Supreme Court Bars Unclaimed Markup In Banking Cases

The Supreme Court has ruled that a banking court cannot grant markup to a bank when the amount was not originally claimed in the plaint. The apex court consequently overturned a February 2019 Lahore High Court (LHC) ruling that had permitted Citibank to recover markup through an amended decree.

A three-member Supreme Court bench accepted an appeal filed by Crescent Spinning Mills, finding that the banking court had improperly relied on Section 152 of the Civil Procedure Code (CPC) to add markup that Citibank had not sought in its original claim.

The case originated in the 1990s after Crescent Spinning Mills obtained financial facilities from Citibank but failed to clear its outstanding liabilities. Citibank subsequently filed a recovery suit worth Rs76 million in 1995, which was decided in the bank’s favour in 1999.

Citibank later secured an amendment to the decree under Section 152 CPC, seeking to include markup until the amount was recovered. The LHC dismissed Crescent Spinning Mills’ challenge to the amendment, leading the company to approach the Supreme Court.

The central issue before the apex court was whether a banking court could insert markup into a decree when such relief had not been requested in the original plaint by using Section 152 CPC.

Counsel for Crescent Spinning Mills argued that Citibank had initially sought recovery of the principal amount along with liquidated damages from October 1, 1995, calculated at 19% annually. He pointed out that the trial court had expressly rejected the bank’s claim for liquidated damages.

The counsel further submitted that the case had originally been instituted under the Banking Tribunals Ordinance, 1984, whose Section 6(4) restricted a banking court to granting only the relief specifically requested in the plaint.

Citibank’s lawyer argued that the banking court had inadvertently failed to award markup under Section 15 of the 1997 Act. He maintained that the bank had therefore applied under Section 152 CPC to correct what it considered an omission in the decree.

He also contended that although the original case had been filed under the 1984 Ordinance, the 1997 Act was already applicable when the decree was issued, allowing markup to be awarded.

The Supreme Court rejected this position in its 18-page judgement, holding that Section 152 CPC cannot be invoked to reopen a case or change the substantive rights of the parties. Such matters must instead be pursued through a review petition or an appeal.

The court further held that relief normally cannot be granted when it was not sought in the original plaint, with unclaimed relief considered abandoned under Order II, Rule 2 of the CPC.

It clarified that a general request for “any other relief” considered appropriate by the court does not automatically permit unclaimed relief unless that relief is fully supported by the facts and evidence already presented in the case.

The judgement added that an appellate court may award alternative relief only when the relevant facts have already been pleaded, the relief remains consistent with the case and granting it does not violate the law.

The Supreme Court converted the petition into an appeal and allowed it, setting aside the LHC judgement and the banking court’s order to the extent that they permitted markup to be added through the amended decree.