1999 PLP 1362 (CLC)

‑‑‑‑S. 15‑‑‑Suit for recovery of loan‑‑‑" Mark‑up for cushion period"‑‑‑ Meaning‑‑‑Claim with regard to mark‑up for cushion period, was meant to compensate Banking company mainly for period consumed in litigation‑‑‑Under provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances), Act, 1997, while awarding decree .for recovery of outstanding amount, mark‑up thereon had to be granted from date of institution of suit‑‑ Award of mark‑up for cushion period would result in grant of mark‑up, for overlapping period. (b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑ ‑‑‑‑S. 15‑‑‑Suit for recovery of loan‑‑‑Execution of various documents filed by plaintiff‑Bank alongwith plaint including memorandum of deposit of title deeds, had not been disputed by defendants/borrowers‑‑‑Liability of defendants in their capacity as legal heirs of deceased borrower, had also not been disputed‑‑‑Suit filed by plaintiff‑Bank, was decreed against defendants jointly as well as severally on outstanding amount with mark‑up from date of institution of suit till its payment. S. Mazharul Haq for Plaintiff. Muhammad Saleem Thepdawala for Defendants Nos.2 to

5. Pursuant to order, dated 27‑4‑1998, the plaintiff has filed legible version of the statement of account alongwith the Sanction Advice. The Sanction Advice shows that the facility granted to the defendant No. l expired on 30th June, 1986 and it carried mark‑up at the rate of 43 paisa per thousand per day. According to the learned counsel for plaintiff, the parties had thereafter entered into agreement of financing, dated 10th April, 1986 whereunder while maintaining the limit of facility to the said extent as was sanctioned on 26‑1‑1986, mark‑up was agreed to be paid for a period of one year instead of 6 (six) months. Furthermore, the rate of mark‑up was maintained at 43 paisas per thousand per day. The facility was granted against the security, amongst others, of hypothecation of stocks. The statement of account filed by the plaintiff shows that mark‑up has been charged beyond the said date of expiry indicated from the agreement of financing. In response to my query about justification of charging mark‑iip beyond 31‑12‑1986, the learned counsel for the plaintiff submits that the defendant No. l and three other companies/concerns were operating as sister organizations and the accounts of all the four (4) organizations were operated by a common person To substantiate his contention, the learned counsel for the plaintiff has referred to certain correspondence exchanged with Messrs International Steel Corporation which apparently was operating from the same premises where the defendant No.l was also having its office. Having gone through such correspondence, I do not find much force in the contention of the learned counsel since the liability for mark‑up must be shown to have clearly been agreed between the parties and cannot be inferred from one sided offers which had never materialized into an agreement. In the circumstances, the plaintiff is not entitled to charge mark‑up beyond the agreed period. To determine as to what was the agreed period of finance, the learned counsel for the defendants has referred to the Sanction Advice showing that the validity period of the finance had period on 30th June, 1986. I am afraid such period stood novated through agreement, dated 10th April, 1986 which shows the amount of mark‑up having been agreed and calculated upto 31st December, 1986. The learned counsel for the defendants has not been able to show any material in support of his assertion that the agreement of financing, dated 10th April, 1986 had subsequently, been filled‑up beyond the authority as could be assumed by the plaintiff. In the circumstances, I find that the parties had agreed for mark‑up upto 31st December, 1986. Significantly the Facility Letter, Promissory Note, Letter of Hypothecation, Memoranda of Deposit of Title Deeds, etc. do substantiate the amount of mark‑up and the purchase price mentioned in the financing agreement. As regards the amount of Rs.919,436 shown in proviso to clause (3) of the financing agreement, the learned counsel for the plaintiff states that such was the amount of mark‑up for cushion period i.e. 210 days. As regards entitlement to mark‑up for cushion period, in my view, such claim was meant to compensate a banking company mainly for the period consumed in litigation. Under the provisions of Act XV of 1997, while awarding decree for recovery of outstanding amount, mark‑up thereon has to be granted from the date of institution of suit. Therefore, the award of mark‑up for cushion period shall result in grant of mark‑up for over‑lapping period. In the circumstances, the plaintiff is not entitled to mark‑up for the cushion period. The statement of account further shows that godown charges in the sum of Rs.42,000 have been claimed by the plaintiff. Such figure has not been disputed ‑by the defendants and can lawfully be charged by the plaintiff. The statement of account further shows that the defendants have repaid a sum of Rs.1,489,790.76. Such figure again is not disputed by the defendants who are entitled to adjustment of the amount repaid by them. Consequently, from the total amount of Rs.39,702,637 shown outstanding in the statement of account, a sum of Rs.29,469,954 charged as mark‑up has to be deducted. The balance figure comes to Rs.10,232,683 which has to be further reduced to the extent of Rs.1,489,790.76. The principal outstanding amount thus, works out as Rs.8,742,892.24. We last mentioned figure includes the amount of godown charges and such fact is acknowledged by Mr. S. Mazharul Haq under instructions from the concerned officer of plaintiff‑bank who is present in Court today. To this, is to be added the agreed amount of mark‑up for one year being Rs.1,598,062 and the total amount to which the plaintiff is entitled comes to Rs.10,340,956.24. The plaintiff has filed two sheets in Court today which contain the summary of the different figures mentioned in the statement of account and copies thereof, have been supplied to the learned counsel for defendants. The execution of various documents filed alongwith the plaint including the Memoranda of Deposit of Title Deeds has not been disputed by the defendants. The liability of defendants Nos.2 to 6 in their capacity as the legal heirs of the deceased proprietor of defendant No. l has also not been disputed. The plaintiff's suit, therefore, is decreed against the defendants Nos.2 to 6 jointly as well as severally in the sum of Rs.10,340,956.24 with mark‑up at the rate of 16 % per annum from the date of institution of the suit till its payment. The plaintiff's suit is also decreed for sale of the mortgaged property mentioned in paragraph 5 of the plaint under Order XXXIV, C.P.C. and for sale of the hypothecated stocks besides the costs of the proceedings. H.B.T./H‑80/K Suit decreed.