Messrs HOTEL KASHMIR PALACE (PVT.) LTD. and others vs FIRST ELITE CAPITAL
This petition for leave to appeal is directed against an interim order passed by the Lahore High Court, which granted a stay of execution of a decree conditional upon the petitioner furnishing a bank guarantee for the full decretal amount. The petitioner challenged this condition, arguing that they had already repaid an amount exceeding the principal loan and that the respondent-Bank was improperly charging a fixed profit rate of 20%, which the petitioner contended was interest disguised as Musharaka investment. Furthermore, the petitioner argued that the High Court failed to account for existing security, specifically the mortgage of the building, and that requiring a bank guarantee effectively amounted to the recovery of the entire decretal amount before the final adjudication of the rendition of accounts. Upon consideration, the Supreme Court issued a notice to the respondent for a future date and ordered that the execution proceedings remain stayed in the interim. The judgment highlights the court's discretionary power to grant stay orders and the necessity of balancing the interests of the decree-holder with the financial burden imposed on the judgment-debtor during pending appeals.
- Can a court impose a condition of furnishing a bank guarantee for the entire decretal amount when granting a stay of execution?
- Does the charging of a fixed profit rate in a Musharaka investment agreement constitute interest?
- Should a court consider existing security, such as a mortgage, before ordering a bank guarantee as a condition for staying execution?
ORDER
MUNIR A. SHEIKH, J.---This petition is directed against interm order dated 31-12-2001 of the Lahore High Court through which the petitioner has been granted stay of execution of the decree subject to 'furnishing bank guarantee of the decretal amount.
2. Learned counsel for the petitioner submitted that the petitioner has already made payment of an amount of Rs,1,03,00,000 as against the amount of loan of Rs,90,00,000 and while deciding the application of the petitioner for stay of execution proceedings, it has not been taken into consideration that the respondent-Bank was charging fixed amount of profit at the rate of 20% which was in fact an interest and was not permissible under the Musharaka type of investment as such it was a case of rendition of accounts which has not been done as the suit was filed on the basis of fixed rate of interest/profit and the learned Judges of the High Court have also not taken into consideration that the petitioner had already provided sufficient guarantee/security in the form of mortgage of building itself before passing the order attaching the condition of furnishing bank guarantee which amounts to recovery of the entire decretal amount at this stage.
3. Notice to respondent for 3-4-2002. Till then, the execution proceedings shall remain stayed.