' This is plaintiff's appeal directed against the judgment and decree dated 11-6-1983 passed by the Special Judge (Banking) Lahore decreeing the suit of the appellant to the tune of Rs,3,55,210.37 and also granting compensation/equitable set-off to the respondent to the tune of Rs,9,38,800 and holding that after adjustment of two amounts against each other the defendant/respondent was entitled to the recovery of an amount of Rs,5,83,589.63.
2. The facts forming the background of this case shortly stated are that the appellant filed a suit against the respondent in the Court of Special Judge (Banking) Lahore, for the recovery of an amount of Rs, 6,51,403.37. The case as set up in the plaint was that the defendant opened an account with the appellant Bank in the Main Civic Centre Branch Islamabad on 12-2-1975. The respondent made an application to the Bank for an advancement of House Building Loan to the tune of Rs,4,50,000 which was advanced to the respondent on the execution of the following documents by him:-
(i) A Demand Promissory Note, C.F.I under Section 20 of the Negotiable Instruments Act.
(ii) A Bond of Continuity C.F.II by which the defendant agreed to pay with interest whatever amount was found due by the Bank.
(iii) C.F.10. The defendant had executed C.F. 10 by which he had created equitable mortgage of the property No,59-A, Mozang Road, Lahore.
(iv) Registered Mortgage, detailed as under:--
(a) Registered Mortgage Deed dated 20-2-1975 of the property NoA60,F/6/3 new number 8, street No,7, Islamabad 2000 Sq. Yards together with the existing and the future construction thereon for a consideration of Rs,2,50,000.
(b) Registered Mortgage of Plot No,460, F/6/3, New number 8, Street No,7, Islamabad, measuring 50' x 120' 2000 S4. Yards together with the existing and future constructions thereon, dated 24-12-1976 before the Sub-Registrar, Rawalpindi in consideration of Rs,2,00,000 at the rate of 13% interest.
(c) Registered Mortgage Deed of the property No,S. 60-R-59-A situated at 50-A, Mozang Road, Lahore measuring 2 kanals 4 marlas and 206 Sq. Feet with construction, registered on 28-11-1969 before the Sub-Registrar at Lahore. (but the item of mortgage appears to be irrelevant as it was not connected with the House Building Loan under question. This mortgage appeared to have been effected for a different loan as was apparent from the date of the registration of the mortgage. It had been effected years before the sanction of the loan in question. It was not understandable as to how the bank has included this mortgage in the transaction of loan in question as security.)
3. The case of the plaintiff was that after the execution of the said documents the amount of Rs,4,50,000 was advanced to the respondent on the terms and conditions settled with him. The amount of loan increased due to addition of amount of interest which became due on account of non-payment of the loan by the respondent, as such, an amount of Rs,6,51,403.37 was recoverable from him at the time of filing the suit. A prayer was made that the suit be decreed for the recovery of the said consolidated sum with the direction that the respondent should deposit this amount with interest in the Court.
4. The defendant was granted leave to appear and defend the suit on his application. He filed written statement. A plea was implicitly raised that long before the suit was filed, the defendant made an offer to the Bank for the payment of the principal amount by raising it from various quarters but the plaintiff Bank did not pay any heed to this offer. It was also pleaded that the plaintiff was not entitled to any amount on account of interest as the total agreed amount of loan was never paid to the defendant, which was required for the construction and completion of the building, structure which purpose was known to the plaintiff which could not be completed due to which earlier investment was rendered un-productive and the defendant could neither dispose of nor rent out the same, therefore, the accrual of interest was the result of infringement of the terms of the loan by the plaintiff Bank, as such, the plaintiff was not entitled to the interest claimed. It was again repeated that it was the plaintiff who defaulted and committed the breach of original agreement to advance the loan which was required for raising construction over a plot of land as a result of which the same could not be completed, as such, the infringement of the terms of the loan by the plaintiff disentitled the plaintiff to claim any interest. It was also averred that repayment schedule as agreed between the parties was to come into force from the date of completion of building structure or the full availment of the loan facility, as such, the plaintiff having failed to pay the full agreed amount of loan as a result of which the building structure could not be completed; therefore, the interest has been charged arbitrarily and at exhorbitant rates. It was, however, admitted that the defendant applied for house building loan but the payment of total amount of loan was denied. In Para.5 of the written statement on merits it was specifically pleaded and claimed that the plaintiff had violated the terms of the agreement and was, therefore, liable to pay the damages to the defendant because the act of refusal by the plaintiff to provide agreed funds to the defendant resulted in stoppage of construction work and for that reason the defendant had to keep a Chowkidar for longer time than was necessary and as such he suffered to the tune of Rs,24,000. At the end he made prayer as under:- "In view of the above it is most respectfully prayed that the suit of the plaintiff may very kindly be dismissed with costs. Further, prayed that the defendant be awarded compensation for the damages caused to him resulting due to the violations of the agreement by the plaintiff or any other relief which the Court deems just or proper may be awarded."
5. The controversies as emerged from the pleadings of the parties were reflected in the following issues framed by the learned Special Judge (Banking), Lahore:-
(1) What was the contracted total amount of loan? OPP
(2) Whether the total contracted loan amount was delivered to the defendant? OPP
(3) If issue No,2 is in the negative what is its effect? OPP (3-A). If issue No,2 is in the negative whether the defendant can claim compensation and to what extent"? OPD
(4) Whether the agreed rate of interest has been levied, if not what is its effect? OPP
(5) Whether the insurance policies pawned by the defendant were encashed immediately on maturity? OPP
(6) If the above issue is in favour of the defendant what is its effect? OPP
(7) Whether the plaintiff was to demand back the loan on the completion of the building? OPD
(8) Whether the suit is pre-mature, if issue No,7 is in the affirmative? OPD
(9) Whether the defendant is entitled to special cost and to what extent? OPP ' Relief Additional Issues (1) Whether the plaintiff was bound to serve notice on the defendant regarding the recovery of the loan in question before filing the suit? OPD
(2) If the above issue is in favour of the. Defendant what is its effect on the suit? OPD
(3) Whether the suit has been filed through duly constituted authority? OPP Iii support of his case the plaintiff-Bank examined Mumtaz Hassan an Officer, i,e. Manager Muslim Commercial Bank Ltd.
As P.W.1 and closed his case. However, a right was reserved to lead evidence on additional issue No,3 which was framed by the trial Court on 7-4-1983 after the evidence of the plaintiff was concluded. Apart from this oral evidence the appellant also produced in evidence a mortgage deed dated 20-2-1975 as Ex.P.1, a pro-note as Ex.P.2, a letter for filing documents as Ex.P.3, and second mortgage-deed dated 24-10-1976 as Ex.P.4. An objection regarding the production of promissory note in the evidence was raised on the ground that the same was neither attached with the plaint nor entered in the list of reliance, the decision on which question was deferred for disposal alongwith the main suit. Statement of Account was produced as Ex.P.5.
6. The oral evidence of the respondent-defendant also consists of the statement of respondent himself which was recorded twice. In the first instance on 23-4-1983 and thereafter on 26-5-1983 after the statement of Ch. Mumtaz Hassan as PW.1 was second time recorded on 25-5-1983. On 5- 6-1983 learned counsel for the respondent withdrew the objection that the suit was pre-mature, therefore, issue No,8 reflecting the said controversy was not pressed.
7. Under issue No,1 it was held that there was a contract regarding the house building loan for a sum of Rs,4,50,000 between the parties which fact was admitted by the defendant, as such, the said issue was answered against the defendant. Under issue No, 2 it was held that the total contracted loan amount was not paid to the defendant as a consequence thereof this issue was decided in favour of the defendant. Under issues Nos.3 and 3-A it was held that as a consequence of failure of the Bank to pay the total contracted amount of loan the Bank was not entitled to charge any interest whatever from the defendant pertaining to the amount actually advanced.
Both these issues were answered accordingly. Issues Nos.3-B and 9 were taken up together and decided in favour of the defendant. It was held that no court-fee stamp was liable to be affixed on the amount of damages/compensation claimed or granted to the defendant. Under issue No,4 it was held that since the project of the defendant could not be completed due to the failure of the Bank to advance full amount of contracted loan, therefore, Bank was not justified in charging the interest including penal interest from the defendant. Under issues Nos.5 and 6 it was held that the defendant had undergone a loss in the shape of excessive interest, the Bank was directed to account for the amount of insurance policies from the date of their maturity and re-calculate the interest thereafter. These issues were decided accordingly. Issues Nos.7 and 8 as observed by the learned trial Court were not pressed vide statement to that effect made by the learned counsel for the defendant which was recorded on 5-6-1983, therefore, no decision was given on these issues as they were treated to have been abandoned. Additional issues Nos.1 and 2 were held to have become redundant in view of statement of learned counsel for the defendant recorded on 5-6- 1983. Under issue No,3 it was held that the suit was filed by a duly authorised person, therefore, this issue was answered in favour of the plaintiff. In the result the trial Court held that the plaintiff was entitled to recover only that amount out of the total amount of Rs,4,50,000 which was actually paid to the defendant. The actual amount paid to the defendant was held to be Rs,3,89,000 and after deducting the amount of Rs,33,789 which the bank had recovered on account of insurance premium net amount of Rs,3,55,210.37 was found to be due from the defendant to the plaintiff- bank.
' On the other hand the defendant was held to have suffered loss at the rate of Rs,14,000 per month on account of rent which he would have earned had the building been completed and also an amount of Rs,24,000 which he paid to the Chowkidar, as such, he was found entitled to the recovery of Rs,9,38,800 on account of compensation and equitable set off. After deducting from this amount the said amount decreed in favour of the Bank a decree of an amount of Rs,5,83,589.63 was passed in favour of the defendant and against the plaintiff leaving the parties to bear their own costs.
8. The plaintiff has assailed the judgment and decree passed by the learned trial Court in this appeal whereas the defendant has neither filed any appeal nor cross-objections regarding decree passed in favour of the plaintiff for the recovery of an amount of Rs,3,55,210.37. In this view of the matter, so far as defendant is concerned for the purposes of this appeal he admits to have received an amount of Rs,3,89,000 out of the contracted amount of loan of Rs,4,50,000. In this appeal the plaintiff has prayed that the interest disallowed by the learned trial Court be allowed and the damages allowed to the respondent be set aside.
9. We have heard learned counsel for the parties. We have also undertaken detailed scrutiny of the material brought on the record by the parties in their evidence with the assistance of the learned counsel for the parties. It is manifest from statements of accounts Exs.P.5 and P.6 that the amount of loan was in fact not paid to the defendant in lump sum but was paid in instalments from time to time. On each payment the Bank had been charging the interest and the amount of interest so recoverable was shown to have been credited to the account of the respondent as part payment on account of the loan itself and in this manner a case was made out that the entire amount of loan stood paid up, as such, the plaintiff was entitled to the recovery of the total amount of contracted loan as also the interest as claimed in the plaint. It is also manifest from these statements of accounts that if the amount of interest had not been charged from the respondent on each instalment which was paid to him, the total amount paid to the respondent out of the contracted amount of loan was Rs,3,89,000 as held by the learned trial Court. Out of this amount an amount of Rs,33,789.63 was recovered Mst. Akhtari Begum v. Muhammad Qasim (1987 CLC 157), S.K. Abdul by the Bank from the insurance premium, therefore, the amount of Rs,3,55,210.37 was the remaining amount which was recoverable from the respondent. The question which arises for determination in this appeal is whether the respondent was entitled to any damages compensation and set off and if so to what extent. The decision of appeal as a matter of fact revolves around the decision of this crucial question. It was the respondent's case that he was entitled to recover compensation as equitable set off from the respondent on account of damages which he suffered. We have noticed that in his application made under Order XXXVII, Rule 3, C.P.C.
For grant of leave to appear and defend the suit in respect of this aspect of the case it was pleaded that refusal of the Bank to pay further amount of loan to the defendant to enable him to complete the structure which was the purpose of the loan known to the Bank, the structure was not completed and investments already made were rendered unproductive as a result of which the interest had been accruing because incomplete structure could not be disposed of despite the efforts by the defendant in this behalf. It was also stated that the plaintiff was not entitled to any interest as also the suit amount. No averment in this application was made that the defendant has settled with Egyptian Embassy to rent out the premises after completion, to the said Embassy at Rs,14,000 per month as rent and as such on account of non-completion of building, the defendant had suffered a loss at the said rate of monthly rent and was entitled to compensation as set off on that basis, as was subsequently pleaded in his statement when he appeared as his own witness.
As has been noticed above in the written statement though the defendant complained that he could not complete the building on account of non-payment of the total contracted amount of loan due to which investments already made become unproductive but as a result thereof, the only relief claimed was that the plaintiff-bank was not entitled to the recovery of any amount on account of interest and further that he suffered a loss of Rs,24,000 on account of pay which he paid to the Chowkidar for keeping him at the spot for a longer period than the period within which the property was likely to be completed. Examined in this perspective it is manifest that the compensation/damages as set off was never claimed with reference to expected amount of income which the defendant would have earned after completion of the building on account of rent. The law is well-settled that the decision of the Court in a suit cannot be based on any ground which was not raised and set up in the pleadings. We derive support for taking this view from judgments of the Supreme Court reported as Government of West Pakistan (Now Punjab) through Collector, Bahawalpur v. Haji Muhammad PLD 1976 SC 469 and A.G. Sikandar v. Haji Abdul Hamid 1978 SCMR 85. It is also firmly settled law that no party in a suit is entitled to lead evidence in respect of a plea which was not raised in the pleadings, and even if any evidence was led on such a plea which was not taken in the pleadings, the same cannot be considered as evidence in the case. This is the consistent view taken by the superior Courts in chain of reported judgments some of which are as under:- ' Aziz v. Mahmoodul Hassan and 3 others (1988 CLC 337), Shafiq Ahmad v. Jamiat Khan and others (1989. CLC 1356), and Qurban Hussain v. Mst. Bashir Begum etc. [PLD 1986 SC (AJ&K) 109].
10. It has already been noted that in the written statement the compensation/damages claimed by the defendant on account of non-completion of the house for failure of the Bank in not paying the total contracted amount of loan was that the Bank was not entitled to recover the interest on the amount actually advanced and that he had suffered an amount of Rs,24,000 which he paid to Chowkidar who was employed to look after the building under construction for a longer period than he was in normal circumstances required to be employed had the total amount been paid.
The decision of the learned trial Court, therefore, based on the alleged loss on account of non- recovery of rent of the premises by the defendant regarding question of damages, which the house could fetch had it been completed and rented out to Egyptian Embassy was not permissible under the law as it was neither pleaded and the only relief claimed was that the bank was not entitled to recover the interest. The learned trial Court also failed to appreciate that there was no evidence on the record that the contracted amount of loan was the total and maximum estimated cost of construction of the house and the house would in all circumstances have been completed with the said amount. There is also no covenant between the parties though the facility of loan was given to the defendant for construction of the house, that it was understood between the parties that the house would be completed with the said amount and no further money was required. Even otherwise since the defendant was claiming equitable set off, a relief in equity, therefore, before he could claim that relief it was incumbent upon him to have proved on record that he did take all possible steps to avoid the loss by raising funds from other sources to complete the house. Any person who seeks equity is required under the law to do equity. The case as made out in the written satatement by the defendant was that due to non-payment of the remaining contracted amount of loan he could not complete the construction of the house and in this manner an attempt was made to make out a case that there was shortage of funds. The learned trial Court while accepting this plea altogether ignored that in the written statements specific stand was taken by the defendant that he had been offering the re-payment of the loan after raising funds from other sources but to this offer the Bank did not pay any heed from which it could safely be presumed that the plaintiff had money which he offered to the Bank as alleged and there is no explanation on the record as to why he did not spend the same on the completion of the house in order to avoid the said loss of rent. The rule laid down in judgment reported as Bashehsar Nath Khanna & Sons v.
Messrs Grindlay & Co. Ltd. Lahore and others (A.I.R. 1937 Lah. 73) relied upon by the learned trial Court is not applicable to the facts of this case as the facts in the reported case were altogether different. In the reported case it was understood between the parties that with the advanced loan the debtor was to open a letter of credit for a specific purpose and it was implicit therein that that was the maximum amount which was to be invested in opening the letter of credit, therefore, in those circumstances it was held that the defendant was entitled to raise a plea of equitable set off and circumstances on account of which the set off were claimed was specifically pleaded. For the foregoing reasons the findings of the learned trial Court on issues Nos.3 and 3-A are not sustainable and the same are hereby set aside and reversed. It may be pertinent to note here that it is apparent from the mortgage deeds that re-payment of the loan was agreed to be made after the completion of the building. Issues Nos.7 and 8 were framed on this point on the objection raised by the defendant in the written statement. As C has been observed above, the defendant abandoned that plea reflected in issues Nos.7 and 8. In this view of the matter the defendant could not now turn around and plead that the completion of building had any nexus with his liability to pay back the amount received by him from the Bank as loan.
11. It may also be pointed out here that out of the total amount of Rs,4,50,000 an amount of Rs,3,89,000 was paid by the Bank to the respondent as held by the learned trial Court which is a substantial part of the loan and there is no evidence on the record as to how much part of the building had been completed with the said amount by the respondent and the remaining unbuilt part would have been completed with the remaining amount.
12. Learned counsel for the defendant/respondent finally argued that the transfer of an amount to Rs,84,100 to the Current Account No,536 of the respondent was illegal and unauthorised, therefore, the said amount should also be taken to have not been paid out of the total sanctioned amount of loan, therefore, out of the amount of Rs,3,89,000 which has been held to have been paid to the respondent this amount should also be deducted having not been paid. We are afraid the argument is not tenable inasmuch as the learned trial Court has taken into consideration this amount as an amount paid to the respondent out of the sanctioned loan amount and if the respondent felt aggrieved he could challenge the said findings either by filing cross-appeal or cross objections without which he could only support the judgment and decree of the learned trial Court and is not entitled to claim any relief in respect of findings recorded against him. We endorse the view taken by the learned trial Court that the plaintiff-Bank I was not entitled to recover any amount on account of interest for the reason that the interest could accrue only if the total amount of loan had been paid. The plea of the plaintiff-Bank that it was entitled to recover from the respondent defendant interest on the amounts paid to him from time to time is not tenable.
13. In the result the appeal partly succeeds and the judgment and decree of the learned trial Court through which an amount of Rs,9,38,800 was granted to the defendant on account of compensation/set off is hereby set aside. The parties are left to bear their own costs. The suit of the plaintiff-Bank is decreed to the tune of Rs,3,55,210.37 as directed by the learned trial Court and a preliminary decree is hereby passed for the recovery of the said amount which shall be paid within six months from today. In case the said amount is not paid within that period the plaintiff-Bank may make an application in the trial Court for passing final decree.