INSTITUTE OF BANKING AND FINANCE, BAHAUDDIN ZAKARIYA

UNIVERSITY

“COURT DECISION OF NPL CASE”

Course: BUSINESS LITIGATIONS

Submission date: 12 APRIL, 2023
Submitted to: SIR KHAWAJA MUNIR
Submitted by: GROUP # 03
Class: BBA-8-MORNING
 COURT DECISION
HIGH COURT
CASE # 420
PARTIES INVOLVED
PLAINTIFF: ALLIED BANK
GULGASHT BRANCH, MULTAN.
DEFENDANT: Mr. ABC
FINANCE MANAGER OF Orient Cotton Mills.
Resident of Sabzazar Colony, Multan.
DATE OF DECISION: 12-April-2023

INTRODUCTION
This is a decision in a non-performing loan case between lender; ALLIED BANK, Gulgusht
Branch and borrower; Mr. A who is a Finance manager of orient cotton mills. The case involves
a dispute over a loan of 10 Million Rupees. The lender; ALLIED BANK, Gulgusht Branch
claims that the borrower; Mr. A has failed to repay the loan as agreed and seeks to recover the
remaining balance. The borrower; Mr. A disputes the lender's claim and asserts that the lender's
actions were unjustified. The legal issue at stake is whether the borrower is liable for the
remaining balance of the loan.

BACKGROUND
Plaintiff: The Allied bank has agreed to give a loan of 10 million to Mr. A who is a C.E.O of the
orient cotton mills in Multan and very old client of the plaintiff. The loan has been offered on the
basis of the past long-term relation of the client with the bank with a written agreement having
clear terms and condition of return schedule and time period against the security. After the non-
performance of the loan, the bank has sent many reminders of payments and at last the legal
notice of warning of using entitlement of litigation against the concern case. But the defendant
has just repaid the 8 lakhs of the loan. Now the concern party is not willing to pay the remaining
loan amount. And Bank is suffering the loss in this regard. Allied Bank appealed to court and ask
for the recovery of remaining amount of the loan which is 2 lakhs. Otherwise the court is
appealed to give order to sell the security to recover the bank loss.
Defendant: Mr. A who is finance manager at Orient cotton mills, has been part of the loan
readjustment meetings with the Bank manager and offered to settle the loan outside the court as
the company is not in a well financial condition. Mr. A has offered to pay back 6 lakh rupees in
readjustment purpose but the Bank manager didn’t accept. Again 7 lakh rupees were offered but
Bank manager allegedly declined the offer. At last, Bank manager remained silent on the

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offering of 8 lakhs rupees and Finance manager of Orient cotton mills had paid the consent
amount of 8 lakhs as perceived to be the loan settled payment. According to the situation, there is
no amount left on the company as Bank has accepted the adjusted amount at the real time of loan
adjustment under the silence as law of implied authority.

LEGAL ANALYSIS
The case involves a dispute between Allied Bank and Mr. A over a loan of 10 million rupees.
The bank claims that the defendant has failed to pay the remaining 2 lakh rupees despite repeated
reminders and a legal notice, while the defendant claims that he had offered to settle the loan
outside of court and had made payments of 8 lakh rupees, which were accepted by the bank as
settlement of the loan. The legal analysis will depend on the interpretation of the loan agreement
and the communications between the bank and the defendant, and whether the bank had accepted
the adjusted amount of the loan under the law of implied authority.

DECISION
Based on the facts presented, the court determines that the bank had accepted the adjusted
amount of the loan under the law of implied authority. So, the defendant may not be liable for the
remaining amount of the loan.

REASONING
Legal rules and conditions for acceptance
Acceptance According to Section 2(b),
"When the person to whom the proposal is made signifies his assent thereto, the proposal is said
to be accepted."
Rules:
1. Acceptance must be absolute and unqualified.
2. Communicated to offeror.
3. Acceptance must be in the mode prescribed.
4. Acceptance must be given within a reasonable time before the offer lapses.
5. Acceptance by the way of conduct.
6. Mere silence is no acceptance.
Mere silence is not acceptance
If the offeree fails to respond to an offer made to him, his silence cannot be confused with
acceptance. But, there is an exception to this rule. It is stated that, within 3 weeks of the date on
which the offer is made, the non-acceptance shall be communicated to the offeror. Otherwise, the
silence shall be communicated as acceptance
When communication is complete
Communication of acceptance (Section 4)

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Communication of acceptance is complete when it is put in the course of transmission to him as
to be out of the power of the acceptor to withdraw the same and when it comes to the knowledge
of the proposer.
Time of revocation of acceptance
An acceptance may be revoked at any time, but not afterward, before the communication of the
acceptance is complete as against the acceptor.
Acceptance with subsequent condition
Conditions are of three types, which are as follows
1.Express condition: In an express condition, certain facts can operate as condition as it
has been expressly agreed upon by the parties to the contract;
2.Implied condition: When certain facts which operate as a condition are not expressly
mentioned by the parties but can be inferred by the conduct of the parties to contract is known as
an implied condition
3.Constructive condition: When the court believes that the parties to a contract must have
intended to operate certain conditions because the court believes that the Justice requires the
presence of the condition. These conditions are known as constructive conditions .
A contract comes into force by the acts or conduct of one party to the other party. The acts or
conduct of the party can be turned into a promise only by meeting of mind or an agreement
between both the parties. An acceptance that carries a subsequent condition may not have the
effect of counter-proposal. Thus, where a person ‘A’ accepted the terms of the contract for the
sale of a good by accompanying the acceptance with the warning that if money was not delivered
to him by a particular date, then the contract will remain repudiated. The acceptance of the offer
would not be deemed to be a counter-proposal
Acceptance of counter proposals
In certain cases, the person whose proposal or offer has not been accepted absolutely or
unqualifiedly by the offeree as the offeree attaches a counter-proposal to the original proposal,
the offeror becomes bound by the counter-proposal. If, by the conduct of the offeror, he indicates
that he has accepted the terms of the counter-proposal laid down by the offeree.

CONCLUSION
The case involves a dispute between ALLIED BANK and Mr. A, a finance manager of Orient
Cotton Mills, regarding a non-performing loan. The bank claims that Mr. A failed to repay the
10-million-rupee loan as agreed, while Mr. A dispute this and argues that the bank's actions were
unjustified. The legal issue at stake is whether Mr. A is liable for the remaining 2 lakh rupees of
the loan. The court has determined that the bank had accepted the adjusted amount of the loan
under the law of implied authority, and therefore Mr. A is not liable for the remaining balance.

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The legal analysis depended on the interpretation of the loan agreement and the communications
between the bank and Mr. A.

JUDGE’S SIGNATURE

MUHAMMAD TUFAIL
DATE OF SIGNATURE: 12-APRIL-2023