2005 PLP 444 (CLD)

He has stated that the said three sponsor Directors have paid an amount of Rs.10,767,480 and only an amount of Rs.290,740 remains to be paid. He further stated that final date of repayment was in the year 1994 and no mark‑up can be charged beyond agreed period. In this respect he relied upon the case of Textile Management (Pvt.) Ltd. v. N.I.T. 2002 CLD

276. On the other hand Mr. Mahmood Ahmed Khan, the learned counsel for the respondent contended that the three sponsor Directors had separate accounts from which they were separately disbursed the amount of facility and that the dues were paid in' specific accounts. He supported the impugned judgment and decree. We have considered the arguments of the learned counsel and have gone through the record. The facility was sanctioned by the respondent vide its letter dated 27‑5‑1993 which provided that the said three sponsor Directors have been granted Promissory Note Discount facility of Rs.10,000,000 for taking up shares in case of unsuccessful floatation. In this letter rate of return has been fixed at 20.0% per annum (excluding Central Excise Duty) and period of facility is mentioned as 6 months. All the three sponsor Directors separately signed and executed Pronote Discount Agreement. Pledge of Marketable Securities, Demand Promissory Note, Personal Guarantees. The three sponsor Directors were disbursed by the respondent the amount of facility through their respective loan accounts as follows:‑‑ Mushtaq Ahmed Vohra Rs.3,400,000 Nasir Mushtaq Vohra Rs.3,400,000 Mrs. Gulshad Begum Rs.3,200,000 Total amount Rs.10,000,000 It seems that the sponsor Directors failed to repay the dues of the respondent and requested for renewal of the facility. However, the three sponsor Directors wrote letter dated 26‑6‑1995 by which they started making payment in instalments and paid an amount of Rs.300,000 as initial instalment in Loan Account No.941008‑01 of Mrs. Gulshad Begum. Thereafter further instalments were paid in the same account under specific letters, copies of which have been filed with the replication of the respondent in the Banking Court. There are also letters showing payment in the Loan Account No.941007‑01 of Musthaq Ahmed Vohra the appellant. No payment however is shown in the Loan Account No.941006‑01 of Nasir Mushtaq Vohra. The respondent served legal notice on the appellant and then filed the suit. As stated above the appellant application for leave to defend the suit was dismissed. On filing of brew up of account, the suit was decreed by the impugned judgment and decree. The first contention of the learned counsel for the appellant is that the three sponsor Directors were given finance facility of Rs.10,000,000 against which they were required to pay a total amount of Rs.11,058,220 against which they have paid to the respondent an amount of Rs.10,767,480 and that only an amount of Rs.290,740 remains to be paid. In other words, the contention of the counsel for the appellant is that all three accounts be considered as one transaction and the payment made against such three transactions be considered as payment of total dues to the respondent. The appellant counsel further submitted that the respondent has received excess amount then was due in settling the account of Mrs. Gulshad Begum and that the appellant is entitled to adjustment from such excess payment in the account of Mrs. Gulshad Begum. The counsel has not cited any law to show in the first place that the three accounts of the sponsor Directors can be considered as one transaction and that the appellant is entitled to adjustment from the alleged excess payment in the account of Mrs. Gulshad Begum. Otherwise too, on documents as have been filed before us, they show that three separate loan accounts were being maintained by the three sponsor Directors in their respective names and they were separately disbursed the amount of facility by the respondent and that they have also signed and executed separate agreement and security documents for the respective facility allowed to them. There is therefore no occasion for treating the three loan accounts as one transaction. Furthermore, there is no substance in the submission of the appellant counsel that the appellant be allowed adjustment from the alleged excess payment made in the account of Mrs. Gulshad Begum. The Bank has not filed any suit against Mrs. Gulshad Begum and there is no lis before us in respect of her loan account. Even otherwise there is no principle of law on the basis of which the amount in one account can be transferred for the adjustment of another account more so when conscious payments have been made in specific account. The second contention of the learned counsel for the appellant is that the facility granted to the appellant was for six months and that the respondent was not entitled to charge mark up beyond the agreed period of the facility. In his respect the letter dated 27‑5‑1993 shows that the facility was granted by the respondent to the appellant for period of six months on return raise of 20% per annum. The appellant has signed Pronote Discount Agreement, Pronote and also the Guarantee in the sum of Rs.3,759,

795. The relevant provision of the Pronote Discount Agreement is as follows:‑‑ "

1. The Customer agrees that as long as payment is not received by the Bank, the amount paid to the Customer on a bill of exchange, promissory note or other negotiable instrument may at the absolute discretion of the Bank, be treated as outstanding against the customer, who hereby expressly covenants and agrees that the said amount shall be repaid to the Bank on demand together with central excise duty, service charges and costs incurred by the Bank in the amount of Rs.3,759,795 (Rupees three million seven hundred fifty nine thousand seven hundred ninety five only) in seeking payment of the bill of exchange promissory note or other negotiable instrument, together with liquidated damages calculated at the rate of 20% per annum of the total assistance for the period such repayment is delayed." Similarly the relevant provision of guarantee is as follows:‑‑ In consideration of your having at the request of Mr. Mushtaq Ahmad Vohra, entered into Promissory Note Discounting Agreement dated December 8, 1993 (hereinafter referred to as the said agreement) with Mr. Mushtaq Ahmed Vohra, (hereinafter referred to as "the customer"), I/we hereby jointly and severally guarantee, to you repayment of all sums due and payable to you under the said agreement, provided the total amount recoverable from me/us under this agreement shall not at any time exceed the sum of Rs.3,759,795 (rupees three million seven hundred fifty nine thousand seven hundred and ninety five only) plus charges and all other sums due under the said agreement. The amount agreed to be repaid by the appellant on the above documents inclusive of rate of return is Rs.3,759,

795. In terms of paragraph No.16 of the plaint, the respondent has disbursed the amount of facility to the appellant and showed it to be maturing on 16‑6‑1994. It is alleged that appellant requested for renewal, roll over and extension of facility and correspondence in this respect continued between the appellant and the respondent until about 1997 and thereafter on 17th May, 1999 the respondent served legal notice on the appellant. From the documents and pleadings, it appears that the respondent continued to charge mark‑up on the facility up to the date of filing of the suit. The break up of account filed by the respondent before Banking Court is as follows:‑‑ Principal 4,085,828 ADD: Mark‑up [till agreed period i.e. 16‑6‑1998] 2 861,199 6,947,027 ADD: Accrued for further period [till 20‑11‑2001] 1,627,644 8,574,671 LESS: Payment received ‑ Against Principal 1,838,130 ‑ Against Mark‑up 3,861,949 (5,700,079) ADD: Liquidated damages 689,902 Total amount recoverable 3,564,494 The Banking Court has disallowed the respondent claim to accrued mark‑up and liquidated damages but has allowed the remaining claim and decreed the suit for Rs.1,246,948 with further relief as already mentioned above. The question therefore is whether the Banking Court was justified in allowing mark‑up up to 16‑6‑1998 as mentioned in the above quoted break‑up of account, filed by the respondent. As noted above the facility was granted for a period of six months which, as per respondents own pleading was maturing on 16‑6‑1994 and the amount payable on maturity by the appellant to the respondent was to be Rs.3,759,795 inclusive of all charges. It seems from the break‑up of account filed by the respondent, that the Bank has continued to charge a mark‑up beyond the agreed period and it also reflect charging of mark‑up over mark‑up. The charging of mark up beyond agreed period and mark‑up over mark‑up are not allowed by law. Similarly no extension, roll over or renewal is allowed by law without actual disbursement and such extension, roll over or renewal have been held to be without consideration and void. Reference in this regard is made to the case of Agricultural Development Bank of Pakistan v. Jasarat Hussain (2002 CLD 93), Allied Bank of Pakistan Limited, Faisalabad v. M/s. Aisha Garments, etc. (2001 MLD 1955), Textile Management (Pvt.) Limited v. N.I.T. (2002 CLD 276), National Bank of Pakistan v. Punjab Buildings Products Ltd. (PLD 1998 Kar. 302), United Bank Limited v. Ch. Ghulam Hussain (1998 CLC 816), United Bank Ltd. v. M/s. Gravure Packaging (Pvt.) Ltd. (2001 YLR 1549), Habib Bank Limited v. M/s. Qayyum Spinning Limited (2001 MLD 1351). On the basis of the above discussion, we are of the considered view that on the date when the suit was filed by the respondent against the appellant no amount was due from the appellant to the respondent rather there was an excess payment by the appellant to the respondent. We therefore allow this appeal and set aside the impugned judgment and decree and dismiss the suit of the respondent with costs. M.B.A./M‑173/K Appeal allowed.