On 30-11-2002 the plaintiffs filed the .suit for damages alleging therein that in the middle of November, 2001 they had applied for opening of two letters of credits (L.C.) in favour of Messrs China National Electronics Import and Export Liaoning Company for US Dollars 11125.40 and another L.C. in favour of Messrs Nanji .Panda Electronics Company for US Dollars 24960 with the defendants (Bank).
2. On 3-12-2001 the Assistant Vice-President Marketing Ms. Sadia Muzaffar of the Bank informed the plaintiffs that their L.Cs. were opened and copies of these L.Cs. were delivered to the plaintiff along with Bank credit vouchers of margin and commission amount. The plaintiffs informed the details of L.Cs. to their supplier and, requested them to execute the shipments. Plaintiffs paid the swift charges to the Bank for' immediate transfer of the L.Cs. to the beneficiaries/suppliers. On 11-12-2001 ,the plaintiffs received information from the beneficiaries' ,that the L.Cs. were not received by them, therefore, the plaintiffs were embarrassed in the eyes of foreign shippers who had already processed the goods for shipment and had booked the shipping space for shipments of the goods.
The plaintiffs made inquiries from the Bank and came to know that the L. es. were not opened on 3- 12-2001, but fake L. Cs. were given to the plaintiff. The said fact was brought to the notice of the higher authorities of the Bank. In spite of notices and letters the Bank did not pay any heed to it, therefore, legal notice was served upon the Bank. The-plaintiffs further alleged that due to inordinate delay in opening the L.Cs. and due to delivery of fake L.Cs. the, plaintiffs have suffered tremendous loss to their reputation and goodwill which cannot be assessed in terms of money, but they claim damages for Rs.1,00,00,000 hence this suit.
3. The defendants/Bank were served. They filed the written statement and admitted that in the middle of November, 2001 the plaintiffs had opened not only two L.Cs. but four L.Cs. with the Bank.
They denied the allegation of the plaintiffs and claimed that no loss was caused to the plaintiffs or they had supplied any details Of losses. They pleaded that the plaintiffs had to pay an amount of Rs.64,000 in respect of facilities provided to them, but they failed to pay the amount, therefore, they have filed the suit. The defendants have also pleaded that the suit was maintainable.
4. Out of the pleadings of the parties the following 1, sues were framed:-- Issues:--
(1) Whether the L.C. delivered to the plaintiff along with bank debit vouchers of margin, commission and swift charges by the defendant branch were fake?
(2) Whether the plaintiff suffered financial loss of business, reputation and business goodwill due to acts of defendants officials?
(3) Whether the plaintiffs are entitled to compensatio and damages claimed?
(4) What should the decree be?
5. In order to prove the case the plaintiffs have filed a affidavit-in-evidence of their Chief Executive Zafar Hassan Khan and produced all the required documents namely: Swift transmission messages of L.Cs. terms and conditions sent to the beneficiaries as Exhs.3 and 4; e-mail dated 11- 12- 2001 received from beneficiaries of L.C. that they had not received the L.C. as Exh.5: Bank vouchers of payment showing L.C. numbers as Exhs.6 and 7; various letters from 16-11-2001 to 21-12- 2001 sent by plaintiffs to defendants complaining; that L.Cs. were not opened as Exhs. 8 to 10; and legal notice as Exh.13. The defendants filed affidavit of Rao Muhammad Ayoob as Exh.15. He produced the power of attorney as Exh.16.
6. I have heard the parties Advocates. Perused the record of this case very carefully. My findings on the above issues are as under for the following reasons:-- Findings:--- Issue No.1 Affirmative.
Issue No.2 Affirmative.
Issue No.3 Affirmative.
Issue No.4 Suit is decreed as prayed.
7. Before I discuss the issues .I . would like. to decide a preliminary objection raised by the learned Advocate for the defendants that the suit is not maintainable as Zafar 1 assan Khan was not authorized to file the suit. He has stated that no resolution of the plaintiffs has been filed authorizing Zafar Hassan Khan to file the suit, -therefore, the ' suit is not maintainable. He has relied upon a case of Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation Limited PLD 1971 SC 550.
Conversely, the learned Advocate for the plaintiffs has argued that under the Articles of Association the Chief Executive has power and authority on behalf of the Company to institute, conduct, compromise, refer to arbitration and abandon legal and other proceedings, claims and disputes in which the Company is concerned. He has produced the Articles of Association.
8. A perusal of the C.P.C. reveals that Order XXIX (1), C.P.C. deals with the suits filed by or against Corporations, which reads as under:-- "XXIX (1). Subscription and verification of pleading. In suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principle officer of the corporation who is able to depose to the facts of the case."
9. In the present case Zafar Hassan Khan is the Chief Executive of the plaintiffs, therefore, by virtue of Order XXIX, rule 1, C.P.C. he is authorized to sign and verify the plaint. Even otherwise under clause 22 of Articles of Association the Chief Executive/Director of the Company has power and authority to institute legal proceedings. Thus, Zafar Hassan Khan was authorized to institute the suit hence the preliminary objection is overruled.
Issue No.1:
10. The plaintiffs Chief Executive, Zafar Hassan Khan, in his affidavit, stated that in the middle of November, 2001 he had applied for opening of two L.Cs. with the Bank. He had paid all the charges including swift charges. On 3-12-2001 Mrs. Sadia gave him the Bank vouchers and the copies of L.Cs. (Exhs. 3 and 4) by disclosing that the two L.Cs. were opened. He communicated the information to the supplier, but vide Email letter (Exh.5) dated 11-12-2001, the supplier informed them that the L.Cs. had not reached, therefore, the plaintiffs sent letters to the defendants on 12-12- 2001 and 13-12-2001 (Exhs. 11 and 12) about the non-receipt of L.Cs. by the supplier. He further claimed that the copies of fake L.Cs. were given to him. The defendant's witness Rao Muhammad Ayoob admitted in the cross-examination that Mrs. Sadia Muzaffar had informed the plaintiffs that his L.Cs. had been opened on 3-12-2001 and she had credited an amount of margin, commission and swift charges for transmission of L.Cs. to the beneficiaries. He further deposed that L.Cs. were transmitted on 12-12-2001 and 14-12-2001. His cross-examination further reveals that he admitted that the copies of L.Cs. were delwered to the plaintiff by the Bank on 3-12-2001, but voluntarily added that the copies of L.Cs. were supplied only to the extent that the defendants would open the L.Cs. according to copies of L.Cs. supplied to the plaintiffs.
11. From the above evidence it is clear that the plaintiffs had applied for opening of L.Cs. in the middle of November, 2001. The charges were paid including the swift charges. The plaintiffs were informed that L.Cs. were opened on 3-12-2001 and the copies of the L.Cs. (Exhs. 3 and 4) were provided to the plaintiffs. The evidence further shows that the plaintiff communicated the required information of L.Cs. to the supplier, but vide E-mail letter (Exh.5) dated 11-12-2001 the supplier informed the plaintiffs that they had not received the L.Cs. Then the plaintiffs sent letter to the defendants on 12-12- 2001 (Exh.10) bringing the above facts to the Bank's notice mentioning the numbers of L.Cs. in the letter and further told them that the plaintiffs would be put to severe damage and their business would be affected. Another letter was sent t.o the Bank on 13-12-2001 that till 12th December, 2001 the supplier had not received the L.Cs. but the Bank did not reply the said letters to the plaintiffs. The plaintiffs had also produced the vouchers showing that the amount was deposited on 3-12-2001, therefore, the L.Cs. were required to have been opened on the said date but the copies of L.Cs. provided o the plaintiffs, were found to be fake L.Cs. As per statement of Bank's witness the L.Cs. were opened on 12-12-2001 and 14-12-2001. He explained that the copies of L.Cs. were provided to the plaintiffs so that the Bank would open the L.Cs. according to the said copies. If that was so then the numbers of subsequent opened L.Cs. could have been shown in the evidence or copies of said L.Cs. Or some other documents could have been produced to show the numbers of said L.Cs. to ascertain whether the said numbers were tallying with the numbers provided to the plaintiffs. Non-production of such material adversely affect the stand taken by the defendants in the evidence.
12. From the evidence available on the record I am of the considered view that on 3-12-2002 in spite of payment of all the charges the L.Cs. were not opened, but copies of fake L.Cs. were given to the plaintiffs, as such, the issue is replied in affirmative.
Issues Nos.2 and 3:
13. As both the issues are connected with each other, therefore, they are discussed together. The plaintiffs were doing their business and had contracted with foreign supplier. A profitable business can be carried out on a goodwill and fulfilment of timely promises. The business can flourish if a goodwill reputation of a firm is established through their acts and deeds by timely performance of the part of their contract. If the promises are not fulfilled then the business of that firm would not flourish and it will adversely affect the reputation of the firm in the market. A reputation is built after a passage of long period of time and if some lapse or omission is made then such reputation can be eroded within no time, which was built up after efforts and hard work of the firm.
14. In the present case the plaintiffs could not fulfil their promises as they had supplied the information received from the Bank to their foreign supplier that L.Cs. were opened on 3-12-2001 and the goods be sent because the Bank did not open the L.Cs. on 3-12-2001. As such the Bank provided false information to the plaintiffs. The plaintiffs were shocked when on 11-12-2001 they came to know through E-mail from their foreign supplier that they had not received the L.Cs. At that point of time the plaintiffs must had gone into a panic as the reputation of the plaintiffs was being eroded and damaged through the acts and deeds of the Banks. The Bank was required to send the L.Cs. to the concerned Bank immediately as swift charges were paid, but it appears that in spite of service of notice the Bank did not pay any heed to it and after 8 days of the payment of all the charges the Bank opened the L.Cs. on 12-12-2001 and 14-12-2001, as admitted by the officer of the Bank in the affidavit. Thus, the plaintiffs have suffered loss to their reputation, business and goodwill due to the acts of the Bank.
15. Zafar Hussain Khan, plaintiffs witness, on the loss of reputation, business, goodwill etc. has given the details in paras.11 to 13 of his affidavit, which are as under:--
11. It is important to mention here the practice and procedure in the International business. The practice of International business is that the shipper only starts preparing goods after he receives a confirmed L.C. as the goods are always prepared according to requirements and specification of each customer. Hence a minimum lead time of 30 to 45 days is required in executing export order after receiving L.C. In most of the contracts the time factor is the essence of the contract. In every business the time achievement is goodwill which one gets after sustain efforts scarifies, years of dedication and hardwork. Once the goodwill is damaged, the entire business is ruined.
12. That due to inordinate delay in opening the I,.C's. the stock could not reach in my hands and as such my onwards commitments of supply of goods to my customers could not be fulfilled which again resulted in lose of reputation in local market and recoveries of outstanding amounts in the local .market were delayed. This had disturbed the entire business cycle and has caused financial losses to me. The mental torture' and agony suffered by me due to deliberate act of the Bank was over and above the financial losses suffered by me.
13. That due to the delivery of documents of fake L. Cs. I have suffered tremendous loss to my reputation and goodwill. This loss cannot be assessed in terms of money, but for the purpose of claiming damages, I claim Rs.1,00,00,000.
16. As such, the plaintiffs are entitled to compensation damages.
17. However, the plaintiffs could not produce any evidence showing the specific financial loss of the business because of the above acts. However, the plaintiffs have suffered loss of reputation and goodwill. The issues are replied hi the affirmative.
Issues No.4:
18. After considering the material available on record and keeping in view the agony which the plaintiffs had suffered when they received E-mail from the defendants which had caused mental shock and their business reputation and goodwill were being ruined. Apart from the above, Banking system is based upon trust. If the trust is eroded then the Banking system may collapse. As such the officials of Banks have to show, act and behave in such a manner that the trust reposed upon them by the citizens should not be shattered. When the transaction is with a foreigner or foreign country then not only the image and reputation of the Bank is involved 1, but the image and reputation of the party and country is at stake. Smallest error or omission on the part of the Bank would adversely affect the party and country. Therefore, such type of lapses should not be taken lightly, but stringent steps should be taken so that it may serve an eye opener for others.
19. Keeping in view all the circumstances, I am of the view that an amount of Rs.1,00,00,000 would be sufficient as damages to meet the ends of justice, as such, the suit of the plaintiff is decreed, as