' SHEZADA MAZHAR, J.---Plaintiff filed a suit for the recovery of Rs,198,374,824 and damages under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (F.I.O., 2001) against Soneri Bank Limited and two others. Notices were issued through all applicable modes. In response to the notices, defendants Nos. 1 and 3 entered appearance on 24-4-2005 and filed separate applications for leave to defend the suit on behalf of both the defendants. Defendant No, 2 did not enter appearance, therefore, he was proceeded against ex parte. The applications for leave to defend the suit filed by the defendants were allowed and on 27-6-2008 following issues were framed in the suit:
(1) Whether the suit is not maintainable and the plaintiff has no locus standi? OPD
(2) Whether the suit is insufficient stamped? OPD
(3) Whether the statement of accounts does not support, the assertions of the plaint; OPD
(4) Whether the suit is barred by the principle of estoppel and acquiescence? OPD
(5) Whether the plaint is liable to be rejected under Order VII, Rule 11, C.P.C.? OPD
(6) Whether the defendants, being authorized dealers, have failed to fulfil their legal and contractual obligations in that capacity, if so, to what effect? OPP
(7) Whether the plaintiff is entitled to damages claimed, if so, to what extent? OPP
(8) Relief.
2. The matter was adjourned for arguments on the legal objection qua the maintainability of the suit. On 20-5-2009 once again the matter was adjourned for arguments on preliminary issues Nos.
1 and 5.
3. Learned counsel for the defendant No, 1 submits that suit under section 9 of the F.1.0., 2001 by the customers only lies if relationship of banker and customer exists between the parties. In the present case, no relationship of banker and customer exists between the parties as plaintiff has already repaid the finance facility availed. Further submits that suit by customer lies if some default in fulfilling the obligation with regard to the finance has been alleged against the banker. In the present case, plaintiff requested for the grant of letter of credit facility for purchase of Indonesia Steam Coal which was allowed to the plaintiff as per the terms and conditions settled between the parties and on receipt of documents from the foreign supplier the letter of credit was paid. Learned counsel further submits that even the plaintiff has re-paid the amount of finance facility along with the profit/commission to the defendant No,1 before filing of the present suit therefore no case is made out before this court. Learned counsel further submits that claim of the plaintiff in the plaint is that defendant should have verified about the defendant before issuance of the letter of credit.
The defendant failed to do so therefore plaintiff has suffered damages due to this act of the defendant No,
1. Learned counsel submits that these kinds of damages cannot be claimed in a banking suit as in the banking Court only "finance" related cases can be filed. In support of his contentions learned counsel has relied upon (2003 CLD 1026), (2001 CLC 1904), (1998 CLC 1718), (2009 CLD 49), and (2003 CLD 1843).
4. Learned counsel for defendant No, 3 also made his submissions on almost the same lines. He further added that there is no agreement of the plaintiff with defendant No, 3, therefore, defendant No, 3 do not fall in the definition of customer or financial institution. In banking court suits can be only against customers or financial institutions. In this regard relied upon (2008 CLD 1326) and (PLD 2003 Lah. 358). Further submits that suit for damages is not maintainable before this Court and in this regard relied upon (2006 CLD 167), (2009 CLD 432), (2002 CLD 1170), (2006 CLD 1147), (2003 CLD 931) and (2003 CLD 1165). Further submits that plaintiff has not attached statement of account with the plaint and therefore the same is liable to be dismissed and in this regard relied upon (2008 CLC 9651)(sic.), (2004 CLD 1232) and (2004 CLD 587). Learned counsel for defendant No,3 further submits that no documentary evidence available on record to show that defendant No,3 was attorney of the foreign supplier and therefore this suit is liable to be dismissed being not maintainable on this ground alone.
5. On the other hand, learned counsel for the plaintiff submits that defendant No, 1 has failed to comply with the applicable laws, rules, regulations and relevant documents and therefore suit is maintainable before banking court/this court. Learned counsel submits that defendant No,1 is bound to perform in accordance with the provisions of Foreign Exchange Regulations Act, 1947 and the directions of State Bank of Pakistan as contained in Foreign Exchange Manual. Submits that any agreement in violation of Foreign Exchange Regulations Act or the directions contained in Foreign Exchange Manual is unlawful and void. Submits that present suit has been filed on failure of defendant No, 1 to fulfil his obligations with regard to finance received by the plaintiff. Further submits that in the suit, apart from other claims, the basic claim of the plaintiff is that defendant No,1 was not entitled to receive the amount of finance and profit thereon as defendant had failed to fulfil the obligations mentioned under the law. Submits that this Court have the powers to bifurcate the claims and can delete/rejected the claims which do not fall within the jurisdiction of this Court.
Submits that plaintiff has sought restitution of his money paid in relation to "finance" and for such relief this Court had exclusive jurisdiction. In support of his contentions learned counsel for the plaintiff had relied upon (2008 CLD 765), (2006 CLD 1147), (2009 CLD 432).
6. I have heard the arguments and gone through the record.
7. From the perusal of the case file it is revealed that the case of the plaintiff as set out in the plaint is that defendant No, 1 was under a statutory obligation to comply with the directions and requirements as set out in the Foreign Exchange Manual issued by State Bank of Pakistan under Powers contained in section 20(sic.) of the Foreign Exchange Regulation Act, 1947. For proper understanding the relevant clauses are reproduced here under:-- 21.---(1) No person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of this Act or of any rule, direction or order made thereunder.
(2) Any provision of, or having effect under, this Act that a thing shall not be done without the permission of the Central Government or [the State Bank], shall not render invalid any agreement by any person to do that thing, if it is a term of the agreement that that thing shall not be done unless permission is granted by the Central Government or [the State Bank], as the case may be; and it shall be an implied term of every contract governed by the law or any part of (Pakistan] that anything agreed to be done by any term of that contract which is prohibited to be done by or under any of the provisions of this Act except with the permission of the Central Government or [the State Bank], shall not be done unless such permission is granted."
' Under section 21(1) read with section 21(2) of the Act ibid, defendant No, 1 had no power to enter into any contract or agreement which would directly or indirectly evade or avoid in anyway the operation of any provision of the Foreign Exchange Regulation Act, 1947, or of any rule direction or other order made thereunder. It is the claim of plaintiff in the plaint that due to act of defendant No, 1 in violation of above mentioned clauses, defendant No, 1 had failed to perform his obligations with regard to the "finance" therefore suit is maintainable before this Court.
8. Suit before this Court can be filed under section 9(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which states:--
9. Procedure of Banking Courts.---(1) Where a customer or a financial institution commits a default in fulfillment 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 office of the financial institution as may be duly authorized in this behalf by power of attorney or otherwise."
' In the above section three words are of importance namely "Customer", "Finance" and the "Obligation". All these words have been defined in section 2(c), (d) and (e) of the F.I.O., 2001, as "Customer" means a person to whom finance has been extended by 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 a surety or an indemnifier", "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-rights, bills of exchange, promissory notes or other instruments with or without buy-back arrangement by a seller, participation term certificate, musharika, morabaha, musswa ma, 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 is, 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 advance or granted;
(vi) 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. "obligation' includes:-
(i) any agreement for the repayment or extension of time in repayment of a finance or for its restricting 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 covenants made by or on behalf of the customer to a financial institution at any stage, including representation, warranties and covenants with regard to the ownership, mortgage, pledge, hypothecation or assignment of, or other charge on assets or properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfillment of a promise; and
(iii) all duties imposed on the customer under this Ordinance; and
9. From the above provisions of law, it is clear thatiA under F.I.O., 2001 only those issues can be solved which are between the customers and the financial institutions in respect of finance and that too on the ground that any A obligation has not been fulfilled.
10. When the above definitions are read with the facts of the present case it is clear that plaintiff was a customer of the defendant No,
1. However, the said finance facility have already been re- paid by the plaintiff therefore now the question is whether repayment of finance will disentitle the "Customer" to agitate any default of the financial institution with regard to the "obligation" which financial institution was required under the law to perform at the time of grant or during the period when finance facility was in use of the plaintiff?
11. In order to institute suit under section 9 only one condition is mentioned i,e, "default in fulfillment of any obligation with regard to any finance".
In the plaint it is alleged by the plaintiff that defendant No, 1 has failed to comply with the directions issued by the State Bank of Pakistan with regard to letter of credit and that any agreement contrary to the said instruction is void and therefore even if executed by the plaintiff cannot be used against the plaintiff in view of section 21(1) and (2) of the Foreign Exchange Regulation Act, 1947. It is well settled principle of law that Circulars of State Bank of Pakistan have to apply as a law and have binding effect like other provisions of law as Circulars have been issued under the authority and same must be treated as having the force of law.
12. Therefore, the alleged default of defendant No,1, with regard to the failure of defendant No,1 to follow State Bank instructions, covered under the obligation as defined under section 2(e) of F.I.O., 2001. In this regard reliance is placed on "Tri Star Industries (Pvt.), Ltd. v. State Bank of Pakistan and another, (2004 CLD 257), wherein it is held that Definition of finance' and 'obligation' as provided for under section 2(d) and (e) respectively of the Ordinance ibid are wide enough to cover the dispute urged in this petition. In case either customer or financial institution commits default in fulfillment 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 filing a plaint. The obligations in terms of State Bank of Pakistan Circular and Instructions of H.B.L. Sought to be enforced through this petition come within the purview of 'obligation' envisaged under section 9 of the Ordinance, 2001 as discussed above."
13. The alleged default is made during the subsistence of finance facility and this Court has the jurisdiction to adjudicate upon such defects.
14. Before dealing with the claims raised by the plaintiff in his plaint I would like to point out that the case law referred by the learned counsel for the defendants Nos. 1 and 3 deals with the cases where customers had raised claims of tortuous liability which admittedly cannot be raised in Banking Court.
15. If a claim is based on breach of contract for finance the same will be dealt with under section 9(1) of the F.1.0., 2001, however, if the claim is based on tortuous act then Banking Court has no jurisdiction. In this regard reliance is placed on "Abdul Rehman Allana v. Citi Bank", (2003 CLD 1843).
16. Now the claims as raised by the plaintiff in its plaint includes:--
(a) U.S. $ 2,400,000 (United States Dollars Two Million Four Hundred Thousand) (equal to approximately to Rs,142,512,150 at the exchange rate of Rs, 59,38 to U.S $ 1) being the payment made by AWT to Soneri Bank for retirement of the shipping documents pertaining to the 40,000 metric tons of Indonesia steam coal received from the fraudulent foreign seller under the aforementioned letter of credit;
(b) Rs, 216,108 (Rupees Two Hundred and Sixteen Thousand One Hundred and Eight) being the amount of commission and fees paid by AWT to Soneri Bank for the opening and the purported extension of the aforementioned letter of credit;
(c) Rs, 44,527,171 (Rupees Forty Four Million Five Hundred and Twenty Seven Thousand One Hundred and Seventy One) being amount of additional expenditure and loss incurred in acquiring and using alternate fuels in replacement of the Indonesia steam coal not delivered by the fraudulent foreign seller, and lost profit on lower cement production; and
(d) Rs, 5,101,790 (Rupees Five Million One Hundred and One Thousand Seven Hundred and Ninety) being the amount of legal fees and other costs and expenses incurred to date in pursuing the fraudulent foreign seller for redress abroad, and continuing.
When the above claims are read with the discussion made above, the claim raised at (a) and (b) above can be tried under F.I.O., 2001 whereas rest of the claims cannot be entertained before the Banking Court. In view of the law laid down in "Messrs Shazim International (Pvt.) Ltd. And 6 others v.
Messrs First Women Bank Ltd. (2009 CLD. 432) and the statement made by the learned counsel at the bar, the claims mentioned at (c) and (d) are hereby deleted as the said claims do not fall within the jurisdiction of this Court.
17. From the -above discussion, the suit filed by the plaintiff is maintainable before this Court however, only to the extent of claim raised in para 46 (a) and (b) of the plaint. The rest of the claims are hereby deleted from the plaint. Now the matter is fixed for 4-11-2013 for appointment of local commission for recording of the evidence of the parities.