of Yen claimed by the Bank in the above petition includes, the items which should not have been included by the Bank in Yen as observed hereinabove, namely, 14 % penal interest, 7 foreign exchange risk, etc. The only items, which could have been computed in Yen are (1) the balance of the principal amount and (ii) 74% contracted interest with six monthly rests. The other items should have been calculated in Pak rupees. The amount of claim is, therefore, required to be re-worked out under two separate heads, namely Yen and rupees. The rupees amount shall carry interest in rupees at 7t % from the date of the petition till payment/realization with six-monthly rests. The Yen amount is to be converted into Pak rupees on the basis of foreign exchange rate obtaining on the date of payment/realization in terms of section 3 of the Order.
I am of the view that it is a fit case for appointment of a Commissioner for the purpose of ascertaining the amount payable to the Bank in terms of my above findings. I, therefore, appoint the Nazir of this Court as the Commissioner, who shall after notice to both the parties take accounts and shall ascertain the amount payable by the respondents in the light of the above findings and shall submit his report to this Court within four weeks from the date of receipt of this order. Upon receipt of the proposed report, the Court shall pass a final order. Each of the parties shall deposit tentative fee of Rs. 750 with the Nazir, subject to the final, order.