1. Upon refusal to grant leave to defend the suit. I had `directed by order dated 22-11-2000 the parties to file the details of the amount actually withdrawn and the amount actually paid from the date when the agreement was first entered into. Both the counsel have filed their relevant statements of accounts. Mr. -Ainuddin Khan in the statement of account has stated that the principal amount as on 26-7-1992 being the renewal stands at Rs,11,877,433.95 and subsequently shows mark-up on daily product basis alongwith the mark-up of 210 days and liquidated damages thereby coming to the figure claimed in the suit. The defendants on the other hand have shown the actual withdrawal from 1990 till date and have also shown deposits from 1990 till date and according to them a sum of Rs,42,892,703 have been withdrawn whereas a sum of Rs,36,944,142.50 have been actually deposited. This amount of actual withdrawals and deposits does not include the mark-up that is allowed for the period of finance namely one year. The amounts shown are the actual withdrawal. The defendants have stated that the rate of mark-up is Rs,0.48 per thousand per day (17.52%) and the buyback price was Rs,15,955,000, but because the amount was available and remained available to them being the sale price received by them the amount was utilized and it is, therefore, that the figure of Rs,42,892,703 is shown. He states that the repayment shows that the figure has not exceeded the sanction amount of 12.5 million and even on the date of the filing of the suit the amount repayable was only Rs,5,948,560.50. The defendants have in their statement shown the appropriated buyback price at Rs,1,600,000 which is calculated on the repayment as on the date. According to them the amount, therefore, of the liability that is payable by them to the plaintiff is Rs,7,548,560.50 instead of amount of Rs,31,331,777.04 as claimed by the bank.
2. Mr. Ainuddin Khan has stated that the agreement is liable to be looked into from 1992 and not 1990 and that the payments made by them during the year 1990, is not liable to be included for the purpose of the determination of the amount. The question arises as to whether the subsequent section advice Annexure 'A-1' to the plaint is to be looked into or will it be Annexure 'A' to the plaint, the sanction advice, that will be taken into consideration. In Annexure _A', the total amount is the enhancement of the existing limits that was granted on 20-12-1990 in the sum of Rs,12.5 million with a mark-up of Rs,0.39 per thousand per day (14.23%). The agreement of 1990 in respect of the original finance Shad not been filed alongwith the plaint in suit. The question could have arisen whether the present suit is also maintainable or not in the absence of the original agreement but as the finance was continued to be availed of during the period of 1992, therefore, it was stated, that the suit was maintainable. Moreso, the plaintiff had filed with the counter-affidavit, the original agreement dated 2-12-1990 shows the purchase price at, Rs,12.5 million and the repurchase price at Rs,15,303,125. I proposed to proceed on the basis of the original agreement rather than on the second agreement. At this Mr. Ainuddin Khan stated that the second agreement was duly entered into and as the same has been entered into and agreed upon by the defendants it is this agreement that has to be considered and not the previous agreement. Mr.Ainuddin Khan stated that in fact this was a running account and that, such accounts in their very nature cannot actually determine the purchase price or repurchase price as such, there can be no possible determination of the repurchase price despite the amount mentioned in the agreement. I have pointed out to Mr. Ainuddin Khan that the agreements are contractual obligations and have to be acted upon in the manner as contemplated therein. Mr. Ainuddin Khan read the preamble of the agreement dated 2- 12-1990 which is as under:-- "(I) The customer has agreed to sell to the Bank raw-materials/finished goods, spares/machinery etc. (hereinafter referred to as 'Goods') up to a sum of Rs,12,500,000 (Rupees twelve millions five hundred thousand only)"
3. The agreement also in its paras. 1 and 2 of the main part refers to the purchase by the bank and its resale to the customers, whereby upon the resale to the customers of the goods purchased by the bank, the purchase price has been mentioned as Rs,15,303,125. This is an agreement which in its very term is bai muajjal or a morabaha agreement in which agreement the sale has A been made to the customers and repayment thereof has been deferred. The deferment of payment is nothing but a debt credit) payable by the defendants to the plaintiff Imam Malik has reported a ruling of Abdullah Ibne Umer (God be pleased with him) that "whoever advances a loan must not stipulate except the principal loan shall be payable" (Muwatta Imam Malik, page 613, Noor Muhammad, Karachi). This has also been referred to by in the case of HBFC, v. Rana Muhammad Sharif (Shariat Law Reports 515) and has also been referred to in the order of the Supreme Court in the case of Dr. Muhammad Aslam Khaki and others v. Syed Muhammad Hashim and others PLD 2000 SC 225. Dr. Moulana Taqi Usmani, J. In this judgment has elaborately discussed the question of what is sale and what is Riba. In the judgment it is held that:-- "135. One of the wrong presumptions on which all theories of interest are based is that money has been treated a commodity. It is, therefore, argued that just as merchant can sell his commodity for a higher price than his cost, he can also sell his money for a higher price than its face value, or just as he can lease his property and can charge a rent against it, he can also lend his money and can claim interest thereupon." Having held that money cannot be sold, Moulana Muhammad Taqi Usmani, J. Further proceeded to explain the theory on as to why money could not be exchanged. He stated that, as money is not a commodity it cannot be treated like other commodities and its use has been restricted to its basic purpose namely to act as a medium of exchange and as a measure of value. He said that the Holy Qur'an has categorically spelt out that "Allah has allowed sale and prohibited interest". He said that the sale is in the nature of trade and where money cannot be sold it cannot be traded. In the circumstances, no increase under any circumstances of a debt that has been created can be allowed. In the order of the Supreme Court in the case of Dr. Aslam Khaki it was held that: "23. We have already held that although the mark-up system as in vogue in our banks is repugnant to the Injunctions of Islam, yet it is not correct to assert that the transaction of murabaha or bai muajjal in itself is prohibited. If the transaction fulfills the necessary conditions spelled out above, it cannot be held repugnant to the Injunctions of Islam. But the reference of this transaction in this clause, in the context of a return on a promissory note or a bill of exchange is not according to the basic principles of a Murabaha transaction. The reason is that murabaha or bai muajjal is a transaction of sale effected on the basis of deferred payment. One of the basic conditions of this transaction, like any other sale, is that the price is fixed at the time of the original contract of sale.
4. This price may include a margin of mark-up (profit) added on the cost incurred by the seller. To determine the amount of mark-up, the seller may take different factors into consideration, including the deferred payment, but as already explained once the price is fixed, it will be attributable to the commodity and cannot be increased or decreased unilaterally, because as soon as the sale is accomplished, the price of the commodity became a debt payable by the purchaser. If this debit is evidenced by a promissory note or a bill of exchange, it is not different from a note or a bill evidencing a loan, and no return, whatsoever, can be changed over that note or bill, because it will amount to charging interest on the debt."
5. After having discussed that nothing can be increased on a debt it was held that: "a purchase who has delayed payment despite his ability to pay may be subjected to punishment but, it cannot be taken to be a source of further return to the seller on percentum basis." In view of the judgment of Shariat Appellate Bench of the Supreme Court of Pakistan in the case of Dr. Aslam Khaki and others, I am of the view that the debt had been created under 1990 Agreement and that upon the debt having been created in 1990 no further increase in any manner whatsoever can be made. Mr. Ainuddin Khan states that the agreement of 1992 was by consent of both the parties. It is a principle of law that, what cannot be done directly cannot be done indirectly and that, no agreement against public policy is a valid contract. Mr. Ainuddin Khan states that even in Islam any agreement that is written shall be a valid contract and will be binding on both the parties. No doubt, this is a.
6. Correct proposition but the position in the present case is that under this agreement there has not been any sale as has been contemplated under the contract and no money disbursed, and has therefore not been acted upon. No amount having been disbursed under the 1992 agreement and this agreement does not contemplate continuation of previous agreement, therefore, the agreement of 1992 is not a valid contract and cannot be looked into. In the circumstances, I hold that all credits and debts made from 1990 shall be looked into and shall be taken into account. The repurchase price has been determined in the contract and the amount that has been determined is Rs,15,303,125. The purchase price of Rs,12.5 million is liable to be deducted from this amount to arrive at the mark-up that has been agreed between the parties. The amount after deduction comes to Rs,2,803,125. I have verified the withdrawals on the deposits. The principal amount payable as on 30-6-1998 comes to Rs,5,948,560.50 in which the amount of mark-up in the sum of Rs,2,803,125 is liable to be added. The amount, therefore, liable to be paid with mark-up by the defendant is Rs,8,751,685.50. Mr. Ainuddin Khan states that this amount does not include the Excise Duty and other charges liable to be paid by the defendants and the same are liable to be included.
7. The amount of Excise Duty and other charges admittedly are Rs,656,452.60 which are liable to be included. After including the Excise Duty and other charges, the total liability of the defendants comes to Rs,9,406,138. I, therefore, decree the suit against the defendants in the sum of Rs,9,408,138 with mark-up thereon at the rate of 17.52% as stated by the defendants in their calculations from the date of the filing of the present suit till payment. The plaintiffs are also allowed costs of the suit.
8. Mark-up shall be levied on the last date of payment. There shall, however, not be any compounding of the mark-up in any manner whatsoever.