1. ' Through this application, preferred under section 10 of Act XV of 1997, the defendant No,2 who is sued as guarantor, has sought leave to defend the proceedings. It is urged by the learned counsel for defendant No,2 that the plaintiff was paid a sum of Rs,2.5 million on 25-9-1989 and a further sum of Rs,7,10,000 on 3-10-1993 towards pertial liquidation of liability in respect of the two Letters of Credit No,KCY/3/97792 and KC"/3/97778. It is submitted by Mr. Tanoli that such amounts have not been credited in the account of defendant No,1. The case of defendant No,2 further is that it is ready to take delivery of the imported merchandise upon retirement of documents paying the principal amount with mark-up for 150 days from the date of lodgement subject to delivery of the goods.
2. ' Mr. Tasawur Ali Hashmi, appearing for the plaintiff, submits that the defendant No,1 has already taken delivery of the goods covered by Letter of Credit No,KCY/3/097792 upon execution of Trust Receipt which has been filed as Annexure G-4 with the plaint. It is further urged that the status of defendant No,2 is merely of a guarantor and the delivery of goods can be taken by the defendant No,1 alone. The liability of the defendant No,2 as guarantor is to make payment of the Letter of Credit amount within two (2) days of demand in the event of default committed by the defendant No,
1. It is further urged that both the L.Cs. Were usance Letters of Credit payable after 150 days. The period of 150 days was prescribed for the purpose of making payment to the beneficiary and, therefore, no limit for charging mark-up could be inferred therefrom. Reliance on behalf of the plaintiff for charging mark-up and the commission has been placed Instructions Circular No,108 of 1997. The receipt of the sum of Rs,2.5 million against the subject Letters of Credit has been denied and to substantiate such assertion, copy of Credit Voucher showing receipt of a sum of Rs,2.5 million on 3-9-1989 has been produced. Such voucher shows that the amount of Rs,2.5 million was received in respect of Letter of Credit No:097509 established on behalf of the defendant No,2. The last mentioned Letter of Credit, according to the plaintiff, was quite distinct from the subject transaction. As regards the amount of Rs,7,10,000 allegedly paid on 3-10-1993 by the defendant No,1, Mr. Hashmi submits that whatever amount was received from the defendant No,1 has duly been accounted-for in the statement of account.
3. ' As to the liability for principal amount, the same has not been disputed by the defendant No,2.
4. However, it to be considered as to for what period, the plaintiff can charge mark-up from the defendant No,l. Admittedly, the Letters of Credit in question were usance L/Cs and payable at 150 days on D.A. Basis from receipt of the Bill of Lading. Although the documents filed in support of the plaint do not show the actual date of payment to the beneficiary, the Letter of Credit amount could not have become due before its payment. The plaintiff, therefore, could have made claim for recovery immediately upon the,amount became in due as above but it has chosen to delay the filing of proceedings till 17-10-1997 when the present suit was filed. The plaintiff cannot burden the defendant with liability for mark-up merely on account of its own negligence in preferring the claim. The delay in preferring claim and the resultant loss allegedly caused to the bank can be attributed to officers/staff of the plaintiff itself and it is imperative for the bank to fix responsibility for the loss and take departmental action accordingly. As regards the rate of mark-up, the plaintiff's reliance is on its Circular No,108 of 1997. The circular was admittedly issued in 1997 and cannot apply retrospectively to a transaction which has taken plance in the year 1989. The Letters Credit and the correspondence exchanged between the parties including the application for establishment of Letters of Credit do not show if the parties had agreed to payment of any mark- up. The plaintiff has not produced any documents to show if any instructions for charging mark-up were issued prior to establishment of Letters of Credit in question and/or the same were brought to the notice of the defendants to regulate the terms thereof. Markup, under the Islamic Law of Banking, can be charged only if an agreement is reached between the parties to that effect. In the present case, the plaintiff having failed to show existence of any agreement for charging mark-up, is not entitled to claim the same. The question then is as to whether the non-entitlement of the plaintiff to claim mark-up, can be considered a serious and bona fide dispute entitling the defendant No,2 to grant of leave. I am afraid, the answer to the above question has to in the negative for the reason that the amount of mark-up claimed by the plaintiff can conveniently be segregated from the remaining claim. As to the contention that the defendant No,2 is prepared to retire the documents upon payment of the principal amount with mark-up for period of 150 days, suffice to observe that such claim could lawfully be made only by the defendant No,1 who has chosen not to defend the proceedings. The defendant No,2 cannot assert the right to delivery of the imported merchandise and cannot be granted leave on such ground.
5. ' The application for leave to defend, in the circumstances, is dismissed.
6. ' As a result of dismissal of the application for grant of leave and on account of non-filing of application for leave by the defendant No,1, the contents of the plaint are to be deemed to have been admitted. The plaintiff has claimed a sum of Rs,19,862,659.41 as the principal amount due under the letter of credit in question out of which it has admitted receipt of a sum of Rs,5,623,500 by way of adjustment of the margin amount. The balance of Rs,14,239,159.41 is outstanding and due against the defendants. The plaintiff cannot claim any mark-up over the said amount for want of agreement between the parties. The plaintiff has also failed to the any material entitling it to claim mark-up which is disallowed despite the admission of its liability for 150 days contained in the application filed by the defendant No,2. The defendant No,1 is the principal-debtor who cannot be burdened with mark-up on the basis of said admission made by the guarantor.
7. ' In the circumstances, the plaintiff's suit is decreed against the defendants jointly as well as severally in the sum of Rs,14,239,159.41 with mark-up at the rate of 16% per annum from the date of institution of suit till its payment. The plaintiff's suit is also decreed for sale of the pledged stock and for costs of the proceedings.