1. On 14-9-2000, the defendants were declared ex parte whereafter the Court required the plaintiffs to file a summary of the Statement of Account verified on oath giving details and break up of principal amount, buy back price, rate of mark-up, prompt payment bonus, mark-up charged for the cushion period, mark-up charged beyond the period of Agreement of Finance, mark-up on mark-up charged and any other amount debited to the account of the customer. On 13-10-2000, the case was fixed for further orders. This Court observed that the Statement of Account was not in accordance with its order of 14-9-2000. Miss Sofia Saeed, learned counsel has thereafter filed today a Summary of the Statement of Account which is verified on oath.
2. The brief facts of the case are that the plaintiffs a Development Financial Institution/Banking Company within the meaning of section 2(a)(ii) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act XV of 1997 field a suit against the defendants as Guarantors being customers within the meaning of Act XV of 1997. The suit against Guarantors only was filed on account of the fact that, the principal debtor is in the process of winding up as proceedings have commenced and that, they could not be sued unless an appropriate application under section 316 of the Companies Ordinance was made. She stated that otherwise also the guarantors could be sued independent of the principal debtor, on the basis of the Letters of Guarantee. She said that the plaintiff had requested the defendants grant two separate finances to. Ultra Engineering Industries (Pvt.) Ltd. under agreements of purchase and sale, dated 20-8-1989 and 18- 3-1991 for a sum of Rs.9.800 million and 8.68 million respectively. The plaintiffs have filed the said agreements as Annexures P.1 and P.2 to the plaint. The defendants guaranteed the repayment of the said finances in the event of non- payment by the principal debtor namely Messrs. Ultra Engineering Industries Private Limited (under winding up) the defendants, therefore, guaranteed by letter of guarantee the said two distinct finances by guarantees, dated 20-8-1989 and 20-3-1991.
3. Alongwith the said guarantee there are also four Armexures giving details of the properties held in the name of the guarantors. However, the said guarantors have not executed any mortgage nor have mortgaged the said properties with the plaintiffs. The claim of the plaintiff in accordance with the Statement of Account filed with the plaint is Rs.31,593,857.55. The claim under the Statement of Account filed today is also stated to be the same.
4. I have perused the documents as also the Statement of Account filed by the plaintiffs today. I shall deal with each agreement separately.
(1) Agreement, dated 20-8-1989: The contractual price stated in the said agreement is Rs.9,800,000. However, the amount actual disburied is Rs.9.799,850.02. The said amount was disbursed as the price agreed for the supply and delivery of machinery under the contract with the supplier, to the company. It was, therefore, agreed under the said agreement that the purchase price (the price at which the company had agreed to repurchase the machinery) was agreed at Rs.14,907,733. I have seen in the Statement of Account presently that the buy back price has been stated to be 16,288,651.73 and has been calculated as 6 per cent. of the purchase price. I had, therefore, asked Miss Sofia Saeed who was being instructed from Muhammad Hussain of the plaintiffs Bank, as to how this was done. She stated that this was done on account of para 2.07, which reads-- It is, however, specifically understood and agreed to by and between the parties hereto that this Purchase Price, based on certain assumption as to disbursements etc., is tentative and that the final purchase price which might even be a higher price shall be conveyed to the Company at a later point of time' ."
5. The relevant portion that has been read out by Miss. Sofia Saeed, suggested that the purchase price could be increased if the disbursement had, gone beyond the actual contractual price. In this, however, the actual contractual price actually disbursed was lesser than the value mentioned in the agreement. Notwithstanding the above also an increase of the purchase price could not have been affected as, the price of the machinery had not changed. Miss: Sofia Saeed has referred to a letter, dated 10-11-1994 in which the principal namely Ultra Engineering Industries Limited has requested for rescheduling of the two finances and in which letter it is stated:-- "In view of the above, we submit our request in the following manner.
(1) Entire mark-up and other dues up to 31-12-1994 may be adjusted against the proceeds of Long Term Loan (T.F.C)
(2) Repayments of Principal Amount of Phases I and II would be commenced from 1-1-1996.
(3) Mark-up and other charges that would become due on and after 1-1-1995 will be paid regularly."
6. Subsequently also various letters were written to the same effect. The production of this letter contradicts the arguments, that under clause 2.07 the purchase price could be increased. The agreement is categorical, with the assumption being, that, the contract price remaining the same, the purchase price will be payable, but on a change in the contract price, the purchase price may be altered. Statement of account also does not speak of a change in the original contract price, the purchase price, therefore, cannot be changed. The buy back price (the purchase price) has been calculated on the amount actually disbursed by adding 6 per cent. as mark-up. In the plaint also it is not pleaded that there was any cause for change of the price. I would, therefore, hold that the purchase price is the actual debt that has been created by the agreement, dated 20-8-1989 and which debt cannot be changed or altered.
7. I shall now come to the second agreement, dated 18- 1991.
8. Agreement, dated 18-3-1991: The contractual price stated in the said agreement is Rs.8,681,000.
9. However, the amount actual disbursed is Rs.8,037,193.80. The said amount was disbursed as the price agreed for the supply and delivery of machinery under the contract with the supplier, to the company. It was, therefore, agreed under the said agreement that the purchase price (the price at which the company had agreed to repurchase the machinery) was agreed at Rs.13,426,066.07. I have seen in the Statement of Account presently that the buy-back price has been stated to be Rs.14,441,589.59 and has been calculated as 6 per cent. of the purchase price. I had, therefore, asked Miss Sofia Saeed who had instructed from Muhammad Hussain stated that this was done on account of clause 2.07 that: "It is, however, specifically understood and agreed to by and between the parties hereto that this Purchase Price, based on certain assumption as to disbursements etc., is tentative and that the final purchase price which might even be a higher price shall be conveyed to the Company at a later point of time."
10. The relevant portion that has been read out by Ms. Sofia Saeed, suggested that the purchase price could be increased if the disbursement had gone beyond the actual contractual price. In this, however, the actual contractual price actually disbursed was lesser than the value mentioned in the agreement. Notwithstanding the above also an increase of the purchase price could not have been affected as, the price of the machinery had not changed. Miss Sofia Saeed has referred to a letter, dated 10-11-1994 in which the principal namely Ultra Engineering Industries Limited has requested for resheduling of the two finances and in which letter it is stated: "In view of the above, we submit our request in the following manner.
(4) Entire mark-up and other dues up to 31-12-1994 may be adjusted against the proceeds of Long Term Loan (T.F.C.)
(5) Repayments of Principal Amount of Phases I and II would be commenced from 1-1-1996.
(6) Mark-up and other charges that would become due on and after 1-1-1995 will be paid regularly."
11. Subsequently also various letters were written to the same effect. The production of this letter contradicts the arguments that under clause 2.07 the purchase price could be increased. The agreement is categorical with the assumption being, that, the contract price remaining the same the purchase price will be payable but on a change in the contract price the purchase price may be altered. Statement of account also does not speak of a change in the original contract price, the purchase price, therefore, cannot be changed. The buy-back price (the purchase price) has been calculated on the amount actually disbursed by adding 7 per cent. as mark-up. In the plaint also it is not pleaded that there was any cause for change of the price. I would, therefore, hold that the purchase price is the actual debt that has been created by the agreement, dated 20-8-1989 and which debt cannot be changed or altered.
12. I am of the view thai any increase in the actual debt payable shall amount to Riba which is against the Qur.' anic Injunctions. In the case of Dr. M. Aslam Khaki and others v. Syed Muhammad Hashim and others reported PLD 2000 SC 225. It has been held that: "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. This price may include a margin of mark- up (profit) added on the cost incurrected 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.
13. After further discussion the Shariat Appellate Bench of the Supreme Court in the aforesaid case held: "If this debt 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.'
24. Sub-clause (1) of the proviso to section 79 provides that if the purchaser in a Murabaha or Bai Muajjal transaction did not pay the price, evidence by a promissory note or a bill of exchange, a further return at the original rate of mark-up shall be payable by the purchaser for the whole period within which the price remained unpaid after its maturity. For example A purchased a commodity for thus, sold to B for a price of Rs.110 to be paid after one year, say, on 31st January. A promissory note in the amount of Rs.105 is signed by B in favour of A. Now, this promissory note is nothing but an instrument evidencing a debt payable by B to A, which includes the original mark- up by the Shariah. If B does not pay Rs.110 to A on 31st January, sub-clause (1) of the proviso to section 79 of the Act, 1881 provides example, shall be payable by B to A for the whole period of nonpayment after 31st January."
14. I am of the same view. I will not allow any addition on the purchase price agreed to between the parties.
15. In the Statement of Account filed by the plaintiff today the plaintiffs have also claimed payment of rebate under clause 210(b) which reads as under:--- "(b) No rebate shall be admissible to the Company in the event of an installment received after its respective Due Date. PICIC may, however, in its sole discretion and after it has received the next two installments on Due Dates, allow either full or a proportionate rebate on a payment received after the Due Date."
16. The rebate is a rebate on prompt payment or payment within the due dates. Such rebate assumes that the same has already been included for the purposes B of arriving at the purchase price. It further presumes that in the event of delay in payment the said amount shall be charged but, if the payments are made within due dates the interest amount will be reduced. I am of the view that this is nothing but mark-up on the marked-up price which cannot be allowed.
17. The plaintiff have also claimed commitment charges as provided under clause 8.01 which reads as under:--- "8.01 (a) As from 30 days after the Date of Consent the Company shall pay to PICIC a commitment charge, at the rate of 3/8th of 1% (three-eighth of one per cent) per three moths on Contract Price not utilized by the Company from time to time provided that, PICIC may in its absolute discretion levy the commitment charge at the rate of half of one per cent (1/2 of 1%) per three months if the Company, for any cause whatsoever fails to utilize the Contract Price within the time to be specified by PICIC in writing."
18. The commitment charges relate to non-utilization of the finances. It is not pleaded in the plaint nor stated in the agreement that delay has been caused by the defendants that why they become liable to pay of commitment charges. Miss Sofia Saeed, argues that the commitment charges have been levied because of the factum that the consent was granted on 29-12-1988 whereas the agreement was entered into on 20-8-1989, therefore, for the intervening period for the delay in disbursement the same is liable to be paid by the defendants. I do not subscribe to this view. The first reason is that such has not been pleaded in the plaint and that there is no allegation of delay as on the part of the defendants. The defendants not having delayed the payment a penalty for non-utilization cannot be charged. It has been candidly accepted by Mr. Muhammad Hussain that the agreement was prepared by PICIC themselves. If the agreement for any reason has been delayed and not pleaded that, the delay has been caused by the defendants, they cannot be penalized for a act not done by them. I would, therefore, also do not allow the commitment charges.
19. The plaintiffs have claimed prepayment premium under clause 6.06 of the Purchase and Sale Agreements which reads as under:--- "6.06. In the event of PICIC declaring the Purchase Price due and payable immediately under the provisions of Article 6.02 of this Article, PICIC shall have the right to charge the Company, in addition to the Purchase Price and other charges due, a premium at the rate of 3% (three per cent.) per annum on the amount of the Purchase Price recalled for the period from the date of such recall to the stipulated date of payment."
20. From the wording of the para. it is apparent that it is a premium on the purchase price. I have already held that no increase on the purchase price shall be granted. I would disallow a sum of Rs.199,177.26 contained in respect of both the agreements as prepayment premium.
21. I would allow the Central Excise Duty in the sum of Rs.521,942.97. However, the court-fee and Legal Expenses shall be covered by costs that shall be awarded.
22. The claim of liquidated damages is not allowed, as the same is not E proved. Otherwise also the plaintiffs have not been able to show why such should be granted.
23. In view of the above discussion the following shall be the account and the liability of the defendants. Agreement dated 20-8-1989Agreement date 18-3-1991 Purchase price Rs. 14,907,733 Rs. 13,426,066 Less: Rebate under Clause 2.10(b)
24. Rs. 2,714,775.29 Rs. 2,406,930.92 Less: Commitment Charges Under clause 8.01(a): Rs. 202,887.46 Rs. 94,767.58 Less: Amount received: Amount Due Rs. 9,725,741.28 Rs. 2,264,329.90 Rs. 8,943,045.28 Rs. 1,981,322.22 Total due in respect of Both Agreements.
25. Rs. 4,245,651.19 In the amount of Rs.4,245,651.19 the sum of Rs.521,942.97 is added to bring the total to Rs.4,767,594.16.
26. In view of the above I decree the suit for a sum of Rs.4,767,594.16 against the defendants jointly and/or severally with mark-up thereon at the rate of 6% per annum from the date of suit till payment. The mark-up shall not be compounded in any manner whatsoever.