' MUNIB AHMAD KHAN, J.--- This is an application under Order VII Rule 11, C.P.C. Made by the defendant Bank for rejection of the plaint on the ground that the suit filed under the Banking jurisdiction is not maintainable as the contention and relief(s) in the plaint are not covered under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as FIO) and that the suit under section 9 can be filed only when there is non-fulfilment of any obligation with regard to any finance while in the instant suit there is no violation of obligation nor any term of finance has been breached. It has further been stated that suit for damages does not fall within the Banking jurisdiction and that the instant suit is counter blast to the Bank's suit. To this application no counter affidavit has been filed but the learned counsel for the plaintiffs has argued the matter and pointed out the contents of the plaint and stated that the suit has not only been filed for damages but also for rendition of accounts, redemption, recovery of mortgaged property and recovery of excess payments made to the Bank. He has pointed out factual position that the plaintiff No,1 applied for Export Refinance Facility (ERF) to the extent of 3 Millions to the Bank in 1992 and a security was submitted by the predecessor of plaintiffs Nos.3 to 7 in the shape of mortgage of property while other documents were also executed. It has further been submitted that no agreement was executed nor sanction advice was issued but an Agreement of Refinance Facility was executed in respect to the ERF and that has been paid through export remittance and that the plaintiff availed Refinance Facilities from 1992 to 1999 and lastly the outstanding was rescheduled in the sum of Rs,5.9 Millions and a security was submitted in the shape of mortgage of another plot of D.H.A. While other documents were also executed, whereas, the plaintiff has paid Rs,144,22,394 to the Bank but it has not returned the documents with mala fide intention and that after the above finance no facility has been provided by the Bank while above amount has been paid during the period of 31-10-2000 to 28-11-2001 by making payment of about Rs,46,00,000 while from July, 2002 till March, 2005 a further sum of Rs,98,00,000 was paid totalling Rs,144,22,394. It has been averred in the plaint and pointed out by the learned counsel for the plaintiffs that despite approaches by the plaintiffs to the Bank, the Bank has not returned the documents or redeem the mortgaged property nor has accounted for excess payment and that it has also not given the statement of account to show that what mark-up has been charged while the Bank has deducted unwarranted amount from the plaintiffs' account, which is reflected from plaintiffs' account No,CUR-00604-1. According to the plaintiffs a sum of Rs,100,22,394 has been paid in excess but despite all efforts the defendant has not paid any heed rather filed a Suit No,4 of 2006 in the Banking Court No,1 on false allegations, wherein, Bank has taken the stand that finance facility of Rs,14,093 Millions was granted to the plaintiff No,1 in the year, 1992. The above suit has been contested and allegations of the Bank have been denied while debit entries have also been disputed and that there is no document on record to support the entries of the Bank. It has further been stated that hypothecated machinery and stock have been sold for a sum of Rs,46,00,000 and said amount has been deposited in instalments with the defendant Bank, while the Bank with bad intention converted Export Refinance into Running Finance just to keep the account alive notwithstanding the fact that the business of the plaintiffs stopped in 2001 and because of these illegalities, the plaintiffs suffered physically and mentally and in such a situation, the defendant is liable to pay the plaintiffs a sum of Rs,100,22,394 towards the excess payment and liquidated damages at the rate of 20% amounting to Rs,20,04,478 and in addition damages of Rs,100 Millions with following details:---
(i) Loss/damages on account of Mental Torture/agony suffered by the plaintiff.PKR 25(M)
(ii) Loss of reputation caused by the defendant/FWB.PKR 25(M)
(iii) Loss in respect of business of export And/or import.PKR 50.(M) Total damages PKR 100 (M)
2. In the prayer clause money decree has been prayed for the above amount i,e, for Rs,100,22,394 along with 20% liquidated damages of Rs,20,04,478 together with damages of Rs,100 Millions.
3. The learned counsel for the plaintiffs has argued that the claim of damages is a direct outcome of the banking business and cannot be separated and since the suit has been filed for rendition of accounts, redemption and recovery of excess payment, therefore, other prayers in respect to the declaration, permanent injunction and recovery of damages can be taken together and both cannot be separated. Keeping in view the legal objection of maintainability of suit as to whether the amount of damages can be taken up with the adjudication of finance and whether the said damages can be treated as a result of non-fulfilment of any obligation in terms of clause-9 of the FIO, 2001, the learned counsel were directed to argue the matter in detail while Mr. Arshad Tyebally, present in Court on date of hearing, was also required to submit his point of view in the position of Amicus Curiae.
4. Learned counsel for the plaintiffs in support of his arguments stated that the damages cannot be separated and to be treated as a part of finance and to be taken-up in Banking Court as same falls within section 9 of the FIO and that the plaint cannot be rejected while at the most it can be returned under Order WI, Rule10, C.P.C. He has submitted that there is relationship between the plaintiffs and defendant as a "Customer" and "Financial Institution", therefore, under section 7(4) of the FIO, no other Court has jurisdiction in the matter except the Banking Court and within the meaning of section 2(b) of the FIO if the amount claimed exceeds Rs,50 Millions then the High Court is competent. He has referred 2002 CLD 658 (NPB v. Khalid Mahmood) and has pointed out that the Honourable Division bench of Peshawar High Court in the above cited case as well as a Single Judge of this Court in a case reported as 1998 CLC 1718 has laid down specification that the Banking Courts have jurisdiction as per above authorities. Learned counsel has further pointed out PLD 1999 Kar. 01 (Value Gold v. UBL) on the point that the suit for damages cannot be decided without recording evidence and that the application is premature and that since the Bank has also filed a suit No,20 of 2007 (old number in banking Court 4 of 2006) which has been transferred to this Court, therefore, consolidated issues may be framed in view of 2007 CLD 634 and that the leave be granted to the borrower in the Bank's above suit as has been granted in this suit to the Bank and both suits be taken up together. He has further cited 2003 CLD 1419 and submitted a copy of unreported judgment in HCA No,115 of 2008 (HBL v. Messrs Victor Electronics).
5. On the other hand, learned counsel for the defendant has argued that the suit is not maintainable as it contains a huge amount towards damages, which is not a finance and cannot be taken up under the banking jurisdiction and that suit does not fall within the meaning of section 9 nor the plaintiffs, for the purposes of damages, fall within the meaning of customer in terms of section 2(c) of the FIO nor the amount can be termed as a finance in terms of section 2(d) of the FIO. He has submitted that on the request of the plaintiffs facilities were rescheduled and it was never objected by the borrower while alleged payment of Rs,144,22,394 is presumptive and that the plaintiffs have claimed certain amounts which have been included in the credit. Learned counsel submitted that the plaintiffs are claiming amount, which falls within the meaning of tort and claim in this respect cannot be taken into a summary procedure as provided under Banking Ordinance.
He has cited 2003 CLD 1843 (Karachi). He has pointed out condition for filing a suit before the Banking Court and in this respect he has relied upon 2002 CLD 658 Peshawar. He has further cited 2006 CLD 1147 (Lahore), 2006 CLD 167 (Lahore), 1993 SCM R 441, 2003 SCM R 1156, 2003 CLD 1848, 2004 CLD 112, 2007 CLD 457, 2008 CLD 385, 2008 CLD 576, 2006 SCM R 1347.
6. On the point of rejection or return of the plaint, learned counsel for the defendant submitted that since the plaintiffs have mixed up two issues, out of which issue of damages falls within the jurisdiction of civil courts while another falls within the jurisdiction of Banking Court, therefore, the plaint is to be rejected and cannot be returned as the said plaint cannot be presented anywhere.
He has further submitted that all the issues of excess payment, wrong calculation or violation of obligation can be contested by the plaintiffs in the suit which has been filed by the Bank against it and even the issue of miscalculation etc. And adjustment can also be considered by the Banking Court while the plaintiffs can be compensated by way of mark-up etc. If it establishes in the Banking Court that extra amount has been claimed by the Bank or some obligation has been violated by it, hence, plaint be rejected.
7. Mr. Arshad Tayabally, learned Amicus Curiae, towards assistance of this Court has pointed out section 9(1) of the FIO and has emphasized on the words used in that section specifically "Obligation", "Finance", "Customer" and "Financial Institution". He has cited 2000 MLD 850 and submitted that if the suit is for damages and is not outcome of violation of an obligation nor directly connected to the finance suit then claim of the damages cannot be entertained. He has further cited another authority 2007 CLD 457 (Lahore) on the ground that claim under tort is not within the jurisdiction of the Banking Court. He has argued that the suit of either party i,e, Banking Court of the financial institution or the Customer to be decided on its own merits and it is not necessary that if the Bank has been granted leave to defend then Customer should also be provided same opportunity. He has pointed out that for the said reason section 10 of the C.P.C. Has been made inapplicable by virtue of section 9(4) of the FIO so one suit filed by either of the Financial Institution or Customer should not be stayed because of pendency of another suit and that the consolidation of two suits, out of which one is based on the documents while other on presumptions in respect to the damages etc., will not facilitate administration of justice. To support the above arguments, he has also referred 2005 CLD 569 (DB) Lahore and 2006 CLD 1220 (Lahore).
8. After hearing the arguments of the learned counsel it appears that question involved in the instant matter is as to whether claim of damages can be entertained by a Banking Court under FIO, 2001 or not. In this respect relevant provisions of the Banking Laws are necessary to be gone through, some of them are section 2(c)(d) and (e) defining the Customer, Finance and Obligation.
These subsections are reproduced as under:--
(2) Definitions.........
(a) .......
(b) ........
(c) "customer" means a person to whom finance has been extended by a financial institution and includes a person on whose behalf a guarantee or letter or credit has been issued by a financial institution as well as surety or an indemnifier;
(d) "finance" includes;
(i) an accommodation or facility provided on the basis of participation in profit and loss, mark-up or mark-down in price, hire-purchase, equity support, lease, rent-sharing licensing charge or fee or any kind, purchase and sale of any property including commodities, patents, designs, trade marks and copy-rights, bills of exchange, promissory notes or other instruments with or without buy-back arrangement by a seller, participation term certificate, musharika, morabaha, musawama, istisnah or modaraba certificate, term finance certificate;
(ii) facility of credit or charge cards;
(iii) facility of guarantees, indemnities, letters of credit or any other financial engagement which a financial institution may give, issue or undertake on behalf of a customer, with a corresponding obligation by the customer to the financial institution;
(iv) a loan advance, cash credit, overdraft, packing credit, a bill discounted and purchased or any other financial accommodation provided by a financial institution to a customer;
(v) a benami loan or facility that if, a loan or facility the real beneficiary or recipient whereof is a person other than the person in whose name the loan or facility is advanced or granted; ' any amount due from a customer to a financial institution under a decree passed by a civil Court or an award given by an arbitrator; ' any amount due from a customer to a financial institution which is the subject matter of any pending suit, appeal or revision before any Court; ' any other facility, availed by a customer from a financial institution.
(e) "obligation" includes;
(i) any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment or extension of time in payment of any other amounts relating to a finance or liquidated damages, and
(ii) any and all representations, warranties and convenants made by or on behalf of the customer to a financial institution at any stage, including representations, warranties and convenants with regard to the ownership, mortgage, pledge, hypothecation or assignment of, or other charge on, assets of properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfilment of a promise; and
(iii) all duties imposed on the customer under this Ordinance; and
9. Another relevant section of law under which the case is being filed in the Banking Court is section 9(1) while 9(4) is in respect to stay, same are also reproduced for convenience:--
9. Procedure of Banking Courts.- -(1) Where a customer or a financial institution commits a default in fulfilment 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.
(2) .........
(3) ........
(4) The provisions of section 10 of the Code of Civil Procedure, 1908 (Act V of 1908), shall have no application for and in relation to suits filed hereunder.
10. From the scheme of law i,e, Financial Institutions (Recovery of Finances) Ordinance, 2001 (F.I.0), it appears that the summary procedure provided under the Ordinance is almost similar to the procedure provided in Order XXXVII, C.P.C. According to which the defendant has to obtain leave to defend first and after leave is granted parties have to file affidavits of their witnesses towards examination-in-chief. The procedure has been more specified under sections 9(3) and 10(4), whereby, it has been made mandatory upon the parties that certain formalities to be completed by specifying the amount of finance, the amount paid and payable as well as the amount of finance availed by the customer and what amount of finance with other amount relating to finance are due and that the amount, if any, which the defendant disputed is payable to the financial institution and facts in support thereof. It has been noted from the Ordinance that although section 9 provides that customer and the Bank both can file the suits but procedure specified under sections 9(3) and 10(4) is in respect to the suits which are filed by financial institution and defended by the customer while no separate procedure has been provided for the customer to file the suit. If the procedure given under the Ordinance for filing leave to defend application is gone through then it will show that it is for the customer but since section 9(1) provides that a customer can also file a suit against financial institution, therefore, same procedure, as applicable to the Banks, has also to the stretched to the suits filed by the customer.
Such procedure, as provided, for filing of the plaint under section 9(3) is specifically in respect to the finance, which provides as follows:-- 9(3) The plaint, in the case of a suit for recovery instituted by a financial institution shall specifically state--
(a) the amount of finance availed by the defendant from the financial institution;
(b) the amounts paid by the defendant to the financial institution and the dates of payment; and
(c) the amount of finance and other amounts relating to the finance payable , by the defendant to the financial institution upto the date of institution of the suit.
11. Likewise, section 10(4) providing procedure for taking a defence and its requirement are necessary to be gone through, hence same is reproduced as under:--
10. Leave to defend-- (1).............
(2)...................
(3)...................
(4) In the case of a suit for recovery instituted by a financial institution the application for leave to defend shall also specifically state the following:--
(a) the amount of finance availed by the defendant from the financial institution; the amounts paid by the defendant to the financial institution and the dates of payments;
(b) the amount of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit;
(c) the amounts, of finance and other amounts relating to the finance payable by the defendant to the financial institution upto the date of institution of the suit;
(d) that amount if any which the defendant disputes as payable to the financial institution and facts in support thereof:- Explanation.-- For the purposes of clause (b) any payment made to a financial institution by a customer in respect of a finance shall be appropriated first against other amount relating to the finance and the balance, if any, against the principal amount of the finance.
12. In the F.I.O. Almost complete procedure has been provided for the working of Banking Courts but keeping in view that wherever specific provisions are not available then by virtue of section 141 C.P.C., the procedure provided in the Civil Procedure Code will be applicable, hence, keeping in view that the customer and Banking Institution both can file a suit, therefore, one may not be stayed on the ground of pendency of another, the F.I.O. Has specifically providing that section 10 of the C.P.C.
Will not be applicable in respect to the suits filed in the Banking Courts under the F.I.O. If we analyze the above quoted provisions of law keeping in view the entire scheme of law then we can realize that the dispute, which has anticipated and is intended to be solved under the F.I.O, 2001 is in between the customer and the financial institution in respect to the finance and that too on the ground that any obligation has not been fulfilled. The word "Finance" has been defined in detail in the law and suffice it to say that entire definition of Finance in any shape has been given while customer is denoted as a person who has been given any finance by the financial institution. In such a situation, the word "Damages" cannot be put in the definition given for the Finance nor it can adjust with the definition of customer. Moreover, word "Obligation" of which non-fulfilment a suit can be filed specifically contained the word "Finance" or any other amount relating to finance or liquidated damages but it does not include general damages on the basis of presumptions or compensatory damages towards mental torture and agony etc. The scheme of the law provides that since the matter relates to commercial transaction and that the issue is to be decided in speedy way, therefore, specific _procedure and system has been provided and since the documents executed between the parties toward their rights and liabilities are to be produced, followed by money transaction, therefore, they are given weight and until the defendant establishes his case, leave to defend cannot be granted.
13. Contrary to the summary procedure for finance, a suit for general damages or actual damages needs detailed evidence and issue in that respect cannot be decided only on the basis of documents executed between the parties, as to prove such type of damages, extraneous evidence to show that the claimant has suffered mental torture, agony or damages in respect to loss of reputation is to be brought and supported through different types of evidence with aid and assistance of evidence of other persons having no concern with the grant of finance e.g. By experts from medicine and other professions etc. It appears that the standard of-evidence required for proving a case under the Banking Law, keeping in view the documents executed for grant of finance, is quite different than the quantum of evidence required to prove general damages towards the loss of reputation or agony etc. As far as issue of liquidated damages is concerned and as provided in the definition of obligation, such type of damages are different and as per law these are the damages which have expressly been stipulated by the parties in their contract. In case of breach of the contract these are liquidated damages or the damages which have been ascertained.
14. Liquidated damages have been defined in the Black's Law Dictionary as follows:-- "Liquidated damages is the sum which party to contract agrees to pay if he breaks some promise and, which having been arrived at by good faith effort to estimate actual damages that will probably ensue from breach, if recoverable as agreed damages if breach occurs. In re Plywood Co.
Of Pa., C.A. Ps., 425 F.2d 151,
154. Such are those damages which are reasonably ascertainable at time of breach, measurable by fixed or established external standard, or by standard apparent from documents upon which plaintiffs based their claim. Ramada Development Co. v. U.S. Fidelity and Guaranty Co., C.A. Mich., 626 F.2d 517, 525. Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the 'anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or no feasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty."
15. If one goes through the plaint of the suit in hand then it will appear that the plaintiff has alleged that a sum of Rs,100,22,394 has been claimed towards excess payment while liquidated damages of Rs,20,04,478 has been claimed, over and above a sum of Rs,100 Millions has been claimed as a damages towards mental torture, loss of reputation and loss in respect to the business. It is apparently clear that for such type of damages a different procedure is to be adopted which is not provided under the Banking Law nor leave to defend is necessary in such type of cases of which initial burden lies on the plaintiff, claiming such type of damages. If the general damages are talked out from the plaint then naturally, the suit will be out from the jurisdiction of this Court and plaint would have been filed in the Banking Court having pecuniary jurisdiction up to Rs,5 crores but again the question will arise as to what procedure then to be adopted by the Banking Court.
From the arguments of the learned counsel for the plaintiff it has not been clarified as to how the damages have been calculated and how the liquidated damages can be included in general and compensatory damages.
16. The authorities reported as 2002 CLD 658 DB (Peshawar) as well as 1998 CLC 1718 (Karachi) have specified the issues on which a suit can be filed in the Banking Court bur both these authorities have specifically removed damages in tort from the banking suits. PLD 1999 Kar. 1 cited by the plaintiff is not of any help in the situation as it simply says that the evidence to be recorded for the damages but it has not discussed specific issue involved in this suit. The authority cited by the learned counsel i,e, 2002 CLD 658 provides that there are some conditions to be followed before filing suit in Banking Court and both the parties must come within the meaning of customer and Financial Institution and matter should relate to the finance. In another authority 2008 CLD 576, it has been held that when special damages have been claimed then it is specifically to be shown as to in which head of account, damages has been claimed. In another authority PLD 2005 AJ & K 15, the damages have been defined. The authority cited by the learned counsel is in respect to the damages and their clarification.
17. Mr. Arshad Tayebaly has emphasized on the point that the damages cannot be claimed under the Banking Law as by raising that claim, the person does not fall within the definition of customer nor amount of damages falls within the definition of Finance. He has further pointed out that suit for damages and for recovery of finance cannot be taken together nor they can be equated in so many terms and that the damages are out of the jurisdiction of the Banking Court and that both the suits of the customer and of Bank, even if damages have not been claimed, are to be taken separately on the basis of merits of both the cases and if the suit of the customer is tagged with the suit of Bank then the very purpose of recovery of finance in terms of the agreements will fail.
18. Keeping in view the observation given above as well as contention of the learned counsel of the parties and of Mr. Arshad Tayebaly one can easily reach the conclusion that the procedure provided under the F.I.O. Can be adopted when there are specific conditions in terms of section 9(3) and defence under section 10(4) while the issue of damages cannot be fixed in any definition nor definition of the Finance or obligation can be interpreted in a way that it should include the general damages. Anyhow, issue of liquidated damages which can be F calculated in terms of the agreement can be taken in a defence by a customer if a suit is filed by a financial institution while that can also be taken if the customer himself wants to file a suit on-the allegation of non- fulfilment of obligation. It is further to be seen that a customer should keep its requirements within the given parameters as envisaged under the agreement which he has executed with the financial institution as both the parties are required to follow their agreement while none can apprehend any unforeseen even nor can be held responsible to the presumptive calculation of damages etc. If the general damages are allowed to be taken-up in the suit for recovery of finance then the financial institution will also be given an opportunity to calculate their loss on the basis of non- return of finance at the relevant time. Through the procedure provided by the law both the parties have been confined to the extent of finance and liquidated damages and nothing else. It has further been noted that the instant suit has been filed by a Limited Company and its Director while general damages have been claimed for the company and its director as well as for the legal heirs of some of the directors, which shows that damages have been applied to a remotest way, which are even not permitted under the law.
19. In such a situation and keeping in view that plaint cannot be returned as it contained two different causes one relating to the Banking Court while another in respect to the damages to be entertained by the Civil Court, therefore, the only option is to reject the plaint. It has also come on record that the Bank has filed a suit, hence the defendant can take all the pleas of miscalculation, over payment and liquidated damages in that suit
20. In such a situation, I do not find any force in the contention of the plaintiffs, accordingly, the C.M.A. No,2959 of 2008 is allowed and the plaint is rejected under Order VII, Rule 11, C.P.C.