MUHAMMAD AKRAM SHAD Versus ALLIED BANK LIMITED

ASIM HAFEEZ, J.--- Instant regular first appeal impugns judgment and decree dated 05.04.2024, whereby application seeking leave to defend, submitted by the appellant, was dismissed and consequently respondent's suit for recovery was decreed for Rs.1,999,451/- with cost of suit and Cost of Funds, recoverable from the date of default.

2.Facts, apparent from the record and necessary for adjudication are that respondent financial institution claimed customer banker relationship since 2005, which allegedly continued in wake of repeated renewals periodically. Plaint depicts execution of Finance Agreement dated 22.07.2019, in terms whereof Sale price mentioned was Rs.60.00 Million and purchase / marked-up price was Rs.72.00 Million which was regarding grant of CF (Pledge) facility. Agreement had an expiry date of 30.06.2020. Another Finance Agreement was also executed on 22.07.2019, regarding RF facility containing sale price of Rs.10.00 Million and purchase / marked-up price of Rs.12.00 Million. Agreement had an expiry date of 30.06.2020, which was enhanced to another year in terms of supplemental agreement dated 23.07.2020 pursuant to the request letter of the appellant dated 23.06.2020 and revised banking arrangement letter of 23.07.2020, duly signed by the appellant. Subject matter claim relates to RF facility, wherein sum of Rs.9,999,451/- was outstanding at the time of the execution of Finance Agreement, regarding RF facility. Respondent acknowledged, in the plaint, that Rs.8.00 Million was paid towards principal amount of RF facility and only Rs.1,999,451/- remained payable. Respondent claimed that markup for the contractual period was paid, which was around Rs.2.7 Million which was for the period from July 2019 till June 2021 in lieu of the utilization of the funds at the disposal of the appellant.

Application seeking leave to defend was submitted but found devoid of any substantial question of law and fact. Hence, the decree.

3.Learned counsel for appellant submits that in terms of the finance agreement, sued upon, the respondent was required to disburse fresh finance facility, and no renewal of overdue facility was committed or agreed. Adds that no mark-up could be claimed or charged from July 2019 to 30th June 2021 and amount of mark-up paid of over Rs.2.7 Million was liable to be adjusted against principal sum, which adjustment if allowed would result in clearing alleged liability of around Rs.1.990 Million. Learned counsel for respondent defended the decree.

4.Submissions heard. Record perused.

5.Request for facility renewal vide letter of 21.06.2019 is not denied, which request includes CF (Pledge) and RF facilities, followed by submission of loan application. Pursuant to the request, without fresh / de-novo credit evaluation of the appellant, respondent agreed to extend finance through facility letter of 08.07.2019, which contained conditions 8 and 9 relating to the fresh disbursement of CF facility. No claim of CF was raised or sought to be enforced. Pursuant to facility arranging letter, Finance Agreements for CF and RF facilities were separately executed, including security documents to secure repayments. Statement of account showed outstanding amount of Rs.9,999,411 on 23 April 2019. Defence raised that RF facility was required to be disbursed afresh stood defied upon perusal of appellant's request letter of 23.06.2020, which illustrates the position without any ambiguity. Request letter is followed by issuance and acceptance of revised banking arrangement, through letter of 23.07.2020 and execution of supplemental agreement, extending repayment of RF facility to June 2021. When confronted that how RF facility, outstanding at the time of execution of agreement on July 2019, was adjusted, learned counsel submits that no mark-up could be claimed without fresh disbursement of the finance. This manifest misconstruction of the terms of financing arrangement and provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, which inter alia defines obligation, which includes allowance of time for repayment or extension of time. Amounts paid were adjusted and so was the mark-up payments. Banking court had allowed cost of funds from the date of the expiry of RF facility, which was 30.06.2021, and rightly classified as date of default for the purposes of determining cost of funds. We do not find any illegality in the judgment. No substantial question of law and fact is available to qualify appellant for grant of leave to defend. No interference warranted.

6.Appeal is meritless and same is, hereby, dismissed.

MQ/M-33/L Appeal dismissed.