1. MUHAMMAD ASLAM ARAIN, J.--This appeal under section 9 of the Banking Tribunals Ordinance, 1984 is directed against the judgment and decree dated 10-4-1993 passed by the Banking Tribunal for Karachi and Sukkur in Suit No,7 of 1992 (United Bank Limited v. Messrs Novelty Enterprises Limited and others), where under the suit filed by the respondent on the basis of the confirmation slips dated 30-12-1987, is decreed.
2. The case of the respondents as set out in the suit under section 6(1) of Banking Tribunals Ordinance, 1984, for recovery of Rs,31,354,102 plus liquidated damages as on 1-12-1991, was that the plaintiff was a Banking Company registered under the Companies Act, 1913 having head office at State Life Building No,1, I.I. Chundrigar Road, Karachi, having a branch at Jubilee Insurance House, Karachi. It was stated that the defendant No,1 (now respondent No,1) was a company having Head Office at 192-A, Raja Square, Sindhi Muslim Co-operative Housing Society, Shahrah-e-Faisal, Karachi. The defendant No,2 was a mortgagor and defendants No,2 to 4 were guarantors It was the case of the appellant bank that through an application dated 30-6-1985 the respondent No,1 requested plaintiff Bank for opening irrevocable Letter of Credit in favour of M/s. Piaggio and Company International Corporation Div. To the extent of US $ 13,47,593.50 for the import of component for assembly/manufacturing of motor-cycles. The mark-up agreed to be paid, was at the rate prescribed by the State Bank of Pakistan i,e, 55 paisas per 1000 per day. Such request was granted by the appellant and the respondent established L.C.No,042/LC/1508/85 for US $ 13,47,593.50.
3. The appellant Bank received the import documents with regard to the consignment and a demand notice was sent to the respondent No,1 directing that retirement of documents be effected on payment of Foreign bills. The set of documents, which plaintiff Bank released were specified, in paragraph 6 of the plaint.
4. Case of the appellant further was that the Letter of Credit bearing above number was established on D.A. (Documents against Acceptance) basis. The import documents with regard to the consignment were received by the plaintiff Bank and defendant No,1 accepted the two Bills of Exchange, the maturity dates being 180 days from each B/L date. The plaintiff Bank wrote four letters to the defendant No,1 to retire the documents but once the defendants failed to pay on the maturity dates the plaintiff bank debited the P.A.D. (Payment Against Documents) account of the defendant on 19-11-1987 and 28-3-1988. Case of the appellant Bank further was that the defendant executed two balance confirmation slips dated 30-12-1987 thereby acknowledging his liability.
5. Defendant No,2 to execute a joint Letter of guarantee dated 30-12-1987 in favour of the plaintiff Bank.
6. It was all stated that the defendant No,2 executed an additional Memorandum, of Deposit of Title Deed i,e, her personal immovable property bearing plot No,6/6. Survey No,P.R.2, measuring 595 sq.
7. Yards, situated at Bachubhai Eiuljee Road, Preedy Quarter Karachi, on 3-5-1986. It was said that through this document the defendant No,2 agreed to continue earlier equitable mortgage in favour of the bank recredit facilities to M/s. Imtiaz Engineering Company Limited and the continuation of the equitable mortgage was for further facilities to the said limited company and to defendant No,1 to the extent of Rs,19,23,111.75 plus mark-up at the rate of 54 paisas per 1000 per day. It was also stated that for two other limited companies of the defendant No,1, namely M/s. Imtiaz Engineering Co. Limited and M/s. Rani Ghee Mills Limited, he availed facility from the plaintiff bank and availed various credit facilities from plaintiff bank and letters acknowledging liability to pay were sent by the Raja Group of Industries in respect of defendant No,1 and the said two companies which amount to acknowledging liability to pay.
8. Because the defendants neglected to pay the amount as was due, legal notice dated 20-12-1988, was sent to plaintiff bank. The total liability of ihe defendant in respect of the said Letter of Credit was shown as under:-- (i)As per P.A.D. Statement of accountRs,17,809,908.52 (ii)Mark-up on above till 1-12- 1991Rs,13,558,193.48 Total: Rs,31,354,102.00 On the basis of such averments, the prayer made in the suit was as under:--
(i) A final mortgage decree against defendants Nos. 2 and 3 for Rs,31,354,102.00 on 1-12-1991 and 20% Liquidated damages thereon amounting to Rs,6,270,820.00 making a total of Rs,37,624,922.00 with mark-up at the rate of 55 paisa for 1000 per day from the date of the suit till payment.
(ii) A decree singly and jointly against the defendant for sums mentioned is sub-para. (i) above.
(iii) Cost of the suit.
9. The respondent defended the above suit and challenged the claim of the plaintiff bank as set out in the plaint.
10. The learned Trial Court came to the conclusion that the plaintiff Bank could not charge any further amount except the amounts mentioned in Exhibits 'F and 'V', both dated 30-12-1987 for Rs,11.705 million and Rs,6.52 million respectively, including mark-up charges and mark-up per 210 days cushion period. It may be observed that at the hearing before the learned Trial Court Mr. Liaquat Merchant, learned counsel for the defendants submitted that without prejudice to other pleas taken by him, he would not case those pleas and conceded to the passing of the decree in the abovementioned amounts against defendant No,1 as well as defendants No,2 to 4, as prayed in the plaint.
11. The learned Trial Court having discussed all aspects of the matter decreed the suit against the defendants jointly and severally for Rs,11.796 million and Rs,6.52 million total Rs,18.31 million with future mark-up at the latest rate prescribed by the State Bank of Pakistan from the date of decree till realization under section 34-B, C.P.C. Find mortgage decree against defendant Nos.2 and 3 for Rs,18.31 million with future mark-up at the latest rate prescribed by the State Bank of Pakistan was also granted. The claim of A liquidated damages at the rate of 20% was not granted as no evidence was led by the plaintiff Bank to show that it suffered any loss or damages nor such plea was raised in the plaint.
12. We have heard the learned counsel for the parties and have perused the entire record. Contention of Mr. A.I. Chundrigar, learned Advocate for the appellant Bank is that on the basis of two balance confirmation slips, filed along with the plaint, the impugned judgment has come in favour of the appellant but the amount in the balance confirmation slips, which should have been made basis of the decree is not awarded/made. According to the learned counsel, the respondent had acknowledged the liability of the amount shown in the balance confirmation certificates and having damages the defendant respondent cannot be allowed to say that he was not liable to pay such and such amount. According to the learned - counsel the acknowledgement of amount in the balance-sheet should be accepted because respondents never challenge the same.
13. Mr. Farooq H. Naek, learned Advocate for the respondent, have pointed out to the balance confirmation slips, which included mark-up plus cushion mark-up, as allowed by the State Bank of Pakistan, and on that basis the suit was decreed. Contention of the learned counsel further is that the appellant cannot claim more than what has been decreed in their favour. Mr. Farooq H. Naek has also contended that the mark-up could have been claimed only for one year plus the cushion mark-up but there can be no mark-up over mark-up in a ease of Non-Interest Based Finance. He has referred to the circular of State Bank )f Pakistan dated 26th November, 1984 in support of the above intentions.
14. We have considered the above contentions. It is an admitted position that an Irrevocable Letter of Credit was opened at the request of the respondent on 30-6-1985 to the extent of US $13,47,593,50.
15. The import documents with regard to the assignment by the appellant Bank and demand notice sent to the respondent No,1 for effecting retirement of documents of Foreign Bills because the respondent No,1 fails to make the payment on the maturity date viz. After 180 days Appellant debited the P.A.D. Account of respondent No,1 on 19-11-1987 and 28-3-1988. It cannot be said that the respondent No,1 did not execute two balance confirmation slips dated 30th December, 1987 acknowledging by liability for the amount mentioned therein, appellant was entitled to one year mark-up and 210 days cushion mark-up in the light of agreement for Finance: executed between the appellant Bank and the respondent No,1 this as laid down by the State Bank of Pakistan in its Rules and Regulations.
16. Under Islamic mode of Banking in Pakistan, no mark-up charge after one year is allowed. The circular of the State Bank of Pakistan to that effect has been already referred.
17. Keeping in view the principles set out in the State Bank Circular No,32, dated 26th February, 1995 appellant was entitled only to the principal amount plus one year mark-up and 210 days cushion mark-up from the respondents.
18. The learned Tribunal granted decree for Rs,11.796 million plus Rs,6.25 million, total Rs,18,316 million in favour of the appellant Bank on the basis of two balance confirmation slips already referred which includes principal finance inclusive of mark-up charges and mark-up charges for cushion period.
19. It has rightly been observed by the learned Tribunal that the appellant was not entitled to any liquidated damages, as it had failed to show that it suffered any loss on account of non-payment of purchase price by the respondent on or before the stipulated period. As held in the case reported in 1993 M LD 1571, no liquidation damages can be allowed in favour of the appellant Bank.
20. The learned Tribunal passed the impugned judgment and decree for very valid reasons and had taken into consideration the law on the subject. The findings of the learned Tribunal, therefore, need no interference and the appeal is, therefore, dismissed with no order as to costs.