' AMIN-UD-DIN KHAN, J.---Through this appeal, the appellant/plaintiff has challenged the judgment/order dated 31-5-2010 passed by the learned single Judge of this Court as Banking Court, whereby the plaint has been returned under Order VII, Rule 10 of the C.P.C. For presenting the same before the appropriate forum. The nutshell of order is that the appellant/plaintiff does not fall within the definition of 'Financial Institution' so as to file the suit under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 before the "Banking Court".
2. Learned counsel for the appellant has advanced lengthy arguments and reiterated his stance taken before the learned trial Court and as such prays for setting aside the judgment/order impugned herein and acceptance of this appeal.
3. On the other hand, learned counsel for the respondents has vehemently opposed the stance taken by the learned counsel for the appellant. States that the judgment/order is absolutely in accordance with law and the Banking Courts in Pakistan established under the Financial Institutions (Recovery of Finances) Ordinance, 2001 are having no jurisdiction to try the suit filed by the appellant-Bank/Banking Company.
4. We have heard the learned counsel for the parties at full length and also gone through the record minutely with the able assistance of learned counsel for the parties.
5. The brief facts are that the appellant on 21-9-2006 filed a suit for recovery against the respondents-defendants stating therein that the plaintiff is a 'Banking Company' which is incorporated in Bahrain. The plaintiff-Bank is also transacting in Pakistan through its branches named as Faisal Bank Limited and Meezan Bank Limited. The Universal Weaving Mills which is a registered company in Bahrain, in 1996 approached the plaintiff for grant of finance facility in Bahrain. On account of finance facility awarded to Universal Weaving Mills a finance agreement dated 21-7-1997 was executed between the plaintiff and defendant No.1 and the facility was disbursed to the borrower in Bahrain on 26-8-1998. The second facility in form of `Morabaha Agreement' dated 1-2-1999 was awarded to the Universal Weaving Mills. It is further stated that defendants Nos.1 to 5 are parties against whom an arbitral award was issued by the Gulf Cooperation Council Commercial Arbitration Centre on 5-5-2005 and pursuant to the award a judgment was passed by the Senior Civil Court of Bahrain as mentioned in Para 24 of the plaint. In the plaint the following prayer has been made:- "In view of the above submissions, it is most respectfully prayed that a judgment and decree may be passed in favour of the plaintiff and against the defendants in following manner:
(a) (i) An amount of Pakistan Rupees equal to US$14,803,059.81 which represents the amount that was allowed to the plaintiff in the Award calculated till December 16, 2003;
(ii) compensation in lieu of cost of funds of the plaintiff from December 16, 2003, till the date of institution of this suit; and
(iii) pendente lite mark-up from the date of institution of this suit till a full realization of all the amounts due to the plaintiff.
(b) Arbitration costs in Bahrain including the charges of the Arbitration Centre, translation charges, lawyer's fees; and
(c) Plaintiff's costs and expenses in connection with the current proceedings in Pakistan."
6. We have noticed that learned trial court has noted the facts and arguments advanced by the learned counsel for the parties with full detail, therefore, need not be re-noted here.
7. The most important fact in our view is that the appellant/plaintiff has prayed for recovery of amount on the basis of an award. As the arbitration clause was available in the 'finance agreement' and the appellant-plaintiff has not sought a decree after adjudication by the court on the basis of 'finance agreement', therefore, the plaintiff was to cross two hurdles.
(1) Plaintiff is a "Financial Institution".
(2) Suit on the basis of 'Foreign Award' is competent before the Banking Court.
(1) The appellant-plaintiff is a "Financial Institution" in the light of definition given in the Financial Institutions (Recovery of Finances) Ordinance, 2001. The relevant section 2(a)(i) of the Ordinance is as follows:-
2. Definitions.--In this Ordinance, unless there is anything repugnant in the subject or context--
(a) "financial institution" means and includes--
(i) any company whether incorporated within or outside Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan through its branches within or outside Pakistan and includes a government savings bank, but excludes the State Bank of Pakistan;
(ii) ------
(iii) --------- ' Learned counsel for the appellant has stated that his case falls under section 2(a)(i) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. For discussion it will be appropriate that subsection (1) of section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 be reproduced here for ready reference, as the same is most relevant:-
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.
(iii)---------- (iv)-------- (v)--------- ' The definition of "Banking Company" has been mentioned in subsections (b) and (c) of section 5 of the Banking Companies Ordinance, 1962, which are as follows:-
(5) (b) "banking" means the accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise, and with drawable by cheque, draft, or otherwise;
(c) "Banking Company" means any company which transacts the business of banking in Pakistan "and includes their branches and subsidiaries functioning outside Pakistan of banking companies incorporated in Pakistan".
' The businesses of Banking Companies have been mentioned in section 7 of the Banking Companies Ordinance, 1962 and for doing banking business a license is required from the State Bank of Pakistan in accordance with section 27 of the said Ordinance. It will also be useful to refer to the term "foreign banking company". In this context, section 5(ffa) of abovementioned Ordinance is as follows:- 5(ffa). "foreign banking company" means a banking company, not incorporated in Pakistan, which has a branch or branches doing banking business in Pakistan under a license issued by State Bank of Pakistan in this behalf.
8. In the above noting of statutory provisions and after its perusal it is clear that a "foreign banking company" which is not registered with the State Bank of Pakistan, cannot do the banking business in Pakistan and therefore cannot file a suit under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and is not a "Financial Institution" in the light of said provision of law. We get further support from the perusal of section 3 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001 because a State Bank certifies cost of funds of the banking companies which are registered with the State Bank of Pakistan and those cost of funds are to be awarded in a decree passed by the Banking Court and the word "shall" indicates that without awarding cost of funds no decree can be passed. Furthermore, thorough reading of the definition of "Financial Institution" given in section 2(a)(i) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 leads us to find that the transaction in respect of which the 'banking company' comes to the court must be in Pakistan, as the words employed in section 2(a)(i) "any associated or ancillary business in Pakistan through its branches within or outside Pakistan". In this view of the matter, it is necessary that the transaction must be in Pakistan and the branch of 'financial institution' may be outside Pakistan. In this case the transaction took place in Bahrain and the appellant-plaintiff is not registered with the State Bank of Pakistan and the transaction has been claimed directly by the plaintiff company in Bahrain and not through its any branch in Pakistan, therefore, we agree with the findings recorded by the learned trial Court, except the findings noted in the last line of Para 15 at page 25 of the judgment that for banking or associated or ancillary business in Pakistan a company must be incorporated in Pakistan.
(2) Now we come to the second point which was actually in issue in the suit, as we have noted supra that the appellant-plaintiff has come to the court for implementation of an award issued in Bahrain, as per the appellant/plaintiff, in accordance with the 'finance agreement' between the parties there is an arbitration clause. In accordance with the arbitration clause matter was referred to the Arbitrators, Gulf Cooperation Council Commercial Arbitration Centre, who issued an Award in favour of the appellant and upon the award a judgment has been passed by the Senior Civil Court of Bahrain. For implementation or adjudication on the basis of foreign awards no provision is available in the Financial Institutions (Recovery of Finances) Ordinance, 2001. On this score also the suit was not competent before the Banking Court.
9. In the light of what has been discussed above, we see no force in this appeal, same stands dismissed with costs.