Law:

Section:

(a) Negotiable Instruments Act (XXVI of 1881)---S.20--S-Inchoate stamped document, filling in the blanks of---Bank has a right to complete and or fill in the blanks of such documents in accordance with the agreement with the customer. PLD 1986 Kar. 464 and 1981 CLC 880 rel. (b) Contract Act (IX of 1872)--S. 74---Breach of contract--­Compensation---Reasonable compensation, question of fact---Proof---Where contract contained any stipulation by virtue of which any specific amount or a penalty was payable when a breach of contract was committed, then the party complaining of the breach was entitled to receive from the party committing breach of contract, not the amount or penalty specified therein but reasonable compensation not exceeding the amount mentioned in the contract---Reasonable compensation was a question of fact and the party who claimed such compensation must prove that fact which could only be done by producing evidence or by placing on record documents to prove reasonable compensation in the circumstances of the case where the law permitted or requesting the Court for permission to adduce evidence. (c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)--- ----S.9---Contract Act (IX of 1872), S.74--­Suit for recovery of loan---Additional interest, award of---Clause regarding increased interest in case of default, was inserted in the credit agreement between the plaintiff/Bank and the defendant/borrower--- Effect---Such a clause was in the nature of penalty and the same could not be enforced under S.74 of Contract Act, 1872, unless the requirements laid down in the said S.74, were fulfilled--­Plaintiff/Bank did not produce any oral evidence to justify the additional interest or the loss suffered by the plaintiff/Bank on account of the breach of contract committed by the defendant/borrower---Neither any document with its affidavit was attached nor permission was sought to place any such document on the Court file to show as to what would be reasonable compensation for breach of the obligation by the defendant/borrower--­In the absence of any evidence adduced by the plaintiff/Bank, it was not possible to award…

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