2001 PLP 1096 (CLC)

MAULVI ANWARUL HAQ, J.‑‑‑ This E.F.A. arises out of proceedings ‑for execution of a decree passed in a suit filed by the respondent‑bank against, inter alia, the appellants. It will be appropriate, in order to understand the controversy between the parties, to refer to the plaintiff's case to indicate the finances for the recovery whereof the suit was filed. These are detailed in para.2 of the plaint and are as follows: (i) Rs.27,15,000 disbursed vide a sanction letter, dated 23‑12‑1987; (ii) additional Financial assistance of Rs.30,00,000 vide sanction letter, dated 20‑6 1988; (iii) financial assistance of Rs.15,00,000. vide sanction letter, dated 4‑2‑1989. In para.2 of the plaint it was stated that Rs.85,10,96 stood accrued for payment on account of finances and other charges as per terms of the agreement between the parties. Consequently a prayer was made for a decree for recovery of Rs.85,10,

596. A decree was accordingly passed by Banking Tribunal, Lahore on 4‑9‑1995 for the said amount with costs which were assessed at Rs.21,

504. The decree was accordingly put into execution. While the decree was so under execution negotiation started between the parties for restructuring of the several loan accounts with reference to the incentive schemes issued by the State Bank of Pakistan. It is an. admitted position that apart from the said financial assistances or working capital accounts some other loan accounts were also being maintained by the present appellants with the respondents. On 16‑10‑1999, Syed Iftikhar Ali Bukhari, appellant No.2 addressed a letter to the Bank referring, to a meeting held with the Bank officials. Alongwith this letter a pay order in the sum of Rs.10,00,000 was also sent. In the said letter it was indicated that in case the proposal being made in the letter for the adjustment of the liabilities is not approved by the Bank then the said amount‑ of Rs.10,00,000 shall be adjusted in the working capital amount. This was so stated in para.3 of the said letter. (Annexures "F" to the E.F.A.). Apparently the proposal was not approved: Thereafter, the appellant sent a pay order on 16‑11‑1999 in the sum of Rs.25,00,

000. It was indicated in the pay order that the same is for' loan Account No.002378 and loan Account No.002948. Similarly another pay order was sent in the sum of Rs.15,00,000. indicating that the amount is to be adjusted in the said two accounts, mentioned in first pay order, dated 16‑11‑1999. The payments were accepted by the Bank.

2. The appellant then approached the executing Court with an application. It was stated in the said application that out of decretal amount of Rs.85,10,596 the appellant has paid . Rs.50,00,000 through the aforementioned three pay orders and that they are ready to pay the balance amount of Rs.35,32,100 as also the amount of costs i.e. Rs.21,

504. The following instruments were filed alongwith application:‑‑ (a) Deposit at call, dated 28‑7‑2000, in the sum of Rs.21,504; (b) Deposit at call in the sum of Rs.14,30,596, dated 28‑7‑2000; (c) Pay Order, dated 29‑7‑2000 in the sum of Rs.16,25,000; and (d) Pay Order, dated 29‑7‑2000 in the sum of Rs.4,55,

000. A prayer was accordingly made for certifying the satisfaction of the decree for payment of all the amount due under the same. This application was taken up by the Banking Court on 7‑8‑2000. The respondent‑bank took the position that out of. said 'amount a sum of Rs.20,80,000 has been adjusted against the decretal amount while a sum of Rs.29,20,000 has been adjusted against sortie other account. Learned Judge, Banking Court proceeded to dismiss the application on the same day.

3. The present E.F.A.. came up for limine hearing on 15‑8‑2000 when pre‑admission notices were ordered to be issued. Pursuant to the same., Mr, Qaisar Javed Mian, learned counsel for respondent‑bank has put in appearance. Necessary records are available having been appended with this E. F. A. We accordingly intend to take up the main appeal and decide the same.

4. Learned counsel for the appellants argues with reference to section 59 of the Contract Act, 1872 that since the appellants had duly intimated the respondent‑Bank‑as to how the payments made by them are to be applied, the Bank had no lawful authority to apply the same otherwise. Learned counsel for the respondent‑Bank, on the other hand, argues that the appellants owe other debts as well. It was in the discretion of the Bank to apply the payments made by the appellants a thought fit to its best advantages.

5. We have gone through the records appended with this E.F.A. with the assistance of the learned counsel for the parties. We find that there is no dispute that the payment were in fact made by the appellants as stated in detail by us above. It is also not the case of the Bank either before the learned Judge Banking Court or before us that the said payments were not accepted by it. Similarly, it is also admitted before us that some other debts are also due to the respondent‑bank. We have also stated above that the appellants had duly intimated the Bank that all the three payments were to be applied to the discharge of the debts due to the Bank by the appellants against the said financial assistance/working capital accounts. In the case of the first payment of Rs,10,00,000 made vide pay order, dated 16‑10‑1999 sent alongwith the said letter it was stated that in case the proposal being made in the letter covering the entire liabilities is not ' accepted then the amount will be adjusted against working capital account. So far as the pay order, dated 16‑11‑1999 are concerned we find that it was indicated in the very instruments that the amounts are to be adjusted against the working capital accounts, numbers whereof were duly indicated on the said instruments.

6. We may reproduce here section 59 of Contract Act, 1872:‑‑ "

59. Application of payment where debt to be discharged is indicated.‑‑?Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted must be applied accordingly." A bare reading of the said provision of law would show that in case the following conditions are met then the payment has to be applied as indicated by debtor: (a) Making of payment to the creditor by the debtor; (b) indication either expressed or implied that the payment is to be a applied to discharge of particular debt; . (c) acceptance of payment. In case the above‑noted conditions exist then the creditor must apply the payment made by the debtor as indicated by him.

7. We have no doubt in our mind that under the said provisions of law a debtor has vested right to indicate that the payment is to be applied towards the liquidation of a particular debt. We also find that the said provision of law lays down in mandatory term that where a payment is made with the said indication, and the creditor accepts the same, then the payment is to be applied according to the indication made by the debtor. Reference be made to the case of Munshi Emanuddin Ahmad reported as PLD 1952 Dacca 279, 1 wherein it was observed that where a money has been expressly paid for a specified object and it was received and acknowledged on that account, there is no power on the part of either of the parties to the transaction, without the consent of the other, to vary the effect of, the transaction of altering the appropriation in which both originally concur.

8. We do find that all the conditions set out in section 59 of the Contract Act, 1872, exist in the present case. The appellants had made the payment indicating the particular debt for the discharge whereof the 8 payments were to be applied and the payments were accepted by the respondent‑Bank. Learned Judge Banking Court appears to have acted on the assumption that notwithstanding the pleas raised before him by the judgment debtor, the decree‑holder Bank had the discretion to apply the payments to the discharge of any other debt. This is not to be as it is only when the debtor fails to indicate the manner in which the payment is to be applied that the creditor has a discretion to apply the payment to any debt actually due and payable to him by the debtor.

9. As a result of the above discussion, we hold that the payments made by the appellants could only be applied for the discharge of the debts against the working capital accounts or in other words the decretal amount due under the decree under execution. Learned counsel for the appellants contends that the balance amount due under the decree including the costs have since been paid. This fact has not been denied by the learned counsel for the respondent Bank. We, therefore, find that the entire decretal amount including costs stand paid by the appellants to the respondent‑Bank and the decree stands satisfied. The execution petition. is accordingly dismissed as having been satisfied. No order as to costs. H.B.T./M‑511/L????????????????????? Execution petition dismissed