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Petitioner: MUHAMMAD ASHRAF VS Respondent: UNITED BANK LIMITED through President and 3 JUDGMENT
Court Name: Lahore High Court Judge(s): Syed Hamid Ali Shah Title:MUHAMMAD ASHRAF vs UNITED BANK LIMITED through President and 3
JUDGMENT
Reported As: 2009 CLD 1250 Result: Petitions allowed Judgment JUDGMENT ' SYED HAMID ALI SHAH, J.---Respondent-Banks introduced various profit schemes on deposits from the customers. One amongst the schemes is "Uni-Sona Deposit Scheme", which was introduced by United Bank Limited and its peculiar feature was 26% profit per annum, through which the investment becomes double within a period of five years and it becomes triple within 7- 1/2 years. Industrial Development Bank introduced a similar scheme called "Monthly Munafa Certificate" whereby profit rate offered to the investors was ranging from 11% to 14% per annum on the investments of 1 to 7 years. The profit was payable on the first of every calendar month. These schemes were widely publicized in print media and through pamphlets. 2. Respondent-Banks before the maturity of these Schemes, altered material condition, the rate of mark-up was reduced considerably which was accordingly, conveyed to the investors/customers, through letters. The rate of profit on UniSona Scheme was reduced to 12.7% on the investment/deposit of five years and 13.1% on the investment for 7 1/2 years. The rate of profit on Monthly Munafa Scheme was reduced to 10% with effect from 1-4-2003. The petitioners are investors/ customers of United Bank Limited and Industrial Development Bank of Pakistan under the above schemes and have assailed the unilateral reduction of profit in these petitions. Writ Petitions Nos.15330 to 15334 of 2003, Writ Petitions Nos.3200 of 2003 and 17840 of 2004 involve common questions. This single judgment will dispose of the above petitions as these have identical facts and present common question of law for determination.
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3. Malik Saeed Hassan, Senior Advocate representing the petitioners in Writ Petitions Nos.1530 to 1532 of 2003, contended that respondent Banks reduced the rate of profit, relying upon the condition of contract that Bank can alter and vary the rate of profit. He added that there are no such condition in the contract and even if there is such condition it is such condition in unconscionable and discriminatory and thus not legally enforceable. Learned counsel supported this contention by referring to the cases of "S. Tufail Ahmad v. Water and Power Development Authority and another" 1976 SCMR 106. "The Chairman Electricity, WAPDA Lahore and 2 others v. Ch. Muhammad Shafi Advocate PLD 1976 SC 254 and Karachi Gas Co. Ltd. v. Dawood Cotton Mills Ltd. PLD 1975 SC 193. Learned counsel contended that a concluded contract between the parties can neither be rescinded nor altered unilaterally. The rescission is legally permissible when the contract so stipulates. The alteration is enforceable when the parties to agreement mutually decide so through a novated agreement, as per the provisions of section 62 of the Contract Act, 1872. He referred to well-known maxim "Pacta Sanct Sarvanda" i,e, agreement must be honoured and referred to the cases of "Ittehad Co. v. The Commissioner, Faisalabad and 3 others" PLD 1994 Lah.29, to support this contention. ' Learned counsel contended that petitioners do not seek enforcement of an obligation, under the contract but their grievance pertains to the breach of statutory obligations of the State. Petitioners assert their rights against the State. Learned counsel supported this contention by referring to the cases of Messrs Walk Orient Power and Light Limited Gulberg III, Lahore v. Government of Pakistan, Ministry of Water and Power through its Secretary Islamabad and 2 others 1998 CLC 1178, M.H. Abidi v. The State Life Insurance Corporation 1990 MLD 563 and India Thermal Power Ltd. v. State of M.P. And others AIR 2000 SC 1005. He went on to argue that public limited company which is not a statutory body or Government controlled body and performs its functions for benefits of its members, may not be regarded as 'Person' performing functions in connection with affairs of Federation and thus such company may not be amenable to writ jurisdiction, yet offices held by Directors and Chief Executive of the Company, must be regarded as public offices, which are of greatest interest to the public. Holder of such offices fall within the purview of Article 199 of the Constitution of Islamic Republic of Pakistan. He in this regard, has referred to the dictum of law laid down by the Honourable Supreme Court of Pakistan in the case of Salahuddin and 2 others v. Frontier Sugar Mills and Distillery Ltd., Tokht Bhai and 10 others PLD 1975 SC 244. Learned counsel referred to the cases of Messrs K.S. Sulemanji Esmailji and Sons v. Messrs M. Sulemanji and Company Ltd 1986 CLC 775, Societe General v. Registrar of Trade Marks 2002 CLD 37, Messrs Mehran Ghee Mills (Pvt.) Limited and others v. Messrs Chiltan Ghee Mill (Pvt.) Limited and others 2001 SCMR 967, Messrs Tri-Star Industries (Pvt.) Ltd. v. Messrs Trisa Bursten Tabrik A.G., and others 1999 YLR 638, Standard Finis Oil Company and others v. National Detergents Ltd. And 2 others 1984 CLC 781, Messrs Chas A. Mendoza v. Syed Tausif Ahmed Zaidi and 2 others PLD 1993 Karachi 790, Messrs Virendra Dresses, Delhi v. Messrs Varinder Garments, Delhi AIR 1982, Delhi 482, Insaf Soap Factory v. Lever Brothers Prot Sunlight Ltd. PLD 1959 (W.P.) Lahore 381 and J. N. Nichols (Vimto) PLC A. Company Incorporated in the United Kingdom v. Mehran Bottlers (Pvt.) Ltd. Karachi. PLD 2000 Kar;192, wherein the Courts granted injunction on the principle that close resemblance of two trademarks will cause confusion and is likely to deceive unwary buyers. Learned counsel submitted that deception to public at large, whether under Trade Mark Act or any other special law like Banking laws has been addressed by the Courts to save public from being cheated. Learned counsel emphasized that any act of deception requires intervention of the Court and the Courts in such situations, are to safeguard the interest of public. While placing reliance on the cases of S.Tufail Ahmad v. Water and Power Development Authority and another 1976 SCMR 106 and The Chairman, Electricity WAPDA, Lahore and 2 others v. Ch. Muhammad Shafi, Advocate PLD 1976 SC 254, learned counsel contended that term in the contract, allowing only one party to increase rates unilaterally is
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unconscionable and discriminatory term and such term of contract, is not legally enforceable. While referring to the case of The Muree Brewery Co. Ltd. v. Pakistan through The Secretary to Government of Pakistan, Works Division and 2 others PLD 1972 SC 279, it was contended that High Court can exercise its constitutional jurisdiction, when impugned action is attacked, on the ground that it was without authority, partial, unjust and mala fide. Rule that constitutional jurisdiction is not exercised when alternate remedy is available, is a rule by which High Court regulates its jurisdiction and not a rule of law. Learned counsel submitted with vehemence that though the enforcement of contractual obligation is not permissible in writ jurisdiction but the authorities when act unfairly, arbitrarily and discriminately, the High Court can interfere in its constitutional jurisdiction Moreso, when impugned action offends principles of Natural Justice. Learned counsel in support of his contention placed reliance on the cases of Messrs Huffaz Seamless Pipe Industries Limited v. Sui Northern Gas Pipelines Ltd. And others 1998 CLC 1890, Messrs Ghaudhri Brothers v. Province of Punjab through Secretary/Chief Purchase Officer, Industries and Mineral Development Department Lahore and 2 others 1993 MLD 2437, Syed Caterers v. Government of Pakistan through Secretary Ministry of Railways, Government of Pakistan, Pakistan Secretariat, Islamabad -and 5 others 2000 MLD 265, Messrs Namil and Company, Lahore through its Proprietor v. Government of Pakistan through Secretary Communication and Works Department Civil Secretariat, Lahore and 4 others 2003 CLC 1711, Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport Karachi and others 1998 SCMR 2268, and Humayun Iftikhar Chishti v. Punjab Local Council Election Authority and others 1999 CLC 79. 4. Mr. Imran Raza Chadhar, Advocate, learned counsel for petitioners in Writ Petitions Nos.11148 of 2003, 15330 to 15334 of 2003 contended that petitioners, in response of public advertisement published in National Press, opted for the Scheme of respondent Bank and invested in Uni-Sona Scheme. The investment, according to the advertisement and brochures, gets double in five years and triple in 7 1/2 years. Respondent Bank made unilateral reduction in profit and the petitioners served upon the respondent legal notice which remained unreplied. Learned counsel contended that respondent cannot deviate from clear stipulation and any unilateral change in the conditions of the contract is illegal. He went on to argue that respondents justified the impugned act (reduction on the plea that profit has been reduced on the basis of direction of State Bank of Pakistan. He added that State Bank of Pakistan vide Letter No,BPD(PV-35)/602/7512 of 2004 dated 14-6-2004, has informed that no instruction was issued to United Bank Limited to reduce the profit rate. Learned counsel then contended that Uni-Sona Scheme was introduced by the Bank, when it was not privatized and it was privatized with the condition that it will own all its existing liabilities and commitments. It was argued that the writ petition is competent against United Bank Limited. He further added that State Bank of Pakistan regulates and controls private Banks in Pakistan. The Banks which are under the control of State Bank of Pakistan, are thus amenable to the writ jurisdiction. It was submitted that the respondent-Bank had added "PLS" in the relevant condition subsequently while terms and conditions of the Scheme are governed according to advertisements and the brochures. Learned counsel submitted that reduction of profit was assailed before this Court in Writ Petition No,14095 of 2003 titled "Parveen Akhtar v. Zonal Chief U.B.L. And Writ Petition No,4095 of 2003 titled Muhammad Javed Anjum v. Industrial Development Bank of Pakistan. The writ petitions were allowed. The Intra-court Appeal (I.C.A. No,68 of 2004) against the decision in Writ Petition No,4095 of 2003, has also met the fate of dismissal. Learned counsel in support of his contentions referred to the cases of Mahabir Auto Stores and others v. Indian Oil Corporation and others AIR 1990 SC 1031, Khumari Shrilekha Vidyarthi and others v. State of U.P. And others AIR 1991 SC 537, Joginder Singh v. The Financial Commissioner, Revenue and Secretary to Government of Punjab and others AIR 1995 Punjab and Harayana 138 and The D.F.O South Kheri & others v. Ram Sanehi Singh AIR 1973 SC 205 (from Indian jurisdiction). He also placed reliance on
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the cases of Wak Orient Power and Light Limited (supra), Ch. Muhammad Latif v. I.G. Sindh 1995 PLC (C.S)1061, Messrs Pacific Multinational (Pvt.) Ltd v. Inspector-General of Police, Sindh Police Headquarters and 2 others PLD 1992 Karachi 283, The Majlis-e-Intizamia Masjid Ghulam Muhammad Abad Colony, Lyallpur v. The Secretary to Government of West Pakistan, Communication and Works Department, Lahore PLD 1975 SC 355 and Muhammad Ashraf Ali v. Muhammad Naseer and 2 others 1986 SCMR 1096, (from out own jurisdiction). 5. Mr. Jawaad Mahmood Pasha, Advocate, learned counsel for the petitioners (Writ Petition No,3200 of 2004) contended that Mahana Munafa Certificate (MMC) has no relevance with profit and loss sharing. Both are distinct transactions. Former is the promise or an undertaking to pay fixed return or profit per annum, while the latter is a transaction where rate of return is calculated on the basis of accrued profit or loss. In the case of M.M.C., the rate or return is predetermined, while in the case of PLS account the rate of mark-up is not anticipated or agreed upon in advance. An account- holder can enter into Banker and customer relationship by opening Bank account, while the Scheme of M.M.C., is not restricted to an account holder only. Learned counsel on the question of competence of constitutional petition for enforcement of contractual obligations referred to the cases of Messrs Ittehad Cargo Service and 2 others v. Messrs Syed Tasneem Hussain Naqvi and others PLD 2001 SC 116, Messrs Airport Support Services (supra), Bayindar Insaat v. Pakistan through Ministry of Communications and 3 others PLD 2001 Lah.426 and Messrs Wak Orient Power and Light Limited through Chief Executive, Lahore v. Government of Pakistan, Ministry of Water and Power through Secretary, Islamabad and 2 others 1998 CLC 1178. Learned counsel submitted that constitutional jurisdiction of this Court can competently be invoked against a banking company, in private sector, and referred to the case of Network Television Marketing Ltd. v. Government of Pakistan and another 2001 CLC 681 and unreported judgment in the case of Parveen Akhtar v. Zonal Chief U.B.L. (W.P.No,14095 of 2003); in support of his contention. Learned counsel referred to the case of Javed Anjum v. Industrial Development Bank of Pakistan 2004 CLD 520, ,to contend that the letter (assailed in these petitions) whereby the profit rate was reduced, has already been set aside and the judgment was upheld in I.C.A. No,68 of 2004. Learned counsel referred to section 2(c) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and contended that a person, who has invested in Mahana Munafa Certificate, does not fall within the definition of customer. Where there exists no relationship of Banker and customer, the jurisdiction of Banking Court is ousted. The petitioners cannot institute suit in the Banking Court and the only adequate remedy which is available to the petitioners, is to invoke Extraordinary Constitutional jurisdiction of this Court. ' Mr. Imran Aziz Khan learned counsel for the respondent, on the other hand has fully supported the impugned action. Learned counsel submitted that schemes like Unisona are introduced keeping in view the existing rates of mark-up and the guidelines of State Bank of Pakistan. Whenever the rates are altered, the changes are brought in the earlier schemes to bring uniformity in various banking facilities and accounts. A customer is informed at the time when he purchases certificates that the rate of profit is variable. He added that not only that an information is passed on to customer, when he opens accounts but it is also expressly mentioned in the account opening from that rate of profit is subject to change. The petitioner at the time of purchase of certificates knows this, fact and is, therefore, estopped by his conduct to raise objection or contest the change in rates. He submitted that banking in today's world has become complex and change in rate of interest/profit, is common and universally acknowledged. The Banks in Pakistan, in order to keep compatibility and conformity with the banks abroad, have to make the policies which are adopted by the banks globally. Learned counsel placed on record, recent corporate record of the company, including Form XXIX to show that management of U.B.L, after it's privatization, is in the hands of private individuals. The management, control and funding is in the hands of private individuals, therefore, the actions of the Bank cannot be called in question, in writ jurisdiction. Learned counsel submitted
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that U.B.L is private commercial enterprise, the contract is between two individuals and it's terms cannot be enforced through constitutional jurisdiction of High Court. Learned counsel went on to argue that questions raised in these petitions, involve factual controversy, which cannot be determined in the constitutional jurisdiction. The relief claimed by the petitioners, rests on the resolution of controversy, which requires evidence to be recorded, for it's proof. The petitioners were aware of the condition of charge in the rate of profit they signed account opening form the conditions mentioned in the account opening form were brought to their notice when they purchased certificates, are questions of fact and without determination of these questions the petitioners cannot establish their claim. Learned counsel in support of his contentions has referred to the cases of Messrs Momina Motor Company v. The Regional Transport Authority, Dacca PLD 1962 SC 108; Ghulam Moheyud-Din v. Secretary Industries, Punjab 1996 CLC 2041; Riaz Ahmed Malik v. Mst. Ghazala Riaz Malik 1993 CLC 1834; Tanvir Iqbal Siddiqi v. The Principal, Overseas Pakistan Foundation (OPF) Girls College, Islamabad 1994 SCMR 958; O.S. Mollasse Corporation v. Secretary Industries and Mineral Development Department, Government of Punjab PLD 1997 Lah.546; Abid Hussain v. Board of Trustees Abandoned Properties 2000 CLC 1497; Maqsood Ahmed Toor v. Red of Pakistan 2000 SCMR 928; Barkat Hussain v. Sardar Misri Khan PLD 1992 SC (AJ&K) 45, Noor Jehan Shah v. Pakistan Defence Officers Housing Authority 1997 MLD 2261 Syed Wasey Zafar v. Government of Pakistan PLD 1994 SC 621. Learned counsel contended that the Banking business in Pakistan, even in case of a Private Bank, is controlled by State Bank. The control by State Bank, does not render the functions of private Bank as functions performed in connection with the affairs of Federation. The constitutional jurisdiction can be invoked when functions of the person against whom the grievance is raised, performs functions in connection with the affairs of Federation, a Province or a Local authority. The respondent-Bank does not perform such functions. Learned counsel supported this contention by referring to the cases of Salahuddin v. Frontier Sugar Mills and Distillery Ltd. PLD 1975 SC 244(273) and Sayeda Sayeeda Bano v. Province of East Pakistan PLD 1969 Dacca 352. Learned counsel contended that unilateral increase of rate of energy, was assailed on the ground that increase of rates is unconscionable and discriminatory. The plea was rejected by the Honourable Supreme Court in the case of Syed Tufail Ahmed Shah v, WAPDA 1976 SCMR 106. Learned counsel added that petitioners have raised same plea in these petitions. The issue has since been resolved in the case of Syed Tufail Ahmad shah (Supra) and resolved issues, cannot be allowed to be agitated time and again. Learned counsel then submitted that various remedies were available to the petitioners e.g. Civil suit, representation before State Bank and complaint before Banking Ombudsman. Petitioners approached this Court in its constitutional jurisdiction without availing the other efficacious remedies. These petitions are thus incompetent and in support of his contention, placed reliance on the case of Muhammad Sharif v. The Settlement Commissioner (Lands) Lahore. 1968 SCMR 1164. Learned counsel referred to the case of Chairman Electricity WAPDA, Lahore v. Ch. Muhammad Shafi, Advocate PLD 1976 SC 254 to contend that rate of profit can be reduced even without notice, when the original agreement does not contemplate any such notice. Learned counsel summed up his argument, with the contention that petitioners' case do not fall within the preview of Article 199 of the Constitution, merely on the ground that when the certificates (Unisona) were purchased, U.B.L. Was a nationalized Bank. Learned counsel emphasized that status of a person that he was performing functions in connection with the affairs of Federation, can be determined from the date on which the writ is filed against such person. Learned counsel supported his contention by referring to the case of Sardar Zaheer Ahmed Khan, Advocate v. Mohtarma Benezir Bhutto 1994 MLD 397. The learned counsel for the other respondents adopted the arguments of the Imran Aziz Khan Advocate. 6. Heard learned counsel for the parties and record perused.
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7. Identical issue of withdrawal of rate or profit at agreed rate and unilateral reduction of rate of return, was assailed in Writ Petition No,14095 of 2003 titled Mst. Parveen Akhtar v. Zonal Manager U.B.L., which was disposed of with the direction to respondent-Bank to redress the grievance of the petitioner, on a fresh representation to be filed within one week of the order and granted one month's time to the Bank for the compliance of the order. Respondent-Bank assailed the order of learned Single Judge in chambers, before the Honourable Supreme Court of Pakistan in Civil Petitions No,3216 of 2003. The Honourable apex Court, keeping in view pendency of various petitions on the similar issue and the fact that vital issue on the questions of maintainability of writ petition, enforceability of contractual obligation in writ petition and nature of transaction, ought to have been considered but remained unattended, converted the petition into appeal. The appeal was accepted, vide judgment dated 8-1-2007 and following points were formulated by the apex Court for fresh decision after hearing the parties:-- (i) Whether the contractual obligations, between the private parties could have been enforced by invoking the Constitutional jurisdiction as conferred upon the High Court under Article 199 of the Constitution of Islamic Republic of Pakistan? (ii) Whether the writ could have been issued against United Bank Limited being a public limited company, which is not controlled by the Federal Government or Provincial Government and having nothing to do with the affairs of the Federation, a Province or Local Authority? (iii) Whether the investment was made by the respondent on loss and profit share basis or otherwise? 8. The above formulated points, need closer examination for their determination. I will take up these points in the later part of this judgment one by one, although the above direction of the Honourable Apex Court, was in the matters, which are not before me. 9. I will first advert to the nature of transaction between the parties, as to whether it is on "Profit and loss share basis" or otherwise. Mahana Munafa Certificate (MMC) Scheme of Industrial Development Bank of Pakistan (IDBP) and Uni-Sona Scheme of United Bank Limited, were advertised widely through print media and also through brochures. The terms on which, the investment from depositors, was invited, was monthly payment of profit at a fixed rate for a fixed term. The features of the Investment Schemes are distinct from PLS System, which can be ascertained from the following comparison:-- S. No. MMC/Uni-Sona Scheme Profit Loss Sharing System 1. The Bank at the time of purchase of Certificate/Investment, undertakes to pay the profit at a specified rate.Profit is calculated at the end of year and concept of pre-determined rate of profit is alien to this system. 2. The profit payable to the depositor is predetermined and is specifically mentioned in the certificate.The profit or loss cannot be definitely anticipated or agreed upon in advance. The rate of profit is declared at the end of each closing, which is normally half yearly. 3. The scheme does not make the depositors, to share loss. The terms as advertised and containedSharing of loss in the event it is declared at the end of closing, is precondition.
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in the certificate, do not specify sharing of loss. 4. The Certificate (MMC or Uni-Sona) by itself is a concluded contract.The PLS accounts are operated, on the specified terms and conditions in the Account Opening Form. 5. Frequent transactions in the investment are not possible.The account-holder can frequently make deposits and withdrawals in the account and the profit is worked out on daily product basis. 6. Investment can be made in the scheme, by a person who is not even an account-holderTo enter into relationship of customer in the profit and loss account, it is mandatory for the customer to be an account-holder. 7. The profit is payable without further distinction, on the completion of the period.Accounts are further: distinguished as PLS (Saving), PLS (Term Deposit). In the case of former, profit is declared after six months, while in the latter case, the profit is declared at the expiry of term. 8. Withdrawal is permissible as a whole on the investment and not in piecemeal.Partial withdrawals are permissible from the balance. 10. The above comparison reflects that deposits in the Schemes/Certificates and Profits and Loss sharing accounts are two different Banking facilities. These cannot be clubbed with one another. The stance of the Bank that it is provided in the "Account Opening Form", that terms of Scheme are alterable and rate of profit can be varied, is not convincing. The investor in the Schemes, can invest in the scheme, without being account holder. The "Account Opening Form" is not exclusively for the investors in…
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