' ZIA PERWAZ, J.---This suit for recovery of damages amounting to Rs,100 Million, interest and costs is filed under section 9(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001.
2. Plaintiff No,1 claimed that he is a senior Advocate of Supreme Court, engaged in profession since 14-7-1950. He enjoyed the office of President of Sindh High Court Bar Association and Pakistan Bar Council amongst other posts; served as honorary professor and later on honorary principal of S.M.
Law College from 1956 to 1974. He also remained Member of Governing Body of Sindh University Law Colleges and Karachi University Law Colleges in addition to his status in the field of politics and thus commands respectable status and position in the society. Plaintiff No,2 is wife of plaintiff No,1 and thus enjoys corresponding status as befitting her as the spouse of plaintiff No,1.
3. In 1999 plaintiffs opened US$ Account with Amrican Express Bank bearing No,111084326. They also obtained American Express Credit Cards on the agreed conditions and instructions.
4. The business of the American Express of American Express Credit Cards was later transferred to the defendant-Bank. Fresh American Express Gold Cards bearing Nos.3762-951132- 17006 and 3762-951132-17015 respectively, hereinafter referred to as the "said cards" were issued by the defendant. The plaintiffs continued to hold such American Express Gold Cards valid from 26-4- 2002 to 26-4-2005 on the same conditions. For payment of the annual charges the plaintiffs issued standing instructions that the amount be debited from his Foreign Currency Account with American Express Bank. In the year 2002 plaintiffs planned to visit Australia during summer vacations. At that time more than US$ 7000 were available in the accounts of the plaintiffs with American Express Bank. To ensure availability of funds at their disposal during their stay abroad, plaintiff No,1 personally visited Mr. Raza Hussain Bandayali, Director Operation, American Express Bank who, in presence of plaintiff No,1, contacted the officer handling American Express Card business in the defendant-Bank. Mr. Bandayali ensured the plaintiff No,1 after due confirmation that the 'said cards' were duly activated and valid for payments to the extent of US$ 5000. Plaintiffs travelled by Club class through Cathy Pacific Airlines to Bangkok and thereafter by Qantas Airline from Bangkok to Sydney, Gold Coast, Brisbane and back.
5. During this visit the plaintiffs relying upon the facility presented the "said cards" which on presentation, were not accepted for payment, on 24-6-2002 at Hotel Sheraton-on-Park, Sydney (Australia). The plaintiffs then approached American Express Bank Pitt Street, Sydney who informed that the said Credit Cards could not be accepted. Thereafter on 27-6-2002 and 22-7-2002 "said cards" were not accepted when presented at Surfers Marriott Hotel, Gold Coast and at Hotel Hilton, Brisbane. Plaintiffs claim that due to non-acceptance of said American Express Gold Cards at the above places, they felt greatly insulted, disgraced, defamed and humiliated as they were treated as one using fake cards and suffered extreme agony. Consequently, the plaintiffs served legal notice dated 27-7-2002 followed by a correction notice dated 12-8-2002 whereby the plaintiffs claimed token amount of Rupees one Million for tortuous act of negligence and failure of acceptance of the aforesaid American Express Gold Credit Card with an apology in clearest terms.
In reply to notice the defendants first vide letter dated 8-8-2002 refuted the claim of the plaintiffs on the ground of non-payment of the monthly bills however, through their letter dated 22-8-2002 defendants admitted the error on account of some technical problem in the system, however, the defendants declined to pay the amount as damages. Hence the plaintiffs filed this suit for damages on account of suffering the mental agony for recovery of Rs,100 Million as damages against the defendant as general, special and punitive damages.
6. Application under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 seeking leave to defend was granted on 4-3-2003. It was tree as written statement on behalf of the defendant. The second attorney of defendant was later allowed to sign C.M.A. 7786 of 2002 in red ink subject to objections to be considered at the time of arguments, however, the lapse on signatures of pleadings is a mere technicality and parties have been allowed to rectify the defect by signing the pleadings even at appellate stage. The objection, therefore, does not require further examination after rectification. Defendants refuted the claim of the plaintiffs and have stated that the "said cards" are not debit cards but charge cards, they could have been activated for use at any time by calling their 24 hours customer services. It is further stated that the defendant has no concern with the amount of US$ 7000 deposited by the plaintiffs with the American Express Bank Limited. The American Express Cards were issued to the plaintiffs after taking over the business of the "said cards" from the American Express Bank Limited by the defendant-Bank without deposit of any money as security/lien. That there is no link of the plaintiffs previous Cards Nos.3762- 951132- 17006 and 3762-951132-17015 with his American Express Bank Account deposit of US$ 7000. That the plaintiffs failed to deposit the annual fee of the said charge cards on time. The defendants have further alleged that the plaintiffs have neither instructed for adjustment of US$ 7000 from the account of American Express Bank against the liability under American Express Gold cards nor these accounts have any link with the "said cards" as only the cards business is conducted, independent of the banking business of American Express Bank by the defendant-Bank. The defendants have also denied that the plaintiffs ever approached any representative of American Express Cards working with the defendant-Bank and Raza Bandayali has no concern with American Express Cards business in Pakistan. Defendants further claimed that the cards in question were rightly refused as plaintiffs were in arrears of payment of the annual fee for two months after its becoming due. They also failed to contact the defendant-Bank on 24 hours online service. The defendants have further stated that the technical error occurred in the system was only due to non-payment of annual charges in time. There is no lapse on the part of the defendants and claim for damages is not maintainable.
7. On 4-3-2003 with the consent of the learned counsel for the parties, following issues were framed:--
(1) What damages are claimed by the plaintiffs?
(2) Whether the defendant is liable for the alleged damages?
(3) Relief?
8. To prove the contentions plaintiff No,1 has deposed his evidence as Exh.
1. He also exhibited statement of accounts maintained in American Express Bank as Exh.2, letter of defendant dated 30-6-2001 as Exh.3, covering letter dated 26-4-2002 as Exh.4, air tickets as Exhs.5/1 and 5/2, desk message dated 24-6-2002 as Exh.6, telephone number as Exh.7, two credits as Exhs.8 and 9, letter addressed to Hilton Hotel, Brisbane dated 10-8-2002 as Exh.10, legal notice dated 27-7-2002 and reply thereto dated 8-8-2002 as Exhs.11 and 12, statement of account as Exh.13, letter of defendant dated 22-8-2002 as Exh.14, letter dated 4-9-2002 addressed to the defendant and reply thereto dated 11-10-2002 as Exhs.15 and 16 and format of the defendant along with relevant form of the Gold Credit Cards as Exh.17. Raza Hussain P.W.2 was examined as Exh.18 who has also produced bank statement of plaintiff No,1 as Exh.19. Thereafter the plaintiff closed his side for evidence on 4-4-2003.
9. The defendants in support of their claim have examined Rafi Muhammad Khan as Exh.22, who has exhibited statements of account of the defendant-Bank as Exhs.24, 25 and 26, letter of defendant-Bank addressed to all card members as Exh.27, reply of legal notice dated 11-10-2002 as Exh.28, letter dated 22-5-2002 and 7-6-2002 addressed to Manager American Express Bank as Exhs.29 and 30, photocopy of power of attorneys given by authorized officer of the defendant in my favour as Exh.31 and 32. D.W.2, Umer Qureshi and D.W.3, Asif Iqbal were examined as Exhs. 33 and 35.
Thereafter the defendants closed their side on 16-9-2003.
10. After hearing the learned counsel and perusal of the record, my findings on the above issues are as follows:-- Issues Nos.1 and 2.
11. In support of his claim for damages the plaintiff has examined himself as Exh.1 in which he has deposed that he got the said credit cards activated.
12. From the evidence adduced the case advance d by the plaintiffs is that the defendant committed breach of contract. On account of such breach the plaintiffs suffered mental torture.
Award of damages in transactions arising out of the contract attract the provisions of section 73 of the Contract Act where the defendant failed to perform his part of the contract for payment of money due to which the plaintiff claim to have suffered humiliation and faced with undue hardship and humiliation. In case involving non-payment of money, the damages, to which a creditor is entitled to, is the principal sum and interest due up to the date of payment. This settled principle of law is also laid down in illustration (n) of section 73 of the Contract Act. The relevant section is reproduced as under:-- "73. When a contract 'has been broken, the party who suffers by such-breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
' Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
' When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract."
' Illustrations
(a) ..
(b) ..
(n) A contracts to pay a sum of money to B on a day specified. A does not pay the money on the day. B in consequence of not receiving the money on that day is unable to pay his debts, and is totally ruined. A is not liable to make good to B anything except the principal sum he contracted to pay, together with interest up to the day of payment.
13. Principle for ascertaining the quantum of general and special damages is laid down in the leading case of Hadley v. Baxendale (1854) 9 Exch. 341, which clearly provides the distinction between the two. The provisions of section 73 of the Contract Act, 1872 are not much different for purpose of practical application. Claim for damages was rejected as being to remote in the case of Banco de Portugal v. Waterlow and Sons Ltd. (1932) A.C. 452; and again in the case of Commell Lairds & Co. v. Manganese Bronze and Brass Co. (1993) 2 KB 141. General damages naturally arising according to the usual course of things from the breach of contract are recoverable in the ordinary circumstances. Special damages are awarded in cases, as may reasonably, be supposed to have been in contemplation of both parties at the time of contract. The law does not record consequential damages arising of delay in respect of money as one in the case of Graham v.
Campbell (1877) 7 Ch. D.494 and Urquhart Lindsay & Co. v. Eastern Bank Ltd. (1922) 1 KB 318. Same view has been taken by Honourable Supreme Court in the case of Syed Ahmad Saeed Kirmani v.
Messrs Muslim Commercial Bank Ltd. 1993 SCMR 441.
14. It has also come on record that after having signed the fresh contract the plaintiff, who himself is a senior Advocate, did not approach the defendant-Bank of any of its officers for activation of his credit card but preferred to contact Mr. Raza Hussain Bandayali who himself is not in a position to depose the particulars of the person to whom the plaintiff requested for activation of the said Card and the plaintiff could not be said to have exercised reasonable care in this regard. However, the defence of Union Bank Limited who has entered into a contract to provide services against said cards and has also received the renewal charges for the same in pursuance of standing instructions issued by the plaintiff to debit the amount from his account with the American Express Bank is itself an act of negligence. The defendant has also admitted this position in the letter replied in response to legal notice (Exh.7). There is no evidence to the effect that the plaintiff made any effort to communicate the defendant-Bank with whom the plaintiff entered into agreement.
15. As regards the humiliation and mental agony suffered due to refusal of payment on said cards, the plaintiff No,1 in his evidence has stated that they used the said cards first at Bangkok Airport where it was said that the facility o n the said cards was not available. After the card was refused at Bangkok Airport and the plaintiff had learnt that the card was not in operation, the plaintiffs themselves presented the card at different places knowing fully well that it is not activated and the refusal was likely, therefore, humiliation, as claimed of his reputation was only a consequence of the deliberate act of the plaintiffs. Had the plaintiffs been more cautious, they may not have used the said cards after refusal once or the second time but it appears that they continued to present the same wherever they visited despite the fact that they paid through alternate means and completed their trip as planned but with financial constraints.
16. The transaction involving the use of said cards involves payments against goods purchased or service rendered to the card holder. The company issuing the card makes payment on behalf of the card holder. The respective amounts are then debited to the account of card holder who is allowed specific period for payment as per contract, in case of eferred payments by instalments interest may be payable on the outstanding amount, which may also include additional incentives to the card members to encourage use of credit cards. This basically makes the transaction one of a promise to pay money against future unforeseen transactions for purchase of goods or services under the agreement between the issuer of the card and the holder thereof. The law as to payment of damages in case of failure of promise to make payment under a contract is clearly covered by section 73 of the Contract Act. Similar is the rule of English Law.
17. The words used in illustration 'n' to section 73 of the Contract Act, while admitting the damage suffered as a consequence of non-payment, goes to the extent that the plaintiff may be totally ruined'. According to the Chambers 20th Century Dictionary, Edition 1983, the word 'ruin' means, "roo'in, n. Downfall: collapse overthrow: complete destruction: wreck: loss of fortune or means: bankruptcy: undoing: seduction or departure from chastity of life: downfallen, collapses, wrecked, or irretrievably damaged state (often in pl.): cause of ruin: broken-down remains, esp. Of a building (often in pl.): devastation: bad gin (as blue ruin; slang).-v. t. To reduce or bring to ruin,_v.i. (arch.) to fall headlong: to go to ruin.- ruinable . -v. The meaning of word "ruin" as per New Shorter Oxford Dictionary is, "ruin/'ruun/ v. MI6. [(0)Fr. Rainer or med. L ruinare, f. L ruina: see prec.1 1 v.t. Destroy, extirpate, eradicate; get rid of by a destructive process. MI6-E18. 2 v.t. Devastate; reduce (a building, town, etc.) to ruins; fig. Defeat or overthrow (a Kingdom, power, etc.) completely. MI6. 3 v. t. Inflict irredeemable damage or loss on: deprive of resources, wealth, (social) position, etc.: seduce and abandon (a woman). LI6. 6 v. t. Involve in disaster or failure, make entirely abortive; injure; spoil; wreck completely. LI 6 5 v.i. Come to ruin; be damaged, impoverished, outcast, etc.; fail. Long rare LI6. 6 v.i. Fall into ruins; decay, crumble; collapse." In a situation as described by the words 'totally ruined' such a consequence cannot be anticipated without the loss of reputation and the consequent mental torture, agony, humiliation in addition to financial losses that may be suffered as a result of failure to meet financial obligations because of the breach of promise to make payment on which promises relied to meet his obligation. However, the law expressly bars award of damages in such an eventuality.
18. Learned counsel, in support of his arguments, has stressed on the case of Dr. Professor Haroon Ahmed v. Messrs British Airways and others PLD 2004 Karachi 439. Perusal of the cited judgment shows that it does not pertain to a contractual obligation with the Bank for payment but a dispute with the airline who provided travel services, hence the facts of the cited case are entirely different from the present case, hence is of no assistance to the claim of the plaintiff. Another case cited by the learned counsel for the plaintiff i,e, Messrs Victor Electronics Appliances Industries (Pvt.) Limited v. Habib Bank Limited and another 2005 CLD 1383 involves failure of the bank to establish Letter of Credit. This forms part of the business of the Banks for which separate L.C. Charges are obtained for providing service of negotiating foreign bills of exchange on presentation of documents, either within the country or abroad. The process involves several steps and documentation on the part of the client as explained in detail in the aforesaid judgment and is a part of international trade. This service rendered by the Bank is distinguishable from mere promise to make the payment, as in the present case. No law or precedent was cited to show award of damages in case of nonpayment, or breach of promise to make payment in spite of repeated opportunities. Cases cited are entirely distinguishable from the facts of the present case.
19. In the light of the above my finding on the above issues, I have no alternative but to observe that although the plaintiffs suffered mental torture, agony and humiliation but the claim of the plaintiffs for damages is hit by the provisions of section 73 of the Contract Act as elaborated in illustration 'n' thereto. However, as the breach of contract is established, plaintiffs are entitled to recovery of amount paid by them to the defendant for availing the facility. The issues are answered accordingly. Issue No,3.
20. In view of my findings on above issues, the suit is decreed in the sum of US$ 175 or equivalent amount in Pak Rupee together with interest at 10% from June, 2002, when payment on said cards was refused, till its realization with costs of this suit in favour of the plaintiffs.
21. A copy of the this judgment be forwarded to the State Bank of Pakistan (Banking Service Corporation), the regulatory authority, to adopt strict measures to ensure that holders of credit cards are not faced with humiliating problems resulting from refusal of acceptance of their cards, particularly while travelling abroad in good faith placing reliance on the assurances offered to them by the Credit Card Companies.