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Petitioner: Messrs SHAFIO HANIF (PVT.) LTD., KARACHI VS Respondent: BANK OF CREDIT AND COMMERCE INTERNATIONAL, (OVERSEAS) LIMITED, KARACHI
Court Name: Sindh High Court Judge(s): Wajihuddin Ahmed Title:Messrs SHAFIO HANIF (PVT.) LTD., KARACHI vs BANK OF CREDIT AND
COMMERCE INTERNATIONAL, (OVERSEAS) LIMITED, KARACHI Case No.: Suits Nos.672, 736 of 1990, Nil, 203, 432, 433, 155 of 1991 and 167 of 1992 Date of Judgment:1992-12-23 Reported As: PLD 1993 Karachi 107 Result: Order accordingly Judgment ORDER ' In these suits more or less similar questions of law and fact arise, at least at this stage of the proceedings. Such have a nexus with the jurisdiction of the Banking Tribunals under the Banking Tribunals Ordinance, LVIII of 1984. A common plea is that the relevant suit at the time it was instituted in this Court could either not be filed before the Banking Tribunal under the said Ordinance, the tribunal not being functional till 1-8-1991, when the present incumbent, Mr. Justice (Retd.) K.A. Ghani, was appointed or the jurisdiction of such tribunal, according to other contentions raised, in the applicable suits, was ab initio not attracted at all. Before dilating upon such questions of jurisdiction and ancillary matters it will be appropriate to briefly detail the facts of each case, as such facts figure on the record:-- (j) Suit No,672/1990. Shafiq Hanif (Pvt.) Limited v. The B.C.C.I. is a suit for recovery of Rs,1,393,802 and injunction. This suit proceeds on the ground that the plaintiff, which is an exporter shipped certain goods to Hong Kong and handed over the shipping documents to the defendant-Bank for collection of payment under an arrangement with reference to the Export Re-finance Scheme whereupon a maximum of 6% was chargeable but the hank, transgressing, has raised claim at 16% per annum. It is further urged that the bank could not despatch the shipping documents before crediting due "finance". In the written statement submitted by the defendant-Bank the suit is claimed to be non-maintainable for want of jurisdiction and absence of cause of action. As regards providing re-finance before despatch of the shipping documents it is said that such was in the discretion of the bank. It is claimed that the plaintiff owes a sum 'of Rs,5.489 million to the defendant with mark-up thereon because then the Banking Tribunal was non-functional. Mr.
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Muhammad Sharif appears for M/s. Shafiq Hanif (Pvt.) Ltd. And Mr. Syed Iqbal Ahmed represents the B.C.C.I. Though in the bank's suit M/s. Mansoor Ahmed Khan & Co. Act for Shafiq Hanif (Pvt.) Ltd. And others. (ii) Suit No, Nil of 1991 B.C.C.I. v. Shafiq Hanif (Pvt.) Ltd. Is the Bank's counter-suit for recovery and was filed in this Court on 10-6-1991 (iii) Suit No,736 of 1990. B.C.C,I. v. Fine Food Industries (Pvt.) Limited and others: Instituted on 30-6- 1990, this is a suit for recovery of Rs,29,54,572 under the Banking Tribunals Ordinance, 1984. In the written statement filed by the defendants Nos.1 to 3 the claim on merits is denied, as allegedly incorrect and improper debit entries are made and credits are not duly reflected. The plaintiff is represented by M/s. Liaquat Merchant & Co., the defendants Nos.1 to 3 appear through Mr. B.M. Bangash, Mr. A.I. Chundrigar is for defendant No,7 (IDBP) and Mr. Niaz Ahmad Khan has filed power for the defendants Nos.4 to 6 and 8, the defendant No,8 being the Agricultural Development Bank of Pakistan, a prior mortgagee. (iv) Suit No,203 of 1991. U.B.L. v. Entreprises VI and another. This suit for recovery in the sum of Rs,21,350,000 was instituted on 13-10-1990 and the claim is based on non-interest demand finance in circumstances that the defendant No,2 allegedly informed the plaintiff-bank that he wanted to purchase from the defendant No,1 truck chassis/vehicles of the total value of Rs,20 million and that on approval of finance the plaintiffs, do pay such amount to the defendant The two defendants are said to have assured the Bank that the defendant No,1, as seller, shall hand over all papers pertaining to the chassis/vehicles to the bank, which papers would be in the joint names of the plaintiff-Bank and the defendant No,2. Pay orders were, accordingly, issued and the defendant,No,1 encashed the same. The documents pertaining to the sale of the chassis/vehicles were, however, not forwarded to the plaintiffs. Later the deferidant No,1 completely denied factum and even knowledge of the transaction. The defendants are, therefore, claimed to have colluded in hausing loss to the plaintiff, giving rise to the claim in suit. No written statement seems to have been filed. The plaintiff-Bank is represented by M/s. Mansoorul Arfin and Habibullah Samo while Mr. S. Iqbal Ahmed appears for the defendant No,1 and Mr. Iqbal Kazi for the defendant (v) Suit No,432 of 1991. U.B.L. v. M/s. Alintco (Pvt.) Ltd. And others.- -This suit, brought on 12-3-1991, for recovery of Rs,3,70,40,466 under sections 6 and 8 of the Banking Companies (Recovery of Loans) Ordinate, 1979 has only a remote nexus with a cash credit finance limit because, in November, 1987 the defendants fully adjusted the cash credit but continued to enjoy F.T.R. (Finance Trust Receipts) facility. A fresh "finance" agreement was concluded on 30-6-1989. In the period following the defendants made only nominal payments giving rise to the claim in suit. No written statement has been filed by the defendants. M/s. Mansoor Ahmed Khan & Co. Are for the plaintiff whereas Mr. Mustufa Lakhani represents the defendants Nos.1 to 4. (vi) Suit No,433 of 1991, N.D.F.C. v. MJs. Paksaco Limited and others. --The suit, instituted on 1-4-1991, is for recovery of Rs,23,782,904 under the Banking Tribunals Ordinance, 1984. The plaintiff, which is a banking company, included in the schedule to-the Banking Tribunals Ordinance, 1984, is stated to have granted to the defendant No,1 working capital finance to the tune of Rs,20,000,000 on 9-6- 1990 against the securities detailed in para.6 of the plaint 'and the personal guarantees dated 14- 6-1990 of the defendants Nos.2 to 8. The finance disbursed to the defendant No,1 is claimed to have matured on October 16, 1990 but the defendants failed to liquidate their liability. In defence, the claim is repudiated more or less on technical grounds. Mr. M. Iqbal and Mr. Fazle Ghani Khan are for the plaintiff and defendants. (vii) Suit No,155 of 1992, Muhammad Bashir v. The Bank of Oman Limited, was instituted on 23-2- 1992. In this suit what is questioned is the purported grant of finance by the defendant-Bank to the plaintiff which, apparently, is the subject-matter of Suit No,923 of 1991, currently pending before the Banking Tribunal. It is, inter alia, urged that the defendant-Bank has manoeuvred to bring the
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subject-matter of the dispute within the purview of the concept of "finance" so as to invoke the jurisdiction of the Banking Tribunal under the 1984 Ordinance. It is urged that at the time of the relevant transactions there were no goods to be sold or purchased and, therefore, there was no contract of sale so as to give rise to the pristine concept of "finance". Declaration is sought that the relevant documents detailed in the plaint are void and cancellation thereof is claimed. No written statement seems to-have been filed in the suit. Mr. A. Rauf is for the plaintiff and Mr. Habibur Rehman represents the defendant-Bank. (viii) Suit No,167 of 1992, Abdul Aziz Nawab Khan & Co. v. The Habib Bank Limited.- -This suit, instituted on 2-3-1992, is for rendition of accounts and delivery of goods, the plaintiff being an importer of Iron and Steel Scrap, from time to time and on account, clearing the finance due and correspondingly lifting the imported goods from the godowns of the defendant-Bank, where such were lying pledged. The defendant, allegedly, failed on occasions to issue necessary delivery orders and the plaintiff resultantly suffered. Decree is sought essentially for rendition of accounts. Written statement has been filed by the defendant-Bank in which, principally, it is urged that the suit is barred under the Banking Companies (Recovery of Loans) Ordinance. Mr. Muhammad Salim acts for the plaintiff while Mr. A.R. Akhtar appears for the defendant-Bank." ' Having dilated upon the salient factual features in these cases, the various questions of law may now be specifically set out: (i) To what extent, if at all, the jurisdiction of this Court has been taken away by or under the Banking Tribunals Ordinance? (ii) Where in a suit falling within the jurisdiction of this Court or within that of the Banking Tribunal a set-off is claimed or a counter-claim is lodged when an independent suit incorporating such set- off or counter-claim may not have been entertainable whether such set-off or counter-claim can be entertained? (iii) In cases where successive/counter-suits are filed before this Court and the Banking Tribunal or vice versa and each is competently filed covering the same or similar subject-matter between the same or similar parties, how, if at all, conflicting decisions may be avoided? (iv) In what manner is a suit to be dealt with which at the time when it was instituted was properly institued in this Court but subsequently, factual impediments giving jurisdiction to this Court having been removed, such suit becomes triable exclusively before the Banking Tribunal? (i) TO WHAT EXTENT, IF AT ALL, THE JURISDICTION ' As to the ambit of jurisdiction of Banking Tribunals the applicable provisions are these: THE BANKING TRIBUNALS ORDINANCE, 1984 (2) Definitions.---In this Ordinance, unless there is anything repugnant in the subject or context,-- (a) 'banking company' means---... ........ ........ ..... ; (b) 'Banking Tribunal' means tribunal established under section 4; (c) 'customer' means a person who has obtained finance from a banking company or is the real beneficiary of such finance, and includes a surety and an indemnifier; (d) 'commencing day' means... .... ........................; (e) `finance' includes an accommodation or facility under a system which is not based on interest but provided on the basis of participation in profit and loss, mark-up or mark-down in price, hire- purchase, lease rent-sharing, licensing, charge or fee of any kind, purchase and sale of any property, including commodities, patents, designs, trade marks and copy-rights, bills of exchanges, promissory notes or other instruments with or without buy-back arrangement by a seller, participation term certificate, Musharika certificate, Modaraba certificate, term finance certificate or any other mode other than an accommodation or facile y based on interestand also includes guarantees, indemnities and any other obligation, whether fund based or non-fund based, and
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any accommodation or facility the real beneficiary whereof is a person other than the person to whom or in whose name it was provided; and (f) 'rules' mean... ... ......... ............; (3) Ordinance not to derogate from other laws. --The provisions of this Ordinance shall be in addition to and, save as otherwise provided in this Ordinance, not in derogation of, any other law for the time being in force. (4) (5) Powers of Banking Tribunals.--(1) A Banking Tribunal shall-- (a) in the exercise of its civil jurisdiction have in respect of a claim filed by a banking company against a customer in respect of, or arising out of, finance, provided by it, all the powers vested in a Civil Court under the Code of Civil Procedure, 1908 (Act V of 1908); (b) in the exercise of its Criminal Jurisdiction... ...; (c) exercise and perform such other powers... ... ...; (d) A banking tribunal shall, in all matters with respect to which procedure has not been provided for in this Ordinance, follow the procedure laid down in the Code of Civil Procedure, 1908 (Act V of 1908); (i) No Court other than a Banking Tribunal shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Banking Tribunal extends under this Ordinance, including a decision as to the existence or otherwise of finance and the execution of a decree passed by a Banking Tribunal: ' Provided that nothing in this subsection shall be deemed to affect--- (a) the right of a banking company to seek any remedy before any Court or otherwise that may be available under the law by which the banking company may have been established or ,.Nder that law as amended from time to time ; or (b) the power or, jurisdiction of the banking company or any Court such as is referred to in clause (al; or to require the transfer to .a Banking Tribunal of any proceedings pending before the banking company or any such Court immediately before the commencing day." (Under linings added) It will be seen, upon a perusal of sections 5(1)(a) and 5(3) above-quoted, that while the jurisdiction of a Banking Tribunal purports to be exclusive in matters falling within the parameters of its authority what that jurisdiction precisely is has not, as such, been categorically spelled out. However, since the jurisdiction of a Civil Court may be barred either expressly or impliedly, though in either case it should be clearly and manifestly barred, categorisation by nomenclature of the tribunal's jurisdiction may not have been essential for exclusion of the jurisdiction of Civil Courts (section 9, C.P.C.). Objections in this behalf, which are being overruled, would come up for discussion below. For the present, speaking broadly, if intendment of the legislation is clear and words spelling out ouster can readily and conveniently be found in it such would suffice to constitute ouster. Thus, section 5(1)(a) of the Ordinance, reproduced above, implicitly spells out the ambit of the jurisdiction of a Banking Tribunal namely, "a claim filed by a Banking Company against a customer in respect of, or arising out of, finance, provided by it". This, however, has been postulated not directly but with regard to the exercise of powers of a Banking Tribunal by invoking powers similar to those of a Civil Court under the Code of Civil Procedure. Like, as regards procedure of the Tribunal, is the effect of section 5(1)(d); the former provision, apparently, designed to achieve conferment of jurisdiction on a Banking Tribunal. Upon this follows section 5(3) excluding the jurisdiction of all Courts "with respect to any matter to which the jurisdiction of a Banking Tribunal extends ... ..." This method of conferment of jurisdiction, and exclusive at that, is not without legislative precedent. An identical legislative device was used in the Banking Companies
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(Recovery of Loans) Ordinance, 1979. Relevant postulates of such Ordinance, being useful even otherwise, as an interpretative aid, may here be reproduced: THE BANKING COMPANIES (RECOVERY OF LOANS) ORDINANCE, 1979 (2) Definitions.---In this Ordinance, unless there is anything repugnant in the subject or context,-- (a) 'banking company' means...................... ...... (b) 'borrower' means a person who has obtained a loan from a banking company and includes a surety or an indemnifier; (c) 'commencing day' means... ... ...............; (d) "loan" means. (i) an advance, cash credit, overdraft, packing credit, a bill discounted and purchased or any other financial accommodation provided by a banking compnay to a borrower; (ii) a guarantee, indemnity, letter of credit... ............ ...; (iii) a benami loan, that is, a loare.. ......... ....; (iv) any amount due from any borrower... .............. ..; (v) any loan due from any borrower... ...... (e) 'rules' means .; (f) 'Special Court' means... ... ....... 3. Ordinance not to derogate from other laws.---The provisions of this Ordinance shall he in addition to and, save as hereinafter expressly provided, not in derogation of any other law for the time being in force. 4. Securing and repayment of loan ...................... 5. Omitted. 6. Powers of Special Court. ---(1) A Special Court shall-- (a) in the exercise of its civil jurisdiction have in respect of a claim filed by a banking company against a borrower or by a borrower against a banking company in respect of, or arising Out of a loan, all the powers vested in a Civil Court under the Code of Civil Procedure, 1908 (Act V of 1908); (b) in the exercise of its Criminal Jurisdiction; ...... ... ...And (c) exercise and perform such other powers... ...... ...; No Court other than a Special Court shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Special Court extends under this Ordinance, including a decision as to the existence or otherwise of a loan and the execution of a decree passed by a Special Court and all proceedings, including proceedings following the filing of an arbitration award and-proceedings for the execution of a decree within the jurisdiction of a Special Court, by whatever Court passed, which may be pending any Court immediately before the commencing day shall stand transferred to the Special Court: ' Provided that nothing in this subsection shall be deemed to affect--- (a) the right of a banking company to seek any remedy before any Court that may be available under the law by which the banking company may have been established or under that law as amended from time to time; or (b) the jurisdiction of any Court such as is referred to in clause (a), or to require the transfer to a Special Court of any proceedings pending before any such Court immediately before the commencing day." (Underlinings added) The Banking Companies (Recovery of Loans) Ordinance, 1979 and the Banking Tribunals Ordinance, 1984 cover an identical subject namely, recoveries in relation to banking business. It is only the nature, implications and incidents of such businesses, which distinguish these statutes and furnish the basis which determines whether one or the other may be attracted for seeking legal relief. Comparison would reveal that the common denominators in these enactments are a banking
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company, a "borrower" or "customer" as equivalents and a special forum that may be approached in case of disputes. If it is a "loan" based on interest etc., which is sought to be recovered or questioned the 1979 Ordinance would be attracted but if it is "finance" of a non-interest bearing character remedy by a banking company is to be sought under the 1984 statute for the first of which a Special Court is the exclusive forum but for the second relief is obtainable from a Banking Tribunal. "Loan" has a nexus with a "borrower" and "finance" is connected with a "customer", both, as defined respectively in the 1979 and 1984 statutes. ' An examination of the quoted provisions makes it obvious that in relation to a claim filed by a banking company against a "customer" in respect of or arising out of "finance" provided by it, the jurisdiction of a Banking Tribunal in terms of sections 5(1)(a) and 5(3) of the Ordinance should be exclusive. The exclusiveness of this jurisdiction is further confirmed when section 5(3) of the 1984 Legislation makes the tribunal also Judge of "the existence or otherwise of finance", a similar legislative precedent as to "loan" being found in section 6(4) of the Banking Companies Ordinance, 1979. These are manifest departures from the general principle that a domestic tribunal, unless otherwise provided, cannot be Judge of its own jurisdiction. Nonetheless, but conversely, it will still remain for the Civil Courts to see, if called upon to do so, as to how far the statutes have operated to curtail their jurisdiction. Here, we at once find that a Banking tribunal, relevant to the same provisions, as referred has no jurisdiction whatever in respect of a claim filed by a customer against a banking company even though such claim may be relating to "finance" (as defined) provided by the banking company to the "customer". The omission appears to be deliberate because in the same context the equivalent provision in the Banking Companies (Recovery of Loans) Ordinance namely, section 6(1)(a) thereof clearly confers jurisdiction on a Special Court in respect of all claims whether by a banking company against a "borrower" or by a "borrower" against a banking company pertaining to a "loan" contracted within the terms of such Ordinance. It follows that if a "customer" covered by the 1984 Ordinance were to file a suit against a banking company as regards "finance" provided to him and covered by the Ordinance, he cannot file such an independent suit before a Banking Tribunal. It is now well-settled that tribunals of exclusive jurisdiction cannot be tribunals of unlimited or infinite jurisdiction and their ambit of operation, even if exclusive, has to be specific and is to be confined strictly within the four corners of the legislation creating them and conferring jurisdiction in relation to them. ' May be taken up now the various objections the learned counsel have raised to urge that the ouster of jurisdiction of Civil Courts is not complete upon the terms of the Ordinance in question. It is a well-recognised principle that where a new right is created by a statute or a new duty or liability is imposed thereunder, the statute simultaneously prescribing the mode or manner of enforcement an aggrieved party can seek only such remedy as is provided by that statute and except so far as otherwise provided in the enactment, either expressly or by necessary implication, the jurisdiction to adjudicate upon the right or to enforce the remedy is exclusive in the machinery set up by the statute. Ouster of jurisdiction of Civil Courts in such cases is implicit and no express terms need be explored. At the same time, where a right or duty has existed before the statute has come to occupy the field, the ouster, even when explicit, is conditional and dependent upon the functioning of the forum introduced by the statute: Sultan Ali v. Noor Hussain PLD 1949 Lahore 301, Industrial Development Bank of Pakistan v. Allied Bank, PLD 1986 SC 74. As to the instant legislation, however, neither the term "customer" nor the notion of "finance" nor participation between a banking company and its customer are by any means new. Relevant to banking companies and their customers, as defined, the Ordinance of 1984 merely codifies the law and regulates the procedure for enforcement and that also to the limited extent of remedied provided to banking companies against customers and not vice versa. In spite of purported exclusiveness of jurisdiction conferred on the Banking Tribunals by the Ordinance the ouster of Civil Courts' jurisdiction is,
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therefore, only conditional upon the functioning of the tribunal. The remedy vesting in Civil Courts is thus not totally barred. To this extent I agree with the contentions of Mr. Fazle Ghani Khan, Mr. Mansoorul Arfin and Mr. Muhammad Shard. However, learned counsel also maintain that once a lis, exclusively within the jurisdiction of such a tribunal, is entertained in a Civil Court while the tribunal is non-functional, it should be taken to its logical conclusion. The Civil Court, it is urged, is not a mere caretaker. I think to uphold this would involve unsettling the settled rules of construction. It seems to me that in matters, covered by the exclusive jurisdiction of a Banking Tribunal, entertained in a Civil Court for want of availability of the statutory machinery, the jurisdiction of the Civil Court is only of a stopgap character and should cease when the requisite forum becomes available for providing redress, all antecedent orders and proceedings in the Civil Court remaining valid and binding: United Bank Limited v. Akbar Agencies Limited PLD 1987 Kar. 81, Habib Bank Ltd. v. Cougdthene Chemical Industries PLD 1987 Lahore 567. ' Another argument of the same and other learned counsel is that where in an action attracting the jurisdiction of a Banking Tribunal non-cognizable matters happen also to come up for adjudication it is only in the Civil Courts that the remedy may be pursued. The principle seems to be that when a suit is cognizable partly in a special statutory jurisdiction and partly in a Civil Court or where a suit is based on a cause of action with respect to which relief can be granted by a Civil Court only and merely a connected relief is available in a special jurisdiction it is the Civil Court alone where the lis lies: Mindai v. Sajid Ali AIR 1930 Oudh 69, Sukhdev v. Basdev AIR 1935 Allahabad 594. It is also a fundamental principle that ouster of jurisdiction of Civil Courts is not readily inferred and in matters where a domestic forum exceeds its jurisdiction or that jurisdiction does not arise at all the overall jurisdiction of Civil Courts extends: Province of East Bengal v. Dewan A. Alim (1957) 9 DLR 26; Chalna Fibre Co. v. Abdul Jabbar PLD 1968 SC 381; National and Grindlays Bank Ltd. v. N.P. Miranda 1984 CLC 2106; United Bank Ltd. v. Abdul Rashid 1987 CLC 331. It will, however, remain to be seen whether within the somewhat enlarged…
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