1. MUHAMMAD ALI MAZHAR, J. - By this order | will dispose of CMA No. 2660/2009 filed by the defendants under Order 7, Rule 10 read with Section 151, CPC praying to reject/return the plaint of the Suit to the plaintiff for presentation of the same before the Court of proper jurisdiction in the matter.
2. The defendants have stated in the application that the plaintiff has purportedly filed the Suit under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001., The Suit in sub- clauses (c) and (d) of the plaint disclosed cause of actions. Under the provisions of CPC and other applicable law, the instant Suit is not maintainable for want of jurisdiction. The relevant paragraphs on the basis of which the plaintiff alleged that this Court has jurisdiction in the matter are as under:- "(c) That the cause of action for this Suit arose to the plaintiff firstly on 23.01.2004 when the defendant executed various finance documents in' favour of the plaintiff, and on all subsequent dates when the defendants availed the finance, committed default in repayment, on 25.06.2007 when the defendants made their last part payment to the plaintiff and continues to arise day to day till repayment of the entire finance by the defendant.
(d) That this Hon'ble Court enjoys both pecuniary and territorial jurisdiction in the matter as the office, of the plaintiff is situated at Karachi and the finance documents were executed at Karachi.
3. The defendants have further submitted that the plaintiff made a false and frivolous statement in clause (d) as above with regard to execution of the financial documents at Karachi and misled this Court by misrepresentation of fact, It is further submitted that the plaintiff has approached this Court with unclean hands as this Court has no jurisdiction to entertain the matter. The plaint on this ground alone is liable to be rejected/returned as false statement has been made contrary to the record available before this Court. The defendants have further submitted that the entire set of documents annexed with the plaint itself shows that the same were executed at, Lahore and not at Karachi as stated ^by the plaintiff. Further the defendants have submitted that plaint discloses that no cause of action allegedly arose within the territorial jurisdiction of this Court to file the instant Suit and/or obtain the relief being sought against the defendants. For such reasons, the plaint is liable to be rejected/returned as the plaintiff has no cause of action against the defendants as the sole basis of the cause of action arose at Lahore as demonstrated from the charged documents annexed with the plaint.
4. The plaintiff filed Counter-Affidavit to the above application and submitted That all requests for finance, terms of finance, disbursement/drawdown, additional time for payment and rescheduling etc. Were sent by the defendants to the plaintiffs registered office/head office at Karachi and all repayments were credited by the defendants to. The plaintiff's account at Meezan Bank, FTC Branch, Karachi. Plaintiff further asserted that sanction letter, compliance with the terms of sanction and all other correspondence were initiated and the disbursement advices were issued by the plaintiff from its registered office/head office at Karachi to the defendants and Meezan Bank, FTC Branch, Karachi which effected the transfer of the finance amount from the plaintiff's account at Karachi to the defendants account, It is further asserted that the defendants had .Two branch offices at Karachi during the relevant time and all coordination was done with the registered office/head office of the plaintiff by the two branch offices of the defendants at Karachi.
5. The finance was repaid by the defendants to the plaintiff and such payments were sent by the defendant from Lahore to the plaintiff at Karachi, Further it is submitted that all finance agreements between the plaintiff and the defendant clearly stipulate that the Courts at Lahore will' have the nonexclusive jurisdiction in respect of the subject finance and that the plaintiffs assertion regarding the territorial jurisdiction of this Court in the matter has been reiterated. The plaintiff has vehemently denied that it has made any false statement or attempted to mislead this Court, In the end the plaintiff submitted that the objections raised by the defendants with regard to the territorial jurisdiction of this Court is mala fide and illegal, and this Court has jurisdiction to try the case.
6. I have heard the learned counsel for the parties and gone through. The material available in file.
7. The learned counsel for the defendants argued in support of his application that all the lease facility agreements/lease agreements were executed at Lahore and the Head Office of defendant No. 1 is also situated at Lahore, therefore this Court has no territorial jurisdiction and Suit should have been filed at Lahore, In support of his contention, the learned counsel for the defendants has relied upon a judgment reported in PLD 1960 Supreme Court (Pak.) 202 (Messrs Rahmania Trading Company v. Messrs Eagle Star Insurance Company Ltd). This case pertains to Section 20, Explanation II, CPC, in which it has been held that Corporation doemed to carry on business at its sole or principal office, irrespective of whether cause of action arose there or at place where it has subordinate office provided cause of action accrues at that place. This judgment is not applicable to the defendants' case as it is clear from the contents of the plaint that the defendant is not a Corporation but it is a partnership firm. The learned counsel for the defendants further relied upon a judgment reported in 2005 CLC 1659 (United Distribution Pakistan Ltd v. Al-Syed Agrochemical Services and others), In this judgment again, Section 20, CPC has been discussed and it has been held that case being based upon the contract executed between the parties, the cause of action will arise at the places viz, where the contract is made, where the contract is to be performed or the performance thereof completed or breach or non-performance takes place and where in performance of the contract any money was expressly or impliedly payable. Since in the aforesaid judgment, the plaintiff had admitted that contract was executed between the parties at "J" and contract v/vas to be performed at "J" as demand and supply was to be made at "J", cause of action in circumstances had accrued within the jurisdiction of' place "J". This judgment is not applicable to the defendants' case as in the present case though lease agreements were executed at Lahore, but all requests for finance, terms of finances, disbursement and rescheduling were sent by the defendants to the plaintiffs registered office and all repayments were credited by the defendants to the plaintiffs account at Meezan Bank, FTC Branch, Karachi. The next judgment is reported in 1983 CLC 1369 (Pakistan and another v. M. Faiz Ahmad). Again in this case. Section 20(c), CPC was under discussion and the learned Judge has held that Civil Suit can be instituted in the Court within local limits of whose jurisdiction cause of action wholly or partly has arisen. There is no cavil to the proposition of law laid down in this judgment, again test is to see whether any cause, of action arose within the territorial jurisdiction where the Suit was instituted. The next case relied upon by the learned counsel for the defendants is reported in 1987 SCMR 393 (State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem). This case is also inapplicable to the facts and circumstances of the case as it only pertains to Section 28 of the Contract Act with the ratio that agreement between parties for jurisdiction of Court shall be tried only by one of such Courts having jurisdiction could not be considered contrary to public policy as it would neither contravene provisions laid down in Section 28 of the Contract Act nor violate in any manner provisions of Section 9 or Section 20 of the CPC. In the present case, there is no agreement specifying any specific Court of law for trying the Suit, in fact in the lease agreements it has been clearly stipulated that competent Courts at Lahore shall have nonexclusive jurisdiction. The' learned- counsel for the defendants next relied upon 2001 CLC 1904 (Nadeem Ghani v. United Bank Limited and others), In this judgment also, provisions of Section 20, CPC have been taken into consideration with the observation that a Suit could be instituted in a Court within whose jurisdiction the cause of action had arisen or where the defendant carried on business or worked for gain. The learned counsel for the defendants further referred to a judgment reported in 2002 SCMR 1835 (Malik Allah Yar Khan v. Mst. Mumtaz Begum). In this judgment, it has been observed that findings of Trial Court that the execution of agreement relating to any property at place "S" had not been proved and only agreement proved on record was in respect of properties situated at place "C", therefore the order of return of the plaint was in accordance with law and did not suffer from any illegality. This judgment is not helpful, to the case of the defendants because there is no dispute regarding the execution and place of lease agreements signed at Lahore. In the next judgment reported in 2006 CLD 405 (Nusrat Mehdi Chaudhri v. Habit) Bank Limited and another), the learned Division Bench pf Lahore High Court has observed that objection of jurisdiction was not illusionary, frivolous or bald, rather same by all means is a substantial question of law, determination of which would depend upon ascertaining of certain jurisdictional facts. Recording of requisite evidence could not be ruled out for such ascertainment. This judgment is focused on general principle that as and when the substantial question of jurisdiction arises, it should be decided first. The next judgment relied upon by the defendants' counsel is reported in 1992 SCMR 1174 (Messrs Kadir Motors (Regd.) Rawalpindi v. Messrs National Motors Ltd., Karachi and 3 others).
8. Again this judgment has focused Section 20, CPC with the observation that plaint showed that defendant resided at Karachi and their principal office was also located at Karachi. Original contract between the parties which had given rise to the filing of the suit for recovery was negotiated and entered into at Karachi. Primarily, the Courts at Karachi had jurisdiction to try the suit according to Section 20(c), CPC. This case is also inapplicable to the facts and circumstances of the present case as in this judgment all series of transactions took place at Karachi, In addition to the above, learned counsel for the defendants has relied upon another judgment reported in 2002 CLD 527 (National Investment Trust Ltd. v. Lawrencepur Woolen and Textile Mills Ltd.), In this judgment also, the learned Judge has focused his findings on Section 20, CPC with further observation that Suit could be filed within the territorial jurisdiction of a Court where the cause of action or any part thereof arose irrespective of the question whether the defendant Corporation had its principal or subordinate office within such jurisdiction. Question of territorial jurisdiction, however, can only be decided on the basis of the case made out by the plaintiff and not the defence set up by the defendant. Explanation II to Section 20, CPC was only relatable to clauses (a) & (b) and not (c) of the said Section. Keeping in view this judgment, it is Clear that Explanation II which pertains to corporation is only applicable to clauses (a) &, (b) of Section 20, CPC but the clause (c) is an independent clause which gives rise to any Suit in any territorial jurisdiction where the cause of action wholly or in part arises, In the same sequence, the learned counsel for the defendants has further relied upon 2003 CLC 1744 (Messrs Royal Flying Coach Ltd. v. Messrs Toyota Tsusho Kaisha Ltd.) Again in this case, Section 20, CPC is the subject-matter with observation that nothing was available on record to show that even fraction of cause of action had accrued at place "L", which was condition precedent to file suit at place "L" in terms of Section 20(c), CPC. In the same judgment, it has been further held that cause of action in such suit arises at the place where contract of agency was made or where same was to be performed or where refusal , to account took place. This judgment has open delivered within the parameters of clause (c) of Section 20, CPC which provides two conditions (i) accrual of cause of action wholly (i) or in part, which is a well-settled principle emerging from CPC itself. The learned counsel further referred to 1999 MLD 1315 (Malik Ejaz v. Abdul Haleem and others). Again in this judgment. Section 20, CPC has been discussed. Scheme of law for the purpose of territorial jurisdiction is based on maxim "actor sequitur forum rem i.e. Plaintiff would follow the Court of defendant. The defendants against whom Suit for recovery of price goods was filed by the plaintiff were permanent residents of Lahore who were residing and carrying on business there where transaction took place. Cause of action would accrue to plaintiff at Lahore and not within limits of Courts rn Mardan where goods were dispatched but did not reach. Finding of Court below that goods were purchased at Lahore and contract also took place there, but when (goods were not received at Mardan, cause of action accrued to plaintiff at Mardan, was not maintainable. This judgment is also not applicable in the present case because the possibility of institution of Suit at Mardan was only ruled out from the plea that the goods were not received at Mardan, therefore no cause of action accrued within its territorial jurisdiction. Finally, the learned counsel relied upon 198(5 CLC 2173 (Sardar Muhammad Sarwar Khan y. Azad Government of the State of Jammu and Kashmir), In this case also, Section .20, CPC was discussed with the observation that Suit could be instituted at a place where a defendant or each of them, when there are more defendants in Suit at the time of filing such Suit actually or' voluntarily resides or carries on business or permanently works for gain.
9. In all aforesaid judgment, the learned counsel for the defendants tried to show that since all lease/finance agreements were executed at Lahore, therefore, this Court has no territorial jurisdiction to entertain the Suit but so far as the aforesaid judgments are concerned. I feel unanimity and consensus in all judgments that Court can entertain Suits in the territorial jurisdiction where the cause of action wholly or in part arises and there is no cavil to the proposition of law that plaintiff may institute a Suit against defendant in view of Section 20(c), CPC, provided that the cause of action wholly or in part accrued within its territorial jurisdiction. None of the judgment cited by the defendants has observed that the suit may be filed only in the territory in whose jurisdiction agreement/contract was signed but it only depends upon accrual of cause of action in whole or in part.
10. In response to the arguments advanced by the learned counsel for the defendants, the learned counsel for the plaintiff argued that all the requests for finance, terms of finance, disbursement/drawdown, additional time for payment and rescheduling etc. Were sent by the defendants to the plaintiffs registered office at Karachi and all payments were credited by the defendants to the plaintiffs account, at Meezan Bank, FTC Branch, Karachi. He has further argued that the sanction letter and all other correspondences were initiated and disbursement advices were also issued by the plaintiff from its registered office situated at Karachi to the defendants and Meezan Bank Limited which effected the transfer of the finance amount from plaintiffs account at Karachi to the defendants' account at Lahore. The learned counsel for the plaintiff has also argued that as per letter communicated by the defendant, the defendant has also its branch office at Karachi which too gives rise to the cause of action at Karachi. All finance agreements between the plaintiff and the defendants clearly stipulate that the Courts at Lahore will have non-exclusive jurisdiction in respect of the subject finance, which shows the intention of the plaintiff that Suit may be filed in other territories where cause of action seems to have been arisen, In support of the arguments, the learned counsel for the plaintiff has relied upon 2001 CLC 104 (Busine International
(Pvt) Ltd. v. Aranex International (Pvt) Ltd.), In this judgment, the learned Judge has discussed Section 20, CPC and held that. Courts- will have jurisdiction to entertain the Suit concerning the rights and obligations of the parties in terms of their undertaking at the place where contract had to be performed and where the same was breached, In the same sequence, learned counsel for the plaintiff has also relied upon a judgment reported in PLD 1959 (W.P.) Karachi 348 (Qazi Noor Muhammad v. Pir Abdul Sattar). In this judgment, the learned Division Bench of this Court has held that where the place of payment of debt not specified, debtor must pay at creditor's place, It was the duty of debtor to find out the creditor where the parties have not stipulated the place of . The discharge of debt, it was presumed that the amount was to be paid at the place of creditors. The next judgment relied upon is reported in PLD 1994 Lahore 97 (International Cotton Ginners v.
11. Granulars (Pvt) Ltd.) in which it has been held that the cause of action shall arise at any of the following places:-
(i) The place Where contract was made ;
(ii) The place where the contract was to be performed or performance thereof was completed;
(iii) The place wherein performance of the contract any money to which the suit related was expressly or impliedly payable.
12. The learned counsel for the plaintiff has also relied Upon another judgment reported in PLD 1993 SC 395 (Muhammad Yasin v. Chaudhry Muhammad Abdul Aziz), Again in this case, the -provision under discussion was Section 20(c), CPC and it has been held that suit for recovery of amount can be instituted in a Court within the local limits of whose jurisdiction the cause of action wholly or in part arose, .In the brief facts of this case, the plaintiff was resident of Quetta and had his business at Quetta, reached an agreement with the defendants, who were residents of Faisalabad for the supply of coal. Coal was to be dispatched through the goods company at Quetta to Faisalabad and after receiving the same, payment had to be made. Part of cause of action having accrued at Quetta, suit for recovery of amount could be instituted at Quetta. The learned counsel for the plaintiff has also relied upon another judgment reported in 2000 CLC 1093 (Suzuki Motors Pakistan v. Tariq Javed)'. This suit also pertains to recovery of money in which it was held that appointment of defendant as dealer was approved by plaintiff at Karachi. Delivery challans and sale invoices were to be prepared at Karachi. Defendant used to remit payment to plaintiff at Karachi. Court at Karachi in circumstances was vested with territorial jurisdiction to decide the Suit. Finally the learned counsel for the plaintiff relied upon 2008 CLD 844 .(Messrs Mehran Solvent Extraction (Pvt)
13. Ltd. v. I.D.B.P.) In this case also, defendant had raised the plea that suit should have been filed in the Banking Court at Larkana and, not at Sukkur. The learned Division Bench of this Court held that if- more than one Banking Court has jurisdiction to-try the matter, suit cannot be rejected on mere ground that any other Banking Court is competent to tr*y the case. The Court further observed that the cause of action accrued within the territorial jurisdiction of Banking Court at Sukkur before which the Suit was instituted.
14. In all judgments cited by the learned counsel for the plaintiff and defendants mostly Section 20(c), CPC was under discussion which pertains to the accnial of cause of action wholly or in part. For the purposes of Order 7, Rule 10 and Section 20, CPC. It is very much relevant to decide, whether cause of action wholly or in part arose within the territorial jurisdiction of the Court, It is also clear that all classes of suits could be filed in a Court within the local limits of whose jurisdiction the cause of action arose either wholly or in part. Term "cause of action" refers to every act which if traversed should be necessary for the plaintiff to prove in order to support his. Right to judgment and if not proved, would give the defendant a right to judgment and for that purpose only the facts stated in the plaint are to be considered to determine whether those facts state cause of action or not. Even a fraction of cause of action is a part of cause of action. According to Black's Law Dictionary, Sixth Edition, cause of action means the fact or facts which give a. Person a right to judicial redress or relief against another. The legal effect of an occurrence in terms of redress to a party to the occurrence. A situation or state of facts which would entitle party to sustain action and give him right to seek a judicial remedy in his behalf. Facts, or a state of facts, to which law sought to be enforced against a person or . Thing applies. Failure to perform legal obligation to do so, or refrain from performance of some act.
15. In the leave application, the defendant has framed (13) questions of law and facts but none of the points covers the objection relating to the territorial jurisdiction of this Court. All points are related to the challenge to the authority of person who has filed the Suit, enforceability of personal guarantees, validity, of statement of accounts, validity of imposition of late payment surcharge, and duly execution of finance documents etc. Not a single ground has been taken regarding the non-availability of the territorial jurisdiction by this Court. The learned counsel for the defendants has himself attached many documents with the leave to defend application relating to payment of jara Rental and approval of rescheduling proposal, deliver of cheques at Karachi, outstanding jara rentals, etc. All letters were sent by the defendants to the plaintiff at Karachi. The learned counsel for the plaintiff has also attached letters sent by the defendants from Lahore to the plaintiff at Karachi relating to jara facility of PKR 100 Million, drawdown notice for PKR 100 Million jara from the plaintiff and jara disbursement request etc. The documents have been annexed with the counter affidavit to show that besides lease/finance agreements, there are many other documents, which were received at Karachi, payment was also released to the defendants from Karachi, they were also repaying the amount at Karachi and when they committed default in payment, the plaintiff has filed the Suit for recovery under Section. 9 of the Financial Institutions (Recovery of Finances)
16. Ordinance, 2001 and in fact for the purpose of territorial jurisdiction this Court has ample power to decide the matter between the patties at the place of plaintiff where the defendants had committed default and denied the payment at Karachi, hence cause of action will be taken from the acts of the defendants, whereby they have breached the agreements and defaulted in the repayment of amount at Karachi. Therefore, for all intent and purposes, the Suit is rightly instituted within the territorial jurisdiction of this Court and the case is fully covered under Section 20(c), CPC as the part of cause of action arises at Karachi, which is the default in the repayment of amount.
17. The plaintiff s counsel also pointed out that from the letters written by the defendants, it is Clear that they have their branch office at Karachi and neither this fact has been denied by the defendants nor the defendants' counsel denied the correspondences, attached with the plaint and counter- affidavit which all communicated to the plaintiff at Karachi and the learned-counsel for the defendants has also not denied the very important aspect of this case that all repayments were being made by the defendants at Karachi and all disbursement/release of funds were made to the defendants from Karachi.
18. The Financial Institutions (Recovery of Finances)' Ordinance, 2001 is a Special Law. Lt does not provide any place of suing or any restriction on the Financial Institution to institute the suit but recourse is to be made from the provisions of CPC including Section 20. In the definition clause, Financial Institution means and includes any company whether incorporated within or outside Pakistan which transact the business of banking for any associated It is an admitted fact that all requests for finance, terms of finance, disbursement/drawdown, additional time for payment and rescheduling etc. Were sent by the defendants to the plaintiffs registered office at Karachi and all repayments were credited by the defendants to the plaintiff's accounts Meezan Bank, FTC Branch, Karachi, Most of the judgment relied upon by the defendants' counsel in support of his application filed under Order 7, Rule 10, CPC relate to the accrual of cause of action and none of the judgments has restricted the right of plaintiff to file suit rather in all judgments it has been clearly held that suit may be filed where cause of action arose wholly or in part. Similarly, the judgments cited by the learned counsel for the plaintiff are also related to Section 20(c), CPC so in my view, at this stage, it is to be adjudged only whether the plaintiff has any cause of action to institute the suit within the territorial jurisdiction of this Court. Plaintiff is a banking company and its core business is to earn rental on leases and lend money on mark-up basis. The cause of action accrued in its favour only when the customer commits default in its obligations of repayments as mentioned under Section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The main thrust of the arguments of the learned counsel for the defendants was that since all the agreements were executed at Lahore, therefore only Court at Lahore had jurisdiction to entertain the suit which, is not a correct position in my view. Though the lease facility agreements were executed at Lahore, but this is also a fact which cannot be ruled out that entire disbursements were made from Karachi and the repayment was also made at Karachi and in past also, the defendant was repaying the loans/instalments at Karachi. As long as the customer was fulfilling its obligations in accordance with the terms and conditions of the agreements, there was no default. The cause of action was only accrued to the plaintiff in the event of default and material breach committed by the defendants in the repayments of loans/instalments. So cause of action accrued on the basis of default committed by the defendants at Karachi where they stopped the payment. So in my humble view, this Court has territorial jurisdiction to entertain the Suit.
19. In all the judgments cited by both the learned counsel, the sole criterion and acid test to decide the territorial jurisdiction is the accrual of cause of action in whole or in part in view of Section 20(c), CPC, It is clear that even a fraction of cause of action gives territorial jurisdiction to decide the case, In the present case, it is an admitted position that sanction letter was issued from Karachi, fluids disbursed from Karachi and repayments were being made at Karachi, In the leave to defend application, the defendants have mentioned 70 entries whereby they have shown the amount paid to the plaintiff at Karachi against different dates of repayments which starts from 26.01.2004 and ending on 26.03.2006 which is an another proof that payments were being made at Karachi and discontinuation/default in repayment gives much more than a traction of cause of action to the plaintiff at Karachi. The accrual of cause of action cannot be restricted only to the execution of agreement at Lahore, otherwise, the whole purpose and spirit, of Section 20(c), CPC will be redundant and superfluous and will also negate Section 3 of the Financial Institution (Recovery of Finances) Ordinance, 2001 which provides that it shall be the duty of a customer to fulfill his obligations to the Financial Institution arid where the customer defaults in the discharge of his obligations, he shall be liable to pay for the period from the date of his default till realization of cost of funds of the Financial Institution, It is clear that defendant has committed default at Karachi within the territorial jurisdiction of this Court. All aforesaid aspects of the case suffice to hold that this Court has territorial jurisdiction. The application is dismissed accordingly with no order as to cost.