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Petitioner: NADEEM GHANI VS Respondent: UNITED BANK LIMITED and others
Court Name: Sindh High Court Judge(s): S. A. Sarwana Title: NADEEM GHANI vs UNITED BANK LIMITED and others Case No.:Suit No, 1336 and Civil Miscellaneous Applications Nos, 8015 and 9830 of
JUDGMENT
Reported As: 2001 CLC 1904 Result: Order accordingly Judgment JUDGMENT 1. The brief facts leading to the suit as reflected from the pleadings are that the plaintiff who is the proprietor of Naveed Enterprises, Edmonton, London is engaged since 1989 in the business of import and distribution of various household, fancy goods and other similar material which he imports, from the Far East, Pakistan, India, China, Korea and other places and sells/distributes them in England. Though he had a current account with United Bank Limited, Mark Lane Branch, London (defendant No.1/U.B.L.), he conducted his main business through Barclays Bank, where he used to establish letters of credits for import on D.A. or Collection Basis and never defaulted in payment of any amount. The plaintiff was also operating another firm by the name of "Worldwide Corporation". It is alleged that in 1993, Mumtaz Ali Memon (defendant No.3) who was known to the plaintiff, introduced him to Muhammad Moazzam Khan (defendant No.2) who offered him various financial facilities which were not available from other banks Accordingly the plaintiff opened an account in the name of Worldwide Corporation in which defendant No.2 granted facility of US $2.5 to 3.0 Lakhs against Letters of Credits (non-fund based) with 25% cash margin which was very lucrative as defendant No.1 did not ask for any guarantee or collateral. Thereafter, defendants Nos.2 and 3 offered further better facilities on the condition that he would transfer his existing Naveed Enterprises account from Barclays Bank, Edmonton Branch, London to U.B.L. Plaintiff being thus, lured by defendants Nos.2 and 3 to transfer his account to U.B.L. closed his account with Barclays, obtained a N.O.C. from them and opened his account with U.B.L., Mark Lane Branch and also submitted security for repayment by way of mortgage of his two properties in London. After this had been completed defendant No.1 granted overdraft limit of Pounds 115,000 and Pounds 200,000
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for Letters of Credit subject to the condition that disbursement would only be made upon approval given by the General Manager, namely, defendant No.2. Thereafter, when the plaintiff commenced use of the facilities for his business, defendant No.2 started coercing the plaintiff by demanding commission for allowing disbursement of the facilities and also asked him about the average profit the plaintiff earned so that the rate of commission for disbursement of the facilities could be determined. Upon acquiring such knowledge defendant No.2 claimed commission to the extent of 10% which was later reduced to 5% of the total value in each transaction that was conducted. The plaintiff resisted but because he had broken all ties with Barclays Bank and could not go to any other bank for credit facilities as his properties had already been mortgaged with U.B.L. who threatened not to give a clearance certificate, he had no alternative but to agree to pay commission to defendant No.2 and later to defendant No.3. It is asserted that the pressure of the business was so intense that in the event of refusal the plaintiff would have had to close his business and thereby become bankrupt. In such situation the plaintiff had no option but to submit to the unlawful, illegal and coercive demands made by defendant No.2. In para.10 of the plaint, the plaintiff has given the details of the various amounts with dates which he paid in cash to defendant No.2 directly i.e. Pounds 37,950, remitted to Muhammad Aslam the brother/brother-in- law of defendant No.2 and Pounds 95,000 and a sum of Pounds 15,000 (Rs.881,000) which plaintiffs' mother paid to Moazzam Khan in Pakistan). All these payments are allegedly reflected in the Statement of Accounts (Annexures A/1 to 9 of the plaint). It is further alleged that defendant No.2 used to take money in cash and obtain acknowledgment of debt from the plaintiff. After defendant No.2 was transferred from London and posted as Head of the Special Assets Management Fund Division of U.B.L. Head Office at Karachi, defendant No.3, who then became Incharge of the plaintiff's account, continued to follow the practice of defendant No.2 and thus, the plaintiff paid a total sum of Pounds 26,679.45 in cash directly to defendant No.3 a part of which was remitted to H.B.L. AG Zurich. The plaintiff has also given the details as to how at the. instance of defendant No.2 he was forced to pay commission so that it appeared from the transaction that the plaintiff had borrowed money from defendant or his wife or that he was remitting the amount to Pakistan in connection with his business. It is further stated that the frauds committed by U.B.L. in England were known to all and the Bank of England also issued specific directions. In this connection the plaintiff has attached with the plaint cuttings of the news of fraudulent conduct of the Officers of the Bank and irregularities committed by them which were published in various newspapers. Plaintiff has also attached with the plaint a copy of the Bank Guarantee issued by defendant No.1 in collusion with defendants Nos.2 and 3'in the form of a hand written letter which allegedly is not normally done by a prudent banker. On account of the illegal demands of money which the plaintiff was forced to pay to defendants Nos.2 and 3, a huge amount of interest accrued in his Account as a consequence of which plaintiff suffered serious losses and plaintiff's business collapsed. Meanwhile, in July, 1999 U.B.L. filed a suit against the plaintiff in the High Court of Justice, Chancery Division which proceedings are in progress and plaintiff's legally charged property is liable to be sold towards payment of the dues of the bank which according to the plaintiff are not recoverable as they consist basically of the commissions which the plaintiff was forced to pay to defendants Nos.2 and 3 and the illegal and unlawful interest charged on the debit balance arising therefrom. 2. It is further alleged that when the plaintiff protested against the illegal charges Mrs. Moazzam (wife of defendant No.2) filed a suit in the Central London County Court for recovery of Pounds 76,331.96 together with interest amounting to Pounds 69,000 and further future interest thereon. Copies of the documents filed by the parties have been attached with the plaint which include statements of Moazzam Khan, Mrs. Moazzam Khan and that of the plaintiff filed in the said Court. 3. On 27-9-1999 the plaintiff filed the present suit in this Court claiming the following relief:-- "(1) declare and pass a decree that all commissions to the extent of Pounds 174,629.45 paid to the
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defendants Nos.2 and 3 by the plaintiff is liable to be refunded by the defendants jointly and/or severally; (2)declare that all interests unlawfully charged are liable to be deleted from the account of the plaintiffs; (3)a decree against the defendants jointly and/or severally in the sum of Pounds 1,200,000 for causing loss in business; (4)a decree against the defendants jointly and/or severally in the sum of Pounds 300,000 for causing mental stress, due to the coercive approach and attitude by the defendants; (5)perpetual injunction against the defendants jointly and/or severally and each one of them from proceeding to recover the money from the plaintiffs in England or from attaching or selling any mortgaged properties and taking possession thereof till such time the present action is decided and finally concluded.." 4. Alongwith the suit the plaintiff filed an application under Order XXXIX, Rules 1 and 2 read with section 151, C.P.C. (C.M.A. No.8015 of 1999) to restrain U.B.L. from taking any coercive action against him for recovery of money or acting in any manner whatsoever in the English proceeding to attach or sell or to take possession of the mortgaged properties mentioned in the plaint (which are situated in England) till the disposal of the suit. 5. On 28-9-1999 the Court issued notice of the application for 6-10-1999 and restrained defendant No.1 from adopting any coercive method for recovery of its outstanding amount till then. The parties filed their counter-affidavits and rejoinder affidavits to the application. The ad interim injunction was extended from one date to the other and is still in force. 6. Meanwhile, defendant No.1 filed an application for leave to defend the suit (C.M.A. No.9118 of 1999) which on 3-12-1999 was allowed with the consent of the plaintiff and defendant No.1 was directed to file their written statement within 30 days. Defendant No.2' was late in filing the application for leave to defend and filed the same (C.M.A. No.9636 of 1999) together with an application under section 5 of the Limitation Act for condonation of delay (C.M.A. No.9635 of 1999). On 3-12-1999 both these applications were granted with the consent of the plaintiff and defendant No.2 was also directed to file his written statement within 30 days. No application for leave to defend the suit has been filed by Mumtaz Ali Memon (defendant No.3) and accordingly the matter is proceeding against him in his absence. 7. On 24-11-1999 U.B.L. filed an application under Order XXXIX, Rule 4 read with section 151, C.P.C. (C.M.A. No.9830 of 1999) requesting the Court to discharge and set aside the ex parte ad interim injunction dated 28-9-1999 restraining the Bank from adopting any coercive method for recovery of its outstanding amount from the plaintiff. Copies of this application were supplied to the plaintiff and the other defendants on the same day. Consequently, two interlocutory applications, namely; C.M.A. No.8015 of 1999 and C.M.A. No.9830 of 1999 are pending which have to be decided. 8. Mr. Anwar Mansoor Khan, learned counsel for the plaintiff submitted the following arguments in support of his application for temporary injunction and dismissal of the application filed by U.B.L. (i) That after having obtained funds by mortgage of his two properties to U.B.L., the plaintiff came in the clutches of the defendants who had an upper hand in the relationship between the parties. The defendants used their position to coerce him into meeting their illegal demands which he could not refuse because the borrowed funds had been committed in his business. As there was inequality of bargaining power and the defendants exercised economic duress, the transaction lacked fairness and the Court has the power to examine and correct the improprieties to make the contract a fair one. He cited the case of Abdul Rahim v. U.B.L. PLD 1997 Kar. 62 in support of his argument. (ii)That the conduct of defendants Nos.2 and 3 in obtaining illegal commission from plaintiff amounted to unjust enrichment and the plaintiff was entitled to recover the amount as given in the
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statement of account filed with the plaint. In this connection he referred to the Article entitled "Unjust Enrichment and the Law of Restitution in U.K." published in PLJ 1999 Magazine 271. (iii)That Moazam (defendant No.2) used to take his commission in cash and obtain receipts from him as if they were a loan from Moazam's wife. When plaintiff protested against such improper conduct, defendant No.2 made his wife file a suit in the Central London County Court for recovery of Pounds 76,331.99. He referred to several Annexures to show that he had several times given money to defendant No.2 and had also remitted amounts to his relative in Karachi. (iv)U.B.L. knew about the fraud being committed by the bank officers as such news were published, among others, in the Daily Dawn of 6-4-1998. Further the Bank of England had also taken note of the improper conduct of defendant No.1 in the banking business and had ordered inquiry in respect thereof. (v) That all the ingredients required for grant of temporary injunctions were present; in that the plaintiff had a good prima facie case, the balance of convenience was in his favour and he would suffer irreparable injury if the London properties were allowed to be sold by the English Court because properties in a Court sale always fetch a very low price which injury is irreparable. 9. Mr. Sajid Zahid, learned counsel for defendant No.1 in reply submitted as follows:-- (i) That the plaintiff was a loan defaulter in the tune of Pounds 232,577.48 and had filed this suit as counter-blast to the action taken by U.B.L. for recovery of its dues before the High Court of Justice. Chancery Division in London on the basis of the security documents executed by the plaintiff. (ii) That the High Court of Sindh had no jurisdiction in the matter as neither any cause of action had arisen at Karachi nor any banking transaction between the plaintiff and U.B.L. took place in Karachi, the plaintiff ordinarily resided and carried on his business in England and the bank branch with which the plaintiff had dealings is located in London, the securities held by U.B.L. including the immovable properties mortgaged by the plaintiff were located in London. All acts, transactions and dealings between the parties had a very close nexus with London, the suit was hit by the principle of "Forum Non-Conveniens" and accordingly it should be tried by the English Court and the plaint be returned to the plaintiff for filing it in the Court having jurisdiction in the matter. He referred to several documents filed by the plaintiff and those filed by U.B.L. with the application for leave to defend the suit evidencing the business relationship between the parties, the claim filed by U.B.L. in the High Court of Justice, Chancery Division, proof of mortgage of the property by the plaintiff and various orders passed by the English Court in relation to the proceedings and the order of sale of the property by the English Court. (iii)That the present suit constituted an abuse of the process of the Court. He referred to various documents filed with the plaint in relation to the litigation between Ayesha Moazam Khan (wife of defendant No.2) and the plaintiff pending in the High Court of Justice, Queen's Bench Division, which belied the claim made by the plaintiff in his pleadings. (iv)That plaintiff had not made any specific allegation of impropriety against U.B.L. (defendanf No.1), there was only a general references to it in various paragraphs as the employer of defendants Nos.2 and 3 except paragraph 29 where it had been alleged that defendants Nos.2 and 3 collusively with defendant No.1 and its management proceeded to put the plaintiff to unlawful loss and the defendants to unlawful gain. He added that U.B.L. did not use any coercion on the plaintiff as defined under section 15 of the Contract Act and if such had been the position the plaintiff should have repudiated the contract immediately and taken some action against the alleged coercion which started in 1994 and that it was too late in the day to file the present suit in Karachi on 27-9-1999 which showed his mala fide conduct. He referred to 1993 MLD 1753 in this connection. (v) That U.B.L. did not and could not exercise any undue influence as defined in section 16 of the Contract Act, 1872. The plaintiff was an intelligent businessman and the bank was not at any time in
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a position to dominate his will and referred to PLD 1994 Lah. 100 in this connection. (vi)All dealings between the plaintiff and Ayesha Moazzam (wife of defendant No.2) were private transactions which resulted in litigation between the parties and referred to several documents filed by the parties in the English litigation before the High Court of Justice, Queen's Bench Division in support thereof. (vii) That according to the pleadings the plaintiff's claim against U.B.L. was based on the principle of vicarious liability. The dealing between the plaintiff and Ayesha Moazam were private acts and to make the master responsible for the acts of the employee it must be shown that the wrongful acts were authorized by the master which was not the claim in the present suit. He referred to 1991 MLD 821 at 823 and 1992 MLD 1711 in support of his contention. (viii) That the litigation between Ayesha Moazzam (wife of defendant No.2) and the plaintiff had been settled by a Consent Order whereunder the plaintiff paid a. certain sum to Mrs. Moazzam which was evident from the documents filed by defendant No.2 with his written statement. This proved the mala fide allegations made by the plaintiff in the plaint. , (ix)The Court could not grant temporary injunction where compensation is an adequate remedy which the plaintiff had claimed and if the plaintiff succeeds in proving the claim he could be adequately compensated by payment of money PLD 1977 Azad J&K 70 and 1974 SCMR 519. (x) The balance of convenience was not in favour of the plaintiff as U.B.L. Branch in England is regulated by the Bank of England where U.B.L. had obtained an order for sale of the mortgaged property situated in England. The principle Lex Situs was applicable and this Court should refrain from passing any order in relation to the proceedings commenced by U.B.L. against the'plaintiff, inter alia, on the ground that the plaintiff had mortgaged his property in England and referred to the case of Value Gold Ltd. v. U.B.L. PLD 1999 Kar. 1 at 25. 10. Mr. Habibur Rehman, learned counsel for defendant No.2, inter alia, submitted as follows:-- (i) That the plaintiff made allegations of payment of commission for the first time when ht wrote to the President of U.B.L. at Karachi by his letter, dated 21-5-1995; :iowever, he withdrew his complaint by letter dated 31-12-1996 addressed to the President. The plaintiff having withdrawn the complaint the present suit is patently mala fide and he is not entitled to any relief in equity. (ii) The dispute between the plaintiff and defendant No.2 culminated in amicable settlement by a consent order pursuant to which the plaintiff paid Pounds 5,000 to Aisha Moazam Khan wife of defendant No.2 and in proof he produced a copy of the agreed consent order and a cheque, dated 13-10-1997 issued by the plaintiff in favour of the Solicitors of Aisha Moazam Khan. This fact clearly proves that the allegations made by the plaintiff against defendant No.2 in the plaint are mala fide. 11. Exercising their right of reply, Mr. Khan and later Mr. Akram Shaikh submitted as follows:-- (i) With regard to the objection that the Court did not have jurisdiction to entertain the suit he urged that under section 20, C.P.C. plaintiff had the option to file the suit within the local limits of the jurisdiction of this Court asthe Head Office of defendant No.1 was situated in Karachi where it was also carrying on business and referred to the case of Value Gold Ltd. v. U.B.L. PLD 1999 Kar. 1. He further submitted that defendants Nos.2 and 3 the agents of defendant No.1 and principal characters of the unlawful exercise of economic duress had been transferred to Karachi where they were residing and working. The entire evidence of the improper conduct was in Karachi and the doctrine Forum Non-conveniens could not be applied in the present circumstances. (ii)In reply to objection that the plaintiff had claimed damages and therefore, a mandatory or temporary injunction could not be granted, he submitted that the plaintiff had sought damages for the injury already caused by the defendants and accordingly the relief sought was proper and allowable by the Court and referred to 1994 CLC 726 at 732-A in support of his submission. (iii)When a Court has statutory jurisdiction as in the present case under the Banking Act, 1997) the statutory forum should not relinquish its jurisdiction in favour of the arbitral forum agreed to by the
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parties in an agreement and referred to PLD 1989 Quetta 1. -1982 CLC 1777 and 1983 CLC 1592 in.this connection. 12. I have considered the arguments of Mr. Anwar Mansoor Khan, learned counsel for the plaintiffs for confirmation of the ad interim injunction dated 28-9-1999 and Mr. Sajid Zahid, learned counsel for defendant No.1 (U.B.L.) and Mr. Habibur Rehman, Advocate for defendant No.2 (Muhammad. Moazzam Khan) for discharging and setting aside the ex parte ad interim injunction. 13. From a perusal of the pleadings, the documents filed therewith and the submissions made by the learned counsel the following factual position emerges which is not disputed by any one. (i) In July, 1999, U.B.L. commenced proceedings against the plaintiff, inter alia, for possession of latter's legally charged property. U.B.L. took peaceable possession of the Lea Valley Estate Property on 6-71999 and changed the locks of its two doors. (ii)On 27-9-1999 the plaintiff filed this suit against three defendants, inter alia, for declaration, for recovery of Pound Sterling 1,200,000 for causing loss in business Pound Sterling 300,000 for mental stress due to coercive approach and perpetual injunction restraining U.B.L. from proceeding to recover any money or from attaching or selling any property mortgaged by him. The basic controversy at present revolves around the action initiated by U.B.L. in relation to the property mortgaged by the plaintiff in London to obtain financial facilities from the bank. (iii)The plaintiff is carrying on business in England where he is subject to the English Law and all his dealings with U.B.L. are also subject to English Law. (iv)Defendants Nos.2 and 3 who are alleged to have caused loss to the plaintiff by their improper conduct are now residing and working in Karachi where the Head Office of United Bank is also situated. (v) The immovable property mortgaged by the plaintiff are located in London. All acts, transactions and dealings between the parties took place in London. (vi)In the claim filed by U.B.L. in the High Court of Justice, Chancery Division, several orders have been passed by the English Court in relation to the proceedings including order, dated 20-9-1999 passed after hearing the Counsel of both parties whereby plaintiff herein is required to give possession of Property No.12, Skillion Commercial Centre, Edmonton, London to U.B.L. within 28 days of service of the order on the Solicitor of the plaintiff. U.B.L. is in possession of the Lea Valley Trading Estate Property through their agents. (vii) The plaintiff filed an application under Order 39, Rules 1 and 2 read with section 151, C.P.C: in the present suit to restrain the defendants from taking any coercive action against the plaintiff for recovery of money or acting in any manner whatsoever in the proceedings to attach or sell or to take possession of the mortgaged properties mentioned in the plaint till the disposal of the suit. On 28-9-1999 the plaintiff obtained an ad interim order without notice restraining U.B.L. not to adopt any coercive method for recovery of its outstanding amount which order is still in force. (viii) The claim filed by Aisha Moazzam wife of defendant No.2 against the plaintiff for recovery of Pound Sterling 76,331.96 plus interest in the Central London County Court has been settled by consent in proof whereof defendant No.2 has produced cheque, dated 13-101997 for St. Pound 5,000 issued by plaintiff favouring Aisha Moazzam's Solicitor. The plaintiff has not denied this fact. 14. The first point which arises for consideration is whether this Court has the jurisdiction to entertain the. suit filed by the plaintiff in respect of business dealings between the parties and the cause of action which arose in England. The relevant provisions for the purpose of decision of this question are given in sections 16 and 20 of the Code of Civil Procedure, which read as follows:-- "Section 16. Suits to be instituted where subject-matter situate.--- Subject to the pecuniary or other limitations prescribed by any law, suits-- (a) for the recovery of immovable property with or without rent or profits. (b)......................................................
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(c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property. (d) for the determination of any other right to or interest in immovable property. (e)....................................................... (f) for the recovery of movable property actually under distraint or attachment. shall be instituted in the Court within the local limits of whose jurisdiction the property is situate or in the case of suits referred to in clause (c) at the place where the cause of action has wholly or partly arisen. Provided that a suit to obtain relief respecting or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the Court within the local limits of whose jurisdiction the property is…
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