2023 PLP 222 (CLD)

QAISER RASHID KHAN, C.J.

Through the appeal in hand, the appellant has called in question the judgment and decree of the learned Judge Banking Court-II, Peshawar dated 11.11.2021, whereby, his leave to defend application was dismissed and the recovery suit of the respondent-bank was decreed against him with costs of funds and costs of the suit.

2. Arguments heard and the available record perused.

3. As the record unfolds, it was the appellant, who applied for the grant of finance facility under the Prime Minister Youth Loan Scheme to the respondent-bank, whereby, an amount of Rs. 15,39,000/- was sanctioned in his favour vide Sanction Advice dated 22.09.2015, which was duly availed of by the appellant. In this regard, the appellant executed the charge documents including the Finance Agreement, Demand Promissory Note and Letter of Hypothecation with the respondent-bank. By way of collateral security, the appellant also mortgaged his agricultural land measuring 18.80 kanals in favour of the respondent-bank. However, it was pursuant to the demand of the respondent-bank to the appellant to pay off the outstanding installments and his failure/neglect/refusal to do so, which prompted the respondent-bank to file the recovery suit against him.

4. The primary argument of the learned counsel for the appellant was that the latter could not have been burdened with a markup of Rs.1,96,500/-, as according to him, in the case of default in the payment of the monthly installments, the appellant was only liable to pay the cost of funds from the date of his default under section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and moreso, charging the account of the appellant for the aforesaid mark up amount will fall within the definition of mark up over the mark up.

5. At this stage, it would be more apt to reproduce section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which read as follows:- Section 3 Duty of a customer.

(1) It shall be the duty of a customer to fulfill his obligation to the financial institution. (2) Where the customer defaults in the discharge of his obligation, he shall be liable to pay, for the period from the date of his default till realization of the cost of funds of the financial institution as certified by the State Bank of Pakistan from time to time, apart from such other civil and criminal liabilities that he may incur under the contract or rules or any other law for the time being in force. (3) For purposes of this section a judgment against a customer under this ordinance shall mean that he is in default of his duty under subsection (1) and the ensuing decree shall provide for payment of the cost of funds as determined under subsection (2).

6. It is abundantly clear from the aforesaid provisions of law that a customer who defaults in fulfillment of obligations shall be liable to pay cost of funds for the period from the date of default till its realization as certified by the State Bank of Pakistan besides the other liabilities accrued under any contract/agreement executed by him in favour of the Financial Institution. It in no way exonerates the borrower from the payment of the mark up in the event of his default. The basic aim and theme behind the aforesaid provision of law is to compensate the Financial Institutions for the finance blocked on account of breach of fulfillment of the obligation by a customer. In the present case, it is evident from the record that the appellant had availed of the Finance facility under the Prime Minister Youth Loan Scheme from the respondent-bank to the tune of Rs.15,39,000/- on certain conditions duly enumerated in the Sanction Advice dated 22.09.2015, which includes that the appellant shall repay the entire loan amount within 84 installments and pay the mark up amount at the rate of 6%. As such, keeping in view the Sanction Advice together with other charge documents executed by the appellant in favour of the respondent-bank, the appellant is accountable to pay both costs of funds to the respondent-bank from the date of his default in the payment of monthly installments as a compensation for the finance blocked/struck up due to breach of fulfillment of his legal obligation and the mark up amount as well. Hence, the argument advanced by the learned counsel for the appellant being based on misconception is hereby overruled.

7. The statement of account, so furnished with the plaint, shows the amount of finance facility availed of by the appellant as well as the mark-up charged thereupon. Such statement has been duly certified as per section 4 of the Bankers' Books Evidence Act, 1891 and also in terms of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

8. As such, we understand that the learned Banking Court, Peshawar has duly attended to the controversy, so involved in the matter and while disallowing the application of the appellant for the grant of leave to defend, has rightly decreed the suit of the respondent-bank against him through the impugned judgment and decree. Such findings do not suffer from any illegality, misreading or non-reading of record, so as to in turn call for the indulgence of this court through the present appeal.

9. Resultantly, this appeal along with CM being without any substance stand dismissed. MH/17/P Appeal dismissed.