1994CLC1 (PLP)

MAMOON KAZI, J: ‑‑The appellant has called in question the judgment of the learned Banking Tribunal for Sindh and Balochistan, dated 12‑12‑1988 whereby, although the suit filed by the appellant was decreed, but the claim of mark‑up for Rs.1,309,006.60, was disallowed and instead mark‑up for only 210 days was allowed.

2. The facts of the case, briefly stated, are that on 4‑11‑1982, an irrevocable confirmed letter of credit for DM 100,500.50 (equivalent to Pak. Rs.5,000,000) was established and advised in favour of M/s. Depaimex C.M.B.H. West. Germany, for import of three hydraulic pressers with essential parts and accessories. The letter of credit was to be on mark‑up basis. Subsequently, in terms of the respondent's letter the appellant advised their foreign correspondents, Commerce Bank A.G. Frankfurt to amend and enhance the amount of credit from D.M. 100,500 to D.M. 201,392, with added specification of machinery.

3. On presentation of documents in terms of letter of credit the appellant paid the amount alongwith the relevant charges to their foreign correspondents, at the same time, intimating the respondents to retire the documents forthwith.

4. Thereafter, in spite of repeated reminders from the appellant, the respondent had failed to retire documents and effect payment of the bill amount and other dues, resulting in filing Suit No.1127/1988, by the appellant against the respondent. .

5. It is pertinent to point out that the respondent did not resist the claim of the appellant but by an application dated 10‑12‑1988 (Annexure `E'), they only requested for extension of time for six months for payment of the amount of claim in the suit and further requested that the mark‑up be charged according to rules in the interest of justice. The learned Banking Tribunal under such circumstances has although decreed the plaintiff's suit but it has declined to allow the appellant's claim for mark‑up amounting to Rs.1,309,006.60, claimed from 2‑12‑1982 to 31‑10‑1988. The reasons given by the Tribunal for disallowing the claim are as follows:‑‑ "The plaintiff‑Bank, apart from the above amount of the bill has also claimed on exhorbitant amount of mark‑up from 2‑12‑1982 to 31‑10‑1993, to the extent of Rs.1,309,006.60. It is pertinent to note that the draft drawn under the credit was on sight basis and the Bill amount was to be paid forthwith, vide currency Exchange cost Memo. Annexure G. In case the payment was not forthcoming, the plaintiff‑Bank should have instituted with the Banking Tribunal immediate recovery proceedings against the defendant, which the Bank failed to do. Consequently, the plaintiff‑Bank's claim of mark‑up for Rs.1,3W,006.60 from 2‑12‑1982 to 31‑10‑1988, is disallowed. Instead, we allow mark‑up for 210 days, as a cushion period."

6. We have had the advantage of hearing only Mr. Mamnoon Hassan, learned counsel for the appellant, as none has appeared on behalf of the respondents, although we have waited till 11‑30 a.m.

7. Mr. Mamnoon, has invited our attention to BCD Circular No31, dated 24‑12‑1980, issued by the State Bank of Pakistan fixing rates of mark‑up in different cases. The relevant rates which appeared against item No.(vi) are produced as follows:‑‑ "SCHEDULE OF BANK CHARGES FOR ALL SCHEDULED COMMERCIAL BANKS IN PAKISTAN INTERNATIONAL BANKING?????????????????? Rate ?????????????????????????? Minimum (vi) Mark‑up in the case of??????????????????????????????? (a) 0.78% for 20 days from import bills under Import?????????????????????????????????? the date of negotiation. Letters of Credit including service? charges for??????????????????????????????? (b) If not retired within 20 clearance of goods without??????????????????????????????? days from the date of arrangement.???????????????????????????????????????????????????? negotiation, a??? further ??????????????????????????????????????????????????????????????????????? mark‑up of 0.58% for 14 ??????????????????????????????????????????????????????????????????????? days will be applied on ??????????????????????????????????????????????????????????????????????? the marked‑up? price ??????????????????????????????????????????????????????????????????????? according to (a) above, ??????????????????????????????????????????????????????????????????????? plus extra commission at ??????????????????????????????????????????????????????????????????????? 0.15%. ??????????????????????????????????????????????????????????? (c) If not retired within 34 ??????????????????????????????????????????????????????????????????????? days of the date of ??????????????????????????????????????????????????????????????????????? negotiation, further ??????????????????????????????????????????????????????????????????????? mark‑up of 0.62% will be ??????????????????????????????????????????????????????????????????????? applied on the marked? ??????????????????????????????????????????????????????????????????????? up price according to (b) ??????????????????????????????????????????????????????????????????????? above,? excluding the ??????????????????????????????????????????????????????????????????????? extra commission of ??????????????????????????????????????????????????????????????????????? 0.15%? referred to ??????????????????????????????????????????????????????????????????????? therein. ??????????????????????????????????????????????????????????????????????? (d) If not retired within 48 ??????????????????????????????????????????????????????????????????????? days of the date of ??????????????????????????????????????????????????????????????????????? negotiation, a further ??????????????????????????????????????????????????????????????????????? mark‑up of 0.79% will be ??????????????????????????????????????????????????????????????????????? applied for every ??????????????????????????????????????????????????????????????????????? fortnight on the marked? ??????????????????????????????????????????????????????????????????????? up price. Note: ‑‑In case of earlier retirement, proportionate rebate of the respective mark‑up rate will be allowed." Our attention has been invited by Mr. Mamnoon Hassan to Section 6 of the Banking Tribunals Ordinance, 1984, subsection (4) whereof provides as follows‑‑ "(4) Upon the defendant failing to file a reply within the time given in the show‑cause notice .under subsection (2) or upon rejection by the Banking Tribunal of the plea taken by him in the reply, the Banking Tribunal shall pass a decree in favour of the banking company as prayed for in the plaint."

8. Nothing can be spelt out from the judgment of the learned Tribunal to indicate that the claim for mark‑up put forth by the appellant was not in accordance with the said Circular of the State Bank reference to which has just been made in this judgment. Subsection (4) of section 6 provides that where the plea taken by the defendant in his reply has been rejected by the Banking Tribunal, the Tribunal, has to pass a decree in favour of the Bank as prayed for in the plaint. In the present case, no doubt, the respondent did file a written statement in the case, but as is evident from the written statement filed by the respondent, the claim of the appellant was‑ not denied by them. On the other hand, they filed the said application (Annexure `E') which further indicates that respondents had no intention to resist the claim of the appellant, although they requested for extension of time by six months, which, as is evident from the impugned judgment itself, was allowed by consent. Consequently, there was no clog in the way of the learned Tribunal to allow the claim of the appellant in toto. The observations of the learned Tribunal that when the payment was not forthcoming the appellant should have instituted recovery proceedings against the respondents without wasting any time, in our opinion, do not justify rejection of part of the claim in respect of the mark‑up for which there appears to be no legal basis. No doubt, we have not had the advantage of hearing the arguments which might have been advanced from the other side but the reasons given by the Tribunal for disallowing part of the claim are hardly sufficient as we have pointed out earlier. In fact, as it appears, it was the respondents who‑ were guilty themselves for failing to make the payment which drove the appellants to the necessity of instituting the claim against them before the learned Tribunal. We are, therefore, inclined to agree with Mr. Mamnoon Hassan that the view taken by the Tribunal is not supported by convincing reasons and the judgment is liable to be reversed.

9. In the result, we allow this appeal and decree the appellant's suit in full in terms of the prayer made in the plaint with costs. H.B.T./M‑1875/K??????????????????????????????????????????????????????????????????????????????? Appeal allowed.