JUDGMENT NAZIM HUSSAIN SIDDIQUI, This judgment will dispose of Civil Appeals Nos. 185 and 186 of 2002. In these matters common questions of facts and law are involved and both arise from the same judgment dated 21.12.2001 of a learned Division Bench, Lahore High Court, Rawalpindi Bench, delivered in RFA No. 83/1996, whereby the judgment and decree dated 19.6.1996 of Chairman, Banking Tribunal, Rawalpindi was modified, holding that respondent No. 1, Allied Bank of Pakistan (In C.A. No. 185/2002), was jointly and severally liable with respondent No. 2, Saudi Kalabagh Livestock Company Ltd. (respondent No. 2 in C.A. Nos. 185 and 186/2002) to the extent1 of and amount of Rs.45,600,00/- million.
2. Civil Appeal No. 185/2002 has been filed by Saudi Pak Industrial and Agricultural Investment Company Pvt. Ltd. (SAPICO), showing Allied Bank of -Pakistan and Saudi Pak Kalabagh Livestock Company Ltd., as the respondents Nos. 1 and 2 respectively. In Appeal No. 186/2002 filed by Allied Bank, Saudi Pak .Industrial and Agricultural Investment Company Pvt. Ltd. (SAPICO) and Saudi Pak Kalabagh Livestock Company Ltd. Have been arrayed, as the respondents Nos. 1 and 2 respectively.
3. For convenience SAPICO is referred to in this judgment, as "plaintiff', Allied Bank, as respondent No. 1" and Saudi Pak Kalabagh Livestock Company, as "respondent No. 2".
4. The plaintiff filed the suit No. 12/1994 against the respondents for recovery of Rs.62,400,000.00 and also claimed mark-up at-the rate of Rs.5,600,000 per annum from the date of suit till its payment or in the alternative liquidity damages in terms of the Guarantee.
5. Leamed trial judge viz. Chairman Banking Tribunal; Rawalpindi, vide judgment dated 19.6.1996, decreed the suit of the plaintiff against respondent No. 2 only for Rs.45,600,000 with costs. Suit against respondent No. 1 was dismissed, It appears that Trial Court later on passed an order and decree against respondent No. 2, was recalled on an order passed in review petition. Against said order, an appeal was preferred before High Court and the decree against respondent No. 2 was restored.
6. The plaintiff also filed appeal against judgment and decree dated 19.6.1996 of Trial Court on which the Order was passed, which has been impugned in these appeals.
7. The case of the parties rests upon Bank Guarantee No. 90/2002, dated 18.3.1991 for amount of Rs.40,000,000/-, which was valid upto 18.3.1991 and was executed by respondent No. 1 in favour of the plaintiff. Since the entire case revolves on interpretation of the bank guarantee, it would be advantageous to reproduce it, which is as follows:- "Bank Guarantee No. 90/002 Dated 18.3.1990, Amount: Rs.40,000,000/- Validity until 18.3.1991.
M/s. Saudi Pak Industrial 81 Agricultural Investment Co. Limited, Islamabad.
Dear Sirs, In consideration of SAPICO having agreed to provide finance of Rs.40,000,000/- (Rupees forty million only) (hereinafter called the FINANCE) to M/s. Saudi Pak Kalabagh Livestock Company Limited (hereinafter called the CUSTOMER) repayable in one year from the date hereof, we Allied Bap|< of Pakistan Limited, Civic Center Branch, Islamabad, a banking company in corporated under the laws of Companies Act, 1913 and having our principal place of business in Pakistan at Karachi, do hereby irrevocably and unconditionally undertake and guarantee to SAPICO the payment of Rs.40,000,060/- (Rupees forty million only) and Rs. 5,600,000/- - (Rupees five million six hundred thousand only) being mark-up total being Rs.45,600,000/- (Rupees forty five million and six hundred thousand only) on demand in writing being made to us by SAPICO of the finance payable by the customer to the HAPICO and we further agree with SAPICO as follows:-
(1) That the Finance will be utilized in non-interest based modes of financing on mark-up basis as per agreement signed between the Bank and the Customer, proforma attached. Mark-up is payable on six months basis.
(2) That our liability to SAPICO hereunder shall be that of principal debtor and shall not be in any way abrogated or affected by SAPICO taking or releasing any other security from the Customer in respect of the finance provided that the security which SAPICO may now or hereafter hold in respect of the finance will be duly assigned and transferred to us at the time of SAPICO making the demand.
(3) That a letter signed 6y the General Manager/Chief Executive or authorized officer of SAPICO stating that the Customer has not paid the Finance within the aforesaid period of l2 (twelve) months shall be conclusive evidence that the Customer has not paid and we shall thereupon be bound to fulfill our obligations under this Guarantee without question or reference to the Customer.
(4) This Guarantee is irrevocable and shall continue to remain in force as long as the FINANCE remains outstanding against the Customer subject to the validity of the Guarantee, we shall be discharged from all liabilities under this Guarantee only after the entire finance of Rs. 45,600,000/- (Rupees forty five million and six hundred thousand only) is paid to SAPICO.
We further agree and undertake that any payment due to SAPICO from us hereunder shall be paid to SAPICO by us on demand and in the event of our failure to make such payment within seven days of such demand we shall be liable to pay SAPICO as and by way of liquidated damages, a further sum of 20% of the amount so demanded by SAPICO.
Our total liability under this Guarantee is restricted to a sum of Rs.45,600,000/- (Rupees forty five million and six hundred thousand only). All claims under this Guarantee must be lodged in writing with Allied Bank of Pakistan Limited, Civic Center Branch, Islamabad on or before 10th March, 1991 failing which we shall be discharged of all our liabilities under this Guarantee.
Yours faithfully, For Allied Bank of Pakistan Limited Issued at Islamabad Dated 18.3.1990."
8. Leamed High Court in the impugned judgment, having taken into consideration ail the pleas raised before it, observed as follows:- "From the nature of the transaction and contents of the guarantee it was not difficult for us to conclude that the validity period of guarantee was agreed to between the parties was one year and therefore, it was rightly mentioned as period expiring on 18.3.1990. The view taken by the Tribunal that the claim was required to be filed by 10.3.1991 and thereafter no claim was entertainable was based on an erroneous assumption that the validity period of guarantee was upto 10.3.1991. There could not be any contradiction between the validity period and the period for filing of the claim. Even if the any date prior to the validity period is mentioned in the guarantee that would not discharge the liability of the bank under the guarantee before expiry of the period of validity. Filing of the claim was merely a mode of convenience it could not be 'construed as abridging the period of validity from the nature of transaction and the other clauses contained in the bank guarantee, it is clearly discernible that the guarantee was for a period of 12 months and the liability of the bank could not be discharged before 18.3.1991. Admittedly, claim was lodged by the appellant with the bank on 19.3.1991. Therefore, the claim which was filed within a period of validity was proper and tenable."
9. Dr. Pervaiz Hassan, ASC appearing on behalf of the plaintiff contends that it is a financial institution and its business is to invest its funds in the financing provided to the customers and High Court erred in riot granting interest/profit to the plaintiff for the entire period from the date of default till realization of the funds. Teamed counsel also argued that High Court without any justification refused to grant liquidated damages as was stipulated in the guarantee, It is also urged that right from the very beginning in money suits, if decreed, the interest is granted to the petitioner, In support of his contention, he referred to Section 1 of Interest Act, 1839, Sections 79 and 80 of Negotiable Instruments Act, 1881, Sections 34 and 34-B of CPC, 1908, Section 8(2) of Banking Companies (Recovery of Loans) Ordinance, 1979, Sections 5(1 )(d), 6(4) and 11(4) of Banking Tribunals Ordinance, 1984, Section 15 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, Sections 3 and 7 of Financial Institution (Recovery of Finances) Ordinance, 200I and Sections 73 and 74 of the Contract Act, 1872.
10. Above-referred provisions speak about granting interest to the creditors. Suffice it to say that above provisions are not attracted to this ase, which is exclusively governed by the law relating to gurantee. In such cases, the guarantee rights and liabilities of the parties, are determined with reference to the terms and conditions of the guarantee and a contract of guarantee is to be strictly construed in terms of the guarantee. The guarantee referred to above unequivocally postulates that the total responsibility of the respondent No. 1 was restricted to Rs.45,600,000.00. The Bank/respondent No. 1 irrevocably and unconditionally under took to pay said amount to the plaintiff on demand. As regards the damages, learned Trial Court refused the same on the ground that nothing was brought on record to show that the plaintiff had sustained damages on the ground of default.
11. We asked learned counsel for the plaintiff as to what evidence was brought on record to substantiate the claim of damages, he frankly conceded that no such evidence was available.
Liquidated damages, as a rule, require the positive evidence to Show the actual loss was suffered by the party claiming the damages. Even fixed amount stipulated for liquidated damages cannot be recovered if the quantum of actual loss is not proved. Under the circumstances, the plaintiff is neither entitled to any interest nor to any amount as liquidated damages.
12. Raja Muhammad Akram, learned ASC appearing for the respondent No. 1 strenuously argued that In the guarantee furnished by the respondent No. 1, it has been expressly provided that notice for encashment of the same was to be given by the plaintiff to respondent No. 1 by 10.3.1991. He argued that after 10.3.1991, the claim of the plaintiff became time-barred. He also contended that, under the circumstance, no decree could be passed against the respondent No. 1. It Is also urged that the plaintiff did not assign and transfer the securities to the respondent No. 1, which were held by it In respect of the finance in question. Referring to Section 141 of the Contract Act, 1987, he submitted that all the securities, which were held by the plaintiff from respondent No. 2 were for the benefit of the respondent No. 1 and since the plaintiff failed to discharge its obligations in respect of the securities, the respondent No. 1 stood discharged of its liability to the extent of value of the securities.
13. Keeping in view of contentions, the point for consideration is that whether the plaintiff could encash guarantee upto 18.3.1991 or so could be done only on or before 10.3.1991.
14. The record reveals that on 4.4.1990, the plaintiff had written a letter to the respondent No. 1 asking for amending the bank guarantee with respect to validity date and the date of payment as 7.4.1990 and 7.4.1991 respectively. It also shows that funds were-not released by the plaintiff on the validity date of guarantee i.e. 18.3.1990, but the same were released on 7.4.1990. The correspondence exchanged between the parties, particularly the tetters at pages 75,76,77, 78 and 79 of the paper book of Civil Appeal No. 186/2002 clearly demonstrate that the parties were assuming and acting as if the guarantee was to expire on 18.3.1991.
15. Learned counsel for the plaintiff cited the cases reported as Allah Bakhsh and another v.
Muhammad Ishaque and another (PLD 1984 SC 47), Societe Generate De Surveillance S.A. v.
Pakistan (2002 SCM R 1694 at page 1722) + (2002 PSCC 1441), M/s. Pakistan State Oil Company Limited v. Muhammad Tahir Khan and others (PLD 2001 SC 980 at page 1007), Sandoz Limited and another v. Federation of Pakistan and others (1995 SCM R 1431 at page 1447), House Building Finance Corporation v. Shahinshah Hamayun Corporative House Building Society and others (1992 SCM R 19 at page 29), Ghazanfar Hussain v. Rahmat Bibi (1989 CLC 310 (SC AJ&K) at page 320) Habib Bank Limited v. Malik Atta Muhammad and 4 others (2000 CLC 451 Lah. At page 459), Haji Adam Ali Agaria v. Asif Hussain and 2 others, (1996 M LD 322 Kar. At page 328), Mst. Iqbal Begum v. Abdul Ghaffar and others (1995 CLC 105 Lah. At page 108), Saeed Mahmood v. Halima Bai (1990 M LD 1789 Kar. At page 1791), Najmul Hassan Farooqi v. Messrs United Carpets Limited (1990 ALD 412 at page 413) to contend that it is a fundamental principle of interpretation of documents and statutes that they are to be interpreted in their entire context following a full consideration of all provisions of the document or statute, as the case may be, that every attempt shall be made to save the document and for this purpose a difference between general statements and particular statements of the document be differentiated properly, to save the document rather to nullify it, that no provision of the document be read in isolation or in bits and pieces, but the entire document is to be read as a whole together the intention of the parties, that the Court for this purpose can resort to the correspondence exchanged between the parties, that the Court shall lean to an interpretation, which will effectuate rather than one, which will invalidate an instrument.
16. On this point he also referred to Halsbury's Laws of England (4th Ed), Vol. 20, para 143, which is as follows:- "
143. Principles of construction.-- The principles of construction governing contracts in general apply equally to contracts of guarantee. Dealing with a guarantee as a mercantile contract, the Court does not apply to it merely technical rules, but construes it so as to reflect what may fairly be inferred to have been the parties real intention and understanding as expressed by them in writing, and so as to give effect to it rather than not."
17. In the light of above arguments and the case law referred to above, it is to be seen if the guarantee was encashable upto 18.3.1991 or not. The guarantee in question is a composite document without any recital. In the fourth line of the guarantee it is clearly mentioned that SAPICO had agreed to provide Finance "repayable from the date of guarantee" i.e. 18.3.1990 as shown at the top at left hand comer of the guarantee. Thus the finance was repayable on or before 18.3.1991. In clause 3 of the guarantee, the SAPICO was required to produce a letter stating that "the customer has not paid the finance within the aforesaid period of 12 months" and Allied Bank Limited was only thereupon bound to fulfill the obligations under the guarantee.
18. In view of above SAPICO could not issue letter on 10.3.1991, as required by clause 3 of the guarantee, It thus become clear that repayment was due on 18.3.1991 and not on 10.3.1991 as the finance was given for l2 months from 18.3.1990 and the respondent No. 2 was entitled to use it for the full 12 months, which were completed on 17.3.1991. The date of 10.3.1991, as mentioned in the last paragraph of the guarantee, ex-facie, appears to be a typographical mistake. High Court took it as an error and rightly so. Besides, if the guarantee was valid upto 18.3.1991 then how it could be asserted that the claim by the plaintiff w?s to be filed on or before 10.3.1991. As regards, the plea of securities under Section 141 of the Contract Act, it is noted that Mr. Faridullah Khan, Executive Vice- President of-plaintiff has filed an affidavit saying that the plaintiff did not receive nor does it presently holds any collateral/security in respect of finance of the guarantee. The contents of this affidavit have not been controverted by the respondent No. 1. It being so, it is not established that provisions of Section 141 ibid were violated by the plaintiff. Leamed counsel for the respondent No. 1 submitted that the conduct of the plaintiff is mala fide, inasmuch as for about six years the plaintiff did not take any step towards recovery of decretal amount from respondent No. 2. He also stated that the plaintiff holds 33% shares in the company of respondent No. 2. Suffice it to say that the responsibility of respondent No. 1, in terms of the guarantee, does not become inoperative, It is the right of the plaintiff to seek remedy against respondent No. 1) irrespective of its share, if any, in the company of respondent No.2.
19. In consequence, both the appeals are dismissed with no order as to costs.