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Official Citation: 2024 CLD 1536
Court / Jurisdiction: Sindh High Court
Year of Decision: 2024
Decision Date: 2024-12-31
Parties: Standard Chartered Bank (Pakistan) Limited vs Mr. Yawar Faruqui and JUDGMENT
Ruling Summary: This decision was rendered by the Sindh High Court on 2024-12-31, officially reported as 2024 CLD 1536. In this matter between Standard Chartered Bank (Pakistan) Limited and Mr. Yawar Faruqui and JUDGMENT, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2024 CLD 1536
Court Name: Sindh High Court Judge(s): Muhammad Iqbal Kalhoro, Muhammad Osman Ali Hadi Title:Standard Chartered Bank (Pakistan) Limited vs Mr. Yawar Faruqui and
JUDGMENT
Reported As: 2025 SHC KHI 2082 Result: Appeal Partly Allowed Judgment
JUDGMENT Muhammad Osman Ali Hadi, J: The instant Appeal arises from Judgment dated 30.09.2013 ("the Impugned Judgment") passed by the learned Single Judge in Banking Suit No. B-26 of 2007, whereby the learned Single Judge decreed the Suit of Respondent No.1 (Plaintiff in the said Banking Suit), and Respondent No.1 was awarded Rs.125,491/- (along with markup) as well as damages of Rs.5,000,000/- (Rs. Five Million Only with markup at the rate of 14% per annum). 2. The brief facts of the case are that the Respondent No. 1 was a customer of the Appellant Bank, hence the Appellant issued him a credit card in the year 1998 (as per their own assertion which is denied by Respondent No. 1), bearing number 4921 2400 0032 3006 ("1st Card"). As per the Appellant, the Respondent No. 1 reported his credit card stolen, and a new credit card bearing number 4921 2400 0088 4213 ("2nd Card") was issued to him which was valid from July 2001 - May 2002. In between 4th - 8th July 2001 there were certain transactions conducted on the 1st Card (in Italy, which amounted to Rs.101,478.50/-). Respondent No.1 refuted the charges and stated that his credit card was lost / stolen during such time and the charges were not made by him, for which he had filed a complaint with the Appellant in July 2001. 3. The Appellant then conducted an investigation in 2001, stemming seven (7) uncertain transactions on the credit card, which were disputed by Respondent No. 1. After the investigation was concluded in the year 2001, 6 out of the 7 transactions were reversed in favour of Respondent No. 1. However, one transaction remained intact for the amount of Rs. 125,491/-. The Appellant
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(unknown to Respondent No. 1 at the time) also placed Respondent No. 1's name on Respondent No. 2 (SBP) CIB Defaulters List (for non-payment), labelling him as a defaulter. 4. Respondent No. 1 then submitted that towards the end of July 2006, he discovered two bank statements showing the Appellant had auto-debited his bank account for the sum of Rs.125,491/- on 26.04.2006. This was later found to have been done by the Appellant as a process of recovery, against what the Appellant termed as an "unsubstantiated claim' for losses on the credit card transactions incurred in the year 2001. 5. Respondent No. 1 being aggrieved by the actions of the Appellant filed the Banking Suit for declaration, injunction, recovery and damages (from which the Impugned Judgment stems) claiming, inter alia, recovery and damages for adverse health conditions caused by distress resulting from the actions of the Appellant. 6. The matter was taken up and the Appellant's leave to defend application was allowed, after which the following (consent) issues were framed: Whether the Defendant arbitrarily and unlawfully had placed the Plaintiff's name on the data check defaulters list? If so, what is its effect? Whether the Plaintiff's personal account was unlawfully debited by the Defendant on 14.04.2006 for credit card payment? If so, what is its effect? Whether the Plaintiff is not liable for the alleged Rs.125,000.00 claimed by the Defendant as credit card payment? Whether the Plaintiff's fair name, reputation and health has suffered on account of the banking malpractice of the Defendant? Whether the Plaintiff has cause of action in the present suit and it entitled to the relief/damages claimed in the suit? What should the decree be? 7. Evidence was led by the parties, after which final arguments were heard and the Impugned Judgment was passed whereby the said Suit was decreed in favour of the Respondent No. 1 / Plaintiff, which included damages to the tune of Rs.5,000,000/- with an 18% mark-up. The Appellant being aggrieved by the Impugned Judgement, preferred the instant Appeal. 8. Arguments were commenced by learned Counsel for the Appellant. He opened his arguments by submitting his version of the facts, referring to several documents available on File.[1] He firstly contended that the claim of Respondent No. 1 appears to have been granted by the Trial Court on the basis of defamation of character, for which the stringent process provided under the applicable Defamation Ordinance 2002 was never followed. He further stated that under the laws of defamation, a six-month time period exists within which to issue the alleged offending party notice and file a claim, which was not done. Counsel for the Appellant then referred to provisions under the Defamation Ordinance 2002, particularly sections 5, 9, 11, 13, 10 & 12, for which he explained the compensation available under defamation law provides certain checks and balances, which were not fulfilled by Respondent No. 1. He respectfully submitted that the learned Single Judge ought to have considered the same before granting damages, which has resulted in a per incuriam judgment. 9. He further stated that as per Respondent No.1's own pleadings, his alleged stress and mental torture was discovered in the year 2001, but he did not file any suit until the year 2007. He has referred to articles 22, 24 & 25 of the Limitation Act 1908 which provide a one (1) year limitation period from when an injury is committed or when alleged defamation occurred. He further stated that even under Article 28 of the Limitation Act 1908, the limitation period is only one (1) year from the date of the distress, and that was also time barred. He therefore concluded that even in this regard, under the general laws of limitation, the claims put forth by Respondent No. 1 were time
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barred as the Suit was filed belatedly in the year 2007, whereas the alleged incident / cause of action occurred in the year 2001. 10. Learned Counsel for the Appellant added that the Respondent No. 2 cannot be sued, as they are excluded from defamation as a banking institution, and as such the Suit filed was void. 11. Learned Counsel for the Appellant next contended that the Banking Court could not have granted the damages, as he stated that there are only specific conditions under which a banking court is competent to award damages, which did not apply in the instant matter. He stated that the damages awarded by the Banking Court in the Impugned Judgement were under a claim of tort law', for which the Banking Court does not hold any jurisdiction. He submitted if the Respondent No. 1 had any such claim against the Appellant, the same could only have been done through a civil suit for damages and not through a banking suit. 12. He continued that the evidence and documents provided by Respondent No. 1 are contradictory in nature and that Respondent No. 1 failed to provide any documentation to substantiate the medical (mental trauma, stress, heart problems etc.) injuries sustained by him, upon which the learned Single Judge has relied when granting damages. Counsel referred to an affidavit in evidence filed by Respondent No. 1,[2] as well as certain medical documents filed by Respondent No. 1,[3] for which he submitted that no medical practitioner report was produced, nor was any examination/ cross-examination conducted through any medical professional to verify the authenticity. He submitted it was incumbent upon the Trial Judge to first properly validate the Respondent No. 1's claim before granting any relief, which he states was not done, but that the learned Trial Court awarded damages without properly verifying the same. 13. He maintained that Respondent No. 1 had been using his credit card since the year 1998, with the 1st Credit Card ("1st Card") bearing number 4921 2400 0032 3006 and was issued a 2nd Credit Card bearing number 4921 2400 0088 4213 in July 2001 (expiring in May 2002) ("2nd Card"), after the 1st Card was blocked due to reports of it being stolen. He stated Respondent No. 1 had failed to pay various credit card bills and was informed that a recovery process against him would be initiated if he didn't clear his outstanding dues. 14. Counsel then submitted that even under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance 2001 ("FIO 2001") the Banking Court did not hold jurisdiction to adjudicate the matter and grant damages, as there was a clear absence of default in fulfilment of any financial obligation by the Appellant, which was sine qua non for bringing forward a banking suit. 15. In conclusion of his submissions, learned Counsel for the Appellant summarized that all-in-all, the Impugned Judgment has erred on the several legal grounds (highlighted above), and as such this Appeal ought to be allowed and the Impugned Judgement set aside. He submitted case law in support of his contentions.[4] 16. Learned Counsel for Respondent No. 1 controverted the submissions of the Appellant. He started out by referring to the fact that there were two separate credit cards which were issued by the Appellant, and pointed out that one ends with the number "4213' ("2nd Card") whilst the other card ended with number '3006' ("1 Card"). He submitted Respondent No. 1 never had the 1st Card, and any claims by the Appellant based on the 1st Card cannot be attributed to Respondent No. 1. He submitted Respondent No. 1 was only issued the 2nd Card, and that too in the year 2000 (not in the year 1998 as alleged by the Appellant). He further referred to Para No. 8 (1)(3) of the Memo of Appeal, which he says substantiates his submissions regarding the credit card. He referred to Para No. 2 of the Plaint[5] and the Leave to Defend Application filed by the Appellant[6] in which he submitted that there was a candid admission by the Appellant corroborating that the said credit card was issued by the Appellant to Respondent No. 1. 17. He next referred to Respondent No. 1's bank statement[7] to illustrate the issue of wrongful charges on the credit card, which were resolved in favour of Respondent No. 1. He submitted thesest
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issues were resolved in the year 2001, but were later belatedly and unjustly reopened by the Appellant, without giving any notice to Respondent No. 1. 18. He referred to Page 91 of the File which held the signature of Respondent No. 1 on the plaint. He then cross-referenced the same with Pages 115-119, which were signatures on the disputed transactions, and highlighted that there appeared a clear distinction between the signature in the disputed credit card receipt and that of Respondent No. 1, showing that the credit card receipts were not signed by Respondent No. 1, and the signature on them forged. He contended that no questions regarding discrepancies in the signature were ever raised by the Appellant in their cross-examination, and therefore the same stood as accepted. 19. He next referred to the examination-in-chief and cross-examination[8] of an officer of the Appellant who stated that the date of the alleged investigation conducted by the Appellant was in the year 2002, whereas the auto-debit through which the Appellant withdrew funds from Respondent No. 1's bank account was in April of 2006. He submitted such belated action showed the ill intentions and mala fide on part of the Appellant. 20. Counsel then referred to the examination-in-chief and cross-examination of another officer for the Appellant,[9] which he said showed a clear admission by the Bank themself that there was a discrepancy between the amount allegedly claimed, versus the amount taken from Respondent No. 1. He reiterated that the auto-debit from Respondent No. 1's account was done belatedly, after a period of 4 years and 9 months, as per the Appellant's own admission. 21. He next highlighted the examination-in-chief and cross-examination of a third officer of the Appellant,[10] which he stated also showed a clear admission that the auto-debit was carried out extremely tardily, whereas the inquiry conducted by the Appellant was completed in the year 2001. Learned Counsel submitted that such delayed actions by the Appellant in withdrawing funds from Respondent No. 1's account without any prior warning or providing any chance to defend himself was unlawful. 22. Counsel then referred to several letters of the Appellant[11] in which he stated no figure of Rs.1,25,491/- (i.e. the amount taken from Respondent No. 1) was shown anywhere, but there were other discrepant figures being claimed by the Appellant. Counsel contended that this discrepancy in numbers shows that the Bank did not have any clear amount to claim against Respondent No. 1, but rather the Appellant was conjecturing up random claims. 23. Counsel submitted that the Appellant themself admitted to having conducted an inquiry against Respondent No. 1 in the year 2001, and the matter stood resolved then. 24. Counsel pointed to a letter dated 08.10.2005 issued by the Appellant which stated that they had conducted a re-investigation, and had unilaterally decided to overturn the previous findings concerning Respondent No. 1's reporting of the lost credit card. Learned Counsel submitted that this re-investigation was done without any prior notice, and that the same contradicts the Appellant's own evidence which shows the investigation was finalized in December 2001 and could not have been reopened. 25. Counsel then pointed to the Appellant's pleadings[12] in which he stated that there was an explanation and admission from the Appellant about unilaterally withdrawing funds from Respondent No. 1's bank account through auto-debit, without seeking prior approval. He further submitted that Para Nos. 11 & 14 of the Leave to Defend Application clearly show an admission to this. He contended that the auto-debit system can only be applicable upon instructions by the client, and that the said system is not there to be utilized by the bank against a customer, without first seeking their permission. He submitted that in essence, auto-debit was created for ease of making payments, which facility was awarded to a client, and the purpose of such auto-debit was not for a bank to arbitrarily withdraw funds from clients' accounts as had been done by the Appellant.
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26. Learned Counsel referred to the Appellant's own terms & conditions[13] and referred to Clause 16[14] which holds that the Appellant's own terms provide for notices to first be issued to any card member before seeking a demand, which he submits was not done in the case of Respondent No. 1. 27. Counsel then referred to Clause 18 of the terms & conditions[15] which he says was relied upon by the Appellant against Respondent No. 1, as the said clause provides the Bank a right to set-off any amount against a card holder. He submitted that such clause is a lopsided clause, for which he referred to Black's Law Dictionary citing the said clause as a "in terrorem" clause, which is a threatening clause and is contrary to law, as no due process is followed and the principles of nature justice stand violated. 28. Referring to Para 10 of his Plaint,[16] he asserted that Respondent No. 1's name was added to the defaulters list (CIB) in the year 2001 by the Appellant. He pointed to the Appellant's response[17] which he stated shows that there was no denial by the Appellant in having placed Respondent No. 1's name on the defaulters list. He submitted that due to this, Respondent No. 1's credit rating suffered and he was unable to get further credit cards / finance facilities, causing him great distress. 29. He then showed a letter issued by Respondent No. 2[18] which stated that there was no legal requirement to place Respondent No. 1's name on the CIB, but he submitted the Appellant did the same purely out of maliciousness. 30. He pointed to Respondent No. 2's letter dated 06.11.2004[19] in which they directed that the disputed amount (between the Appellant and Respondent No. 1) should be reported as "amounts under dispute" and not "default". He stated that the Appellant had wrongfully placed Respondent No. 1 as defaulter, despite not having been required to do so, and only removed his name once Respondent No. 1 filed his Suit in June 2007. 31. He referenced a letter dated 01.05.2002 issued by Respondent No. 1[20] which he stated was a clear threat from the Appellant to Respondent No. 1. He submitted that the Appellant did not hold any authority to issue such a threatening letter, and the same was done contrary to law.[21] Referring to Para No. 9,[22] he submitted the Appellant has accepted they can report the name of any person to the credit bureau agency when such person is defaulter, which he stated was an admission on part of the Appellant of having (wrongfully) referred to Respondent No. 1 as a defaulter. 32. Counsel next pointed to a letter dated 29.03.2006 issued by ABN-Amro Bank[23] refusing Respondent No. 1 a credit card. Counsel submitted that such refusal was due to the illegal actions of the Appellant by putting Respondent No. 1 on the CIB List as a defaulter. 33. Learned Counsel then addressed the submissions put forth by the Appellant, that Respondent No. 1 failed to provide proper evidence regarding his ill health. Counsel referred to Respondent No. 1's examination and cross examination[24], and stated that there was no challenge by the Appellant to the health / doctor certificates / test reports filed by Respondent No. 1,[25] and therefore the same were to be accepted as the truth. 34. He next contended that the Appellant is now trying to setup a new case which is beyond the issues and the pleadings, and the same is not permissible. He stated the claims of the Appellant under defamation were never pleaded earlier, nor was the same a part of the issues framed or the pleadings, and therefore cannot be considered now. He referred to Order II Rule 2 of the Code of Civil Procedure of 1908, along with Section 7 of Financial Institution (Recovery of Finances) Ordinance 2002, and Section 73 of the Contract Act 1872 in support of his contentions, as well as various case law.[26] 35. Learned Counsel for the Appellant whilst employing his right of rebuttal, countered the arguments put forth by Respondent No. 1. He submitted that the prayer clause in the Suit[27] fell
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beyond jurisdiction of the Banking Court and could not have been granted. He next reiterated his previous stance that the Suit was hit by limitation, against which Respondent No. 1 failed to provide any grounds for condonation. 36. Counsel further referred to section 93-C Banking Companies Ordinance 1962, whereby he claimed the Appellant was legally protected from exchanging information with the Respondent No. 2, and no suit could have been brought nor could any damages be awarded against them in this regard. 37. He (again) referred to various documents on File, and stated that the 2nd Card cannot be denied by Respondent No. 1. He submitted that the 2nd Card was given as a replacement of the 1st Card, after the 1st Card was reported having been misused / stolen. 38. He further averred the Respondent No. 1 had a default history, and that the Respondent No. 1 was issued both the 1st and 2nd Cards, which he states was previously accepted by Respondent No. 1 (based on documents attached by the said Respondent No. 1 himself). He concluded by reiterating his initial arguments and stated the Impugned Judgement was erroneous and liable to be set-aside. 39. We have heard the extremely exhaustive arguments put forth by both the learned Counsels, and have perused the documents on File. 40. We shall first address the argument of the Appellant relating to the Suit being barred under the laws of limitation as well as per the Defamation Ordinance 2000 ("2000 Ordinance"), as the two points were argued interconnectedly. The plea raised by the Appellant pertaining to the law of defamation, and the process provided under the 2000 Ordinance not being followed are unfounded. Neither of these arguments were present in the Appellants' pleadings, nor were they taken by the Appellant at the trial stage. This appears an attempt by the Appellant to improve their case (post a judgement being passed against them) belatedly at the appellate stage, during oral arguments. Such new grounds cannot be taken verbally, particularly keeping in mind the Appellant had plenty of opportunity during the trial stage to raise the same, before the (consent) issues were framed. In the case of Muhd. Yaqoob v Mst. Sardaran Bibi[28] the Apex Court held: "8. Arguments heard. Record perused. At the very outset, we have noticed that the written statement filed by the Appellant was completely silent with regard to essential details of the oral sale transaction. Further, there was no mention of the value at which the land was allegedly purchased by the Appellant. It is settled law that a party is not allowed to improve its case beyond what was originally setup in the pleadings." (emphasis supplied). 41. In the case of Sardar Muhd. Naseem Khan[29] the Supreme Court held: "3. Heard. In election disputes, the petition (the election petition) and the reply thereto are the foundational documents, which are of utmost importance and significance. And undoubtedly for all intents and purposes these are akin to the pleadings of the parties in a purely civil litigation, which (pleadings) are structural in nature, whereupon the edifice of the case is rested. The election petition lays down the foundation of the claim of an election petitioner, whereas the written reply thereto of the respondent (returned candidate) is the underpinning of his defence. The importance of the pleadings and its legal value and significance can be evaluated and gauged from the fact that it is primarily on the basis thereupon that the issues are framed; though the pleadings by themselves are not the evidence of the case, the parties to a litigation have to lead the evidence strictly in line and in consonance thereof to prove their respective pleas. In other words, a party is bound by the averments made in its pleadings and is also precluded from leading evidence except precisely in terms thereof. A party cannot travel beyond the scope of its pleadings. It may be pertinent to mention here, that even if some evidence has been led by a party, which is beyond the scope of its pleadings, the Court shall exclude and ignore such evidence from consideration. Thus, it is clear that if any party to a lis wants to prove or disprove a case and some material has to
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be brought on the record as part of the evidence, which (evidence) otherwise is not covered by the pleadings, it shall be the duty of such party to first seek amendment of its pleadings." 42. Bolstered and bound by precedents, we find the submissions put forth by the Appellant relating to the Suit allegedly being barred under laws of defamation and / or limitation during arguments in the Appeal to be untenable, and the said submissions are rejected accordingly. 43. The next argument put forth by the Appellant which we shall address relates to the jurisdictional power of the Banking Court to award damages for mental stress, health etc. due to the Appellants actions in the instant case. In this regard, the Appellant has relied upon Section 9 of the Financial Institution (Recovery of Finances) Ordinance 2001 ("FIO 2001"), of which the relevant provisions are reproduced: "9. Procedure of Banking Courts.- (1) Where a customer or a financial institution commits a default in fulfillment of any 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". (emphasis supplied) (3) The plaint, in the case of a suit for recovery instituted by a financial institution, shall specifically state: (a) the amount of finance availed by the defendant from the financial institution; (b) the amounts paid by the defendant to the financial institution and the dates of payment; and (c) the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit. (4) The provisions of section 10 of the Code of Civil Procedure, 1908 (Act V of 1908), shall have no application for and in relation to suits filed hereunder. 44. The Banking Jurisdiction created under FIO 2001 is a special jurisdiction, created for the specific purpose of dealing with financial obligations arising between a 'customer' and a 'financial institution'.[30] 45. Section 9 (ibid.) opens the gateway to this special jurisdiction conferred under the FIO 2001. It provides that any default in a payment arising…
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