' By this order I intend to decide the question of jurisdiction of Banking Court under the Financial Institutions (Recovery of Finances) Ordinance, 2001, raised by the defendants in this suit, which is also one of the grounds urged by them in their application for leave to defend (C.M.A. No,7619 of 2001).
2. Briefly, the relevant facts of the case are that in terms of the underwriting agreement dated 26th February, 1995 executed between the plaintiff bank and defendant No,1, a public limited company, the plaintiff purchased 38,51,200 unsubscribed shares of defendant No,1 at the rate of Rs.58.50 per share. On 24th January, 1996, the defendants Nos.2 to 8 at the demand of plaintiff executed undertaking for repurchase of these shares from the plaintiff at the rate of Rs.58.20 per share as its minimum value. Subsequently, as per undertaking defendants offered to purchase 5% per cent shares at Rs.61.00 per share but lifted only 2-1/2 per cent. Shares from the plaintiff at this rate.
However, the plaintiff continued to receive declared dividends on these shares from defendant No,1 for three years. Further case of the plaintiff is that in terms of the underwriting agreement and undertaking referred above, the plaintiff have extended finance facility to the defendant No,1 with buyback arrangement, therefore, defendants are bound to repurchase the remaining 37,54,900 shares and that relationship of financial institution and customer is thus created between the parties which makes the instant suit maintainable before this Court under its banking jurisdiction.
3. I have heard the arguments of learned counsel for the parties on the point of jurisdiction. Mr. Arshad Tayyabally, learned counsel for the defendants, after referring to various paragraphs of the plaint, vehemently contended that present suit is based on underwriting agreement dated 26-2- 1995 executed between the plaintiff and defendant No,1 and the undertaking dated 24th January, 1996 executed by defendants Nos.2 to 8 in favour of the plaintiff, but these documents neither make out a case of providing finance facility to the defendant No,1 by the plaintiff nor create relationship of financial institution and customer between the parties. Further non-fulfilment of undertaking cannot be termed as default in fulfilment of any obligation with regard to any alleged finance by the plaintiff. He further contended that on the basis of same undertaking defendants have also earlier filed a suit against the plaintiff under the banking jurisdiction of this Court, being Suit No,10 of 2000. In that suit in their application for leave to defend, on somewhat same set of facts as now pleaded by the plaintiff, the plaintiff had specifically challenged the jurisdiction of Banking Court and such objection of the plaintiff was sustained by the Court and consequently, by order dated 21-4-2000 the suit instituted by the defendants was ordered to be considered as a suit filed in the original civil jurisdiction of this Court. Learned counsel, therefore, urged that in the instant suit the plaintiff are estopped from taking a different plea on the point of jurisdiction.
4. Mr. Arshad Tayyabally next contended that in terms of underwriting agreement the plaintiff have purchased specific number of shares of defendant No,
1. On these shares they have been also receiving dividend each year as declared by defendant No,1, thus, it is clear that the status of the plaintiff is that of share-holder of defendant No,1 company any there is no question of any financing or buyback arrangement between the plaintiff and defendants or consequent default in fulfilment of any obligation thereof, therefore, the jurisdiction of Banking Court is not attracted in the present suit. In support of his argument, learned counsel placed reliance on the following cases:--
1. Karachi Electric Provident Fund v. National Investment (Unit) Trust 2003 CLD 1026.
2. Avari Hotels Limited and others v. Investment Corporation of Pakistan and six others 2000 YLR 2407.
3. Bank Al-Falah Limited v. Iftikhar A. Malik 2003 CLD 363.
5. In reply to the above submissions of Mr. Arshad Tayyabally, Mr. Mansoorul Arfin, learned counsel for the plaintiff, stressed that the underwriting agreement dated 26th, February, 1996 and undertaking dated 24-1-1996 executed between the plaintiff and defendants taken together are in the nature of finance with buyback arrangement within the ambit of the definition of "finance" as given under section 2(d) of the Ordinance XLVI of 2001. Further the undertaking executed by defendants Nos.2 to 8 is also in the nature of guarantee on behalf of defendant No,1, therefore, the relationship of financial institution and customer is created between the parties and the Banking Court's jurisdiction is attracted in the present suit. Learned counsel, however, did not dispute that the defendant No,1 company cannot legally buyback their own shares. This admission of the learned counsel makes it abundantly clear that underwriting agreement dated 26th February, 1996, executed between the plaintiff and defendant No,1 is an independent agreement which neither contains nor could have legally contained any clause for buyback arrangement between the parties. Learned counsel was also unable to show from the record that how the undertaking dated 24th January, 1996 executed by defendants Nos.2 to 8, which contemplates purchase of shares of defendant No,1 from the plaintiff, can be termed as guarantee or has created relationship of financial institution and customer between the parties.
6. I have carefully considered the arguments advanced by the learned counsel for the parties, perused the case record and the case-law referred at the bar. A bare reading of agreement dated 26-2-1996 shows that by this agreement plaintiff had underwritten to purchase un-subscribed shares of defendant No,1 without any condition of buyback arrangement provided in it, which even otherwise could not have been incorporated in the agreement as defendant No,1 could not legally buyback their own un-subscribed shares from the plaintiff. It is, therefore, clear that after purchase of such shares of defendant No,1 the status of plaintiff is that of shareholder of defendant No,1, Company. Such investment made by the plaintiff in line with their underwriting agreement, having peculiar features of getting return in the shape of dividends, chance to earn more profits or to suffer losses with the fluctuation of share prices, with further option to negotiate or sale these shares in the stock exchange, cannot be equated with the expression of "finance" as defined in section 2(d) of the Ordinance XLVI of 2001. In the present case, this view is duly supported from the facts that the plaintiff have been receiving dividends on these shares as declared from time to time by defendant No,1 and some of these shares have been sold to the defendants Nos.2 to 8 at a price higher than its purchase price.
7. Besides, a plain reading of the definition of word "finance" given under section 2(d) of the Ordinance XLVI of 2001 reveals that though it is very exhaustive and covers wide range of transactions involving direct or indirect financial implications/interactions but it does not make any reference of "underwriting agreement" or "shares" which are common terms used for specific intendment in the field of commercial activities. A glance at the definition of these two words from the Black's Law Dictionary shows that former has been defined as an agreement between Corporation and Underwriter covering terms and conditions of new issue of securities to be offered to public, while latter represents an equity or ownership interest in the Corporation or Joint Stock Company. Thus, applying the elementary rule of interpretation of statute that if the language of a provision of law is plain, free from any ambiguity and its meanings are clear then it should be regarded as conclusive and question of speculation or intendment contrary to such plain and clear meaning should not arise, it is apparent that neither the act of underwriting nor the act of subscription of shares of a company by a fmancial institution can be categorized as finance as visualized under section 2(d) of the Ordinance KIM of 2001.
8. Similarly, the undertaking executed by defendants Nos.2 to 8 does not amount to guarantee or create any relationship of financial institution and customer between the parties, nor breach of such undertaking could be termed as default in fulfilment of any obligation with regard to any finance, which are the preconditions under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for giving jurisdiction to the Banking Court to entertain a suit. The view taken by this Court in the cases of Bank Al-Falah v. Iftikhar A. Malik 2003 CLD 363. And Karachi Electric Provident Fund v. National Investment (Unit) Trust and others 2003 CLD 1026 is thus fully attracted in the present case.
9. As a result of above discussion, I hold that this suit cannot be entertained under the banking jurisdiction of this Court. Accordingly, office is directed to treat it as a suit instituted in the original civil jurisdiction of this Court. Required formalities be completed by the office accordingly.