HABIB BANK LIMITED Versus SHALIMAR SILK MILLS LIMITED
ORDER
1. In view of the order proposed to be passed on C.MA. 3673/91, this application is dismissed.
2. The plaintiff has filed this suit for recovery of Rs.49,112,679.67. The case of the plaintiff is that various advances, as shown in the plaint, were granted to the defendant No.l who, by way of security executed the various documents, photocopies whereof are annexed with the plaint. The defendants Nos.2, 3 and 4 have been sued on the basis of guarantee respectively executed by them. As far as the defendant No.4 is concerned, Mr. Pingar submits that he died before the filing of the suit and that the suit as against him is, therefore, not maintainable. Mr. Iqbal Kazi, the learned counsel for the plaintiff, states that the plaintiffs have received no other information except the information given by the defendants regarding the death of the defendant No.4 He, however, agrees that the suit as against defendant No.4 does not lie and would have to be dismissed.
1. Mr. A.S. Pingar, the learned counsel for the defendants, contends that the suit is barred by limitation that the plaintiff has wrongfully charged compound and penal interest; and that interest, being un‑Islamic cannot be allowed by this Court.
2. The argument that the suit, in so far as it is based on the promissory notes, is barred by limitation is based on the allegation that the promissory notes (Annexures A/23, B/22 and C/9 respectively to the plaint), when signed, were blank; and that the relative accounts (Annexures C/12, C/13 and C/14 respectively to the plaint) became inoperative on the 19th July, 1981, 21st March, 1983 and 8th June, 1983, respectively. The precise argument advanced by Mr. Pingar is that the promissory notes should have been filled up on the respective dates on which the relative accounts became inoperative or within three years of those dates. Thus, he contends, the promissory notes, Annexures A/23, B/22 and C/9, should have been filled up on the 19th July, 1981, 21st March, 1983 and 8th June, 1983 respectively or within three years thereafter. When I asked Mr. Pingar when, according to him, were the promissory notes signed by the defendant, he was unable to answer and conceded that no allegation in that regard has been made in the affidavit in support of the application for leave to appear and defend the suit. It is also noteworthy, as pointed out by Mr. Iqbal Kazi, the learned counsel for the plaintiff, that, in respect of each of the three advances, the defendant No.1 executed several documents copies of which have been filed with the plaint and it has not been denied that they were executed on the dates which they respectively bear; and thus those dates are the same as the date of the promissory notes. There is, thus no force in the contention that the promissory notes were blank when signed. The argument that the promissory notes should have been filled up on the respective yaws when the three accounts became inoperative is equally without any merit. The promissory notes bear the stamp office dated 10th November, 1984, iiidicu6rig that the stamps were affixed thereon on that date; and it is not the ca6e of the defendant No.1 that stamps were not affixed on the promissory notes when they were signed. Obviously therefore, the promissory notes could not have been signed on any day prior to the 10th November, 1984, and could not, by any stretch of imagination, have been signed on or before, or be filled up on, the 19th July, 1981, 21st March, 1983, and 8th June, 1983, respectively, when the relative accounts are said to have become inoperative. It follows that the question of filling them up within three years of those dates does not arise. The contention on behalf of the defendants is, thus, not supported even by the documents on the record. It may, in this connection be observed that it is well known practice of the banks to have their documents stamped by the stamp office in advance and to keep them ready for use and when necessary. This practice is necessary because it would be well nigh impossible for banks each time an advance is granted or renewed to have to go to stamp office to have the documents stamped. Such a course would not only be highly inconvenient for the banks but also for the borrowers as disbursements of their advances would be considerably delayed pending receipt of duly stamped documents for execution. There is, therefore, nothing inherently defective in the documents which were stamped in November, 1984 but executed in February, 1989.
3. Faced with the above situation, Mr. Pingar contends that the promissory notes ought to have been obtained by the plaintiff when the advances were allowed or, in any case, not later than the date when the relative accounts became inoperative. The argument has only to be stated to be rejected. Mr. Pingar himself referred to the various promissory notes including the ones discussed hereinabove, executed from time to time in each account. Subsequent promissory notes in each account were thus in renewal of the proceeding ones and even if that were not so a promissory note in consideration of a time‑barred debt is valid and enforceable. Besides, a promissory note may be executed on any date on which the parties choose to do so irrespective of the date of the advance to which it relates.
4. The promissory notes in question thus having been validly and properly executed on the Ist February, 1989, the suit on the basis thereof fled within three years from that date is not barred by limitation.
5. Mr. Pingar then contends that the suit on the basis of the mortgage is barred by limitation because the registered' mortgage is dated the 8th May, 1978, and the suit should have been tiled within 12 years from that date. Mr. Iqbal Kazi contends, on the contrary, that the period of limitation commences from the date on which the amount was due to be repaid and invites my attention to the clauses in the deed of mortgage providing that the payment was to be made on demand and that the mortgage is a continuing security so that the question of limitation does not arise. Be that as it may, the promissory notes dated Ist February, 1989, which admittedly relate to the moneys secured by the deed of mortgage amount to acknowledgement of liability under the mortgage. Therefore, 'even if the period of limitation is considered to commence from the date of the deed of mortgage, the period is extended by virtue of the promissory notes which were executed on Ist February, 1989, and the suit on the basis of the mortgage is within the period of limitation.
6. Mr. Pingar does not, as indeed he cannot, press the argument that the plaintiff wrongfully charged compound, instead of simple, interest as well as penal interest because both, the promissory notes and the deed of mortgage, provide for compound interest and Mr. Pingar was unable to point out any debit entry in the statements of accounts on account of penal interest.
7. The learned counsel for the defendants finally submits that interest, being un‑Islamic, cannot be granted by this Court and invites my attention to the several judgments of this Court and of Lahore High Court, both in favour of and against his argument, conceding at the same time that there is no binding authority on the question. That being so, prefer to follow the view that this Court has no power to declare any law invalid on the ground that it is contrary to the Sharia.
8. No other grounds have been urged by Mr. Pingar. In these circumstances, I am of the opinion that the defendants have failed to disclose any defence whatsoever and the plaintiff is entitled to the decree as prayed as against the defendants Nos.l, 2 and 3. The suit is, therefore, decreed against the defendants Nos.l, 2 and 3 as prayed. It is hereby declared that the sum due under the mortgage is Rs.49,112,679.67 with interest thereon at the rate of 4% ever the bank rate with minimum 14% per annum with quarterly rests from 21‑4‑1991 till payment and costs of the suit. Let preliminary decree in Form 5 A, Appendix D Schedule 1, C.P.C., be prepared. The suit of the plaintiff is also decreed against the defendants jointly and severally for Rs.49,112,679.67 with interest thereon as aforesaid and costs. The suit as against the defendant No.4 is dismissed .
9. AA./H‑315/K Order accordingly.