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Petitioner: Dr. Bhagwan Dass and another VS Respondent: Habib Bank Limited
Court Name: Sindh High Court Judge(s): Muhammad Junaid Ghaffar, Irshad Ali Shah Title: Dr. Bhagwan Dass and another vs Habib Bank Limited Case No.: Civil Appeal No. D-01 of 2013 Date of Judgment:2020-09-16 Reported As: 2021 CLD 406 Result: Appeal dismissed
JUDGMENT
JUDGMENT MUHAMMAD JUNAID GHAFF AR, J.---Through this Civil Appeal the Appellants have impugned judgment dated 15.11 2012 in Suit No.43 of 2002 (old) and. Suit No.18 of 2009 (new) passed by Banking Court No.1 Larkana through which Suit filed by them has been dismissed. 2. Learned Counsel for the Appellant No.2 submits that the Banking Court was not justified in dismissing the Suit of the Appellants; that in the first round of litigation, the Appellants being purchasers of the property from the borrower/mortgagor had approached the Banking Court No.1 in Execution Application. and being unsuccessful, this Court and while disposing of 1st Civil Appeal No.D-03 of 2001 vide order dated 19.07 2001, certain directions were given to the respondent Bank in respect of payment of decretal amount and the markup in accordance with lam however respondent Bank has recovered the entire markup which is against the Circulars of State Bank of Pakistan; that the appellant was compelled in the facts and circumstances to pay such amount under protest: however , thereafter filed Suit for recovery of the excess amount so recovered: that the bank statements relied upon by the respondent Bank are false/incorre ct and respondent Bank ought to have considered the calculations made by the Appellant and therefore, impugned order is liable to be set aside 3. Appellant No.1 is appearing in person and lias been permitted by us to assist the Court. According to him, in the order dated 19.7.2001, directions were given to calculate the markup amount in accordance with law, whereas the respondent Bank has charged compound interest which is illegal and a fraud: that the Chartered Accountant produced as witness has given its calculation ,which has been ignored by the Banking Court therefore, Appeal merits consideration and the impugned order be set aside. 4. Learned Counsel or the respondent Bank submits that the judgment and decree had attained finality and in Appeal against an order of the Executing Court, amount was agreed to be paid by the plaintif fs/Appellants, therefore, they had no cause of action to file a fresh Suit and seek refund of the amount of markup already paid.
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5. We have heard both learned Counsel as well as Appellant No.1 in person and have perused the record placed before us. 6. The facts as they appear are that borrower of the Bank namely Shah Muhamm ad Pasha Khrihro had defaulted in making repayment of the finance facility , after which Suit No.795 of 1997 was filed by the Bank and the borrower contested the Suit and even leave to defend was granted. Thereafter the present Appellants filed application under Order I, Rule 10, C.P.C. which was dismissed vide order dated 04.7.1998 which admittedly was not impugned any further . Subsequently , the Suit of the respondent Bank was dismissed on 05.6.1 999 against which Civil Appeal No.07 of 1999 was preferred; stood allowed by a remand order of this Court dated 23.12.1999 and thereafter judgment dated 14.6.2000 and decree dated 22 6.2000 was passed by the Banking Court. It appears that the judgment and decree as above has attained finality as the borrower never impugned the same. However , the Appellants stepped into the proceedings on the ground that they had already purchased the property from the borrower during pendency of the recovery proceeding and their rights were protected under section 92 of the Transfer of Property Act, 1882, whereas, the borrower had also executed a registered Sale Deed in their favor . They then filed an application in the Execution proceedings for making payment of the amount which was dismissed by the Executing Court and against that, Civil Appeal No. D-03 of 2001 was preferred before this Court which was disposed of by a consent order dated 19.7.2001 in the following terms: "In view of the above, the following Order is passed with the consent of both the Learned Counsel. 1. Appellants agree to make payment of the entire amount due against the mortgage with respect to the mortgaged property together with such costs which the respondent No.1 is entitle to recover according to law. However , if entitled benefit under any scheme is available, the same may be allowed as on the date of this order . 2. The Appellants agree to make the payment of the entire amount within four weeks from the date of this order . The exact amount will be conveyed to the Appellant by respondent No.1 within three days which will be forwarded at their address through TCS and copy of the same shall also be filed in this Court. The amount so specified shall be deposited by the Appellants in the Banking Court in satisfaction of the decree. Respondent No.1 undertakes to hand over all the original documents in their possession with respect to the mortg aged property with the banking Court together with the list of documents. Copy of the list will also be provided to the Appellants. 3. On receipt of the entire amount the Appellant shall be entitled to obtain the original documents from the Banking Court and shall have all the rights of mortgagor as available to them within the meanings of section 92 of the Transfer of the Property Act and the property mortgaged shall stand subrogated in their favour . The Appellant shall move the separate application before the Trial Court where the Suit is presently pending between the Appellants and the respondent No.2. After hearing the parties, the learned Civil court shall decide the matter as to possession within four weeks. The possession shall be handed over to the party in pursuan ce to the Order of learned Civil Court. This arrangement has been specifi cally made to afford further opportunity to the respondent No.2 to avail the right of hearing, which, in spite of notice was not availed coupled with the fact that the property is liable to be auctioned and the Appellants are keen to save the property from being auctioned. The possession of the property shall then be handed over by the Bankin g Court in pursuance in the Order of learned Trial Judge. This Appeal stands disposed of in the above terms." 7. It appears that after this judgment the amount was calculated by the respondent Bank and as per plaintif fs' own version, the said amount was paid; but under protest and subsequently the Appellants filed Suit No.43 of 2002 (old) and Suit No.18 of 2009 (new) before the Banking Court No. 1. Larkana which has been dismissed vide impugned judgment. The Banking Court settled the following issues for deciding the Suit of the Appellants: "Issue No.1 Whether the Suit is maintainable according to law?
Issue No.2 Whether the plaintif f has cause of action to file the Suit?
Issue No.3 Whether the plaintif f is entitled for the relief claimed?
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Issue No.4. What should the decree be?
8. The learned Banking Court came to the conclusion that Suit is maintainable and so also that the plaintif fs/Appellants have a cause of action to file the Suit. However , issue No.3 'that whether the plaintiffs are entitled for the relief claimed' was decided against the plaintif fs/Appellants by dismissing the Suit. Insofar as issues Nos.1 and 2 are concerned though respondent Bank is not aggrieved as no Appeal has been filed: but since this Appeal is under a special law i.e. Financ ial Institutions (Recovery of Finances) Ordinance, 2001 ("F.I.O., 2001" ), and our jurisdiction to decide this Appeal is dependent on this very question that whether the Suit was even competent before the Banking Court; therefore, we intend to decide the same as well. Notwithstanding that Bank has not filed any Appeal in respect of Issues Nos. 1 and 2. as above, decided in favor of the Appellants; however , at the same time there is no absolute bar on such adjudication by this Court as it goes to the root cause of the matter . We are conscious of the fact that this is an appeal arising out of the judgment and decree and jurisdiction that is being exercised by us is in continuation of the original suit and as such the Court is empowered to pass any order that can be made by a trial Court Order XLI, Rule 33 of C.P.C. read with section 107, C.P.C. deals with this situation and has provided that the powers of the Appellate Court in this situation are not curtailed and is affirmative having a non-obstante clause. In cases where only part of the judgment and decree (here Issue No.3 only) has been challenged, the Appellate Court, notwithstanding that no appeal has been preferred by the other party , may exercise its powers in favor of any respondent although such respondent may not have filed an appeal. The question that this Court while hearing an Appeal under section 22 of F.I.O., 2001 can exercise such powers under C.P.C. or not is, in our view, not an obstacle inasmuch as there is no complete bar on this at the same time. Moreover , the Appeal is being heard by the High Court and insofar as the provisions of section 22 ibid are concerned, there are no fetters as such in the F.I.O., 12001, as it is only the Banking Court which has been established under section 5 ibid, as being creature of a special law,. The High Court as such is not defined in the F.I.O., 2001. It may however be noted that in large number of cases decided by this Court it has been repeatedly held that provisions of C.P.C. may not be applicable in rent proceedings (here a Banking case) in stricto sensu but the equitable principle of said Code will always be applicable in order to do comp lete justice between the parties and also to meet the ends of natural justice . And lastly , it is settled law that these provisions are a matter of procedure, and as and when needed can be invoked by the High Court, whereas, at the same time are not inconsistent with the provisions of F.I.O., 2001, insofar as these Appellate proceedings under section 22 ibid are concerned. In the case reported as Crescent Leasing Corporation Limited v. Sarhad Goods Transport Company (2013 CLD 854), exactly in somewhat similar situation in a Banking matter , a learned Division Bench while exercising these powers under C.P.C. has been pleased to set-aside the order of the Banking Court. It is well- settled that Courts are duty-bound to decide fundamental questions that may affect the legality of the proceedings before them, such as jurisdiction and limitation, at the earliest possible stage even if an objection to this effect has not been raised. In any event, the questi on of jurisdiction being a legal one, can be raised even at the appellate stage . The language used in the provision, according this, dictum, is affirmative and the rule is further strengthened by NON-OBST ANTE claus es giving the clear impression that the intention is beneficial, so that no legal right should be denied which the appellate Court considers should be allowed within the framework of the suit. To put the matter more lucidly, whereas upon the strict terms in Order XLI, Rule 22, C.P.C. a challenge or other partisan objection to a decree or order arises only on an appropriate filing of an appeal or lodging of cross- objections, such technicalities are confined to parties alone and the appellate Court by virtue of Rule 33 in the same Order has been rendered free to fashion relief according to the requirements of a case, irrespective of absence of requisite appeal or cross objections contemplated in Rule 22 of Order XLI. The object of arming the appellate Court with such an extensive and wide ranging power seems to be none other than to ensure prompt; and ready relief in cases of hardship as also generally to redress wrongs and to do complete justice in the case. The Hon'ble Supreme Court in the case reported as S. M. Yousuf and Bros. v. Mirza Muhammad Mehdi Pooya (PLD 1965 SC 15) has also dealt with this aspect in the following terms:1 2 3 4 5
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The terms employed to confer the power are of the widest amplitude to enable an appellate Court to pass decrees according to the justice of the case. The language used is affirmative and the rule is further strengthened by non- obstante clauses, giving their clear impression that the intention is beneficial, so that no legally right should be denied which the appellate Court considers should be allowed within the framework of the suit. The non-obstante clauses are particularly significant. The fact that the appeal is as to apart only of the decree will not, by itself, restrain the appellate Court's power . Here the whole decree was before the appellate Court, but the other non- obstante clause is directly relevant, for it totally avoids any condition that a party seeking the benefit of the rule should itself have filed an appeal or objection. Therefore, the mere fact of the plaintiff not having filed an appeal against the failure of the trial Court to grant a decree against Amanullah Kirmani would not by itself be sufficient to justify refusal to exercise the power under the rule. The principle as stated in the judgment of the High Court, namely , that "in the absence of a counter appeal being filed a decree against another defendant cannot be given" not only constitutes a fetter upon the extre mely wide power given to the appellate Court by the Code, but may also be thought to be in direct contravention of a clear provision in the rule. 9. Coming to the very issue of maintainability of the Suit in question it is by now settled that for maintaining a Suit before a Banking Court under F.I.O., 2001, there are certain prerequisites which are to be fulfilled and complied with. The Appellant was never a customer of the Bank within the meaning of section 2(c) ibid, and therefore. had no locus A standi to file and maintain its Banking Suit. The learned Banking Court has neither appreciated the law itself: nor the precedents of the various High Courts on such aspect of the matter. There is a series of judgments which have now decided this issue that until and unless the person suing the Bank is a Customer as provided in FIO 2001. the Suit filed by such person would be incompetent before a Banking Court. This is besides the fact that even if a person is a customer, he has to fulfill other conditions B such as availing of finance [s.2(d)] from a financial institution [s.2(a)]. In the case reported as Procter and Gamble Pakistan (Pvt.) Ltd., Karachi v. Bank Al-Falah Limited, Karachi (2007 CLD 1532) a learned Single Judge of this Court has decided this issue after a thread bare examination of F.I.O., 2001. The relevant finding reads as under: 15. The second category of persons who come within the definition of "customer" are the persons. who avails non- fund based financial facility such as Guarantee or Letter of Credit i.e. the persons on whose behalf a Guarantee or a Letter of Credit has been issued by a financial institution. The persons for whose benefit such instruments are opened i.e. the beneficiary of such instruments are not included within the definition of section 2(c) of the Ordinance, 2001 as it, includes within its ambit as "customer" only such person on whose behalf a Guarantee or a Letter of Credit has been issued. The persons who are entitled to receive finance from a Financial Institution without any obligation to repay . such as a beneficiary of a Guarantee or better of Credit or a person who is entitled to receive payment from a financial institution in order to make supplies to a customer of a financial institution cannot be treated as a 'customer' of the financial' institution. There is no room for including the beneficiary of the non-fund based facility to be included in the definition of "customer". A beneficiary cannot be treated a customer of a financial institution as financial institution is not concerned as to who is the beneficiary of its Guarantee or Letter of Credit. It may not even come in contact with the beneficiary of a Guarantee or a Letter of Credit. The beneficiary has merely figured in at the instance of the person on whose behalf the financial institution has issued a Guarantee or a Letter of Credit. Extending the meaning of the word "customer" to the beneficiary of an instrument would amount to doing violence to the provisions of section 2(c) and section 9 of the Ordinance, 2001.The third and the last category of persons who fall under the definition of "customer" are those who stand surety or indemnifier before a financial institution on behalf of direct customers of financial institutions. This last category of persons though not the direct customers of a finan cial institution, as is the case with the first two categories of persons, but through a deeming provision of section 2(c) of the Ordinance, 2001 they too have been made customers of the financial institutions as they have taken upon themselves the obligation to discharge the liability of a customer , who availed the financial facility from a financial institution. 16. The above analysis of the meaning of the word "customer" as defined in section 2(c) of the Ordinance clearly leads to the conclusion that the word "customer" means and includes (a) a person to whom finance has been extended directly by a financial institution : (b) a person on whose behalf a financial "institution undertakes to make
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payment to a third party e.g. under a Guarantee or a Letter of Credit: and (c) a person who has taken upon himself the obligation to repay to the financial institution the defaulted sum in his capacity as surety or indemnifier . Therefore, only these three categories of persons come within the definition of "customer" and only they can sue or be sued under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. No person, no matter in what other capacity he is connected with a financial facility . if he does not fall within the definition of a "customer" as defined under section 2(c) of the Ordinance, 2001, he can neither sue nor be sued under section 9 of the Ordinance, 2001 and the legal remedy for and against, him lies before ordinary Civil Court. 17. From the above discussion it is also evident that the definition of "customer" as provided under section 2(e) of Financial Institutions (Recovery of Finances) Ordinance, 2001 includes within its ambit only such persons against whom a Financial Institution has recourse in the Event of default in repayment of finance provided by it i.e. the persons, upon whom obligation is created to repay in case of default in repayment and no one else and it is for this reason that section 9 of the Ordinance envisages only a financial institution and its customer as party to a banking suit. Thus, the persons who ultimately become liable to make payment to a financi al institution in case of a default in the repayment of finance are the persons who fall under the definition of "customer" and none else. 10. In the case reported as Haji Dad Muhammad v. MuslimCommercial Bank Limited (2011 CLD 785) a learned Division Bench of the Balochistan High Court has been pleased to hold as under: In the above definitions, the word "customer" is limited to a person to whom finance has been extended and includes a person on whose behalf a guarantee or letter of assurance has been issued by a financial institution. It means, the persons, other than defined in section 2(c) of the Ordinance, do not come within the definition of a "customer". Merely being account-holders of the respondents, the Appellants cannot be considered as customers. And the amount allegedly deposited by the Appellants also does not come within the purview of "finance". Similarly , any facility defined in the definition provided by a financial institution covers within the ambit of "finance". Hence, opening of an account and deposition of amount by an account holder would not be considered as finance. After the promulgation of Financial Institut ions (Recovery of Finances) Ordinance, 2001. Special Banking Court has been constituted. Section 9 of the Ordinance which provides the procedure to approach Banking Court, is reproduced as under:- 9. Procedure of Banking Court. (1) Where a customer or a financial institution commits a default in fulfilment of an obligation with regard to any finance, the financial institution or, as the case may be, the customer , may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath, in the case of a financial institution by the Branch Manager or such other officer of the financial institution as may be duly authorized in this behalf by power of attorney or otherwise. Reading of above section clearly shows that all the claims relating to advancement of "loan" or defaults in fulfilment of an obligation pertaining to any "finance", is triable by a Banking Court. The law has not permitted any other claim to be tried by a Banking Court. 11. In the case reported as Invest Capital Investment Bank Limited v. Messrs House Building Finance Corporation (2015 CLD 1828 ) one of us namely Muhammad Junaid Ghaf far, J., speaking for the bench has observed as under: 8. "Insofar as the legal objection. as raise d by the learned Counsel for the Appella nt with regard to the relationship of the respondent as a Customer in terms of section 2(c) of the 2001 Ordinance is concerned, we may observe that no such objection/plea was raised before the learned Banking Court, whereas no issue was framed in this regard. however , even otherwise, we are of the view that the Appellant which itself is an Investment Bank had sought funds/finance from the respondent and had issued a Certificate of Investment as a promissory note. It will not be out of place to mention that for a Suit to be maintainable before a Banking Court in terms of the 2001 Ordinance, there must exists a relationship of Customer and Financial Institution between the parties, whereas there must have been a finance facility , which must have been availed by the Customer and the dispute must have arisen between the Customer and the Financial Institution with regard to violation or breach of any obligation required to be performed or honored by any of them as defined in section 2(e) of the 2001 Ordinance, which again must be in respect of the Finance as defined in section 2(d) of the 2001 Ordinance. Though the learned Counsel for the
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Appellant has only raised the objection with regard to the extent that the respondent does not fall within the definition of Customer , hence, cannot file a Suit under the 2001 Ordinance before Banking Court and can neither claim markup or cost of funds. However , the matter is not that simple and in our view requires a deeper appreciation and understanding of the definition of Customer , Financial Institution and Finance as spelt out in section 2(a), (c) and (d) of the 2001 Ordinance and it would be advantageous to refer to the said provisions which read as under:- 9. Perusal of the aforesaid definition of section 2(c) of the 2001 Ordinance reflects that a Customer includes a person to whom finance has been extended by a Financial Institution and also includes a person on whose behalf a guarantee or letter of credit has been issued by a financial institution, as well as a surety or an indemnifier . From the aforesaid definition it emanates that there are in fact three categories of persons who can be called or termed as a Customer within the contemplation of the 2001 Ordinance. First, a person to whom finance is extended by a financial institution; second a person who avails non-fund based financial facility such as letter of credit; third and last a person who stands surety or indemnifier before a financial institution on behalf of a direct customer of the institution and in fact is somewhat different from a Customer of first two categories. These three categories of Customer as defined in section 2(c) of the 2001 Ordinance, have been elaborately explained by a learned Single Judge of this Court in the case of Procter and Gamble Pakistan (Pvt.) Limited, Karachi v. Bank AL-Falah Limited, Karachi and 2 others (2007 CLD 1532 ). 12. Similar view has been expressed by another Division Bench of this Court in the case reported as Pakistan General Insurance Company Limited v. Muslim Commercial Bank Limited (2015 CLD 600). In view of the above settled proposition of law we are unable to understand as to how the learned Banking Court could have come to the conclusion that the Suit of the Appellants was maintainable and they had a valid cause of action as well. The learned Banking Court while placing reliance on the cases referred to in the impugned judgment, has clearly fallen into error as the said cases had no relevance to the issue in hand before the Banking Court. Therefore, in our…
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