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Petitioner: YAWAR FARUQUI VS Respondent: Messrs STANDARD CHARTERED BANK LTD. and another
Court Name: Sindh High Court Judge(s): Nadeem Akhtar Title: YAWAR FARUQUI vs Messrs STANDARD CHARTERED BANK LTD. and another Case No.: Banking Suit No,B-26 of 2007 Date of Judgment:2013-09-30 Reported As: 2014 CLD 1 Result: Suit decreed
JUDGMENT
JUDGMENT ' NADEEM AKHTAR, J.---This Suit has been filed by the plaintiff under section 9 of the Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), against the defendants for declaration, injunction, recovery of money and damages. 2. The relevant facts of the case, as averred in the plaint, are that the plaintiff had been banking for several years with defendant No,1 bank and its predecessor; namely, Standard Chartered Grindlays Bank Limited. The plaintiff had been maintaining a personal bank account No,08871056201 with the Clifton Branch of defendant No,1, and he was also issued a Visa credit card bearing No,492124000084213 by defendant No,1 sometime in the year 2000. According to the plaintiff, he never obtained loan from any bank, and he never committed default in respect of any transaction that was carried out through his said credit card. In the end of July 2001, the plaintiff discovered that his credit card had been blocked, and upon enquiry, he learnt that about seven (7) transactions involving substantial amounts had been charged by defendant No,1 wrongfully against his credit card in July 2001. When the plaintiff disputed the said transactions and requested defendant No,1, to reverse the amounts thereof, defendant No,1 refused to do so by insisting that the plaintiff, had reported loss of his credit card. Vide letters dated 3-5-2002 and 15-6-2002; defendant No,1 threatened the plaintiff that he will be declared as a defaulter. It was further averred by the plaintiff that in the year 2006, he applied for a credit card facility to ABN AMRO Bank Limited, who refused to grant such facility to the plaintiff, as his name had been placed in the year 2001 on the defaulters' list (C.I.B.)/'Data Check List', on defendant No, l's advice to defendant No,2. It was also averred by the plaintiff that in the end of July 2006, he discovered from the statement of account issued by defendant No,1 in respect of his personal bank account No,08871056201, that an amount
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of Rs,125,491 was debited on 26-4-2006 by defendant No,1 from his said personal account towards 'credit card credit payment', illegally, unauthorizedly, and without any notice to him. 3. In the above background, this Suit was filed by the plaintiff praying that forwarding his name by defendant No,2 on the advice of defendant No,1 for placing the same on the defaulters' list be declared as unlawful, defamatory, and without lawful authority, as he is not a defaulter; permanent injunction be granted restraining the defendants from displaying the plaintiffs name on the defaulters' list, and/or from declaring him as such; mandatory injunction be granted directing defendant No,1 to rectify the plaintiffs personal account to the balance existing on 25-4-2006 inclusive of Rs,125,491, which was unlawfully and arbitrarily debited therefrom by defendant No,1 as purported credit card payment; a decree be granted in the sum of Rs,125,491 with interest thereon at the rate of 18% per annum from 26-4-2006; and, a decree for damages be granted against defendant No,1 in the sum of Rs,100.000 million with interest thereon at the rate of 18%. 4. Defendant No,1 filed, application bearing C.M.A. No,8673 of 2007 in the form of written statement under section 10 of the Ordinance of 2001, seeking leave to defend the Suit. The averments and allegations contained in the plaint as well as the claim made thereunder by the plaintiff, were denied by defendant No, 1. It was averred by defendant No,1 that the plaintiff himself reported the loss of his credit card to defendant No,1; the transactions disputed by the plaintiff did take place as his credit card was used for the same; since the plaintiff was liable to pay the amounts of the said transactions, defendant No,1 was fully justified in charging and debiting the same from his personal bank account as per the agreed terms and conditions; the name of the plaintiff was rightly placed on the defaulters' list in compliance of the Prudential Regulations of the State Bank of Pakistan/defendant No,2; the plaintiffs claim for damages was baseless; and, the Suit is mala fide. In reply to the defendant No, l's C.M.A. No,8673 of 2007, a detailed replication was filed by the plaintiff, refuting the averments and allegations made therein by defendant' No,1, and reiterating the contents of his plaint. No application for leave to defend the Suit was filed by defendant No,2/State Bank of Pakistan. 5. Vide order passed on 8-5-2008, it was observed by the Court that, as damages have been claimed in this Suit and the dispute between the parties appeared to be that of factual in nature, the same could not be decided without evidence. Accordingly, by the said order dated 8-5-2008, leave was granted to defendant No,1 to defend this Suit, subject to the condition that the disputed amount of Rs,125,491 was to be deposited by defendant No,1 with the Nazir of this Court within four weeks; the Nazir was directed to deposit the said amount in any profit bearing Government scheme; and, the fate of the said amount was subject to the final decision of this Suit. The said amount was deposited by defendant No,1 with the Nazir in June 2008, but the same was invested by the Nazir in September 2012. On 15-10-2008, the Issues proposed by the plaintiff were adopted by the Court with the consent of the learned counsel for defendant No,1, which are reproduced in the subsequent paragraphs. 6. The plaintiff examined himself, and produced his affidavit-in-evidence (Exh. P/1); notice dated 2- 2-2009 to the defendants under Order XII, Rule 8, C.P.C. (Exh. P/2); copies of his credit card and CNIC (Exh.P/3); discharge summary dated 10-8-2001 issued by South City Hospital along with his ECG and Cardiac Catheterization Laboratory Report dated 7-8-2001 issued by Cardiac Care Centre (Exh.P/4); his credit card account statement dated 30-7-2001 issued by defendant No,1 (Exh.P/5); the Merchants' slips/receipts in respect of the disputed transactions (Exh.P/6); the defendant No, l's letters dated 3-5-2002, 15-6-2002, 8-10-2005 and 15-8-2006 (Exhs.P/7, P/8, P/9 and P/10, respectively); letter dated 29-3-2006 addressed to him by ABN AMRO Bank N.V. (Exh.P/11); statement dated 30-6-2006 of his personal bank account (Exh. P/12); legal notice dated 21-8-2006 issued on his behalf to defendant No,1 and its Manager (Exh.P/ 13); his letter dated 18-1-2007 to the Governor and Deputy Governor, State Bank of Pakistan (Exh.P/14); and, reply dated 6-9-2006 by the
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defendant No, l's counsel (Exh.P/15). The plaintiff was cross-examined by the learned counsel for defendant No,1, whereafter, he closed his side. He was not cross-examined by defendant No,2. 7. Defendant No,1 examined three witnesses; namely, Mr. Aijaz Hussain, its Manager Litigation (D.W.1), Mr. Muhammad Kashif Khan, its Charge Back Analyst (Dispute Resolution Analyst) (D.W.2), and Mr. Asif Iqbal Siddiqui, its Manager Fraud and Risk Management Unit (D.W.3). D.W.1 produced BSD Circular No,16 of 2004 dated 6-11-2004 issued by the State Bank of Pakistan (Exhs. D/1 and D/2); letter dated 31-1-2004 addressed by Data Check (Pvt.) Ltd. To the Governor State Bank of Pakistan (Exh.D/3); BSD Circular No,6 dated 8-5-2006 issued by the State Bank of Pakistani along with Note on 'Legal and Regulatory Frame Work for Credit Reporting' (Exh.D/4); Agency Agreement dated 19- 5-2000 between ANZ Grindlays Bank Limited and Data Check (Pvt.) Ltd. (Exh.D/5); Prudential Regulations for Consumer Financing issued by the State Bank of Pakistan (Exh.D/6); credit card application form duly signed by the plaintiff, along with copy of his NIC (Exhs.D/7, D/8 and D/9); the defendant No,l's pre-screener checklist (Exh.D/10); the defendant No, l's terms and conditions for issuance of credit cards (Exhs.D/11, D/12 and D/13); the defendant No, l's terms and conditions for opening of bank accounts (Exhs.D/14, D/15, D/16 and D/17); and, e-mails (Exh.D/19). D.W.2 and D.W.3 did not produce any document. All three witnesses produced by defendant No,1 were cross- examined by the plaintiff, whereafter defendant No,1 closed its side. Defendant No,2 did not produce any evidence. 8. Mr. Yawar Faruqui, the plaintiff, submitted that he never obtained loan from any bank, nor did he ever commit default in respect of his credit card ; he was issued only one Visa credit card bearing No,492124000084213 (Exh.P/3) by defendant No,1, which was never lost by him, nor was any such loss reported by him to defendant No,1; the said credit card always remained in his safe custody, and the same was voluntarily surrendered by him before this Court on 8-10-2007 for depositing the same with the Nazir of this Court; he did not use his said credit card for any of the disputed transactions; the copies of the merchants' slips/receipts (Exh.P/6) in respect of the disputed transactions provided to him by defendant No,1, did not bear his signatures; and the same were completely different from his signature; and, all the disputed transactions were carried out through another credit card bearing No,4921240000323886, which was not issued in his name, nor was it owned by him. He specifically pointed out that defendant No,1 admittedly did not produce the other two credit cards allegedly issued in his name. He contended that all the disputed transactions, which were reflected in the statement issued by defendant No,1 on 30-7-2001 (Exh.P/5), were allegedly carried out with different merchants in different parts of southern Italy in a very suspicious manner within a short span of four days from 4-7-2001 to 8-7-2001. He pointed out that on his complaint and protests, six out of seven disputed transactions were resolved/rectified/reversed by defendant No,1 in his favour, and such partial rectification was confirmed by defendant No,1 in the same statement dated 30-7-2001 (Exh.P/5) individually against each of the said six transactions in the words "DISPUTE RESOLVED IN CH FAVOR". He further pointed out that the letters "CH" used by defendant No,1, stand for 'card holder'. He submitted that, despite confirming resolution/ rectification/reversal six out of seven disputed transactions, defendant No,1, without any justification, issued letters dated 3-5-2002 (Exh.P/7) and 15-6-2002 (Exh.P/8), threatening to declare him as a defaulter. He further submitted that he kept on calling upon defendant No,1 through letters, reminders and legal notices to rectify the seventh disputed transaction, but defendant No,1 maintained its illegal stance. He contended that as defendant No,1 had realized its mistake by resolving/rectifying/reversing the disputed transactions, and the disputed amount was never claimed from him by defendant No,1, the dispute stood resolved/concluded, due to which the banking business continued between the parties. 9. Mr. Yawar Faruqui submitted that by debiting his credit card account with illegal charges, issuing incorrect bills in pursuance thereof, and by blocking his credit card, defendant No,1 acted with
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gross negligence and failed to perform its obligations towards him. He strongly alleged that such gross negligence and hostile attitude on the part of defendant No,1, and its failure in performing its obligations towards him, he suffered immense stress and mental torture, which resulted into an adverse cardiac condition causing irreparable damage to his heart. It was specifically alleged by him that, as a result of the above, he had to undergo the procedure of angioplasty in emergency, whereby stent was inserted into his heart. In this regard, he referred to and relied upon the hospital's discharge summary and medical reports produced by him as Exhibit P/4. 10. The plaintiff further submitted that in the year 2006, he applied for a credit card facility to ABN AMRO Bank Limited, who, vide Exhibit P/11, refused to grant such facility to him ; and, it came as a shock to him that, without any intimation or notice to him, his name had been placed in the year 2001 on the data check defaulters' list (C.I.B.) on the advice of defendant No,1 to defendant No,2. He argued that after admitting that the disputed amounts had been wrongfully charged against his credit card and after reversing such charges, defendant No,1 was not Justified at all to place his name on the said list. He submitted that the said list is accessible to the public, and the news of placement of his name on the defaulters' list was known to all in banking circles. It was alleged by him that this caused not only a rude shock to him, but was also a direct adverse smear on his fair name and reputation as, being a senior Advocate of the Supreme Court and High Courts, he is well known in the legal fraternity having held prestigious posts of Joint Secretary and Honorary General Secretary of the Sindh High Court Bar Association, Karachi. It was urged that despite his protests, defendant No,1 did not cooperate, and his name was not removed from the said list. He submitted that his name was removed from the said list by defendant No,1 under the orders of this Court after fling of this Suit by him, therefore, his name remained on the said, list for over six years without his knowledge and without any justification. It was alleged by the plaintiff that such action on the part of the defendants put his health and reputation at stake; caused irreparable damage to his reputation, goodwill and integrity amongst the legal fraternity and public at large, and above all to his health; and, also caused huge embarrassment and humiliation to him as he had been stigmatized and labeled by defendant No,1 as a defaulter. 11. It was stated by the plaintiff that in the end of July 2006, he discovered from the statement of account (Exh.P/12) issued by defendant No,1 in respect of his personal bank account No, 08871056201, that an amount of Rs,125,491 was debited on 26-4-2006 by defendant No,1 from his said personal bank account towards 'credit card credit payment'. It was urged by him that his said personal bank account had no nexus to his credit card, and the above amount was debited by defendant No,1 therefrom illegally, arbitrarily, without any notice, and after five years of the disputed transactions that took place in July 2001, which in any event was barred by limitation. It was pointed out by him that his credit card statement of July 2001 (Exh.P/5) issued by defendant No,1, admittedly did not reflect the amount which was illegally debited from his personal bank account in the year 2006 towards 'credit card credit payment'. He asserted that defendant No,1 committed gross breach of trust and committed grave criminal and civil illegality by permitting such wilful bank fraud against him, and by advising defendant No,2 to place his name on the defaulters' list; and, such unlawful and mala fide actions on the part of defendant No,1 completely destroyed and shattered the trust and confidence which he had in defendant No,1 as a prudent, reliable and trustworthy banker. He alleged that because of the said illegal and mala fide action taken by defendant No,1, he once again suffered tremendous physical and mental anguish due to which he was advised complete bed rest as his medical condition again got aggravated. According to him, the embarrassm ent, humiliation, financial loss, and physical and mental anguish caused to him by defendant No,1, still continues. To sum up his submissions, the plaintiff argued that the evidence produced by him is more than adequate to discharge his burden successfully to prove his claim; the burden so discharged by him had shifted on defendant No,1, who miserably
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failed to discharge the same; there are important admissions and serious contradictions in the evidence of the defendant No, l's witnesses; and, the evidence produced by him has remained unrebutted. The plaintiff prayed that in view of his above submissions, this Suit be decreed in his favour as prayed by him. 12. In support of his submissions, the plaintiff cited and relied upon the cases of (i) Islamic Republic of Pakistan through Secretaru, Ministry of Raitwat's and others v. Abdul Wahid and others, 2011 SCM R 1836, (ii) Municipal Corporation of Delhi v. Association of Victims of Uphaar Tragedy and others, 2012 SCM R 1549, (iii) Abdul Majeed Khan v. Tawseen Abdul Haleem and others, 2012 CLD 6 (Supreme Court of Pakistan), (iv) Muhammad Malik v. Fazal Karim and another, 1999 M LD 935 (Supreme Court AJ&K), (v) Muhammad Ibrahim and others v. Sui Northern Gas Corporation and others, PLD 2012 Peshawar 132, (vi) Nasreen Firdous v. Tanweer Kishwar Siddtqui and 5 others, 1991 CLC 907 (Karachi), (vii) Messrs Habib Bank Ltd. v. Messrs Publix Industries Ltd., 1991 CLC 1907 (Karachi), (viii) Chief Administrator Auaaf Hyderabad v. Ghulam Shabbir Shah alias Dini Ali Shah, 1992 CLC 1263 (Karachi), (ix) Messrs Pak Suzuki Motor Co. Ltd. v. Muhammad Jumshad Saeed, 2009 CLD 503 (Karachi). ' Mr. Neel Keshav, learned counsel for defendant No,1, strongly opposed the plaintiffs claim and the submissions made by him. He asserted that the debits made by defendant No,1 from the plaintiffs credit card account in relation to the disputed transactions, were fully justified as the plaintiff was liable to pay the same as per the terms and conditions agreed and signed by him. He submitted that the credit card was not blocked by defendant No,1 as alleged by the plaintiff, but the same was actually reported as lost by the plaintiff himself, and in such an event too, he was liable to pay the amounts that were charged on his credit card. He further submitted that the plaintiff had obtained three credit cards from defendant No,1, including the one through which the disputed transactions were carried out; the plaintiff intentionally and deliberately concealed this fact from this Court; and, all the disputed transactions were carried out by the plaintiff himself through the said credit card. He also submitted that the plaintiff has not come to this Court with clean hands; no cause of action has accrued to him for filing this Suit; the Suit is mala fide; and, by filing this Suit, the plaintiff has attempted to pressurize and harass defendant No,1, and to wriggle out from his contractual and financial liability towards defendant No,1, 13. 14. Regarding placement of the plaintiff's name on the C.I.B. List, the learned counsel for defendant No,1 submitted that defendant No,1 was duty-bound to do so under the Prudential Regulations of the State Bank of Pakistan. In this context, he referred to and relied upon BSD Circular No,16 (Exh.D/1) and 'Prudential Regulations For Consumer Financing' (Exh.D/6), issued by the State Bank of Pakistan. The debit of Rs,125,491 from the plaintiffs personal bank account towards 'credit card credit payment', was also defended by the learned counsel by submitting that, since the plaintiff had committed default, his outstanding liability was deducted from his personal bank account under 'auto debit system' as per the agreed terms and conditions of the credit card (Exh. D/11). He contended that defendant No,1 had the authority to merge and consolidate the plaintiffs credit card account with his personal bank account. In support of this submission, the learned counsel relied upon Clauses 17.2(d) and 18 of the said terms and conditions (Exh. D/11). The learned counsel argued that credit card was issued by defendant No,1 to the plaintiff on his application, and the plaintiff had not only agreed to the terms and conditions proposed by defendant No,1, but had also signed the same. He further argued that the contract between the parties was a concluded and binding contract, which was duly acted upon by both the parties. It was urged that after enjoying the credit card facility granted by defendant No,1, the plaintiff cannot turn around and dispute the agreed terms and conditions on which the credit card was admittedly issued to him. It was also urged that defendant No,1 is a financial institution of international repute, and it throughout acted
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in good faith strictly in accordance with the terms and conditions of the contract and in strict compliance of the Prudential Regulations issued by the State Bank of Pakistan. In the end, it was prayed on behalf of defendant No,1 that this Suit be dismissed. 15. After perusing the pleadings of the parties, carefully examining the evidence on record and hearing the learned counsel at length, my findings on the issues involved in this Suit are as under:- 16. ISSUE No,1: "(1) Whether the defendant arbitrarily and unlawfully had placed the plaintiffs name on the data check defaulters list ? If so, what is its effect?" ' The disputed transactions were not carried out through the credit card issued to the plaintiff, as the number of his credit card and the number of the credit card used for the disputed transactions, were different, which is evident from the Merchants slips receipts (Exh. P/6). For this reason alone, defendant No,1 was not justified in placing the plaintiffs name on the defaulters' list. Be that as it may, in paragraph 12 of its written statement, it was admitted by defendant No,1 that "certain disputed bills" were reversed, and only "one small bill" was debited from the plaintiff s account. The statement of account dated 30-7-2001 issued by defendant No,1 in respect of the plaintiffs credit card, was produced by the plaintiff as Exhibit P/5, wherein amounts of six out of seven disputed transactions were reversed by defendant No,1 in favour of the plaintiff. The plaintiff also produced reply dated 6-9-2006 of the defendant No, l's counsel as Exhibit P/15, which was issued in response to the plaintiffs legal notice. In Exhibit P/15, there was a categorical admission that certain disputed transactions caused some problem, but the same was resolved; and, it transpired that out of seven disputed transactions, six were wrongly charged to the plaintiffs credit card, which were reversed. Rest of the contents of Exhibit P/15 pertained to the auto debit of Rs,125,490 from the personal bank account of the plaintiff. Defendant No,1 never denied that Exhibits P/5 and P/15 were not issued by it or on its behalf, nor did defendant No,1 dispute any of the amounts that were shown by it to have been reversed through Exhibit P/5. In fact, the plaintiff was not confronted at all by defendant No,1 with regard to Exhibits P/5 and P/15, and/or the entries of reversal of amounts of any of the disputed transactions. Moreover, no suggestion or question was put to the plaintiff that defendant No,1 was justified in placing the plaintiffs name on the defaulters' list in view of his default. Therefore, the entire contents of Exhibits P/5 and P/15 produced by the plaintiff and the implications thereof against defendant No,1, remained un-rebutted and admitted to the above extent. Resultantly, the plaintiff has successfully discharged his burden to prove that the disputed transactions, to the extent of the amounts reversed by defendant No,1 through Exhibit P/5 and confirmed vide Exhibit P/15, were not carried out by him, and also that he was not liable to pay the same to defendant No, 1. 17. Defendant No, witness D.W.1 produced an Agency Agreement dated 19-5-2000 as Exhibit D/5, and also the Agent's letter dated 31-1-2004 to the Governor, State Bank of Pakistan, as Exhibit D/3. Exhibit D/5 shows that Data Check (Pvt.) Limited was appointed by defendant No,1 as its Agent "to collaborate with the Bank to provide the Bank confidential information regarding the credentials and credit worthiness of customers and potential customers of the Bank". Exhibit D/3 shows that the said Agent made a representation to the Governor, State Bank of Pakistan, that the Consumer Credit Bureau to be set up by the State Bank of Pakistan, would be a severe blow to the credit bureaus operated by the private sector. It is to be noted that in Exhibit D/3, the Agent had acknowledged the importance and existence of the customer's consent in the words "Additionally, according to legal experts a customer's consent is ample legal cover to proceed in the matter of sharing banking information. Most of our members are already obtaining consent from their customers and all legal concerns can be put to rest if the State Bank mandates financial institutions to invariably obtain such consent." In paragraph 3 of its written statement, defendant No,1, had stated that "the fundamental purpose to report the status of the customer to Credit
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Bureaus is only share the status of the customer whereby all the Financial Institutions/Banks at least remain vigilant while extending financial…
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