ABAID ULLAH KHAN, J.--In the suit brought by the appellant, National Bank of Pakistan, Lahore, for the recovery of Rs.8,07,141.20 (which amount included the principal sum and stipulated interest plus penal interest) before the learned Special Court (Banking), Lahore, the defendants-respondents at the very first hearing expressed their willingness to pay the principal sum and the interest if the appellant was to forego penal interest and costs of the suit. Further the respondents requested that the decretal amount might be allowed to be paid in instalments. The appellant agreed to the payment of the decretal amount in instalments but did not give up its claim of costs and penal interest. The learned Court thought that penal interest had been levied by the appellant without any justification and, therefore, excused the respondents from its payment. As the respondents had admitted the appellant's claim in the initial stage of the trial of the suit the learned Court did not think it fit to burden them with costs. It decreed the appellant's suit for the recovery of the remaining amount comprising of principal and stipulated interest and directed its payment to be made in instalments as agreed to by the parties.
2. The appellant has approached this Court in appeal and has disputed the validity of the decision of the learned trial Court only to the extent of disallowing penal interest and costs.
3. The learned counsel for the appellant says that he does not press for the recovery of costs. He contends that since the respondents had agreed to pay penal interest the appellant is entitled to recover the same. A stipulation for penal interest, as explained in section 74 of the Contract Act, 1872, may be a stipulation by penalty. In the circumstances of the present case it amounted to penalty and the Court could relieve the respondents of the payment of such penalty. The learned Special Court has acted rightly in not decreeing the appellant's suit for recovery of penal interest.
Its decision is unexceptionable and demands no interference. The appeal is dismissed with no order as to costs.
MA.K./N-231/L