2004 PLP 974 (CLD)

‑‑‑Ss.2(b) & 3‑‑Word 'debt' interpretation of‑‑‑Legislature has specifically excluded the debts of the banking companies and the scheduled banks from the application of S.3 of West Pakistan Relief of Indebtedness Ordinance, 1960‑‑Respondent was a banking company and a scheduled bank, thus S3 of West Pakistan Relief of Indebtedness Ordinance 1960 had no applicability on it. Hafeez‑ur‑Rehman Mirza for Appellants. Malik Imran Aziz for Respondents. Date of hearing: 16th October, 2003. MIAN HAMID FAROOQ, J.‑‑‑Appellants/judgment -debtors, through the filing of the present appeal, has called in question judgment and decree dated 19‑3‑1997, whereby the learned Judge Banking Court passed a money decree with costs and interest from the date of the institution of the suit till realization against the appellants.

2. Precisely stated, the facts relevant for the decision of the present appeal are that the respondent‑Bank, on 2‑5‑1995, filed a suit for recovery of Rs.3,41,058 against the appellants and the respondents Nos.2 and 3, before the learned Judge Banking Court, wherein the defendants filed an application for leave to defend the suit, however, the same was rejected by the learned Banking Court, vide order dated 4‑12‑1995. Thereafter the respondent‑Bank, in support of their claim, tendered loan documents, which were exhibited as Exhs.P.1 to P.6. The learned Banking Court, after finding that the mortgage deed is not a valid document and a 'mortgage decree" cannot be passed, proceeded to pass a money decree, on the basis of promissory note Exh. P.1, with costs and interest against the appellants, vide judgment and decree dated 19‑3‑1997, hence the present appeal.

3. The learned counsel for the appellants has contended that there is no agreement for charging the penal interest, therefore, the respondent‑Bank can only claim simple interest. He while relying upon Samandar Khan v. Mst. Maqbool and others 1974 SCMR 388 and referring to section 3 of the West Pakistan Relief of Indebtedness Ordinance (XV of 1960) has submitted that the respondent‑Bank cannot recover double the amount from the appellants after having deducted the amount paid by the appellants. Conversely the learned counsel for the respondent has supported the impugned judgment and decree.

4. We have examined the record and find that there is no such agreement on record, whereby the appellants undertook to pay the amount of penal interest. Although, as noted above, after the dismissal of appellant's leave application, the respondent‑Bank tendered some documents an its evidence, which were exhibited as Exhs.P.1 to P.6, yet the bank failed to produce any such agreement in order to show that the appellants ever acknowledged the payment of penal interest. The learned counsel for the respondent despite, his best efforts, could not point out any agreement on record in order to demonstrate that the respondent‑Bank is entitled to recover the amount of penal interest from the appellant. It is settled law by now that without any express contract, penal interest could not be charged. If any case‑law is needed, judgments reported as National Bank of Pakistan v. Messrs Ch. Ilam Din & Company and others PLD 1985 Lah. 117 and Allied Bank of Pakistan v. Masood Ahmad Khan 1994 MLD 1557 can be referred. In view whereof we are of the considered opinion that under the present set of circumstances and due to lack of execution of any agreement to this effect, the respondent‑Bank has no authority to charge the penal interest. We are inclined to deduct the amount of penal interest, which has been calculated by both the learned counsel of the parties as Rs.49,980, from the decretal amount and the decree stands amended to that extent.

5. So far as the other contention of the learned counsel is concerned, the same, on the face of it, has no substance. Section 3 of the Ordinance (XV of 1960), relied upon by the learned counsel for the appellant, provides that no Court shall pass or execute a decree in respect of a debt for a large sum than twice the amount of the sum found by the Court to have been actually advanced loan less any amount already received by the creditor. The word "debt" has been defined in section 2(b) of the said Ordinance, definition of which, inter alia, does not include the debts, "due to a cooperative bank, a cooperative society or any banking company registered under the Companies Act, 1913 or any bank, which is scheduled bank, as defined in the State Bank of Pakistan Act, 1956". It flows from the above that legislature has specifically excluded the debts of the banking companies and the scheduled banks from the application of section 3 of the said Ordinance. Undoubtedly the respondent‑Bank is a banking company and also a scheduled bank, thus section 3 of the Ordinance has no applicability in the present set of circumstances.

6. Now coming to the judgment of Samandar Khan ibid, relied upon by the learned counsel. As held above, section 3 of the Ordinance, 1960, is not attracted in the cases of Banking Company and scheduled bank, therefore, the said judgment is not applicable in the present case, as the same was rendered with reference to provisions of West Pakistan Urban Rent Restrictions Ordinance. Needless to add that Banking Company or a scheduled bank was not party in the aforenoted reported judgment. The reliance of the learned counsel on the said case is of no avail to the appellants.

7. In the above perspective, we are inclined to partly allow this appeal and modify the impugned decree, as noted above, thereby deducting the amount of Rs.49,980 from the decretal amount.

8. Upshot of the above discussion is that the present appeal is partly allowed and the impugned judgment and decree is modified to the extent that instead of suit amount of Rs.3,41,058, the respondent‑Bank shall now be entitled to recover a sum of Rs.2,91,

078. However the terms regarding costs and interest shall remain intact. No order as to costs. M.A.W./M‑2380/L Appeal partly allowed.