IJAZ AHMAD CHAUDHRY, J.---Through this appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 order dated 12-12-2004 passed by learned Judge Banking Court-III, Multan has been challenged through which the plaint of the appellant filed in a suit for recovery has been ordered to be returned on the ground that the Banking Court has no jurisdiction to adjudicate upon the matter of recovery of damages claimed by the appellant against the respondents.
2. Briefly the facts of the case are that on 30-9-2000 the appellant filed a suit for recovery of damages to the tune of Rs.2,91,30,520 in the Banking Court, Multan to the effect that the appellant availed various financial facilities from respondents Nos. 1 and 2 and in this regard he also pledged the stock of pesticides valuing Rs.2,33,15,300 as primary security, which remained under the control and possession of said respondents and was further insured with respondents Nos.3 and 4 duly approved Insurance Co. of the respondent-Bank after making payment of the premium amount.
According to the appellant in the night between 4/5-7-2000 part pledged stock duly mentioned in para.No.10 of the plaint was stolen by unknown person regarding which F.I.R. No.203 of 2000 was registered at Police Station, Muzaffarabad, but the claim of the appellant was declined by the Insurance Co. without any justification.
3. During pendency of said suit, respondents Nos.3 and 4 filed an application under Order I, rule 10 (2), C.P.C. for deletion of their names from the array of respondents. The appellant submitted reply to the said application and vide order dated 24-1-2001 learned Judge Banking Court after dismissing the said application adjourned the suit for recording of evidence of the appellant- Company. However, on 6-11-2001 B respondents Nos. 1 and 2 filed an application under Order VII, rule 11, C.P.C. for rejection of the plaint, to which, the appellant submitted the reply as well and the learned Judge Banking Court after hearing both the parties vide impugned order dated 12-12-2004 has allowed the application and directed the office to return the plaint of the appellant as the Banking Court has no jurisdiction to adjudicate upon the matter of damages claimed by the appellant. Hence, this appeal.
4. Learned counsel for the appellant contends that respondents Nos. 3 and 4 were indemnifier and rightly made party falling within the definition of Customer under section 2(c) of the Ordinance, 2001. It is also contended that earlier an application was moved by respondents Nos.3 and 4 under Order I, rule 10(2), C.P.C. for deletion of their names, which was dismissed by the same Court and said order attained the finality having not been challenged any further, hence, the Banking Court was not justified to re-open the matter on the application of respondents Nos.1 and 2, which even otherwise was not moved under Order VII, rule 10, C.P.C. but rule 11, C.P.C. and the impugned order is liable to be struck down by this Court.
5. Learned counsel for the respondents Nos.3 and 1, on the other hand, opposes this appeal on the ground that Insurance Company has nothing to do with the transaction between the appellant and respondents Nos.1 and 2, who provided finance facility to the appellant and if some dispute has arisen between them the said respondents cannot be made party in suit filed before the Banking Court as they do not fall within the definition of borrower.
6. Learned counsel for respondents Nos.1 and 2 also contends that the plaint filed by the appellant did not disclose that there was any default of any obligation in regard of finance facility and claim of damages cannot be adjudicated upon by the learned Banking Court. It is also contended that even the suit filed by the respondents-Bank against the appellants for committing default in the return of finance facility has been decreed while claim of the appellant submitted be fore the Insurance Company regarding theft of the alleged pledged stock was declined. It is lastly contended that the learned Banking Court has passed a well-reasoned order declaring that it has no jurisdiction to determine the claim of the appellant for recovery of damages. Relies upon 1988 CLC 1969 (Karachi); PLD 2001 Lah. 313; 2003 CLD 1843 (Karachi.) and 2004 CLD 239 (Karachi) in support of his contentions.
7. We have heard the arguments of the learned counsel for the parties and also gone through the impugned judgment. It is an admitted fact that loan facility was availed by the appellant, which was provided by respondents Nos.1 and 2 and respondents Nos.3 and 4 practically had nothing to do for the recovery of the said loan facility. The suit filed by the Bank against the appellant for committing default in the return of the said finance facility has already been decreed. The insurance policy in respect of the goods, which were to be imported against the L/C opened by a Banking Company on behalf of a Borrower is not covered by the definition of "borrower" as given in clause (b) to section 2 of the Ordinance, 2001. It is also an admitted fact that an indemnifier is not an indemnifier in the sense in which it has been used in the definition of word "borrower". Moreover, the Banking Court derives jurisdiction under section 9(1) of Ordinance, 2001, which reads as under:--
9. Procedure of Banking Courts:--
(i) 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."
The above provision shows that the Banking Court had no jurisdiction to entertain the claim of the appellant as it was not case of the appellant that the respondents had committed any default in the discharge of the finance facility to the appellant or any obligation thereto. It has been held in 1988 CLC 1668 that the Insurance Company can be sued under the Insurance Policy and not in relation to the loan contract. The relevant portion is reproduced as under:-- "An Insurance Company, which may have issued a Marine Insurance Policy in respect of the goods, which were to be imported against the L/C opened by a Banking Company on behalf of a borrower is not covered by the definition of "borrower" as given in clause (b) to section 2 of the Ordinance. It is true that the Insurance -Company is an indemnifier but it is not an indemnifier in the sense in which it has been used in the definition of the word 'borrower' in above quoted clause (b). The Insurance Company is an indemnifier for any losses, the insured may sustain through the agency of the sea risks insured against i.e. any loss occurring by means of any of the perils insured against and not in relation to the loan contract. The Insurance Company is to be sued on the Insurance Policy and not on the contract of loan or contract of indemnity in relation to the loan. The defences, which may be available to an Insurance Company in a regular suit before a Civil Court if sued' upon a Marine Insurance Policy cannot be the subject-matter of a suit under the Ordinance to which Order XXXVII, C.P.C. has been made applicable, for example the defence that the Insurance Policy was void on account of misrepresentation on the part of the insured or that Insurance Policy had become unenforceable on account of breach of any of the conditions on the part of the insured. Furthermore, the liability of an Insurance Company is not co-extensive with the liability of a borrower. If the borrower had obtained a loan of rupees five lacs from a Banking Company for opening L/C and say that the goods in transit were damaged resulting into loss say of Rs.20,000 only the Insurance Company would be liable under the Marine Insurance Policy to the extent of Rs.20,000 and not to the above amount of loan with interest thereon etc."
8. In the present case the damages have not been claimed by the appellant on the basis of default in the finance facility provided to him. As such, the learned trial Court has rightly held that it had no jurisdiction in the matter of the appellant. The case-law relied upon by the learned counsel for the respondents is fully applicable to the facts and circumstances of the present case.
9. We find no force in the contention of the learned counsel for the appellant that since the application was not filed under Order VII, rule 10, C.P.C., no order could be passed as it is the Court, which has to apply the correct law and plaint has been rightly returned to the appellant for want of jurisdiction. Moreover, the rejection of the earlier application moved by the respondents under Order I, rule 10(2), C.P.C. has no nexus with the impugned order. The learned counsel for the appellant has failed to show that how the respondents could be sued before the Banking Court in the matter, in hand, when their- claim submitted before the Insurance Company for recovery of the amount on account of theft of alleged insured articles was already dismissed.
10. In view of what has been discussed above, we do not find any infirmity or illegality in the impugned order passed by the learned Banking Court, which is maintained and this appeal having no merits is dismissed with no orders as to costs.