1. After dismissal of the leave applications preferred by defendants Nos. l to 7, through order dated 9- 12-1999. I had taken up the plaintiffs claim for examination on 16-12-1999 when Mr. Leghari had partly been heard. The hearing was adjourned for today to enable Mr. Leghari to have instructions.
2. Mr. Leghari has not been, able to establish contact with the concerned officer of plaintiff-bank and, therefore, I have proceeded to hear the matter further.
3. The plaintiff's case briefly stated, is that the defendant No.1 was granted Cash Finance Limit of Rs.50 million and Agricultural Growers Finance Limit of Rs.20 million during the year 1993. The validity period of the finances had expired on 31-12-1993. The present proceedings pertain to the Agricultural 'Growers Finance. In July, 1996, upon request by he defendants, the facilities availed by the defendant No.1 were rescheduled. The sanction latter dated 25-7-1996, issued by the plaintiff- Bank, shows that the Agricultural Growers Finance was converted into Demand Finance and upon inclusion of mark-up, an amount of Rs.27 million was treated as principal amount of facility carrying further mark-up,- at the rate of 15 % per annum. The additional mark-up as above, was to be charged after expiry of two years moratorium period. The rescheduled facility had to be repaid in six biannual instalments commencing after expiry of the grace period referred above. The rescheduling was accepted by he defendant No.1 through its letter dated 3-8-1996. It may be noted that under one of the terms contained in the sanction letter, the defendant No.1 was required to deposit 10% of the cash received from the disposal of stocks of sugar lying under pledge with the bank, apart from usual instalment. This was followed by Financing Agreement 24th December, 1996 whereby the defendant No.1 agreed to sell to the plaintiff-Bank its movable property for a sum of Rs.27 million, referred as the sale price, which was purchased by the defendant No.1 for Sr.
4. No.Nature of FinanceAmount of LimitDate of Date Sanc-of-Ava-- tionRemarks 01 Demand Finance.27.00 (M) 15-7-1996 24- 12-1996Rescheduling of Agril. Production Fin(Growers loan)limit Rs.25,000(M) into demand Finance limit of Rs.27,000(M)Rs.37,168,000 payable in six half-yearly instalments, commencing after expiry of the two years moratorium period. It is significant to reproduce here two clauses of the Financing Agreement which have been referred by the learned counsel for plaintiff during arguments and are as follows:- - "6. It is hereby specifically agreed between the parties hereto that where the purchaser price is payable in instalments, failure on the part of the Customer to pay any instalment on its due date will entitle the bank to demand immediate payment of the entire balance of purchase price remaining due notwithstanding anything to the contrary contained in this agreement and for recovery thereof to take possession of the goods and sell the same.
7. Notwithstanding any thing contained hereinabove, it is hereby agreed that the Bank shall at all times, be at liberty and shall have the right to cancel or reduce the facility under this Agreement, without assigning any reason. The Bank shall also have the right to demand immediate payment of the purchase price at any time without assigning any reason therefor. The Customer undertakes in such event to pay the same within seven days of such demand. In default the Customer further agrees and undertakes to pay to the Bank liquidated damages at 20% of the amount demanded by the Bank and not paid by the Customer.
5. The defendants Nos. l to 7 did execute various documents of security as were agreed between the parties. On 11th April, 1998, the plaintiff-Bank addressed letter recalling the entire amount of demand finance which is as follows:-- "M/s. Al-Asif Sugar Mills Limited Head Office 4th Floor Bank House Habib Square M.A. Jinnah Road, KARACHI.
6. DEMAND FINANCE LOAN: REPAYMENT THEREOF Dear Sir, You were granted the following loans from our Mirpur Sakro Branch:-- That as per decision of our Head Office, you were requested to deposit 10% amount of cash received from the disposal of stock in the demand finance account apart from usual instalments, but you failed to do so.
7. As per renewal of the limit up to 31-12-1993 you were required to inject a sum of Rs.115,000 million in your equity up to 1994-95 and Rs.14,000 million against 1995-96 but the same was not done by you.
8. Also as per minutes of the meeting of working group of the Government Committee on revival of sick industries held on 4-12-1995 at Pakistan Banking Council, chaired by Mr. Sajjad A.I, Member Pakistan Banking Council. It was decided that the sponsor need to put-on fresh equity (either for shifting or for cane growing as per SBP requirement but' nothing was done by you and consequently the Mills have been closed and is not in production since May, 1993.
9. That you did not disclose your borrowing of Rs.19,639(M) with Ex. M.B.L. Which is obvious and deliberate concealment of the facts and reflects adversely on you credit worthiness.
10. You are accordingly advised to repay/adjust the entire loan amount instantly, but not later than 7 days of the receipt hereof, failing which the Bank shall be at liberty to take immediate steps in accordance with the law, for recovery of the Loan.
11. Yours faithfully.
12. (Sd.)
13. ZULFIQAR ALI KHAW AJA MANAGER."
14. It is pertinent to note that the date of availment of facility is mentioned as 24-12-1996 and the sole reason for recall thereof is failure of defendant No.1 to deposit 10% of the amount, received from disposal of pledged stock of sugar, in the demand finance account.
15. The learned counsel for the plaintiff has contended that recall of demand finance, on account of failure of the defendant No.1 to deposit 10 amount of the sugar sold by it towards liquidation of liability under demand finance account, was justified in view of the condition contained in the sanction letter. The learned counsel has further referred to the failure of defendant No.1 to inject a sum of Rs.115 million and Rs.14 million towards equity during the years 1994-95 and 1995-96 respectively. It is, however, admitted by Mr. Leghari that but for the default noted in the letter, dated 11th April, 1998, the repayment of demand finance was not due as per the terms agreed between the parties.
16. The financing agreement, dated 24th December, 1996 was executed between the parties much after the issuance of sanction letter and the terms contained therein would regulate the matter of repayment. The sanction letter, even if treated as subsisting, does not provide for recall of finance and cancellation of agreement between the parties, Such matter is specifically provided for in Clauses (6) and (7) of financing agreement, dated 24 December, 1996. The parties had agreed to recall of facility in the event of default in payment of instalment on its due dates visualized by the agreement itself. Else, the plaintiff-bank had reserved to itself the right to cancel and reduce the facility without assigning reason. Without expressing myself on the enforceability to the last mentioned right, the bank having chosen not to exercise the above right, the same is rendered irrelevant. The plaintiff-bank in the present case, indeed, has recalled the facility on a specified ground which, however; does not find mention in the financing agreement. It is well-established principle that the things required to be done in a particular manner are prohibited to be performed otherwise. Thus, an implied prohibition exists to forbid the plaintiff-bank from recalling demand finance on grounds other than those postulated under the agreement, dated 24th December, 1996.
17. The above-stated principle of law finds support in the case of Nazir Ahmed v. King-Emperor-(AIR 1936 Privy Council 253), Reference No.1 of 1988. Made by the President of Pakistan (PLD 1989 SC 75)
18. Sahib and 3 others v. The State (1990 MLD 1161) and Syed A.I Azhar Naqvi v. The Government of Pakistan (PLD 1994 Karachi 67). Applying the above principle, the plaintiff-bank could not have recalled the demand finance unless there was default in deposit of instalments agreed between the parties. Admittedly, the defendants did not commit default in payment of instalments since the same had not become due on 11th April, 1998 when the notice of recall was sent or even on 5-4- 1999 when the present proceedings were initiated. The present claim, therefore, is premature. It is pertinent to re-state that proceedings, under the Banking Laws, can be maintained for recovery of amount as is already due and the factum of its becoming due pendente lite, is immaterial. This position is explicit from the provisions contained in sections 9 and 15 of Act XV of 1997.
19. It has further been noticed that the sum of Rs.27 million, treated as principal amount of finance through agreement, dated 24th December, 1996 included mark-up. The effect of agreement between the parties is that additional mark-up is to be paid on the sum which includes mark-up.
20. The amount treated as the sum advanced under the demand finance facility had evidently, neverth been disbursed. The legality of plaintiff's claim for mark-up on mark-up and mark-up on undisbursed amount is not free from doubt. However, I do not propose to expatiate any further on this aspect and leave the same to be decided at an appropriate stage for the reason that the plaintiff's claim, as already found is premature hence liable to be dismissed. The suit, accordingly, is dismissed with no order as to costs. Needless to add that the plaintiff can institute fresh proceedings in the event of subsequent cause of action, if any.