Law:

Section:

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--- ----S. 2(d)--- Term 'Diminishing Musharika'--- Connotation-- "Diminishing Musharika" is a concept where a financer and his client participate either in joint ownership of a property or an equipment or in a joint commercial enterprise---Share of financer is further divided into a number of units and it is understood that client has to purchase units of the share of financier one by one periodically, thus increasing his own share until all units of the financer are purchased by him so as to make him the sole owner of the property. (b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-- ----Ss. 2(d) & 9--- Suit for recovery of finance--- "Diminishing Musharika"---Charity or gift---Denial of agreement---New plea, raising of---Parties entered into 'Diminishing Musharika' agreement and on default made by defendant, Bank filed suit before Banking Court---Defendant denied having entered into any agreement with Bank, therefore, Banking Court declined to grant leave to defend to the suit and suit was decreed in favour of Bank---Banking Court included amount claimed by bank in shape of charity imposed on defendant as penalty for delays caused in payment-Validity---Diminishing Musharika could not be taken out of the pale of term `Musharika' which was specifically termed as "finance" in S. 2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001---In case of default by client to fulfil terms and conditions of finance, the financial institution could institute a suit in Banking Court---Charity or gift was something a donor gave/granted with his free will, at his own discretion - and according to his own choice and not under compulsion or under dictates of others---Plaintiff Bank in any eventuality was not entitled to claim any amount on account of charity---Such clause in Musharika relating to charity was void and was in conflict with Financial Institutions (Recovery of Finances) Ordinance, 2001---Defendants in their application for grant of leave to appear and defend the suit completely and outrightly denied availing of finance facility---Defendants could not…

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