1. ' The present suit has, inter alia, been filed for recovery of a sum of Rs,12,862,201 and damages of Rs,1,000 million. The plaintiff is a public limited company engaged in the Ceramics business having its factory at Industrial Area Jamrood Road, Peshawar., The defendant No,1 is a Development Finance Institution (DFI) falling within the definition of banking companies under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (hereinafter referred as Act XV of 1997). The defendant No,2 is State Bank of Pakistan established under the State Bank of Pakistan Act, 1956.
2. The facts leading to the filing of present proceedings. According to the plaint, briefly stated, are that the plaintiff had availed loan/finance under Agreements, dated 12th November, 1983 and 26th June, 1986 in the sum of US $ 1,930,534 equivalent to Rs,29,864,134 and Rs,8,706,000 respectively. The loan was repayable in 16 instalments payable biannualy from 15-3-1987 to 15-9-1994 whereas the other facility, referred as Bridge Loan, was repayable in lump sum within two years from the date of disbursement. According to the plaintiff, it has repaid a sum of Rs,53,324,842 towards repayment of the loan/finance thus making over payment of Rs,14,754,708. It is further averred in the plaint that on 5th June, 1997, the defendant No,2 had announced a One-time Incentive Scheme for settlement of bank dues through. BPRD Circular No,19 of 1997, hereinafter as 'Incentive Scheme', where under different slabs were prescribed for settlement of dues of the Banking Companies. The plaintiff, according to its averments in the plaint, qualified for the category specified under para.4(a)(i) of the above-referred circular. The referred paragraph of the circular, being pertinent, is reproduced hereunder:--
4. The details of the scheme are as under:--
(a) All defaulters can make a full and final settlement of their outstanding liabilities owing to a nationlized commercial bank D.F.Is. As under: {{TABLE}}
(i) 7 years and Principal + 5% of above Principal Amount
(ii) 3 years or more Principal + 20% of but ... Principal Amount less than 7 years.
(iii) 1 year or more Principal + 40% of but Principal Amount less than 3 years or 75% of accrued mark-up whichever is less. {{TABLE}}
(b) For applying the slabs mentioned above the period will be reckoned backward as from June 6, 1997.
(c) A parity may approach the bank/D.F.I. Concerned or in the case of consortium loan, to the lead bank/D.F.I. Within a period of one month of the issuance of this circular Under intimation to other participating bank/D.F.Is. And reach an agreement to pay the above amounts on the above basis in full and final settlement of his over-due obligations.
(d) If a bank or DFI fails to accept the settlement on the above basis, the party concerned may submit a complaint in writing to the "Complaint Cell" of the State Bank of Pakistan which is headed by Mr. Khalid Mahmud Saleem, Executive Director, State Bank of Pakistan, Central Directorate, Chundrigar Road, Karachi (Phone: 2417871 Fax:2425306)
(e) The above incentives will be available to all cases of default including those of sick units."
2. ' The plaintiff's case is that benefit under the incentive scheme offered by the State Bank of Pakistan, as above, was to be extended mandatory to all the defaulters including the plaintiff.
3. According to defendant No,1, for settlement of its liabilities, 5% of the principal amount had to be paid by it over and above the principal sum of Rs,38,570,134 availed by it under the agreements , dated 12-11-1983 and 26-6-1986. The amount repayable by adding 5% of the principal amount, according to the plaintiff, comes to Rs,40,498,641 and having already paid a sum of Rs,53,324,842, excess payment of Rs,12,826,201 was alleged to have been made. The plaintiff has sought recovery of the said amount stated to have been overpaid. In terms of the incentive scheme, the plaintiff claims to have approached the defendant No,1 through letter, dated 16-6-1997 asserting over payment of dues. The defendant No,1 however, declined to accept the claim of plaintiff through its replies, dated 1-7-1997 and 23-8-1997. The plaintiff, thereupon, claims to have lodged complaint, dated 26-8-1997 with defendant No,2 against the defendant No,1 in terms of para. 4(d) of the incentive scheme. According to the plaintiff, no action has been taken by the two defendants who instead have included the names of plaintiff and its Directors in the list of defaulters issued by the Credit Information Bureau (CIB) resulting in loss to the plaintiff. By way of compensation and damages a sum of Rs,1,000 million has been claimed. The prayer clause in the plaint is extraordinarily comprehensive rather containing unjustified and irrelevant prayers.
3. The defendant has resisted the suit asserting that the plaintiff had been making payments from time to time without protest and did not qualify for the benefits thereunder. It is further averred that the benefits under the incentive scheme cannot be claimed 'as of right by any party and settlement of the stuck up and dead loans were intended to be covered by the Scheme. On account of re-scheduling of loans, voluntarily availed by the plaintiff in the year 1995, the plaintiff did not fall under any of the categories mentioned in Para.4 of the incentive scheme. The plaintiff's claim for recovery and damages was disputed on the above basis.
4. On the basis of the pleadings of the parties, the following issues were settled on 16-3-1998:--
(1) Whether the suit is maintainable in its present form against the defendant No,2?
(2) Whether the plaintiff is entitled to benefits of the State Bank Incentive Scheme?
(3) Whether the plaintiff has made any over payments to the defendant No,1 and is entitled to refund thereof. If so, to what extent?
(4) Whether the plaintiff has suffered any losses, and is entitled to any damages, if so, to what extent?
(5) To what relief is the plaintiff entitled?.
4. ' The plaintiff has examined its Assistant Manager (Accounts) Muhammad Aurangzeb as Exh.5 whereas the defendant has examined its Assistant Vice-President, Malik Muhammad Ramzan as Exh.6. I have heard the arguments and perused the record. My findings, issuewise, are as follows:-- ' Issue No,1.--- This issue was not pressed by the learned- counsel .For defendants and is disposed of as such.
5. ' Issue No,2.--- The burden to prove this issue is upon the plaintiff who has claimed itself entitled to benefits of the incentive scheme. The learned counsel for the plaintiff has referred to the scheme, Exh.5/7. Besides, the paragraph quoted here in above from the incentive scheme, paragraph 3 thereof sets out the objects of the scheme which had, statedly, been announced as a prelude to determined pursuit of defaulters and to provide a onetime opportunity to them to voluntarily settle the matter of their pending obligations. The age of default is defined by the State Bank of Pakistan in its subsequent BPRD Circular No:36, dated 17th July, 1997 (Exh.5/A) whereby in relation ,to short term financing, the customer is, treated to have committed default, in case of non-repayment for 90 days from the agreed date. As regards term loan, default is to be treated after 365 days from the, due date of each instalment and every instalment is to be treated-as a loan in itself for the purpose of calculating the age of default. The plaintiff, therefore, in order to avail the benefits of incentive scheme has to demonstrate that it was a defaulter for 90 days in repayment of Bridge Loan and for other loan 365 days on 5th June, 1997 when the incentive scheme was introduced. The relevant pleadings in this behalf are contained in para. 17 of the plaint wherein it is averred that the defendant No,1 had coerced the plaintiff to accept re-scheduling and created fresh loan by converting mark-up into principal in violation of BPRD Circulars Nos.13 and 32 of 1984. The statement, Exh.5/1, prepared and filed by the plaintiff itself shows that payments were regularly made by it since July, 1995. The last payment of Rs,500,000 was made on 1-4-1997 allegedly in respect of the loan granted on 12-11-1983 whereas the last payment towards Bridge Loan was made on 14-6-1992. The defendant No,1 has asserted rescheduling which though referred in the plaint is not admitted by the plaintiff to have become operational. Applying the principle contained in Article 119 of Qanun-e-Shahadat, the burden to prove rescheduling of loans is upon defendant No,1. The sole witness (Exh.6) produced by the defendant No,1 has stated "the liabilities of the plaintiff had been restructured at its own request". This statement of the witness has remained unchallenged in the cross-examination. The defendant No,1 in its written-statement has averred in paragraph 6 as follows:-- "6. ...In fact, the plaintiff itself requested the defendant to reschedule the loan in view of the problems being faced by it. The rescheduling was duly accepted by it and supplemental agreement etc., were executed by it."
6. ' In para. 7 of the written-statement, the following averment again, is relevant:-- "7. ... Since the plaintiff failed to repay the amount within the due date, the same was renewed/rescheduled and the amount of interest has been calculated accordingly."
7. ' In view of the above-stated averments and the statement made by Malik Muhammad Ramzan, Exh.6, it is clear that the parties had agreed for re-scheduling and re-structuring the liabilities.
8. However, the terms of such re-scheduling have not come forth. The plaintiff has not produced any evidence to substantiate its assertion that the re-scheduling as without consideration or was void on any other ground.
9. ' Before proceeding further, I cannot resist commenting on the mechanism and the object of the incentive scheme. The scheme, ex facie, provides for non-acceptance of an offer of settlement at its option by the concerned banking company. The very paragraph of the scheme which was pressed into service by the plaintiff, itself, visualises failure of a bank or D.F.I. To accept the settlement of dues and submission of complaint before the Complaint Cell of the State Bank of Pakistan. Thus, the scheme itself had left room for the banks and the D.F.Is. To decline settlement under the scheme. Moreover, the provisions of complaint and absence of any consequential penalty tends to indicate that acceptance of settlement in terms of the incentive scheme was not mandatory. I am mindful of the principle laid down by the Supreme Court in Independent Newspapers Corporation (Pvt.) Ltd. v. Chairman, Fourth Wage Board and Implementation Tribunal for Newspaper Employees, Government of Pakistan 1993 SCM R 1533 to the following effect:-- "6. There is much weight in the contentions of Mr. Kahlid Ishaque. The principle is well-settled that when express statutory power is conferred on a public functionary, it should not be pushed too far, for, such conferment implies a restraint in operating that power, so as to exercise it justly and reasonably. In the words of Scarman, L J. 'excessive use of lawful power is itself unlawful' (The Development of Administrative Law, published in Public Law, 1990, page 490 at 491). Further, there is a presumption that the Legislature does not transgress its jurisdiction and invade the fundamental rights given by the Constitution. This rule is to be kept in view also in construing and enforcing the law."
10. ' The above rule, however, cannot be stretched to make it obligatory upon a banking company to accept the offer made by a borrower/customer for settlement of dues. The scheme has itself left room for refusal to accept settlement in given cases. However, exercise of the discretion has to be justified with convincing and strong reasoning. I am tempted here to repeat the settled proposition that exercise of power must not be colourable, arbitrary and discriminatory. Use of authority and power, conferred by law, has to be bona fide, transparent and reasonable. In the present case, however, the logic for leaving discretion is understandable since there were known cases of defaulters who through their conduct had rendered themselves disqualified for any indulgence.
11. What bothers me in this case is that the defaulters were given the benefit of one-time settlement whereas those who were faithfully and honestly making efforts for repayment were excluded from the benefits of the scheme. The little experience I have had while dealing with case under Act XV of 1997, compels me to observe that the ratio of borrowers/customers, willing to repay, is negligible.
12. However, it does not mean that there are none. It is unfortunate that the law-abiding customers and borrowers have been . Penalized for their honesty. The concerned ministry of the Government of Pakistan and the State Bank of Pakistan should seriously consider grant of benefit to those who are not defaulters within the meaning of the incentive scheme, at least in identical terms to what has been extended to the defaulters. A copy of this judgment be forwarded to the Secretary, Ministry of Finance, Islamabad and to the Governor, State Bank of Pakistan.
13. ' In the present case, the issue of applicability of the incentive scheme seems to have been raised out of proportion. The case of defendant No,1 itself is that the plaintiff had opted for settlement under the Incentive Scheme and had conveyed its calculation of the outstanding amount to the defendant No,1 who did not accept such calculation and itself worked out details of dues in terms of the incentive scheme. The following statement made by the witness of defendant No,1, Malik Muhammad Ramzan, is pertinent to be referred and is as follows:-- "The defendant No,1 had worked out details in terms of the State Bank of Pakistan Incentive Scheme as announced under the BCD Circular No,19 of 1997. The information about such wording was conveyed to the plaintiff who instead of accepting the terms conveyed to them, sent a reply based on misinterpretation of the Scheme. Meanwhile, BCD Circular No,19 of 1997 was amended by the State Bank of Pakistan through BCD Circular No,36 of 1997. The defendant No,1, again worked out the figures for settlement in terms of BCD Circular No,36 of 1997 which were duly conveyed to the plaintiff. The plaintiff did not respond to the last-mentioned communication. I see Exh.5/11 and say that it is copy of the letter sent by defendant No,1 to the plaintiff. Under the State Bank of Pakistan Incentive Scheme, the position of arrears as on 6-6-1997 was to be considered determining factor."
14. ' The above stand taken by the defendant No,1 clearly shows that the plaintiff was entitled to benefits of the Incentive Scheme but the same could not be given effect on account of failure to reach a consensus figure of the outstanding dues. My finding on issue No,2, therefore, is in the affirmative.
15. ' Issues No,3.--- The plaintiff in relation to this issue has claimed that it has overpaid a sum of Rs,12,826,201. In support of such claim defails of the re-payment made to the plaintiff have been stated in Exh.5/1. The witness of the defendant No,1 when confronted with the statement, Exh.5/1, has acknowledged all the payments. The question which needs to be examined here is if the plaintiff has succeeded in establishing any over payment. The case of the defendant No,1 is that the parties had agreed to rescheduling, and such arrangement was acted upon. The re-scheduling agreement amounts to novation of the earlier arrangements which stood superseded for all intents and purposes. The statement, Exh.5/1, supports such plea and the plaintiff is shown to have made payment on monthly basis almost regularly, However, nothing has been brought on record to show the terms of re-scheduling and to determine the period of default applicable to the plaintiff. Indeed, the extent of restructured liability has also not come on record. In the absence of evidence to the above effect, no finding can be recorded about payments having been made in excess of liabilities.
16. ' Issue No,4.--- The burden to prove this issue is upon the plaintiff. The plaintiff has claimed damages in the sum of Rs,1,000 million. The relevant pleadings are contained in paragraph 31 seq in the plaint. The claim for damages is based on non-dispatch of plaintiff's case to the committee of sick units, threat of recovery of amount claimed by the defendant No,1 as arrears of land revenue, non-acceptance of plaintiff's offer of settlement under the Incentive Scheme and inclusion of plaintiff in the list of defaulters maintained by Credit Information Bureau of the State Bank of Pakistan. The plaint does not contain details of any losses suffered by the plaintiff on account of the above-referred allegation. The claim for damages in the sum of Rs,1,000 million appears to have been assessed by application of rule of thumb and details thereof have not been disclosed. Even in his examination-in-chief, plaintiff's witness Muhammad Aurangzeb, Exh.5, has simply stated that damages in the sum of Rs,1,000 million are sought. I am afraid in a case for damages, details of the loss are required to be disclosed and in the absence of proof of each and every item, the claim has to be rejected being remote and unproved. The plaintiff having failed to prove losses, the finding on this issue is in the negative.
17. ' Issue No,5.--- As a result of my findings recorded herein above, the suit is dismissed with no order as to costs.