Law: Banking Tribunals Ordinance (LVIII of 1984)

Section: 6

Banking Tribunals Ordinance (LVIII of 1984)--S.6(2)---Default in observing arrangements made with the Bank and encashment of personal guarantees---Demand of liquidated damages---Banking Court had erroneously passed decree for lesser amount than what the Bank was entitled to recover---Validity---Bank was not entitled to recover liquidated damages---High Court, in appeal, however, modified the decree accordingly. Allied Bank of Pakistan Limited, Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 ref. JUDGMENT MIAN HAMID FAROOQ, J.--- Union Bank. Limited, through the filing of the instant appeal, under section 9 of the Banking Tribunals Ordinance, 1984, has partially called in question judgment and decree dated 18-4-1996, whereby the then Banking Tribunal, passed a decree for the recovery of Rs.8,92,354 with costs against the respondents. 2. Brief facts giving rise to the filing of the present appeal are that the appellant-Bank filed a suit for the recovery of Rs.14,40,569, against the respondents, before the then Banking Tribunal (since defunct) averring therein that at the request of respondent No.1, a Bank guarantee for Rs.1 million alongwith mark-up etc. was issued on behalf of the respondent No.1 favouring Messrs Prudential Investment Bank Ltd., which guarantee was secured by the mortgage of property and the personal guarantees of the Directors of respondent No.1. Under the aforenoted arrangement, the appellant-Bank issued a bank guarantee No.152 dated 16-1-1994 for Rs.l million favouring Messrs Prudential Investment Bank Ltd., the respondent No.1, statedly, committed default in the arrangement with Prudential Investment Bank Ltd., who asked the appellant ­Bank to encash the Bank guarantee and consequent thereto the appellant-Bank paid an amount of Rs.12,20,880 to the said Prudential Investment Bank Limited. After having made the payment, the appellant Bank demanded the said amount alongwith mark-up etc. from the respondents and on their refusal the Bank filed the aforenoted suit for recovery. 3. Pursuant to the issuance of notices, as per section 6(2) of the then Banking Tribunals Ordinance, 1984, the respondents Nos.1,2 and 4 filed reply to the…

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