1. C.M.A. No,7872 of 2009 ' MUHAMMAD TASNIM, J.--- This is an application (C.M.A. No,7872 of 2009) under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with section 151, C.P.C.
2. (hereinafter called Ordinance, 2001) filed by the defendant seeking leave to defend the suit unconditionally.
3. ' Brief facts leading to this suit are as under:-- ' That the plaintiff-House Building Finance Corporation Limited maintaining its registered office at Karachi and defendant First Dawood Investment Bank Limited is a financial institution having its registered office at Karachi. Upon representation and warranties by the defendant, the plaintiff placed Rs,75,000,000.00 (finance facility) with the defendant on 11th September, 2008 for a period of 94 days through broker AMZ Securities (Pvt.) Limited in pursuance to defendant's letter dated 11th September, 2008. The defendant availed the finance facility in full but did not repay the same as agreed between the parties. In the circumstances legal notice dated 6th January, 2009 was served upon the defendant calling for repayment of amount due. Such legal notice was responded to by the defendant through its advocate vide letter dated 13-1-2009. Since liability by defendant-was not discharged present suit was filed.
4. ' After service of summons defendant filed present leave to defend application. Mr. M. Salim Thepdawala, learned counsel for the defendant, at the very outset challenged the maintainability of the suit on the ground that there is no relationship of customer and bank hence provisions of Ordinance, 2001 will not apply to the parties to the proceedings. He has further argued that subject transaction between the parties does not fall under the category of banking transaction because neither any finance facility has been granted by the plaintiff to the defendant nor the subject to even otherwise covered under the definition of finances as defiled in Ordinance, 2001. He has further argued that no loan or financial facility was sanctioned or allowed by the plaintiff nor any borrowing under any normal banking transaction was obtained by the defendant. However, he admitted that at the request of defendant-plaintiff had issued cheque of Rs,75,000,000 favouring defendant. He has further submitted that an amount of Rs,32,83,562 was paid by the defendant to the plaintiff on account of mark-up. He has further argued that defendant was not maintaining any bank account with the plaintiff-Bank nor applied for any loan facility under the normal banking transaction therefore there was no relationship of customer and bank between the parties. In support of his contention learned counsel for the defendant has relied upon the case of Karachi Electric Provident Fund v. National Investment (Unit) Trust and others 2003 CLD 1026.
5. ' Conversely, Mr. Ijaz Ahmed, learned counsel for the plaintiff, has invited my attention to Annexure "B" to the plaint which is letter of the defendant addressed to the plaintiff on 11th September, 2008 which reads as under:- "We confirm our borrowing on the following terms and conditions:-- {{TABLE}} Transaction Type Letter of placement Amount Rs, 75,000,000 Rate 17.00% p.a. Settlement Date September 12, 2008 Maturity Date December 15, 2008 No, of Days 94 Maturity Amount Rs,78,283,562 Broker AMZ Securities (Pvt.) Ltd.
6. (Brokerage Division)
7. State Bank of Pakistan Mode of Payment Cheque {{TABLE}} ' Kindly issue a State Bank of _Pakistan Cheque of Rs,75,000,000 (Rupees Seventy-five Million only) favouring First Dawood Investment Bank Ltd., and deliver to the representative of AMZ Securities (Pvt.) Ltd. (Brokerage Division)."
8. ' Learned counsel for the plaintiff while elaborating his arguments submitted that a request for borrowing was made by the defendant to the plaintiff-bank through letter dated 11th September 2008 whereby defendant had requested to issue a cheque of State Bank of Pakistan for Rs,75,000,000 favouring First Dawood Investment Bank Limited and deliver to the representative of AMZ Securities (Pvt.) Limited (Brokerage Division). The submission of learned counsel for the plaintiff was that at the request of defendant a cheque for Rs,75,000,000 was delivered to the defendant in its own name and aforesaid amount was credited in its account. He submitted that said amount was utilized by the defendant and even it has paid markup for the agreed period amounting to Rs,32,83,562. Learned counsel for the plaintiff further submitted that at this stage defendant cannot turn around and take the plea that there is no relationship of customer and a bank which is opposed to the request of the defendant as quoted hereinabove. Learned counsel for the plaintiff has further invited my attention to letter dated 15-12-2008 addressed by defendant to the plaintiff requesting as under:--- "In view of the above, we have decided to convert all money market loans/unsecured loans into a long term loan for 2 years, with annual mark-up payment, while principal repayment will be made at maturity. This new line will carry a pricing of 5% p.a. And will come into effect immediately i.e. From 15-12-2008, it is expected that the aforementioned mark-up rate will not only compensate for the earlier exorbitant interest charge, but will also support the bank to honorably meet its commitments."
9. ' He further submitted that the above quoted request of defendant was not accepted by the plaintiff-Bank. Learned counsel for the plaintiff has also invited my attention to the definition of "customer" as contained. In section 2(c) of Ordinance, 2001 which is quoted hereunder:-- "(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 of credit has been issued by a financial institution as well as surely or an indemnifier"
10. ' He has further invited my attention to the definition of "finance" as provided under section 2(d) of Ordinance, 2001 which defines "finance" as under:-- "(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 of any kind, purchase and sale of any property including commodities, patents, designs, trade marks and copy-lights, bills of exchange, promissory notes or other instruments with or without buy-back arrangement by a seller, participation terms certificate, musharika, morabaha, musawama, instisnah or modaraba certificate, terms finance certificate; (ii)
11. (iii)
(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; (underlining is mine for emphasis)
12. ' In the end learned counsel for the plaintiff has submitted that leave to defend application be dismissed and suit be decreed as prayed.
13. ' I have heard the learned counsel for the parties and have gone through the record, case law cited at the bar and the provisions of Ordinance, 2001.
14. ' From the reading of letter dated 11th September, 2008 it is crystal clear that defendant had made a request for borrowing amount of Rs,75,000,000 on the terms and conditions contained in letter dated 11th September, 2008 and accordingly a cheque for the aforesaid amount was issued to it by the plaintiff. It is also admitted. Position on record that an amount of Rs,32,83,562 was paid by the defendant to the plaintiff on account of mark-up. The availment of facility in the sum of Rs,75,000,000 by the defendant is admitted. It is also admitted by the learned counsel for the defendant during the hearing that no payment whatsoever on account of principal amount has been paid by the defendant till date. It was further admitted by the learned counsel for the defendant in Court that the said amount is payable by the defendant.
15. ' With regard to the contention of learned counsel that there exists no relationship of customer and bank an examination of definition of "customer" as contained in Ordinance, 2001 would show that customer mean a person to whom finance has been extended by a financial institution. Similarly definition of "finance" as provided under section 2(d) of Ordinance, 2001 provides that "finance" includes equity support or any other financial accommodation provided by financial institution to a customer.
16. ' From the examination of the above, it is established that finance facility of Rs,75,000,000 was availed by the, defendant from the plaintiff and even an amount of Rs,32,83,562 was paid by the defendant to the plaintiff on account of mark-up hence it is not open to the defendant to challenge in these proceedings the relationship of bank and customer. As admitted by learned counsel for the defendant that an amount of Rs,75,000,000 was availed but nothing has been paid towards principal amount and he further admitted that such amount is payable by the defendant to the plaintiff. Learned counsel for the defendant has failed to make out any substantial question of law and facts which requires any evidence to be recorded.
17. ' In the circumstances, leave to defend application filed by defendant merits no consideration and same is dismissed. Consequently, the suit filed by the plaintiff is decreed in the sum of Rs,75,000,000 with costs along with cost of fund from the date of default till realization.