2007 PLP 673 (CLD)

MIAN HAMID FAROOQ, J.

The appellants/defendants, through the present appeal, have assailed the judgment and decree dated 4-3-2003, whereby the learned Judge Banking Court, after rejecting appellant's application for leave to defend the suit, proceeded to pass a decree, to the tune of Rs.42,84,660 together with costs and costs of funds, favouring the respondent-Bank.

2. The respondent-Bank filed the suit, before the Banking Court, against the appellants, for the recovery of Rs.44,06,016 in the following manner:-- "(a) Mark-up on cash finance for the period of 13-10-1996 to 30-4-1997 Rs.10,01,234 (b) Forced Demand Finance, of the guarantee, Issued on 6-8-1996. Rs.22,50,000 (c) Mark-up on forced demand finance/Guarantee. Rs.11,54,782 Total Rs.44,06,016" It was pleaded that the appellants availed the cash finance facility of Rs.12.500 millions; they repaid the principal amount of cash finance but the mark-up amount of Rs.10,01,234 remained unpaid. It was further the case of the respondent-Bank that the limit of bank guarantee was renewed, however, when the appellants committed default, forced demand finance was created for payment of balance guarantee amount of Rs.22,50,

000. It was stated that the appellants executed the documents, neglected to repay the outstanding amounts and failed to fulfil their contractual obligations, which necessitated the suit. The appellants filed two applications for leave to defend the suit, inter alia, pleading that the mark-up cannot be charged over guarantee amount and the mark-up claimed on cash finance facility is excessive and against the prevailing rules. The learned Judge Banking Court, after finding that no serious and bona fide dispute exists between the parties, rejected appellants' applications for leave to defend the suit and proceeded to pass a decree for a sum of Rs.42,84,660 together with costs and costs of funds against the appellants, vide impugned judgment and decree dated 4-3-2003, hence the present appeal.

3. Learned counsel for the appellant contends that approximately a sum of Rs.15,00,000, out of the suit amount, was illegally charged under the head of mark-up in both the accounts and although the plea regarding illegal charging of mark-up was taken and raised before the learned Judge Banking Court, yet he failed to give findings on the said controversy. The learned counsel, on a Court question, answered that apart from the amount of mark-up, the rest of the amount is admitted by the appellants and there is no dispute qua the remaining amount. Conversely, the learned counsel for the respondent has supported the impugned judgment.

4. We have heard the learned counsel and examined the summoned record. Present appeal was admitted only to determine the question as to whether the mark-up calculated by the bank is correct and as to whether the statement filed along with the appeal was to be relied upon or not. It appears appropriate to reproduce interim order dated 6-6-2005, passed by this Court:-- "Records have been perused. There is no denial that the previous cash finance was availed. Similarly there is no denial that the Bank Guarantee amount was paid by the respondent-Bank. What is being questioned is the exact amount of mark-up on the payable amount on' the previous cash finance and liability of the appellant to pay mark-up on the amount of Bank Guarantee/forced finance. We do find at page 231 of the trial Court file an application made by the appellants themselves to establish the payment of forced finance with an agreement to pay mark-up as suggested. When confronted the learned counsel states that still mark-up has not been correctly calculated. Only to determine as to whether the mark-up calculated by the Bank is correct or whether the statement filed by the learned counsel with the RFA wherein mark-up has been calculated is to be relied notice be issued to the respondent-Bank for a very early date."

5. Upon the perusal of appellant's leave applications, we find that the appellants specifically pleaded that the mark-up cannot be charged over the guarantee amount and that the mark-up charged on the cash finance facility is excessive. It is also evident from the impugned judgment that the question of mark-up was raised by the appellant before the learned Judge Banking Court. In view whereof, it is evident that the appellants did raise the plea of charging of illegal mark-up, but the learned Judge Banking Court failed to give findings on the said crucial and prime controversy. The learned Judge though rendered some findings on the rest of the pleas agitated by the appellants, but the plea of charging of illegal mark-up was not at all adverted to and decided. We have also examined the statement of accounts filed by the respondent-Bank before the Banking Court and find that in the statement of Accounts (mark-up recovered on cash finance 1996-97) mark-up has been charged after 30-4-1997, whereas according to the learned counsel, the period of finance expires on 30-4-1997. There are other discrepancies and glaring legal infirmities in the statement of accounts, which were not adverted to by the learned Judge Banking Court. As we are inclined to remand the case to the learned Judge Banking Court on the question of charging of mark-up, therefore, we have refrained ourselves from giving any definite findings on the statement of accounts lest the case of either parties may be prejudiced.

6. In the present scenario, we are of the view that the appellants have made out case for the grant of leave to defend the suit and we are persuaded to grant appellant's leave to defend the suit, only to determine the following questions: (i) Whether the mark-up calculated by the bank in both the accounts is correct and legal; (ii) Whether the bank has charged the mark-up after the expiry of finance period; and (iii) Whether the Bank could charge mark-up after the expiry period as given in the finance agreement. We feel that the interest of justice would adequately be met, if the said leave is to be granted subject to the condition of cash deposit, moreso when the learned counsel has admitted that out of the suit amount, approximately a sum of Rs.29,00,000 is admitted, while only the amount charged as mark-up is disputed.

7. In the above perspective, we have examined the impugned judgment and find that the same is not sustainable in law, thus are persuaded to set it aside, which we hereby do.

8. For the reasons stated above, the appeal is decided in the following manner: (i) The appeal is allowed and the impugned judgment and decree dated 4-3-2003 is set aside. (ii) Appellants' applications for leave to 'defend the suit are allowed, only to consider the questions of mark-up, as noted above, subject to cash deposit of Rs.30,00,000 by the appellants with the learned Banking Court No.1, Multan within a period of two months from today. (iii) Consequent to the above, respondent's suit for recovery of Rs.44,06,016 titled "Muslim Commercial Bank Ltd. v. S.S. Ginners etc." shall be deemed to be pending before the learned Judge Banking Court No.1, Multan. (iv) If the appellants deposit a sum of Rs.30,00,000 within the period allowed by this Court, as noted above, the learned Judge Banking Court shall decide respondent's suit after framing issues only on the question of mark-up, recording evidence and of course in accordance with law. (v) In case the appellants do not deposit the aforesaid amount within the time stipulated above, their application for leave to defend the suit shall be' deemed to be dismissed and, needless to add that the law will take its own course. (vi) No order as to costs. S.A.K./S-32/L Appeal accepted.