1. ' NAZIM HUSSAIN SIDDIQUI, J.---The petitioners have challenged the order dated 27-4-1995, passed by respondent No,1 the Banking Tribunal, Karachi, whereby the petitioners' application challenging jurisdiction of said Tribunal was dismissed. The facts relevant for decision of this petition are as follows: ' The respondent No,2 M/s. Nat over Motor Lease Ltd. Had filed a suit for recovery of Rs,6,82,729 against the petitioners before said Tribunal on the basis of Pleet Lease Agreement, dated 27th August, 1991, executed by the parties whereby, the respondent No,2 leased out fine motor vehicles to the petitioners and the latter did not pay the lease amount as per the terms of said agreement.
2. The petitioners were served by publication on 13-12-1994 and by bailiff on 22-12-1994; but did not file written statement within statutory period ' of 10 days, as such, by order dated 13-2-1995 they were declared ex parte. Thereafter, the petitioners filed an application under Order VII, Rule 10 read with section 151, C.P.C. Which was dismissed by the order, which has been impugned in this petition.
3. ' The jurisdiction of the Tribunal was challenged on two grounds. Firstly, it was urged that the transaction in question was not covered by the definition "finance", as appearing in the Banking Tribunals Ordinance, 1984, hereinafter referred to as the Ordinance, and secondly, the petitioners resided at Lahore and it being so the Tribunal at Karachi had no territorial jurisdiction in the matter.
4. Both these contentions were repelled by the learned Tribunal. Disposing of the first plea learned Tribunal observed that definition of "finance" included an accommodation or facility under the system, provided on the basis of "lease". It is noted, as is evident from the impugned order, that this ground though was pressed at the initial stage, but was dropped later on. As regards second ground, learned tribunal observed that the agreement in question was executed at Karachi, therefore, the cause of action, if not wholly, in part at least arose at Karachi and in that view of the matter the tribunal had jurisdiction in the matter.
5. ' In order to appreciate the pleas raised in this, matter, it would be advantageous to reproduce sections 2(a), 2(e) and subsection (3) of section 5 of the Ordinance, which are as follows: "Section 2-A:
(a) "banking company" means--
(i) a bank as defined in Banks (Nationalization) Act, 1974 (XIX of 1974);
(ii) a company incorporated outside Pakistan and transacting the business of banking in Pakistan; and
(iii) a company specified in the Schedule; Section 2(e): ' finance' includes an accommodation or facility under a system which is not based on interest but provided on the basis of participation in profit and loss, mark-up or mark-down in price, hire- purchase, lease, rent-sharing, licensing, charge of 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 certificate, Modaraba certificate, term finance certificate or any other mode other than an accommodation or facility based on interest and also includes guarantees, indemnities and any other obligation, whether fund based or non-fund based, and any accommodation or facility the real beneficiary whereof is a person other than the person to whom or in whose name it was provided; ' Subsection (3) of section 5: "No Court other than a Banking Tribunal shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Banking Tribunal extends under this Ordinance, including decisions as to the existence or otherwise of finance and the execution of a decree passed by a Banking Tribunal;"
6. ' Section 13 of the Ordinance empowers the Federal Government to modify the Schedule as to add any entry thereto or omit any entry therefrom. Under this section, the Federal Government on 26th October, 1994 issued a Notification whereby the respondent No,2 were included in the Schedule.
7. ' Mr. Syed Iqbal Ahmed learned counsel for the petitioners contended that though the term "finance" as defined in the Ordinance includes "lease" but the lease are of two types i,e, "finance lease" and "operating lease". Learned counsel submitted that the lease of respondents No,2 is not a "finance lease". He also argued that the International Accounting Standards L A .S. 17, lays the following three tests for a ' finance lease' as per appendix of IAS 17:
(a) Ownership transfer by the end of lease term;
(b) Existence of bargain purchase option in lease contract;
(c) Lease term to be for major part of useful life of assets.
8. ' Learned counsel concluded that in view of the above three tests, the lease in question is not finance lease and it being so the tribunal has no jurisdiction in the matter. Above contention is void of any force. Suffice it to say that the phrases "finance lease" and "operating lease" in the I.A.S. 17 are used in the financial statements of accounting for leases. They have nothing to do with term "lease" as used in the definition of fmance.
9. The terms "finance" as defined in the Ordinance included an accommodation or facility under a system which provided on the basis of participation in profit and loss, mark-up, or mark-down in price, hire-purchase, lease, rent-sharing, - licensing etc. It is not denied that the accommodation/facility, as envisaged in the agreement was availed by the petitioners and the agreement in essence relates to the financial transaction between the parties. Fleet Lease Agreement amongst others contains the following terms and conditions:
(3) The lessor shall upon receiving the Adjustment Rentals hand over possession of the vehicle to the lessee in an acceptable condition together with all import and registration formalities duly completed. The lessee shall sign a vehicle receipt to indicate satisfactory delivery of such vehicle by the lessor and the time and date thereof.
(4) The lessee shall pay to the lessor rental charges as per rates and at the frequency of payments stipulated in relevant Lease Form. Proper receipts shall be issued in respect of such payments.
(5) That the entire rental charges for the first frequency period would become due and payable strictly in accordance with the terms of the individual Lease Form. The first frequency period shall commence on the day the vehicle is ready for delivery to the lease . Irrespective of whether the vehicle may or may not have been put to any use.
(6) That the lessor may at their sole discretion assign the whole or any part thereof of the rentals payable to them by the lessees, in terms hereof, to any Bank or Financial Institution, and the Lessees will upon receiving written intimation, pay the rentals thereafter to the Bank/Financial Institution nominated therein directly. Any change in this agreement shall only he made with prior consent of the said Bank/Financial Institution.
(7) Throughout the agreed period of lease, the vehicle shall remain registered in the name of the lessor and the Road Tax and Other Taxes due shall be paid by the lessor immediately on demand.
10. Any nonpayment or penalty suffered by the lessee on this account, shall be payable by the lessor on demand.
11. Bare reading of above shows that the agreement in question is covered by the in definition of "finance" as given in the Ordinance and the respondent No,2 is a company within the meaning of section 2(a)(iii) of the Ordinance.
12. ' Learned counsel for the Petitioners next argued that the agreement between the parties was executed on 10-4-1988, 27-8-1991, whereas Notification under section 13 of the Ordinance, was issued on 26th October, 1994. According to learned counsel, the Notification could not be retrospective in its effect, as such, the agreements in question were not covered by said Notification. It is noted that the suit was filed before the tribunal in the month of November, 1994 and at that time said Notification was in the field. Under subsection (3) of section 5 of the Ordinance, the Tribunal has exclusive jurisdiction to decide the question as to the existence or otherwise of the finance. Under these circumstances, the tribunal was the only forum available to the respondent No,2 for deciding their claim. The question, in fact, has been decided by the tribunal that it has jurisdiction in the matter and that the case is covered by the definition of finance referred to above.
13. ' Learned counsel for the petitioners also contended that the vehicles were delivered to the petitioners at Lahore, and the petitioners also resided at Lahore, therefore, the cause of action, if any, arose at Lahore and the Tribunal at Karachi had no territorial jurisdiction in the matter. This point has already been decided by the Tribunal and we agree with its finding mentioned earlier.
14. ' Accordingly, we do not find any merits in this petition and the same is dismissed in limine with no order as to costs. #EndJudgment