' JAWAD HASSAN, J.---This appeal before the Court is filed under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance of 2001) against judgment and decree passed on 07.08.2013 whereby the suit filed by the Respondent Bank was decreed to the tune of Rs,17,94,618.61/- along with cost of funds.
2. Brief facts of the case are that the Appellant approached the Respondent Bank for Home Finance Facility for the purchase of Plot No,12/2, Block-F, Punjab Small Industries Co-operative Housing Society Ltd. Lahore measuring 14 marlas (the "Plot") and construction thereon and the Bank allowed the same to the Appellant to the tune of Rs,2,000,000/- and disbursed an amount of Rs,7,20,000/- to the Appellant on 20.09.2004 for the purchase of Plot and remaining amount of Rs,12,80,000/- for construction thereon. It is further alleged that the Appellant executed certain documents for securing the Finance Facility in favour of Respondent Bank. On default of payment amounting to Rs,18,41,930/- the Respondent Bank filed a suit for recovery of the said amount against the Appellant in which the respective Judge of the Banking Court, after hearing the parties and perusal of record, decreed the suit of the Respondent. Bank to the tune of Rs,17,94,618.61/- vide impugned judgment and decree.
3. Learned counsel for the Appellant argued that the Banking Court has passed the impugned judgment and decree in sheer violation of 2001 Ordinance. Learned counsel further contended that the Court below has failed to take into consideration that the agreements dated 02.09.2004 and 22.02.2005 and the mortgage documents had become void upon disclosure of fraud qua the Plot.
4. The counsel for the Appellant stated that he purchased the Plot after the Bank acceded his request and only after the approval of his request of the finance, he entered into an agreement to sell with the seller of the Plot but with the condition that the legal opinion on the title of the Plot will come from Bank's approved lawyer. After the approval given by the lawyer of the Bank, the Appellant purchased the Plot on 21 September 2004. The counsel further argued that on 8 February 2011, the Appellant received a notice from the Provincial Ombudsman to appear and when he appeared, he was informed that he was not the real owner because the allotment of the seller was bogus. The counsel further argued that after finding this, he contacted the Bank to complain of the gross negligence of the Bank but he still continued to pay the installment. Lastly, the counsel argued that instead of resolving the matter the Bank tiled the suit against him for not paying the finance he availed.
5. Learned counsel further maintained that when the agreements and mortgage were void, the Respondent Bank was not entitled to any markup, costs or cost of funds. Learned counsel further argued that the judgment of the learned Banking Court is silent regarding the objection of the Appellant relating to flaws of Statement of Accounts filed by the Respondent Bank. Learned counsel also submitted that the impugned judgment and decree is a result of misreading and non- reading of available record. Learned counsel also averred that the title of the Plot was defective and it was the duty of the Respondent Bank to verify the genuineness of the Plot. Learned counsel also maintained that it was the mistake by both the parties including the Respondent Bank, as such, the sole responsibility cannot be shifted on the shoulders of the Appellant in shape of payment of markup etc. Learned counsel further added that on account of mutual mistake contract becomes void and in case of a void contract it is the Appellant to claim consideration and not liable to pay any interest or damages. To support his contentions learned counsel placed reliance on the case titled Mt. Rani Kunwar v. Mahbub Baksh, AIR 1930 Allahabad 252 and section 20 of the Contract Act, 1872 (the "1872 Act") in which the Court held that when contract is void on account of mutual mistake, only remedy of vendee is to claim consideration or purchase money and not interest or damages. Learned counsel, further relied on Pullock and Mulla, The Indian Contract Act, 1872 page 463 which reads as "a mistake is material to the formation of the agreement, if it such that had the party mistaken had realized his mistake, he would not have entered that agreement". We have examined and found that this is not relevant to this case in view of the discussion below.
6. Learned counsel for the Respondent Bank vehemently contested the arguments raised by the learned counsel for the Appellant and submitted that there is no illegality in the impugned judgment and decree and the same has been passed in accordance with law. Learned counsel further contended that the Appellant has failed to prove his assertion that the Finance Agreement has become void and only the Respondent Bank is responsible for the same. Learned counsel also contended that the instant appeal is liable to be dismissed on the ground that the Appellant had availed the Finance Facility and also executed certain documents in this regard in favour of the Respondent Bank, as such, cannot resile at this stage and under obligation to pay the finance availed, which is never disputed.
7. A perusal of the record reveals that admittedly on the application of the Appellant, the Respondent Bank approved the Finance Facility in the type of "Home Construct (Plot Purchase)" through Offer Letter dated 01.09.2004 containing certain terms and conditions and in pursuance of which the Appellant while accepting the same signed and thumb marked Finance Agreement dated 02.09.2004. The said Offer Letter clearly depicts that the Appellant has availed the Facility of Finance from the Respondent Bank. The contention of the learned counsel for the Appellant that the agreement had become void and he cannot be A burdened with markup etc. Has no force as the agreement executed between both the parties was a Finance Agreement rather than an agreement between the seller and purchaser of the plot and the same cannot be said to be a void instrument owing to disclosure of fraud at belated stage. It is interesting to note that the Banking Court has rightly observed at page 2 that it is strange that instead of taking the ownership of any omission on his part, the defendant is shifting the responsibility on the plaintiff contending that the plaintiff bank was duly bound to make complete verification about the titled of the plot intended to be purchase by the defendant.
8. So far as the contention of the learned counsel for the Appellant regarding section 20 of the 1872 Act is concerned which is reproduced as under: Agreement void where both parties are under mistake as to matter of fact. Where both the parties to an agreement are under a mistake, as to a matter of fact essential to the agreement, the agreement is void"
9. Moreover, in the case titled, Agricultural Development Bank of Pakistan v. Malik Iftikhar Ahmed (2002 CLD 1280 Lahore) it was held as under: "Where both the parties were not under a mistake but only one party was under misconception of facts, the agreement was not void under section 20 of Contract Act, 1872."
10. In this instance; the Bank was under no mistake as under the terms of the Facilitation Agreement, the subject matter of the said Agreement was the facilitation of the specified amount to the Appellant to buy the Plot, it was not an agreement to sell and there is no mistake here as to the fact that the Appellant was getting some money from the Bank. Moreover, in the Indian judgment of Sri Tarsem Singh v. Sri Sukhminder Singh, AIR 1998 Supreme Court 1400, it was held by the Indian Supreme Court which is as follows: "This Section provides that an agreement would be void if both the parties to the agreement were under a mistake as to a matter of fact essential to the agreement. The mistake has to be mutual and in order that the agreement be treated as void, both the parties must be shown to be suffering from mistake of fact. Unilateral mistake is outside the scope of this Section."
' The question as to whether Section 65 of the Contract Act (reproduced hereunder) is attracted in the instant appeal shall also be discussed in length: "65. Obligation of person who has received advantage under void agreement or contract that becomes void. ---When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it."
' This Section, which is based on equitable doctrine, provides for the restitution of any benefit received under a void agreement or contract and, therefore, mandates that any "person" which obviously would include a party to the agreement, who has received any advantage under an agreement which is discovered to be void or under a contract which becomes void, has to restore such advantage or to pay compensation for it, to the person from whom he received that advantage or benefit.
' In order to benefit from section 20 of the Act, a party has to show a mutual consent. A Mutual consent, which should also be a free consent, as defined in sections 13 and 14 of the Act, is the sine qua non of a valid agreement. One of the essential elements which go to constitute a free consent is that a thing is understood in the same sense by a party as is understood by the other party. It may often be that the parties may realise, after having entered into the agreement or after having signed the contract, that one of the matters which was essential to the agreement, was not understood by them in the same sense and that both of them were carrying totally different impressions of that matter at the time of entering into the agreement or executing the document."
11. In this Appeal before us, the Appellant has failed to show this Court that there was a mutual Agreement with the Respondent Bank. In fact the Respondent Bank approved the Finance Facility in the type of "Home Construct (Plot Purchase)" through Offer Letter dated 01.09.2004 containing certain terms and conditions and in pursuance of which the Appellant while accepting the same signed and thumb marked Finance Agreement dated 02.09.2004. The said Offer Letter clearly depicts that the Appellant has availed the Facility of Finance from the Respondent Bank and it cannot be imagined that it was a mutual agreement for the purchase of the Plot by both the parties.
12. However, this same doesn't apply here under the principle laid down in Manzoor Qadir v. United Bank Limited 2013 CLD 2116 Lahore wherein it was held as follows: "Section 65 of the Contract Act, 1872 protected the respondent Bank from wrongful advantage taken by any person (of the bank's negligence) and such person was bound to restore the same in its entirety---No illegality existed in the impugned order."
13. In light of the above principle, the matter is within the ambit of section 65 of the Contract Act and the Appellant doesn't have any grounds to argue this at length.
14. Moreover, under sections 2-d and 2-e of the 2001 Ordinance, the Appellant is bound to return the amount obtained through finance and the Respondent Bank has rightly filed the suit for recovery on default of repayment of Finance under section 9 of the 2001 Ordinance. Sections 2-d and 2-e of the 2001 Ordinance is reproduced for ready reference which reads as follows:
(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, trademarks and copyrights, 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 advanced 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.
(e) ---obligation includes ---
(i) any agreement for the repayment or extension of time in repayment of a finance or for its restructuring 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 representations, 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 amount 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"
15. It is clear that the Appellant has obtained the finance for the Bank as stated above after first filing an application and then offer letter. This was neither the partnership nor the agreement to purchase with the Bank, hence, Bank is not liable for the mistake or the fraud on the Plot, Hence, section 20 of the Contract Act, 1872 is not attracted in this case. The Appellant in order to get rid of its obligations to repay the finance, is bringing this meritless arguments.
16. In Amtex v. Bank lslami Pakistan Limited (2016 CLD 2007), this Court has elaborated the obligations of the customers in repayment of the finance by laying down which is as follows: "The learned counsel for the parties are on common ground with regard to the fact that the plaintiff is a customer and the defendants are financial institutions. The dispute which is sought to be resolved is regarding "a default in fulfillment of any obligation with regard to any finance". This is a sine qua non and confers a right on the customer or the financial institutions to bring a suit under section 9. Correspondingly, this constitutes the jurisdictional facts which must be in place for this Court to take cognizance of the suit. It will be borne in mind that this Court is a special Court and exercises limited jurisdiction which is hedged, in by the terms of the law.
' The provisions of section 9 will have to be read in conjunction with the definition of obligation given in section 2(e) of the Ordinance, 2001. It can be seen from a reading of the definition of the term "obligation" that it includes any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment or extension of time in payment of any other amount relating to finance. The learned counsel for the plaintiff agrees that this part of the term 'obligation' does not apply to the subject matter of the instant suit and we are here concerned with the part (ii) of the term 'obligation'. At first blush, section 2(e)(ii) is exclusively related to the representations, warranties and covenants made by or on behalf of the customer to a financial institution and not vice versa. The obligation envisaged by section 2(e)(ii) is only an obligation confined to certain duties cast upon the customer and which have to be fulfilled towards financial institutions and in case a breach occurs with regard to the representations and covenants made by the customer, this will give rise to a cause of action or the necessary jurisdictional facts to institute a suit under section 9 of the 2001 Ordinance. The learned counsel for the plaintiff does not take cavil with the proposition that the obligation envisaged by section 2(e)
(ii) is an obligation on behalf of the customer towards the financial institution. However, he has sought to expand the scope of this obligation by relying upon the word "includes" which has been used while defining the term 'obligation'. The word "includes" according to him has been judicially interpreted to mean that the legislature intends to expand the meaning of a term rather than to restrict it and, therefore, the obligation under section 2(e) (ii) must be extended to include within itself the representations and warranties on behalf of the financial institution as well. This, it is submitted, is, erroneous and has no legal legs to stand upon."
17. Lastly, the act of the Appellant for not doing a proper due diligence before the purchase of the Plot is hit by the principle of caveat emptor in which the superior courts have held that let the buyers be beware' as explained in the case of Said Azam Khan v. Adam Khan, 1999 PLD 75 Peshawar, since it was the duty of the Appellants to verify the title of the transaction in hand and the liability of the same can't be put on the Respondent.
18. We, therefore, find no illegality in the impugned judgment which has been passed in consonance with the spirit of law, the Ordinance of 2001 hence does not call for interference by us in the instant appeal.
19. In the circumstances presented hereinabove, this appeal being devoid of any merit, is hereby dismissed with no orders as to cost.