C.M. No,666-B of 2001 ' Habib Bank Limited i.e. Decree-holder filed C.O.S. No,28 of 2000 titled "Habib Bank Limited v. Service Fabrics Limited etc." for recovery of Rs.693,935,955.41 with compensatory charges and liquidated damages. Upon a joint application (C.M. No,171-B of 2000) under Order XXIII, rule 3, C.P.C., the suit was decreed on 22-3-2000 in terms of Agreement (Mark "A") between the parties. Decree holder alleging default against the judgment-debtors in payment of first two instalments of Demand Finance Facility' due on 30-9-2000 and 31-3-2001 as per clause 2 read with clause 8 of the Agreement, filed the present execution petition seeking execution of compromise decree dated 22- 3-2000 through sale of properties/assets and other applicable modes.
2. Through present C.M. No,666-B of 2001, judgment-debtors have filed their objections to execution of the decree. Admitting the compromise decree passed against the judgment-debtors and the decretal amount, they in their objection petition and their learned counsel at the bar has mainly urged that:-
(i) Decree-holder has failed to honour its obligations in terms Agreement dated 24-1-2000;
(ii) judgment-debtors have paid the instalments in accordance with the Agreement;
(iii) judgment-debtors have made down payment of Rs.40 million and also deposited a sum of Rs.26 million towards satisfaction of their liability in terms of Agreement;
(iv) receipt of these amounts has been acknowledged by the decree-holder in column 5 of the execution petition;
(v) decree-holder is entitled to receive only Rs.693,935,955 (decretal amount) from the judgment- debtors in accordance with the repayment schedule mutually agreed upon in terms of Agreement dated 24-1-2000 and nothing in excess thereof;
(vi) no short/long term facility was granted/disbursed by the decree-holder to the judgment- debtors after 22-3-2000 i.e. The date of decree wherefor no amounts beyond the amount of Agreement (Mark "A"), can be debited in the accounts of the judgment-debtors entitling the decree-holder to recover the same through present execution proceedings; and
(vii) the execution petition for above reasons is premature and not maintainable.
' Mr. Azmat Saeed, the learned counsel for the objectors by reference to clause 2.2 of the compromise Agreement (Mark "A") stated that under this clause bank was to "grant" Demand Finance facility of Rs.558.300 M to the company for repayment of the outstanding Demand Finance facility under the rescheduled arrangement on the basis of which the decree was passed. And that it was after grant of this Demand Finance that instalments prescribed in clause 2.2 of the Agreement were to become payable biannually (15 instalments) in eight years starting from 30-9- 2000. It was contended that since Demand Finance as agreed was never disbursed therefore, Bank failed to perform its reciprocal promise thus absolving the judgment-debtors of any liability to make payment of the outstanding Demand Finance liability which according to learned counsel was also incorrectly calculated in the Agreement and was not due. And that none of the instalments fell due because Demand Finance facility of Rs.558.300 m was not granted and reimbursed to the company. And that similarly working capital amount stipulated in clause 2.4 was different from the statement of account now filed by the decree-holder bank alongwith its reply.
3. The decree-holder Bank filed a reply to the above objection petition reiterating the contents of clauses 2.1, 2.2, 2.3, 2.4 and 2.5 of the Agreement between die parties. It was admitted in the reply as well as in the execution petition that judgment-debtors had paid a sum of Rs. 40 million in terms of clause 1 thereof and had also paid sums set out in clause 5 of the execution petition towards ERF-1, ERF-2 CF(P) and CF(H) but it was contended that for Demand Finance liability, only a sum of Rs.700,000 was paid instead of first two instalments. It was also stated by the decree-holder that the Bank subsequent to the decree rescheduled the Demand Finance facility as per Agreement and renewed the working capital facility of the judgment-debtors on 21-10-2000 and obtained necessary documents. Denying that any amount in excess and beyond the scope of the compromise decree was sought to be recovered through the execution petition, it was stated that amount of about Rs.26 million, were paid towards facilities other than the Demand Finance and the same were adjusted in terms of column 5 of the execution petition and objection qua their non- adjustment was untenable.
4. I have given serious consideration to the submissions of the learned counsel of the parties and have also examined the record. In my opinion the main question requiring resolution in the present execution petition relates to the interpretation of phraseology employed in the Agreement dated 24-1-2000 i.e. Mark "A" on the basis of which the decree was passed on joint request of the parties.
The dates of the Agreement, the suit and the decree also provide a window in the sequence of events and the actual covenants between the parties. Examined from this angle, answers to questions agitated by the parties directly and naturally emerge from the bare reading of the Agreement itself and the chronology of events.
5. Agreement (Mark "A") between the parties bear the date of its execution as 24-1-2000. Parties in their petitions have also made a reference to the said Agreement as dated 24-1-2000. Through C.
M. No, 171-B of 2001 under Order XXIII, rule 3, C.P.C., parties requested for a decree in terms of Agreement dated 24-1-2000 (Mark "A") and the same was granted by this Court on 22-3-2000. The decree sheet shows that plaint in C.O.S. No,8 of 2000 was presented by the decree-holder Bank on 26-1-2000. Interestingly Agreement dated 24-1-2000 (Mark "A") in its recital, definitions, operative part as well as covenants makes repeated reference to the pendency of C.O.S. No,8 of 2000 and consent decree to be obtained therein, although the suit was initiated on 26-1-2000. This lends support to the fact that Agreement (Mark "A") dated 24-1-2000 and the plaint in C.O.S. No,8 of 2000 were made and signed by the parties simultaneously, although the plaint was presented two days later i.e. 26-1-2000. In the Agreement itself references through computer changes to the filing and pendency of C.Q.S. No,8 of 2000 seems to have been added but parties overlooked changing the date of the Agreement. It is thus evident that the parties had agreed to each and every term, figure, covenant and stipulation regarding finance facilities forming subject-matter of the Agreement and their mode and manner of settlement. These covenants also included agreements qua judgment- debtor's liabilities, their admission of the same, rescheduling/ restructuring of these liabilities and the period/manner of repayment thereof by the judgment-debtors.
6. The recitals and terms of the Agreement evidently prove that the decree-holder Bank had, upon negotiations between the parties, agreed "to reschedule/restructure/renew" the outstanding finance facilities df the company. The rescheduled/restructured/renewed transactions between the parties and the terms thereof were incorporated in the Agreement i.e. "Mark A". The recitals being relevant are reproduced hereunder:-- "Whereas the Company availed certain Finance Facilities from the Bank including the Foreign Currency (ADB and IBRD Loan, Cash Finance (Hyp), Cash Finance (Pledge), Export Re-finance (Parts I and II) and Trust Receipt facilities.
' And whereas the Company could not repay the Finance facilities in accordance with the Finance/Loan Agreements with the result that the said Finance facilities became stuck up.
' And whereas the Bank filed Civil Original Suit No,8 of 2000 titled "Habib Bank Limited v. Service Fabrics Limited etc." in the Lahore High Court, Lahore for recovery of Rs.693,935,955.41 payable under the said facilities.
' And whereas the Company and the Sponsors/Directors accept the accuracy of the sum of Rs.693,935,955.41 as their outstanding liability towards the Bank.
' And whereas the Company and the Sponsors/Directors in order to revive the project of the Company and to pay back the dues of the Bank have approached the Bank for rescheduling/restructuring/renewing of the finance facilities.
' And whereas the Bank has, for the purpose of facilitating and enabling the Company to pay its dues to the Bank, decided to reschedule/restructure/renew the above finance facilities of the Company.
' After the recitals, the operative part of the Agreement "Mark A" begins with clause 1 relating to definitions inter alia including those of events of defaults, finance facilities, outstanding liabilities as on 24-1-2000, rescheduled/ restructured facilities, rescheduled/restructured liability and "suit"
(meaning C.O.S. No,8 of 2000) and "Consent Decree" (meaning consent decree to be obtained in C.O.S. No,8 of 2000).
7. This Agreement "Mark A" was super imposed by Court's seal on 22-3-2000 to convert the same into a decree of the Court. The obvious object of simultaneous civil suit was to establish the default of the judgment-debtors in repayment of the Bank's finances, their admission of the outstanding liabilities, rescheduling by the Bank and repayment of the same by the judgment-debtors as per the terms stipulated in the Agreement which was to be incorporated in the decree to become directly executable in case of a default.
8. Through Agreement and compromise decree, judgment-debtors have admitted their liability for payment of rescheduled Demand Finance facility of Rs.558.300 M alongwith mark-up in eight years through 15 biannual instalments specified in clause 2.2 and the working capital facility in terms of clauses 2.3, 2.4 and 2.5 of the Agreement. The down payment of Rs.40M (out of which Rs.25M was paid, prior to the Agreement, on 16-11-1999) was in addition to the rescheduled Demand Finance of Rs.558.300 M and the renewed working capital facility. It has not been denied by the judgment- debtors or their counsel that decree-holder Bank fulfilled its contractual obligation by rescheduling/restructuring Demand Finance facility of Rs.558.300M and by renewing working capital liability of the judgment-debtors. In my opinion upon grant of rescheduling, restructuring and renewal of the said facilitates, the executory clauses, if any, of the Agreement/decree were converted into final terms which did not in any way suffer from inexecutability.
9. Renewal/ rescheduling/ restructuring of financial facilities only ensues upon default non- payment, delayed payment or inability in payment of outstanding liability by a customer who normally seeks such concession upon admission and determination of liability. By soliciting rescheduling or restructuring, as the case may be, a customer, in essence, either requests postponement of repayment of a finance on renewed terms as agreed between the parties or asks for reorganization/refurbishing of financial basis of a finance and its liquidation. By approving rescheduling/restructuring/ B renewal of a financial facility, the bank forgoes its immediate right of recovery and enforcement of securities against the customer. The effect of rescheduling, restructuring and renewal of finance facility is mutually agreed by the parties to be absorbed by future interest, mark-up charges or commissions till the agreed date of liquidation of liability as has been done in the present compromise decree. Rescheduling, restructuring and renewal is also thus a facility or accommodation granted by the bank to a customer. This facility has been recognized as an "Obligation" defined in section 2(e) of Financial Institutions (Recovery of Finances)
Ordinance, 2001 as under:--
(e) "obligation" includes--- "(i) any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment of or extension of time in payment of any other amounts relating to a finance ' Under section 3(1) ibid it is "the duty of a customer to fulfil his obligations .To the Financial Institutions". The default in discharge of such "obligation" not only incurs "the cost of funds" under section 3(2) ibid but is also actionable under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Furthermore a judgment against a customer under the Ordinance is a pronouncement of default under section 3(3) ibid of duty prescribed under subsection (1) of section 3 thereof. In the present case judgment in terms of compromise decree was issued and entered against the judgment-debtors on 22-3-2000.
10. The learned counsel for the objectors in order to defend default of the judgment-debtors has tried to draw benefit from the terminology employed in clause 2.2 of the Agreement that "the Bank shall grant a Demand Finance (DF) facility of Rs.558.300 (M) to the company", by interpreting it to mean that Rs.558.300 M were to be actually disbursed by the decree-holder Bank to the judgment- debtors. The main stay of his case is upon the meaning of the word "grant". The learned counsel states it to mean release and disbursement of finances but he has overlooked that the word "grant" means the giving, bestowing or forwarding of a privilege, right, interest, benefit, subsidy, exemption, concession, approval, sanction or permission. Clause 2.2. Did not state that additional Demand Fina.Nce of Rs.558.300 M was to be paid and released to the judgment-debtors. This clause reads in its entirety and in the context of whole agreement only means that the Bank was to grant the rescheduling facility for Demand Finance of. Rs.558.300 M to the company by allowing its payment in prescribed 15 biannual instalments in eight years. Such rescheduling was granted. There is thus no merit in the arguments of the learned counsel for the objectors that decree-holder Bank failed to perform its reciprocal promises.
11. It is also noteworthy that judgment-debtors had not specifically claimed in their objection petition that under the Agreement, decree-holder Bank was bound to credit their Account with a further sum of Rs.558.300 M as Demand Finance facility. Judgment-debtor No,1 in its letters dated 18-7-2001 and 5-9-2001 requested for further restructuring of decretal liabilities but did not at all agitate against nonperformance of any reciprocal obligations by the decree-holder Bank. In these letters, judgment-debtors expressly admitted their liability to pay the decretal amount and by proposing further rescheduling, the judgment-debtors incurred another event of default under clause 8.1(f) of Agreement "Mark A".
12. I have thus no reservation in holding that the judgment debtors were liable to pay instalments of Demand Finance facility as specified in clause 2.2 of the Agreement "Mark A". Non-payment of the two consecutive instalments of the same amounted to an event of default under clause 8.1(a) entitling the Bank to seek execution of the compromise decree dated 22-3-2000.
13. Amounts stated in objection petition to have been paid by the judgment-debtors to the decree- holder have been acknowledged, admitted and adjusted by the decree-holder Bank as per column 5 of its execution petition. Execution of decree through enforcement of securities and other modes has been sought by the decree-holder after reduction of the said amount from the decretal money. Endeavour of the learned counsel for the objectors to go behind the decree and its amounts by trying to calculate and recalculate the figures cannot be allowed. The judgment- debtors are bound by their Agreements and are debarred under law from going behind the decree passed by consent. Compromise decree dated 22-3-2000 in absence of any challenge thereto has also become final.
14. In view of the above discussion, Objection Petition i.e. C.M. No,666-B of 2001 has no substance and is accordingly dismissed.
' Main Execution Petition ' The terms and conditions of sale of the mortgaged properties shall be filed within a period of ten
(10) days by the decree-holder Bank. To come up for further proceedings and appointment of Court auctioneers on 18-7-2002 for sale of the mortgaged properties etc.