The plaintiffs filed suit for recovery of Rs.1,78,61,33631 against the defendants. The plaintiff claimed to have advanced loan in the name of defendant No.1 as C.C. Account No.38, C.C. Account No.40, I8P and loan originally allowed in the sum of Rs.20 lacs. The loan was secured through and legal mortgage whereas the rest of the advances were secured through equitable mortgage of property owned by defendants.
2. The defendants' application for grant of leave to appear and defend the suit was allowed on 26- 6-1991 subject to their depositing a sum of Rs.50 lacs. As the leave was conditional to the deposit of the abovementioned amount the PLA was considered to have been dismissed.
3. The defendants had filed first appeal against the order which was heard and disposed of by a Division Bench of this Court on 13-12-1993. The F.A.O. Was dismissed in view of the rule laid down in judgment reported as "Pakistan Fisheries Ltd., Karachi and others v. U.B.L." (PLD 1993 SC 109). After the dismissal of the F.A.O. The suit came up for hearing and was ordered to be decreed and judgment to follow. At the time of the dictation of the judgment and on perusal of the sanction advice it was deemed just to rehear the learned counsel.
4. The statements of accounts enclosed with the plaint had shown the debit of interest on quarterly basis whereas the sanction advice and the promissory note had no such stipulation. Penal interest was also charged on all accounts. The Credit Incharge Faisal Islamic Bank of Bahrin, a foreign banking institution, was appointed as Local Commission for calculating interest at the rate of 13% only on quarterly rest. The learned Local Commissioner filed its report on 2-11-1994. The contents of the order, dated 12-10-1994 were read out in open Court to the learned counsel for the defendant as also to the learned counsel for the petitioners. The learned Local Commissioner also placed on the file his report. Copies thereof were also delivered to the learned counsel for the parties. On the next date of hearing the learned counsel for the plaintiff sought adjournment to seek further instructions from the bank. None of the parties filed objections to the report of the Local Commissioner and the statements of accounts prepared by him which have been marked as Exhs.
C-1 and C-1/1 to C-1/7. There being no objection the report is considered as accepted.
5. The plaintiff had charged penal interest on all the loan accounts whereas no such agreement was effected between the parties in this regard except in case of loan in the sum of Rs.20 lacs where in term No. 1. It was mentioned: The mortgage deed should also provide charging of penal interest 5% P.A. Over and above normal interest in case default in payment/adjustment of the advances as per repayment arrangement."
The Local Commissioner covered only the loan amount of Rs.20 lacs. The same was the only amount repayable through instalments. Close perusal of the statement of accounts enclosed with the plaint shows that on the first default in payment of first instalment, penal interest at the rate of 5 was charged on all the outstanding amount which was against the terms as mentioned in the sanction advice and as such the penal interest on other accounts except the loan account of Rs.20 lacs, secured through legal mortgaged is disallowed.
6. So 'far as penal interest on the defaults made in payment according to repayment arrangements is concerned, the same is allowed on each and every default of the instalment without any accumulative interest of compound interest.
7. The Local Commissioner has computed penal interest on the loan account accordingly with total sum of Rs.3,80,500. The wine is granted.
8. The plaintiff had claimed excessive amounts in CC-38 & CC-40 accounts whereas IBP account was properly maintained. The report of the Local Commissioner having been- accepted, being not objected to the amounts are allowed as under:--- A/C No.CLAIMED ALLOWED CC-381,03,92,334.31 77,91,135.31 CC-4010,52,032.00 7,81,112.00 IBP (i) 63,36,020.00 3,80,500.00 Loan(ii) Penal interest @ 5% 1,78,61,336.311,37,80,507.31
9. In view of the above, preliminary decree in the sum of Rs.1,37,80,507.31 is granted in favour of the plaintiff against the defendants with interest at the rate of 2 % above the bank rate or at the agreed rate A whichever is higher. Penal interest at the rate of 5 % is also allowed over and above the rate already allowed on the loan amount presently outstanding at Rs.47,46,810 without any accumulative effect of compound interest.
10. The defendants arc given four months' time to adjust the decretal amount. In case of non- payment the petitioner shall have the right to apply for final decree for the sale of the mortgaged properties.