' MUNAWAR AHMAD MIRZA, C.J.---This appeal is directed against judgment and decree, dated 31st August, 1995 passed in Civil Suit No,29 of 1995 whereby appellants were directed to pay a sum of Rs,539,576, with future mark-up and costs.
2. Relevant facts briefly mentioned are that pursuant upon regular sanction towards 6th November, 1993 appellants M/s. Hitec Metal Plast (Pvt.) Ltd. Established Letter of Credit No,527811/DA with Habib Bank Ltd. Complex Branch, Quetta for importing material from Federal Republic of Germany valuing approximately US Dollar 67,031.25. The payment against letter of credit was to be made by appellants within 90 days from 'Bill of Lading'. The shipment of goods relating to letter of credit was effected on 22nd December, 1993 and documents were negotiated. Consequently Bill of Exchange was due for payment to respondent Bank on 21st March, 1994.
3. It is the case of respondent-Bank that appellants failed to pay the mount against letter of credit equivalent to Pak Rupees 20,65,101 within ..'fated period i,e,, 21st March, 1994 whereupon in the respondent "Bank" to create forced finance account against them. However, appellants paid the principal amount on various dates from 31st May to 5th December, 1994. Respondent, therefore, claimed from appellants sum of Rs,1,26,555 (Rupees one lac twenty-six thousand five hundred fifty- five) by way of mark-up, commission and central excise duty. Additionally an amount of Rs,4,13,021 (Rupees four lacs thirteen thousand twenty-one) were also sought as liquidated damages on account of appellants' failure to honour the commitment within specified time. Thus, suit for recovery of Rs,5,39,576 (Rupees five lacs thirty-nine thousand five hundred seventy-six), besides future mark-up was filed before Banking Tribunal, Balochistan claiming following reliefs:---
(1) Decree for sum of Rs,1,26,555.
(2) Decree for sum of Rs,4,13,021 as liquidated damages.
(3) Mark-up at the rate of 52 paisa per thousand per day from the date of filing of suit till the date of decree and from the date of decree till the date of realization of decretal amount.
(4) Costs of the suit may please also be awarded.
4. Appellants on service of show-cause notice, filed reply on 15th June, 1995 seeking permission to defend the suit. It was specifically pleaded that liquidated damages, do not form part of agreement executed between the parties, therefore, same could not be claimed. Validity of accounts maintained by respondent 'bank' was also expressly challenged. It was asserted that on account of respondent's cancelling facility regarding letter of credit, appellants suffered huge losses. Thus, liability of suit amount was refuted. Learned trial Court rejected request of appellants regarding permission for defending the suit and granted decree in favour of respondent 'Bank'.
Vide judgment dated 31st August, 1995 which is reproduced below in extenso:--- "The plaintiff-bank has sued the defendants for recovery of the abovementioned amount under the following circumstances:--- ' That on request of defendant No,1 limits of L/C was sanctioned on 29-10-1992, and which had to expire on 31-1-1994, and a security property was mortgaged, and the payment was made to the 3rd party on behalf of the defendants but the defendants did not pay Rs,1,26,555 as due against them on 31-5-1994 and further the defendant did not pay the amount to the Bank in time for which the plaintiff claim 20% liquidated damages being Rs,413,021.
' Now the plaintiff has filed the suit because the defendants did not pay the amount in spite of several demands made to them.
' The defendants filed reply to the notices saying that the plaintiff have caused huge losses to them, due to their 'plaintiff' conduct and have filed a case of damages against the plaintiff in the Hon'ble High Court of Sindh. They have further stated in their reply to the notice that there was no agreement for liquidated damages, therefore, no such demages could be claimed.
' The case was argued by the counsel for parties. It is admitted that the - L/C facility was availed and from the statement of account in suit is due against the defendants to the plaintiff-Bank because as per agreement the amount was not paid to the Bank in time.
' So far as liquidated damages are concerned it is also disputed that the amount was not paid to the Bank within the agreed period, therefore, the Bank was at loss for the period when the amount due was not paid to the Bank by the defendants. So the defendants are liable to pay liquidated damages as well.
' I see no reason to allow the defendants to make defence.
The suit of the plaintiff is based upon documents, therefore, I decree the amount in suit with costs in favour of the Bank against the defendants jointly and severally and the defendants are also ordered to pay mark-up at the agreed rate from the date of filing of the suit, till the whole decretal amount is realized. The defendants are also liable to pay liquidated damages, to the Bank at the agreed rate. The mortgaged property is ordered for foreclosure."
' Mr. Basharatullah, Advocate for appellants strenuously urged that provisions of section 6(2), Banking Tribunals Ordinance, 1984 makes it obligatory for trial Court to hold enquiry about controversy raised by the debtor and failure to adhere with said requirements causes contravention of basic principle of law. According to him liquidated damages neither formed part of 'contractual obligations nor respondent Bank was justified to demand it specially when payment of the principal amount had been cleared prior to institution of the suit. Learned counsel canvassed that demand relating to mark-up upon existing liability of mark-up not only disregards relevant law but also tends to violate instructions issued by State Bank. It was thus stressed that amount claimed in the suit being unjustified merited rejection. Legality of the impugned judgment granting mark-up on the decretal amount was also emphatically challenged.
5. Learned counsel for respondent-Bank vehemently opposing the appeal, argued that trial Court considering contractual obligations and obvious losses suffered by the Bank on account of appellant's conduct about withholding delaying or denying payment of amount due; had rightly allowed benefit of mark-up and liquidated damages. Learned counsel stressed that liability concerning principal amount and mark-up was factually not disputed by appellant through petition for leave to defend, filed on 15th of June, 1995; therefore, according to him impugned judgment did not suffer from any defect or infirmity. Learned counsel maintained that liquidated damages formed part of agreement which had been validly executed between the parties, therefore, trial Court has not committed any error while granting decree, pertaining to said amount.
6. We have carefully perused the record and considered arguments advanced by learned counsel for parties in the light of relevant law.
7. The appellants in the petition seeking leave to defend have not controverted assertion regarding factual aspects mentioned in the plaint. It may be seen that essential element for putting forth present claim such as (i) opening letter of credit; (ii) receipt of money by company at Germany on despatching goods; (iii) issuing bill of lading; (iv) fattum of negotiating document, and (v) liability of payment within 90 days from Bill of Exchange; have not been refuted. Most important and crucial objection agitated by appellants pertains to entitlement of respondent 'Bank' about liquidated damages. Therefore, it essentially needs examination whether trial Court without existence of specific condition in the contract could allow liquidated damages. Secondly whether liquidated damages could be awarded, unless beneficiary have formally proved actual loss even if amount was fixed in that behalf. Admittedly liability against 'Bill of Exchange' was not cleared by appellants within due date. However, entire principal amount and part of mark-up was adjusted by the appellants before institution of suit, culminating in present proceedings. Thus, another factor needing consideration would be whether after receiving principal amount prior to institution of suit, respondent 'Bank' could demand liquidated damages. Perusal of Agreement for Irrevocable Documentary Credit Freely Negotiable in Beneficiary's Country, reveals that, stipulation for payment of liquidated damages, certainly existed. Now looking to factual side it is quite apparent that respondent 'Bank' despite opportunity has neither produced any evidence nor mentioned detailed break-up of losses actually suffered to justify demand concerning liquidated damages.
8. General principle for granting compensation when beneficiary alleges breach of contract; are obviously regulated by sections 73 and 74 of Contract Act. Evidently without proving actual loss, even fixed amount stipulated for liquidated damages does not become automatically payable.
Record manifestly displays that respondent 'Bank' has not adduced an iota of evidence suggesting quantum of actual losses suffered by reasons of default on the part of appellants. We, therefore, feel that demand for specified liquidated damages by creating liability through forced finance account against the appellant was not justified.
9. Adverting to other aspects it is not disputed, that mark-up calculated uptil filing of suit, was also claimed. Now analysing legal position, emerging from above factors apparently damages could be assessed either on the basis of expected profits under section 73 of Contract Act or actual loss where liquidated damages could be extended to 'Maximum amount mutually agreed between the parties within the purview of section 74 of Contract Act. It is obvious that appellants could not simultaneously claim 'liquidated damages' as well as mark-up for committing breach of stipulation subject-matter of contract. Therefore, we unhesitatingly observe that amount of mark- up having been separately claimed, by respondent-Bank; its demand concerning damages specially without formally proving the same is not warranted. Trial Court has cursorily, without specifying any reasonings has allowed benefit of mark-up for entire period besides ' liquidated damages' to respondent 'Bank' . Thus, we are pursuaded to hold that, benefit of mark-up for entire period clearly suggests, expected profits on agreed rates; therefore, no justification existed to allow liquidated damages, specially without substantiating the same. Accordingly claim put forth by respondent 'Bank' concerning liquidated damages is not sustainable. It may further be observed that payment of future expected profits; calculated as per agreed percentage of mark-up on the decretal amount by "excluding liquidated damages" is certainly fair and proper and would meet ends of justice.
10. It would not be out of place to mention, that during pendency of proceedings, appellants have deposited various amounts under the directions of this Court which necessarily requires adjustment towards decretal amount, costs and future expected profits calculated at agreed rate of mark-up. However, after accounting by excluding amount of liquidated damages, if any liability still subsists same be recovered from securities furnished by appellant before this Court. On clearance of entire decretal amount with costs and future mark-up (excluding liquidated damages) the securities shall stand discharged. It may be clarified that property which has already been mortgaged in favour of respondent 'Bank' shall remain under-lien till entire decretal amount is completely satisfied.
' The appeal is disposed of in the above terms. Decree be modified accordingly. Parties are, however, left to bear their own costs.