Export Refinance Facility, IB-6 Agreement, SBP BSD Circular No. 35 and Statement of Accounts

Export Refinance Facility, IB-6 Agreement, SBP BSD Circular No. 35 and Statement of Accounts Banking Case Laws Corporate Law Industrials Knowledge – Corporate Law Lahore High Court Litigation & Arbitration Solutions - Corporate Law Mr. Justice Shahid Karim in his judgment has decided the issue regarding export refinance facility, IB-6 agreement, SBP BSD Circular No. 35 and statement of accounts in Civil Original Suit (Banking) No. 7 of 2006.

1. This suit is for the recovery of Rs. 111,030,677.85 along with costs of funds and cost of the suit.

2. The suit was filed on 17.2.2006. A synoptical resumption given in the plaint forming the basis of the suit is that the defendant No.1-Company was inter alia granted a combined Export Refinance Facility (ERF-I) or Own Source LCY or FCY (pre and post shipment limit) to the tune of Rs.68.75 million vide offer letter dated 28.8.2003. An agreement of finance dated 01.09.2003 for ERF-I for Rs.68.75 million was executed. ERF-I facility was continued and increased to Rs.80 million through an offer letter dated 02.08.2004 and an agreement for finance followed this offer letter and which was dated 02.08.2004. The ERF-I limit was further enhanced to Rs.100.00 million under an agreement for finance dated 01.10.2005. These facilities were availed by the defendant No.1-Company and in evidence thereof a statement of account has been appended as Annex -D, D/1, D/2, D/3 and D/4‘. The amounts which are alleged to be outstanding and payable under ERF-I facility is Rs. 94,037,435.65.

3. The second facility which has been combined in this suit and which was granted to the defendant No.1 was a limit for establishment of Letter of Credit (LC) for import or inland for aggregate amount equivalent to US$. 173,500. It is alleged that on receipt of shipping documents for 9 LCs by the plaintiff, the defendant-Company failed to make payments to accept and obtain from the plaintiff-Bank trust receipts which were the documents of the title of the goods that were procured against the LCs. Since no payments were made by the defendant No.1 to the plaintiff-Bank, in fulfillment of its obligations, the plaintiff-Bank had to make payments to the beneficiaries of the 9 LCs. The details of the overdue LCs and the documents executed by the defendant No.1 in support of and to secure the discharge of its obligations have been brought forth in paragraphs 7 and 13 of the plaint. The amount outstanding in respect of the 9 LCs is Rs. 16,993,241.20. Separate statement of account has been appended with the plaint in support thereof. The defendants No.2 and 3 executed personal guarantee in favour of the plaintiff-Bank and which are dated 14.10.2004. The case of the plaintiff-Bank in simple terms is that the defendants No.1, 2 and 3 have failed to discharge and liquidate their obligation under the ERF-I as also under the LCs which were established by the plaintiff-Bank.

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