KHILJI ARIF HUSSAIN, J.--- The plaintiff-Bank filed suit against the defendants for recovery of Rs.50,322,002/- under Banking Tribunal Ordinance, 1984. After repeal of the Ordinance suit was transferred to this Court. The defendants filed their written statements and raised various' questions of law and denied their liability. On 24.9.1998, the learned counsel for the plaintiff made statement at bar that in view of the defendants having disputed disbursement of a sum of Rs.3,850,000/- and its utilization the plaintiff would like to adduce evidence and sought for settlement of issues. The learned Judge ordered that the written statements filed by the defendants be taken no record and matter be fixed for settlement of issues. On 11.1.1999 following consent issues were filed:
(1) Whether the plaintiff is entitled to recover the outstanding amount as prayed in the suit?
(2) Whether the plaintiff is entitled to recover the Penal Mark-up, liquidated damages, Excise duty, project monitory fees, trusteeship commission and Mark-up on Mark-up and Mark-up on continuous basis?
(3) Whether the suit has been filed authorizedly?
(4) Whether the plaintiff disbursed and paid to the defendants facilities above Rs.24,050,000? If so, on what dates?
(.5) Whether the plaintiff is entitled to charge Mark-up at the rate of 22 per cent? If so, from what period to what period?
(6) What is the effect of revised re-sale price and payment schedule sent by the defendant to the plaintiff under cover of its letter dated 27.2.1990?
(7) Have the defendants paid to the plaintiff Rs.16,939,037/-?
(8) Whether the defendants are jointly and severally liable to pay outstanding amount? If so, to what extent?
(9) What should the decree be?
2. On behalf of the plaintiff-Bank, plaintiff's witness Mr. Shahid Naseem appeared and gave evidence and produced various. Documents. On behalf of the defendants, Munaf Yousuf appeared and gave evidence as Ex.6 and produced statement of account and certain correspondence exchanged between the parties. After recording the evidence of the respective parties matters were heard and were reserved for orders by a learned Judge of this Court. By order dated 16.9.2003, it was ordered that matter be fixed for further evidence regarding issue of maintainability as per roster. After passing of the order by the learned Judge on behalf of the plaintiff, plaintiff's witness, namely, A.I Yawar Mirza appeared and produced power of-attorney as Ex.7/1, General power-of- attorney dated 4.5.1991 as Ex.7/2 and resolution passed by the Board of Directors as Ex.7/3. The learned counsel for the plaintiff closed the plaintiff's side and by consent of the parties matter was fixed for arguments.
3. Before considering the respective arguments of the learned counsel for the parties and give my findings on various issues framed, I would like to give brief facts of the case.
4. The plaintiff-Bank granted two finance facilities, viz. Long term finance facility and short term finance facility. By a short term investment agreement dated 16.8.1988, the plaintiff-Bank granted finance facility for a sum of Rs.23,000,000/- on "account of payment basis" in the manner provided in Schedule "B" of the agreement. The defendant agreed to pay a sum of Rs.40,093,094/- as the purchase price payable in instalments in terms of Schedule "C" to the said agreement. The purchase price was determined at the rate of 22 paisa per rupee per thousand per day. The defendants were further entitled to rebate of 7 paisa per rupee per annum on the amount of instalment if the payment of the instalment were received by the plaintiff-Bank on or before due dates. In terms of the agreement of finance for short-term loan the plaintiff- Bank agreed to disburse amount on 15.5,1988. In Schedule "B" of the said agreement it was provided that estimated period of Ma.Rk-up is from 15.5.1988 to 30.9.1991. The purchase price was determined on two different rates of Mark-up. At the rate of 15%, i.e. With rebate as provided under the agreement the defendants were liable to pay Rs.34,654,382/- and at the rate of 22% the defendants were liable to pay Rs.40,093,094/- I would like to mention here that in the agreement purchase price has been shown as Rs.40,093,094/-, i.e. The repurchase price in the agreement has been calculated at the rate of 22 paisa per rupee per day. Schedule "C" provided due date of repayment of instalments and in terms of the said Schedule in case defendant had paid the instalment within the date of repayment, then the plaintiff-Bank was required to charge mark-up at the rate of 15 paisa by giving rebate of 7 paisa on the instalments and in all defendant was liable to pay Rs.34,654,382/- and in case defendant does not pay the amount on or before the due date then defendants had to pay Rs.40,093,094/-, the agreed purchase price.
5. Under the long term agreement the plaintiff agreed to provide finance of Rs.2,100,000/- and defendant agreed to pay purchase price for Rs. 5,1,69,776/-. The purchase price was determined and. Calculated at the rate of paisa 22 per rupee per annum subject to the rebate of 7 paisa per rupee per annum in case the instalment was paid within due date. Expected date of disbursement was shown as 1.6.1988 and date of repayment for first instalment was shown as 31.3.1989. The purchase price under both agreements, viz. Long term finance 22 paisa per rupee per day being Rs.40,093,094/- and Rs.4,075,824/-. In Schedule "C" of the agreements date of maturity of the instalment was shown and likewise it was clearly stated that in case the defendant has paid the amount on due date then defendant was liable to pay in all Rs.4,095,824/-, otherwise defendant was liable to pay Rs. 5,169,776/-calculated at the rate of 22 paisa. The defendant executed trust deeds dated 14.11.1988 and 18.3.1989. The defendants also executed memorandum of deposit of title deeds on 19.11.1989 and mortgaged the property and charge of the mortgage was duly. Registered with the Registrar of Companies on 10.1.1989. The defendant further executed deed of floating of charge on its assets, hypothecation of the plan. The defendants Nos. 2 to 8 gave their personal guarantees for the repayment of outstanding liaVities of defendant No. 1.
6. Heard Mr. Anwar Muhammad, learned counsel for the plaintiff, and Mr. Mansoor-ul-Arfin, learned counsel for the defendants.
7. On the basis of facts stated above, I will now discuss the matter issue`wise. Issues Nos. 3, 4, 7 and 8 have not been pressed by the learned counsel for the parties and, therefore, there is no need to give any finding on the said issue.
ISSUE NO.5: I will first discuss this issue. Mr. Mansoor-ul-Arfin, learned - counsel for the defendants, argued that charging of mark-up at the rate of 22 paisa is illegal as same is penalty provided in the agreement and defendants are liable to pay amount with mark-up at the rate of 15 paisa. In support of his contention learned counsel relied upon the case of /. C.P. v. Chiniot Textile Mills Ltd.
8. I am affirmed that the case-law relied upon by the learned counsel helps him in any way. In the said judgment, the learned Judge held that:- "A document has to be read in its entirety and in case it is assumed that the: investment agreement, dated 12th April, 1989 was substituted by the Supplementary Agreement, the rate of mark-up will have to be calculated at the rate of 22% per annum. The argument that lower rate of mark-up be assumed to have been agreed through supplementary agreement between the parties."
9. Schedule "C" of the agreement provided date of. Maturity of each instalment as well as amount with and without rebate.
10. From. The statement of account. (Ex.5125), it appears that due instalments were shown as calculated at the rate of 22 paisa per rupee per annum and rebate was granted in terms of the agreement in respect of the instalments which were paid within due dates. It is not the case of the defendants that initial price was fixed and calculated at the rate of 15 paisa per rupee per annum and in the event of default in - payment of instalment, defendants were liable to pay instalments calculated at higher rate of 22 paisa per rupee, per annum, so as to term it as penalty clause. The charging of mark-up at the rate of 22 paisa and given rebate in case of payment in time cannot be termed as penalty clause.
11. My view finds support from the case of Bishambhar Das v. Katha Singh (AIR 1933 Lah. 523). In the said judgment it has been held as under:- "Where a creditor plaintiff shows a concession to the defendant that if he paid the amount on a certain specified ate no interest would be charged but that if he failed to avail himself of the concession he would be liable to pay interest at stipulated rate from the date of the bond, such condition cannot be said to be in the nature' of the penalty and cannot be relieved against under S. 74, Contract Act, or on equitable grounds."
"In order to avoid the consequences of Section 74 of the Contract Act, all that a mortgagee need to do is to reserve the higher rate as payable under the mortgage and to provide for its reduction, in case of punctual payments".
For the foregoing reasons I decide this issue in affirmative.
ISSUES NOS. 2 & 6: The plaintiff's witness produced statement of account as Ex.5/25 and as per summary filed by the plaintiff following amounts were shown as disbursed, debited and credited in the statement of account of the defendant: Particulars ST/TFCs-I St/TFCs-II LT/TFCs Total Principal 23,000,000 3,850,000 1,050,000 27,900,000 Markup 17,953,000 2,543,321 237,723 20,734,000 Excise Duty 920,000 154,000 48,453 1,122,453 Project mon.fee 203,179 30,732 20,359 254,270 trusteeship comm. 253,975 38,413 17,984 310,372 less payment Received/Adjusted Subsequent To the date of claim2,790,000 500,000 3,290,000 Net Claim 39,541,017 6,113,466 1,374,519 47,03,002 Mr. Anwar Muhammad, learned counsel for the plaintiff heavily relied upon the financial statement for the year ended on 30.9.1996 of the defendant (Ex.5/24). In the said statement following amounts have been shown as outstanding:- 1996 1995 6 REDEEMABLE CAPITAL Rupees Rupees 6.1 Principal 6.2 Long term TFCs 1,345,550 1,345,550 6.3 Short term TFCs 26,848,220 26,848,220 28,193,770 28,193,770 6.4 Accrued mark-up 16,986,071 6.5 Frozen mark-up 4,500,000 49,679,841 28,193,770 Less: Current portion shown under current liabilities4,181,856 748,153 45,497,985 27,446,617 The learned Advocate argued that as defendants had admitted the amount in their audit report.
12. The learned Advocate argued that as defendants had admitted the amount in their audit report, the plaintiff-Bank is entitled for the decree of the said amount.
13. It is by now settled that Bank can claim only purchase price from its customer alongwith other charges in terms of agreements between the parties, which customers agree to pay to banks.
14. The plaintiff's witness in his cross-examination produced letters dated 27.2.1990 (Ex.5/28) and 31.7.1989 (Ex.5/29), by which plaintiff has revised. Purchase price and payment schedule in respect of long term finance facility of Rs.2,100 million. From the perusal of Ex.5/28 it appears that first instalment of finance was disbursed by the plaintiff-Bank on 19.2.1990 and second instalment on 21.2.1990, as against on 1.6.1986, the original expected date of disbursement under Schedule "B" of Ex.5/1. Likewise first instalment became due and payable under Ex.5/1 was 31.3.1990, whereas under revised schedule first instalment was payable on 30.9.1990. It is interesting to note that under original agreement (Ex.5/1) first instalment was payable after one year and nine months of the disbursement of finance, whereas under revised schedule first instalment became due and payable after seven months of the disbursement of finance.
15. In terms -of rescheduled/revised repurchase price, the defendants were liable to pay purchase price in sixteen instalments of Rs.231,876/40, totaling to Rs.3,710,022/40 at the rate of 15 paisa from 31.3.1990 till 31.3.1998. The revised schedule 31.3.1990 till 31.3.1998. By letter dated 31.7.1998 (Ex.5/29), the plaintiff-Bank revised repayment schedule in respect of short-term finance. In terms of said letter, plaintiff agreed to disburse finance Rs.23,000,000/- in four instalments commencing from 11.1.1989 to 13.5.1989 as against the original agreement (Ex.5/12), whereby plaintiff undertook to disburse finance on 15.5.1988. In terms of Ex.5/29, the defendants were liable to pay purchase price by 30.6,1992 in six quarterly instalments. In the last instalment, defendant had to pay purchase price also. (The pride of Rs.34,544,657.53 was calculated at the rate of 15% and Rs.39,932,164/38 was calculated at the rate of 22%. The defendants were entitled for the rebate of 7% in mark-up in case instalment was deposited on due date).
16. The repurchase prices of the long term and short term finance agreed by the plaintiff in terms of revised schedule were as under: Long term Ex.5/28 (i) @ 15% Rs.3,710,022.40
(ii) @ 22% Rs.4,603,932.80 Short term Ex. 5/29 (i)@ 15% Rs.34,544,657.53
(ii) @ 22% Rs.39,932,164,34 The total amount payable as per revised schedule at the rate of 15 paisa was Rs.38,254,679.93 and 22 paisa was Rs.44,536,097.14.
The plaintiff has disbursed amount under Ex. 5/28 and Ex.5/29 and also granted rebate in terms of revised price.
17. Apart from repurchase price the plaintiff claimed following amounts:
18. Rs. 28,042/- as monitoring fee, Rs.35,053/- trusteeship commission, totaling to Rs.63,034/-.
19. The' defendant had paid a sum of Rs.16,939,037.47 upto the date of filing of suit and after filing of the suit defendant had paid under short term finance a total sum of Rs.45,403,782/-. If the amount paid by the defendant is .Adjusted towards the purchase price calculated at the rate of 15 paisa, viz. Rs.3,710,022.40 Rs.34,544,657.53=Rs.38,254,679.93, the defendant had paid an excess amount of Rs.7,149,102.07 and if payment is adjusted from the repurchase price calculated at the rate of 22 paisa, Rs.4,603,932.80 + 39,932,164.34 = 44,536,097.14. The defendants had paid a sum of Rs. 867,686/-, more than the purchase price. After adjusting Rs.63,094/-, being balance debited amount towards monitoring fee and trusteeship commission, the defendant had paid an excess amount of Rs.7,086,009/-, if calculated at the rate of 15 paisa and Rs.804,592/-, if calculated at the rate of 22 paisa per rupee per thousand per day.
20. Now I will take into consideration whether plaintiff has sanctioned and granted finance of Rs.3,850,000/- or not. By letter dated 9.12.1990 (Ex.6/2), the chartered accountant of the defendants requested for sanction of additional finance of Rs.3,0304 million to utilize the same towards the repayments of plaintiff's dues. The plaintiff vide his letter dated 20.12.1990 (Ex.5/23) sanctioned the finance so requested. The amount of Rs.3,850,000/- was directly credited in the account of the defendants on 30.6.1991 and further plaintiff gave rebate of Rs.1,784,054.30 on it, being payment of instalment within due date,.
21. The defendant No. 1 by his letter dated 21.12.1991 (Ex.6/3) again admitted and acknowledged that additional finance of Rs.3,848,219.18 has been used for the adjustment of due instalments.
22. The defendants' witness in his examination-inchief admitted that amount of additional finance was adjusted towards two instalments of mark-up on short term TFC facility. In cross-examination defendants' witness further admitted that additional finance of Rs.3,850 million was sanctioned through Ex.5/23, and that defendants did not request for said additional finance.
23. In view of the above, the defendants are liable to pay apart from purchase price agreed under short term and long term agreements of finance a further sum of Rs.3,850,000/-.
24. As no agreement of finance has been executed between the parties in respect of additional finance, the plaintiff is not entitled to claim mark-up of Rs.2,543,321/- debited in the account of the plaintiff.
25. The defendants are, therefore, liable to pay following amounts: Long Term Finance: Revised purchase price Ex.5/28 @ 22 paisa Rs. 4,604,932.80 Short Term Finance: Revised purchase price Ex.5/29 @ 22 paisa Rs.39,932,164.38 Monitoring fee and trusteeship commission Rs. 63,094.00 Additional finance Exs. 6/3 and, 5/23 Rs. 3,850,000.00 Rs.48,449,191.18 Less Paid: Paid by defendant Ex.7/4 adjusted from Additional Finance as admitted in cross- examination and not reflected in Ex.7/4 Rs.45,403,782.00 Rs. 3,850,000.00 Rs .49, 253, 782.00 Apart from above payment, defendant also claimed adjustment of rebate which was not granted on the instalments paid within due date and admitted by the plaintiff's witness in his cross- examination, but I am not dealing with the same as issue, how much excess amount has been paid by the defendant, is not before me.
26. In the case of Ehsan A.I. Alibhoy and 2 others v. Industrial Development Bank of Pakistan and 5 others (2003 PLR (Qta) 357), the Hon'ble Supreme Court has held as under:- ".... 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 he damages.
Even fixed amount stipulate or 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."
27, By now it is well-settled that liquidated damages can be recovered only if party claiming the same, can prove the same.
28. The plaintiff failed to discharge the burden is this regard and in fact has not stated a single word in his evidence about the liquidated damages. I, therefore, held that plaintiff is not entitled for the liquidated damages.
ISSUES NOS. 1 & 9:
29. For the foregoing reasons since the defendants had paid more than the amount due to plaintiff before the plaintiff the enactment of Financial Institutions (Recovery of Loans) Ordinance, 2001, the plaintiff is not entitled to any decree as the plaintiff's suit has become infructuous and is accordingly disposed of with no order as to cost.