2002 PLP 94 (CLD)

MUHAMMAD SAIR ALI, J.‑‑‑This Regular First Appeal has been filed by Agriculture Development Bank of Pakistan challenging only a part of judgment and decree dated 30‑10‑1996 of Banking Tribunal‑I, Sargodha refusing to award liquidated damages, charges, costs and mark‑up, while awarding decree to appellant for Rs.79,327 alongwith costs.

2. On 11‑6‑1998 record of the case was requisitioned. Supporting the appeal, learned counsel for the appellant has argued that in terms of finance agreement between the parties, the appellant was entitled to the award of liquidated damages @ 20% till payment and other charges/costs incurred by the appellant. He further submitted that the learned Presiding Officer, Banking Tribunal awarded decree only for Rs.79.327 but refused to grant the abovesaid claims and such refusal is contrary to law, contract and is arbitrary.

3. Record has been examined and arguments duly considered.

4. Record shows that on 12‑2‑1987, respondent was extended finance of Rs.1,76,609 for tractor purchase. Under the hire‑purchase agreement, the loan was repayable in 8 years in equal yearly instalments of Rs.22,376 per year. Respondent paid a sum of Rs.46,079 prior to the suit and Rs.63,044 after the institution of the suit. The respondent as such reimbursed total amount of Rs.1,09,123 to the appellant out of the above said finance. The learned Banking Tribunal awarded additional mark‑up on enhanced rate from 1‑7‑1990 to 31‑12‑1990 and 1‑7‑1991 to 7‑7‑1995 and awarded decree of Rs.79,327 with costs to the appellant after adjustment of the amounts settled and paid by the respondent. We find that refusal of the learned Banking Tribunal to award liquidated damages, mark‑up and costs was legally justified. Having incorporated mark‑up in the financed amount of Rs.1,76,609 alongwith mark‑up for the cushion period, appellant fixed Rs.22,376 as the yearly instalment payable by the respondent. Mark‑up having been included in the instalment amount, cannot be charged by the appellant twice. Mark‑up cannot be allowed to the appellant like interest recurring on the interest bearing loan. It will be a total negation of the mark‑up system of finance introduced by abolishing interest based loans of the Banking Companies. Similarly, liquidated damages, if automatically allowed @ 20%, will obviously amount to interest charging on exhorbitant rates thereby defeating the intent and purpose of the legal change introduced in the banking laws. Even otherwise liquidated damages awardable under section 74 of the Contract Act, 1872 demand proof of actual loss through evidence of the banking companies. No such evidence was either presented or sought to be presented by the appellant. Furthermore, liquidated damages under section 11(4) of the Banking Tribunals Ordinance, 1984 were permissible at the discretion of the Tribunal, only on failure of judgment debtor to pay the decretal amount. Since, no reasons to seek such discretion from the Tribunal were given nor did any occasion thereto arise, therefore, the learned Presiding Officer was justified in refusing to award liquidated damages to the appellant. As to the claim for other charges and costs, appellant failed to produce any evidence or record for such debits (denied by the respondent), therefore, the appellant was not entitled to claim such costs or charges.

5. In view of the above, the appeal is dismissed. Q.M.H:/M.A.K./A‑315/L Appeal dismissed,