1. ' SYED HAIDER ALI PIRZADA, J.--- These two appeals may be disposed of by a common judgment because they raise the identical questions. We narrate the facts of only the first appeal.
2. ' The appellant is a banking company carrying on business at Karachi and elsewhere and among others has a branch at Hotel Pearl International, Karachi. The appellant, at the request of the respondent, had granted the 'respondent banking facility and accommodation by way of cash finance of Rs,105,000 in terms of an agreement of finance dated 7-9-1985 executed by the respondent. At the request of the respondent, the appellant had entered into said agreement of finance with the respondent under which the appellant had agreed to purchase from the respondent 'goods' as per stock statement supplied by the respondent for Rs,1,06,000. The respondent, in turn, had agreed to buy back from the appellant the said 'goods' on the basis of `mark-up' for the total sale consideration of Rs,1,20,000 on terms and conditions stated in the said agreement. The photostat copies of said agreement and stock statement dated 4-9-1985 and 17- 8-1985 were annexed to the plaint.
3. ' It was the case of the appellant that the appellant therefore, pursuant to the said agreement on 7-9-1985, had paid the respondent the said sum of Rs,1,06,000 as the sale price of the said 'goods' purchased by the appellant from the respondent. The said amount was shown as debt in the respondent's account with the appellant. Under the said agreement, the respondent had undertaken however to pay the buy back price of R420,000 of the said goods by 30-6-1986 and the appellant Bank had agreed to defer payments and accept the said price as aforesaid.
4. ' It was the further case of the appellant that in consideration of the appellant granting the respondent, the respondent had executed demand promissory note as security amount of Rs,1,20,000 inclusive of mark-up at such rate as prescribed by the State Bank of Pakistan. Photostat copies of pronote dated 7-9-1985, letter of D.P. Note and letter of continuity were annexed to the plaint. It was the further case of the appellant that in consideration of the appellant granting the respondent the said finance, the respondent had deposited with the appellant, by way of simple mortgage title deeds of his property with the intention of creating security of equitable mortgage thereon, and by memo. Of deposit dated 7-9-1985 and confirmed the said deposit having been made earlier particulars of which are given in para. 7 of the plaint:As further security, and in consideration of the appellant granting the respondent the said facility, the respondent by letter of hypothecation had also hypothecated its stocks in trade and aforesaid 'goods' as security more fully described in the said letter of hypothecation. The respondent on 7-9-1985 had repaid a sum of Rs,5,400 which was credited in his account. However, the balance amount of finance amounting to Rs,99,600 became payable with mark-up as aforesaid. The respondent had failed and neglected to pay the said amount of Rs, 99,600 as it fell due on 30-6-1986 so that the entire amount of buy- back price became due and payable by the respondent to the appellant together with liquidated damages.
5. ' It was the further case of the appellant that the said finance was provided by the appellant to the respondent on the basis of `mark-up' at the rate of 00.41 paisa's per day from 7-9-1985 to 30-6- 1986 with provision for suitable rebate, on timely repayment and since no payment was made by the respondent, `mark-up' amounting to Rs,4,969.63 and Rs,15,030.37 was debited in account on 30th December, 1985 and 30th June 1986 which amount became due and payable by the respondent to the appellant. As the respondent committed breach of the said agreement and did not pay the said amount or part payment, the appellant, by its letter dated 29-6-1986 demanded from the respondent the said amount of Rs,1,20,000 as then outstanding. Further demands were also made on the respondent by letters dated 14-6-1987, 9-7-1987, 17-6-1988 etc. But the respondent did not care to pay the same. The appellant, under the said agreement, was entitled to demand payment of the entire balance amount of the said buy-back price remaining due and for recovery thereof, was entitled to take possession of the said goods under hypothecation and sell the same.
6. ' It was the further case of the appellant that in view of the default in payment and breach of the said agreement of finance, the appellant was entitled to sell the said mortgaged property in realization of its security for the aforesaid amount and in case of any default, the respondent was liable personally to pay the balance amount remaining due to the appellant. On account of the said agreement of finance, the respondent was liable to pay the appellant the sum of Rs,119,700 due from the respondent. As the respondent failed to repay the aforesaid amount by the expiry date, and/or even thereafter, and as the finance remained stuck up, the appellant by its lawyer's letter dated 26th August, 1988 cancelled the facility, demanded the repayment of the amount of Rs,1,19,000 from the respondent within 7 days of receipt thereof. The respondent even then did not care to pay the said amount and as such under clause 8 of the said agreement became liable to pay also the sum of Rs,23,800 as liquidated damages at the rate of 20% of the said amount. The respondent, therefore, was liable in all to pay the appellant a sum of Rs,1,42,800 being the amount of finance, mark-up and the amount of liquidated damages as aforesaid. In these circumstances, the appellant filed suit being Suit No,697 of 1988 before the Banking Tribunal for Sindh and Balochistan, Karachi.
7. ' The summons were served on the respondent on 21-9-1988. In response to the said summons, the respondent appeared before the Tribunal and submitted that the respondent had approached the appellant-Bank to allow it some relief in the payment of amount due against him. A copy of the plaint was also supplied to him with a direction to submit the written statement by 27-9-1988. On 28-9-1988 the respondent remained absent and also did not file the written statement. The case was adjourned to 10-10-1988. On 10-10-1988 the respondent was again absent, the suit was decreed ex parte against him. The learned Tribunal, on the basis of the documents produced by appellant, decreed the suit for Rs,1,04,569.63 with further mark-up for 210 days as cushion period.
8. The suit was decreed with cost. While decreeing the suit, the learned Tribunal did not grant liquidated damages. It is advantageous to reproduce the relevant observation which reads as under:- "As mark up has been levied on the finance twice and as mark up on Rs,4,969.63 is permissible, plaintiff-Bank's claim for liquidated damages, is not granted as there is no provision for granting liquidated damages under the Banking Tribunals Ordinance."
9. ' The appellant being aggrieved against the above observation, has filed the present appeals. The respondent, though served by substituted service, remained absent. The respondent was also absent before the learned Tribunal.
10. ' We have heard Mr.Inamul Haque, learned counsel for the appellant. We have perused the impugned judgment and we have also gone through the documents produced before the learned Tribunal.
11. ' It is an admitted position that the respondent executed demand promissory note for Rs,1,20,000 equitable mortgage of property belonging to the respondent and other relevant documents. The said finance was to be paid on or before 30th June, 1986 which the respondent failed to do in spite of the written request by the appellant and a legal notice dated 26-6-1988 served upon the respondent. In these circumstances, the appellant filed the above suit for recovery of the amount.
12. The agreement of finance was executed on 17th September, 1985.
13. ' The relevant clause for the purpose of appeal is clause 8 of the Agreement which reads as under:- "Notwithstanding anything contained hereinabove, it is hereby agreed that the bank shall at all times, be at liberty and shall have the right to cancel the facilities under this Agreement, without assigning any reason, and demand immediate payment of the buy-back price without assigning any reason therefor. The Customer undertakes in such event to pay the same within seven days of such demand. In default the customer further agrees and undertakes to pay to the Bank liquidated damages at 20% of the amount demanded by the Bank and not paid by the customer."
14. ' A perusal thereof would show that notwithstanding anything contained in the said agreement, it was agreed that the Bank would be at liberty and would have right to cancel the said agreement facilities under the said agreement, without assigning any reason, and demand immediate payment of the buy-back price without assigning any reason. The customer/respondent undertook in such event to pay the same within seven days' time. In default the customer further agreed and undertook to pay to the Bank liquidated damages at 20% of the amount demanded by the Bank and not paid by the customer. Under clause 8 of the said agreement, the respondent became liable to pay liquidated damages at the rate of 20% of the said amount. It appears that the learned Tribunal has overlooked the provisions of clause 8 of the salid agreement wherein specifically provided is that the respondent will be liable to pay liquidated damages at the rate of 20% of the said amount. Unfortunately, this aspect of the matter does not appear to have been considered by the Tribunal.
15. ' A suit in question was instituted before the Banking Tribunal constituted under the Banking Tribunals Ordinance (Ordinance No, LVIII of 1984). Banking Tribunal means Tribunal established under Section 4 of the Ordinance (see. Section 2 (b) ). The word 'finance' is defined under clause
(e) of section 2 of the Ordinance. It includes an accommodation or facility under a system which is not based on interest but provided on the basis of participation in profit and loss, mark-up or mark-down in price, hire-purchase, lease, rent-sharing, licensing, charge or fee of any kind, purchase and sale of any property, including, a commodities, patents, designs, trade marks and copyrights, bills of exchange, promissory notes or other instruments with or without buy-back arrangement by a seller, participation term certificate, musharika certificate, modaraba certificate, term finance certificate or any other mode other than an accommodation or facility based on interest and also includes guarantees, indemnities and any other obligation, whether fund based or non-fund based, and accommodation or facility the real beneficiary whereof is a person other than the person to whom or in whose name it was provided.
16. Section 6 provides for the procedure of Banking Tribunal. Section 5 of the Ordinance provides for powers of Banking Tribunal.
17. We have perused the Ordinance and find no such restriction as observed by the learned Tribunal.
18. In these circumstances, therefore, the conclusion is inescapable that the appellants were entitled to claim liquidated damages.
19. ' We would, therefore, allow these appeals, set aside the aforesaid observations in so far as no liquidated damages have been awarded and remand back the case to the Tribunal with a direction to dispose of the suits according to law.
20. ' We would like to observe that the learned Tribunal should proceed according to law unfettered by the observations of this Court because they are only meant to find out whether it has jurisdiction to award liquidated damages or not. None of this observation or finding could mean or can be taken into account as conclusive at the stage of deciding the suit. In the circumstances of the case, the parties are directed to bear their own costs.