The plaintiffs have claimed Rs. 3,64,704 on the allegation that Khybel Express Limited Peshawar were the agents of the plaintiffs for selling air tickets on credit which was known to the defendant No. 1. Khyber Express Limited, which is in liquidation, issued and delivered to the plaintiffs a cheque dated 30-4-1968 drawn upon defendant No. 2 for Rs. 1,84,956.46. This cheque was delivered to defendant No. 1 on 1-5-1968 who presented the same for collection on 30-5-1968. Two more cheques dated 15th May, 1968 for Rs. 1,63,076.64 and Rs. 16,671.30 were delivered by Khyber Express to the plaintiffs who deposited them with the defendant No. 1 on 16-5-1978. All the three cheques were deposited with a branch of defendant No. 1 at Peshawar. The defendant No. 1 presented these cheques to defendant No. 2 for collection on 30th May 1968. On 12th June 1968, the plaintiffs were for the first time informed by defendant No. 1 that the cheques have been dishonoured. The plaintiffs have alleged that due to mala fide and wilful delay and/or negligence on the part of the defendant No. 1 in failing to clear the said cheque in the normal course of business and presenting the same with the defendant No. 2 for collection, the aforesaid three cheques were dishonoured when they were finally presented, as a result of which the plaintiffs have suffered a loss of Rs. 3,64,704. The defendant filed their written statement and denied their liability. The following Issue No. 10 is being tried as a preliminary issue;-- Whether this honourable Court has jurisdiction in the matter?
The parties have not led any evidence on this issue and have only relied on the averments made in the plaint, written statement and the documents filed with the plaint.
2. Mr. Mansoorul Arfin the learned counsel for the defendant No. 1 has contended that the Peshawar branch of defendant No. 1 has its separate and distinct entity from defendant No. 1 and should be treated as an indepen--dent Company/Bank. He has referred to sections 7, 12, 13 and 15 of Ordi-- nance XIX of 1949 (National Bank of Pakistan Ordinance, 1949) and contended that each branch of defendant No. 1 is a separate and independent entity from the Bank itself and therefore as the entire cause of action has arisen at Peshawar this Court has no jurisdiction to try the Suit. Section 6 provides that Head Office at Karachi shall be the principal register, of all shareholders of the Bank.
Section 7, provides that the Bank shall cause to be maintained at the offices of its Local Boards branch registers of the shareholders. Section 11 provides that the Head Office of the defendant No. 1 shall be at Karachi. Section 12 provides that the general superintendence and direction of the affairs of the business of the Bank shall be entrusted to the Central Board which may exercise all powers and do all such acts and things as may be exercised by the Bank and are not by the Ordinance expressly directed or required to be done by the Bank in general meeting. Under section 13 Local Boards have been established each at Karachi, and Lahore, which shall without prejudice to powers conferred upon the Central Board have power within the prescribed limits generally to transact all the usual business of Bank. Mr. At-fin states that now a Local Board has been con-- stituted at Peshawar also. From these provisions the learned counsel infers that each of the Local Boards should be treated as a Head Office. The establishment of the Local Board does not mean that it will be a substitute for the Central Board. Local Boards have been created merely to facilitate the Management and the business of the Bank. The establishment of Local Boards does not amount to bifurcation of the Central Board or Head Office A of the Bank which is at Karachi. It is, therefore, clear that the Head Office of defendant No. 1 is at Karachi with branches all over Pakistan, having Local Boards generally to transact all the usual business of the Bank or that may be prescribed. From the aforestated provision the defendant No. 1 have failed to establish that each branch of the defendant No. I is separate and distinct and independent of the Bank itself.
3. In support his contention that each branch has to be considered as a separate Bank the learned counsel has relied upon (1878) 3 A C 325, 1912 AC 212 (1914)15AER617and(1954)2AER226.
4. In Henrey Prince and others v. Oriental Bank Corporation (1878)3AC325,the defendant-Bank had branches at Sydney, Murramburah and Young, the branch at Sydney apparently the head branch.
Plaintiff-appellant held a promissory note for -- 429.95 made by Messrs H & G who were storekeepers at Young. Messrs N & G had their account with the Banks Branch at Young but bad no account at M or S. The note was made payable not at Young but at branch Murramburah. The appe113nt lodged the note with BNSW their banker for the purpose of collection. BNSW then lodged over the note to respondent's Bank at Sydney for sending it to M where it was payable. On 3rd April when the note fell due M branch sent to S branch a transfer draft in favour of BNSW for --758-35- 8d being for four separate items, one of which was H & G's note for -- 429.96. These entries were duly entered in the corresponding books of M & Y branches. On 4th April H & G's store was destroyed by fire. On 5th April M branch asked S Branch to cancel the transfer draft in favour of BNSW and return the promissory note dishonoured which was accordingly complied with. On 7th April S branch gave the appellant notice of the dishonour of the note. On the basis of evidence the finding was that the makers of the note had not paid any money in respect of the note into the Bank. The appellant had contended that what passed between M & S branches and remittance from M to S was equivalent to a payment of money to S. The Privy Council observed: "The case really turns upon the position or status of these branch Banks. In principle and in fact they are agencies of one Principal Banking Corporation of firm."
To support this observation reliance was placed by Privy Council on Clode v. Bayby 12M&W51, where it was held that for the purpose of estimating the time at which notice of dishonour should be given, the different branches were for that purpose to be regarded as distinct. Reference was also made to the case of Wood Land v. Fear 7E&B519where it was held "that a joint stock Bank was bound to pay the cheques of a customer at that branch only at which he kept his account, and had not violated its engagement with the customer by refusing to pay his cheque at another branch". Lastly Granett v. McKewan Law Rep. (8Ex.10was noticed by the Privy Council.
5. In Rex v. Lovitt (1912 A C 212) following observation was made;-- "Although branch banks are agencies of one principal firm, it is well settled that for certain special purpose of banking business they may be regarded as distinct trading bodies."
After referring several authorities Lord Robson observed: "In each of these cases, the Courts having regard to the necessary course of business between the parties, held that the bank had in some measures localised its obligation to its customer or creditor, so as to confine it, primarily at all events, to a particular branch."
6. In Clare & Co. v. Dresdner Bank (1914) 15 A C R 617) the plaintiff a firm of foreign bankers carrying on business in England had a claim with the Berlin Branch of the defendant-Bank and at the time of outbreak of war between England and Germany there was a balance standing on their credit.
The plaintiff wrote to London Branch a letter requesting the payment of the amount stand--ing on their credit at the Berlin Branch. No such demand was made for payment at the Head Office or the Berlin Branch. The money was not paid and the plaintiff thereupon brought an action to recover Rowlatt, J. Observed as follows;- "It seems to me, however, that locality is an essential part of the debt owing by a banker to his customer, and that his liability to pay is limited to the place where the account is opened. As a general rule, no doubt, a debtor has to seek out his creditor and pay him, but in the case of a bank with several branches I do not think that that rule can apply. Money has a different value in different parts of the world, even although it is expressed in the same currency, and I cannot con-- ceive it possible that a .Man with -- 1,000 to hi: credit at a Bank in New Zealand could come to London and demand payment of that sum from a London Branch of that bank without giving any consideration for that convenience, or without giving time to the branch in London to ascertain whether he was in fact a customer of the New Zealand Bank and had that amount to the credit of his account there. I come to the conclusion, therefore, although the question does not seem ever to have been raised before, that there is no obligation on a bank with branches in different countries to pay in one country a debt due to a customer on current account at a branch in another country."
7. Again in the Arab Bank Ltd. v. Barclays Bank (Dominion, Colonial and Overseas) (1954) 2 A E R 226, somewhat similar question was involved. 1n this case the A Bank had a current account with B Bank of Jerusalem. A Bank was declared absentee and B Bank under the provision of law had paid the amount to the custodian appointed by Israel Government. The main discussion in the case was on the point whether A Bank's right to obtain payment of the sum at their credit on their current account was totally abrogated by the outbreak of war, or whether the right was merely suspended.
However, during discussion while referring to the case of Jachimson v. Swiss Bank Corpora--tion (1921) 3 K B 110,the following observation was made :- The case decides, in my judgment rightly, that a customer must make a demand for payment at the branch where his current account is kept before he has a cause of action against the Bank.
Generally, it is the duty of a debtor to seek out his creditor and tender the amount of his debt, but there is nothing to prevent parties, from agreeing, if they wish, that that shall not be the duty of the debtor, and it was held that a contract of current account necessarily implies an agreement that that shall not be the Bank's duty: otherwise the whole object of the contract would be frustrated.
The balance at the customer's credit is only payable at the branch where the current account is kept, and so the customer must go there or send his instructions there before he can get his money. and finally Lord Reed in his speech observed; Accordingly, I am of opinion that on May 15, 1948, there was a debt of --. 582,931 due by the respondents to the appellants, and that it was a debt situated in Jerusalem where alone it was payable. Further performance of the contract of current account was prevented by the outbreak of war so that no further banking services could be performed by the respondents for the appellants, but the debt fell within the class of accrued rights and was not abrogated. The respondents have paid the amount of the debt to the Custodian of Absentee Property in Irsael, and, if this was a debt situated in Israel after May 15, they were bound to make that payment and the appellants cannot recover anything in this action. To succeed, the appellants would have some how to establish that any debt owing to them was not, after May 15, situated in Israel, because it is only in that case that the respondents would have been wrong in making payment to the Custodian in Israel.
8. It is thus obvious that the contention raised by the learned counsel for the defendant No. 1 in a generalised manner cannot be accepted. The branches of a Bank are its agencies and can be treated distinct separate from the Bank only for specialised purpose in respect of matters relating to the accounts opened in that branch. The reason for this view is obvious. It would be difficult for the Bank to carry on its business by means of branch if a customer who kept an account in one branch might draw cheque o another branch or the head office and demand that it should be cashed there because the officials at one branch do not know the state of a customer' account at another branch. For this reason the consensus is that the obligation of a Bank to pay the cheques of a customer rested primarily on the branch where he kept his account and in that case the Bank can right. Fully refuse to cash the cheque at another branch. Nowadays as the branches are being opened in every part of the Country as well as in foreign countries, restriction have been imposed on remittances abroad, value an exchange rate of currencies is fluctuating every day and considering the business convenience and exigencies and for proper discharge of it duties to some extent the Bank has to localise its obligations to itcustomers or creditors. Therefore unless otherwise agreed in the case of payments under the account maintained at the branch and for estimating the time at which notice of dishonour should be given, different branches are to be treated distinct and independent.
9. The learned counsel for defendant No. I referred to London Provincial and South Western Bank Ltd. v. Buzzard (1918) 35 1 T R 142where it was held that a stop to one branch of a Bank is not an effective stop on cheque drawn on another branch of the same Bank. This principle is based on the same special reason on which the obligations of the Bank are localised. This does not establish that each branch is to be treated as a separate and independent Bank.
10. Except for specialised business purposes all branches and head office constitute only one Bank.
This finds support from observation made in Paget's Law of Banking, 8th Edition at page 262 where it is stated that "where a crossed cheque is transmitted by one branch to another or the head office for collection . . . . ., the whole system would be treated as one bank, and the protection of the statute would ensure through all stages of the operation of collection". Further reference can be made to the case of London City and Mid Land Bank Ltd. v. Gordon (1903) A C 240where it was held that drafts drawn by one branch on another branch or on the head office of the same bank or vice versa are not cheques or bills, there being no distinct drawer and drawee. In this way the branches and head office have been treated as one Bank. A contrary view was expressed by Bailhacha, J. In Ross v. London County and Westlminister & Parr's Bank Ltd. (1919) 1 K B 678but Paget has termed this decision to be wrong. Again in Prince v. Oriental Bank Corp., it was held that any internal change by transfer of shares and election of directors do not change the identity of corporation and the opening of new branch is no change in the constitution. The corporation remains the same and the branches and Head Office constitute but one undertaking. The Head Office and the branches, except for special business, purposes are treated as one entity and a branch is not only a part of the corporation but is an agency of its principal office.
11. In the present case no demand has been made in respect of payment under a current account.
The entire suit is based on torts and alleged negligence of the defendant No. 1, its officers and employees in discharge of their duties as bankers. As each branch of the Bank is an agency of its principal office, for any negligence of a branch office, the Bank will be held liable. The liability in such cases cannot be restricted to the branch where negligence has been committed.
12. In the circumstances it has to be seen whether this suit could have been filed at Karachi. Mr. Mansoorul Arfin the learned counsel for the defendant No. 1 has contended that by virtue of section 120, C. P. C. Sections 16, 17 and 20 of C. P. C. Are not applicable to the High Court in exercise of its original civil jurisdiction. And as neither the defendant's branch which dealt with the matter is located in Karachi nor any part of the cause of action has arisen at Karachi, the Court has no jurisdiction. On the other hand Mr. Liaquat Merchant the learned counsel for the plaintiff has referred to PLD 1964 Kar.
11. No valid reasons have been advanced to persuade me to disagree with this authority. Mr. Arfin attempted to distinguish by stating that the present case relates to a statutory corporation whereas in this judgment case related to a Public Limited Company. This can hardly be any ground for not applying the principles laid down in PLD 1964 Kar.
11. It has not been pointed out how and in what manner the defendant No. 1 can claim a special privilege which has not been conferred by the statute. I am in respectful agreement with the observation made in PLD 1964 Kar.
11. The claim against the defendant No. 1 is for recovery of damages suffered by the plaintiffs due to the alleged negligence of the branch office of the defendant No. I at Peshawar and its officers. This is not a case where any demand has been made in respect of a current account at Peshawar nor does the matte relate to such specialised business obligations and exigencies which may attract the exceptional rule that a Branch may be treated as distinct and independent Bank from its principal office.
My finding on the Issue is therefore in the affirmative. The suit shall now be fixed for trial on other Issues.