' UMAR ATA BANDIAL, C J.---Learned counsel for the petitioner has made submissions in aid of this petition and refers to the order of the .Court dated 21-1-2009. The contents of the said order relevant for the present purposes are reproduced below: "On 5-1-2006 the respondent bank issued a pay order in favour' of the manufacturer of the vehicle in the amount of Rs,8,79,000 out of which Rs,87,900 was already taken as pre-deposit from the petitioner. A sum of Rs,7,91,000 was therefore lease financed to the petitioner upon the terms contained in agreement dated 23-12-2005. The repaynient schedule at page 11 of the petition shows that the outstanding finance was subject to markup at 17% per annum. The petitioner made the down payment punctually on 23-1-2006 but paid nine instalments until October 2006 with delay The vehicle was delivered to the bank on 13-11-2006 whereupon the bank issued notice to the petitioner to pay an amount of Rs,8,32,969 in order to obtain delivery of vehicle. Thereafter the bank issued another notice on 19-11-2006 demanding again the said payment. There is no notice on record confronting the petitioner with the fact or the consequences of any default by the petitioner and the payment necessary to cure any over dues. Instead the bank demanded a payment of Rs,8.32,969 for delivery of the vehicle and termination of the finance lease given to the petitioner.
' The learned counsel for the petitioner submits that the bank demanded the said payment which, together with equity amount and the petitioner's paid installment amounts equals Rs,10,53,000. This figure represents' the excess over the financed amount to be Rs,2,21,320, which represents the profit derived by the bank in 11 months of lease finance. Based on the above findings, learned counsel alleges a 30% per annum rate of return was demanded by the bank which is contrary to the terms of lease finance agreement and tantamount to wanton recovery from the petitioner. The petitioner could Snot oblige the respondent bank which sold out the vehicle without further notice.
' The learned counsel for the respondent bank submits that the petitioner teas in default of payment of his rental obligation to the extent of delay in the payment of each installment.
Therefore, the pre-emptive action taken by the respondent bank was justified. He seeks time to explain the calculations behind the recovery effected by the said bank from the petitioner. He also opposes maintainability of this petition on the ground that it arises from a contractual obligation and that an alternate remedy is available before the learned Banking Court.
' For the purpose of this court, it is material that on the date of delivery of the leased car, the petitioner had paid all instalments that were due. At, best the allegation against the petitioner was of delay in making such payments. The bank declined delivery of the vehicle to recover an amount which is prima facie indefensible under the terms of the finance agreement and is in contravention of the SBP Regulation No,0-6 pertaining to re-possession in auto loans. There was failure by the respondent bank to confront the petitioner with his specific default and the means to cure the same. Prima facie the Court notices oppressive conduct and illegality in the dealings of the respondent bank whilst administering the finance lease to the petitioner that is granted and managed pursuant to the regulatory and supervisory direction of the State Bank of Pakistan. The foregoing points are such that require deeper consideration with the assistance of State Bank of Pakistan.
' Admit. Notice. The respondent banks shall file written statement within two weeks."
2. Learned counsel for the respondent bank has raised an objection to the maintainability of this petition. That point has been dealt with in a similar situation in Ms. Safina Aslam and others v.
Muslim Commercial Bank and another (2011 OLD 18). He has thereafter rendered able assistance and disclosed all material documents bearing reference to the auto loan transaction availed by the petitioner. The fact sheet of the case provided by the respondent bank reproduces the payment dates of installments by the petitioner. Not a single installment is overdue for more than 90 days in order to attract classification under the Prudential Regulations for Consumer Financing ("Prudential Regulations") issued by the SBP. It is noted from the table of payment dates that installment of October 2006 was paid on 1-11-2006 with a delay of 30 days. On that date the petitioner became current with all his instalments and obligations.
3. Nevertheless after delivery of vehicle on 13-11-2006 the respondent bank chose to terminate the auto loan by letter dated 15-11-2006 without issuing any prior notice of termination. Payment of Rs,8,32,969 was demanded as condition for the leased vehicle to be delivered to the petitioner. The notice of termination is surprising because the only prior notice dated 18-10-2006 issued by the respondent bank called for clearance of two instalments with additional charges; that notice was duly complied by the petitioner on 1-11-2006..
4. Accordingly, the termination of auto loan was effected: firstly, without notice and secondly, without the case of the petitioner incurring classification under Regulation R-14 of the Prudential Regulations of the SBP. Result 'of the said action was that on a financed amount of Rs,7,91,000 disbursed on 5-1-2006, the petitioner was asked vide notice dated 15-11-2006 to pay Rs,8,32,969.
This is in addition to the earlier down payment of Rs,87,980 made by the petitioner and the payment of ten instalments along with markup and additional charges. Considering only the principal amount of the loan and the payments made by the petitioner, the respondent bank therefore sought to derive profit of Rs,2,21.320 for ten months financing of loan amount of Rs,7,91,000. In rough terms such rate of profit translates to a rate of return nearing 30% per annum.
The bank achieved the said object by the sale of the financed vehicle prior to its delivery to the petitioner and by the refund of Rs,1,47,268 to him out of its total market price received by the bank.
5. There are two glaring defects in the conduct of the respondent/bank. Firstly, the termination letter dated, 15-11-2006 is not preceded by any notice in terms of Regulation of Prudential Regulations issued by SBP. The specific default period of 90 days is not attracted to the facts of the case and consequently re-possession of the financed vehicle, in the circumstances of the case is contrary to the Prudential Regulations. Secondly, the respondent bank lured the petitioner into making his account current as on 1.-11-2006 in order for the bank to renege the auto loan by demanding the full loan amount plus profit as condition for delivery of the vehicle otherwise received by the bank on 13-11-2D06. There is an element of mala fide and coercion in the conduct of the respondent bank in so far as it ignored its own notice dated 18-6-2006. There was also failure by the respondent bank to confront the petitioner with his specific default and the means to cure the same.
6. On Court's direction the matter was also inquired by the SBP. Comments by SBP have been perused. These are cursory, superficial and without reference to the facts of the case and wrongly assume the petitioner's case to fall under substandard classification under Regulation R-14 of Prudential Regulations. The SBP has not even satisfied itself whether the policies of the respondent bank accord with the Prudential Regulations of the SBP.
7. This matter is symptomatic of banking practice by the respondent bank. Such unfair action, in particular, deceptive inducement followed by unilateral renunciation of contractual obligation to honour a finance commitment, needs to be scrutinized by the SBP. The SBP is directed to probe the transaction and dealings by the bank and to take action against the respondent bank in accordance with law and facts and in order to determine a suitable compensation package for the petitioner.
8. This petition is accordingly allowed with the foregoing observations.