Pakistan’s Supreme Court: banking court cannot award unclaimed interest
The Supreme Court of Pakistan has ruled that a banking court cannot award a bank interest on a debt if it was not expressly sought in the original plaint. The court overturned a February 2019 ruling by the Lahore High Court that allowed Citibank to include such interest in an amended judgment, Dawn reports.
Dispute between Citibank and Crescent Spinning Mills
A three-judge bench headed by Justice Muhammad Ali Mazhar allowed the appeal in the Crescent Spinning Mills case. The Supreme Court concluded that the banking court had improperly added unclaimed interest to the judgment by applying Section 152 of Pakistan’s Code of Civil Procedure.
In the 1990s, Crescent Spinning Mills obtained financing from Citibank but failed to repay the debt. In 1995, the bank filed a suit seeking recovery of 76 million Pakistani rupees. In 1999, the court ruled in favor of the bank, and Citibank later secured amendments to the judgment to include interest until the funds were recovered.
After that, the Lahore High Court dismissed the spinning company’s challenge to the amendments. The Supreme Court converted the filed petition into an appeal and set aside the rulings of the High Court and the banking court insofar as they allowed interest to be awarded through an amended judgment.
More current news is available on the UA.News Telegram channel Telegram.
Limits on correcting a court judgment
Crescent Spinning Mills’ representative, Haq Nawaz Chatta, said that in its original suit Citibank had sought recovery only of the principal debt amount and liquidated damages at a rate of 19% per annum from October 1, 1995. According to him, the trial court separately rejected the claim for liquidated damages.
The bank’s lawyer, Muhammad Omar Saleem, argued that the banking court had not awarded interest in accordance with Section 15 of the 1997 law. Citibank therefore filed an application under Section 152 of the Code of Civil Procedure, after which the judgment was amended.
In its 18-page ruling, the Supreme Court stated that Section 152 cannot be used to reconsider a case or alter the substantive rights of the parties. Such issues must be raised through an application for review of the judgment or an appeal. The court also stressed that, as a general rule, a court cannot grant relief that was not sought in the plaint.
In the court’s view, a standard request to grant any other appropriate relief cannot by itself serve as grounds for awarding an unclaimed remedy. Alternative relief is possible only if the necessary circumstances are set out in the plaint and are consistent with the case materials and the law.
