2012 PLP 961 (CLD)
BANK OF PUNJAB through Authorised Officer — Plaintiff Versus Messrs KNK INFRASTRUCTURE (PVT.) LTD. through Chief Executive Officer and 2 others — Defendants
| Citation | 2012 PLP 961 (CLD) |
| Forum / Court | Lahore |
| Bench Members | N/A |
| Parties | BANK OF PUNJAB through Authorised Officer — Plaintiff Versus Messrs KNK INFRASTRUCTURE (PVT.) LTD. through Chief Executive Officer and 2 others — Defendants |
| Primary Law | Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001) |
Q1: What are the key laws and sections cited in 2012 PLP 961 (CLD)?
This judgment primarily cites: Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2012 PLP 961 (CLD)?
The case was heard and decided by the Lahore bench comprising: N/A.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2012 PLP 961 (CLD) (BANK OF PUNJAB through Authorised Officer — Plaintiff Versus Messrs KNK INFRASTRUCTURE (PVT.) LTD. through Chief Executive Officer and 2 others — Defendants). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
S. 3
Agreement for rescheduling of loan
Levying of service charge
Charging of mark-up
Plaintiff had advanced an amount of Rs.78 million under Murabaha finance agreement to the defendant and purchase price of goods transacted was fixed at Rs.90 million
Plaintiff, upon expiry of the facility and having defaulted in payment, entered into a rescheduling agreement which extended term of finance but levied service charges @ Rs.16.88 % for the extended term
Defendant's contention was that mark-up had been charged beyond contract period
Held, rescheduling agreement was not enforceable with respect to service charges as said charge was clearly in the nature of an interest and could not accrue either under law or on the terms of the Murabaha facility
Financial Institutions (Recovery of Finances) Ordinance, 2001, created for unpaid creditor/financial institutions an entitlement to compensation through cost of funds as determined under the provisions of S.3 of the Ordinance from date of default until date of realization
Defendant's contention with respect to accrual of mark-up under the rescheduling agreement was upheld
Suit was decreed to the extent of unpaid amount against the defendants jointly and severally along with the payment of cost of funds with effect from the date of default till realization in terms of S.3 of the Ordinance.
Judgment & Decree
UMAR ATA BANDIAL, J.
The plaintiff advanced an amount of Rs.78 million under Murabaha finance agreement dated 10-10-2005 to the defendant No.1 company. The purchase price of the goods transacted was fixed at Rs.90 million payable on 15-1-2006. The disbursement of the principal amount is admitted at page 8 of the PLA. After expiry of the facility an amount of Rs.32.074 million has been repaid until 11-2-2008. The plaintiff entered into a rescheduling agreement which extended term of finance till 30-6-2010 but levied service charges @ Rs.16.88 per cent for the extended term. On the foregoing basis the plaintiff claims Rs.78 million as principal amount and Rs.54.592 million on account of mark-up the balance whereof after adjustment of repayments made in the amount of Rs.22.518 million, is stated to be outstanding.
2. The defendants filed their PLA wherein the only substantial plea taken is that markup has been charged beyond contract period in the suit. After filing their PLA the learned counsel for the defendants stopped appearing in these proceedings. Accordingly, the defendants were proceeded against ex parte on 26-11-2009. Nevertheless on the touchstone of Ali Khan's case (PLD 1995 SC 362), the pleas taken in the PLA are examined below.
3. The Murabaha facility agreement has purchase price of Rs.90 million payable on 15-1-2006. The rescheduling agreement dated 10-9-2007 claims service charges @ Rs.16.88% per annum till 30-6-2010. Such charge is clearly in the nature of interest and cannot accrue either under law or on the terms of the Murabaha facility. Consequently, the rescheduling agreement is not enforceable with respect to service charges. On the other hand, from the date of default, namely, 15-1-2006 until date of realization, the FIO 2001 creates for unpaid creditor/financial institutions an entitlement to compensation through cost of funds as determined under the provisions of section 3 of the said Ordinance.
4. Accordingly, the plea taken in the PLA with respect to accrual of mark up under the rescheduling agreement is upheld. As a result, this suit is decreed in the amount of Rs.57.926 million against the defendants jointly and severally along with payment of cost of funds w.e.f. 15-1-2006 till realization in terms of section 3 of the FIO, 2001. M.W.A/B-1-L Order accordingly.