1. ' Vide this order, I intend to dispose of the office objection dated 9-8-1999 whereby it has been noted that from a perusal of the contents of the plaint the suit appears to be a banking suit.
2. Although it is not stated as much, however, the office objection implies that the suit should proceed before the learned Banking Judge of this Court under the provisions of the Banking Companies (Recovery of Loans) Act, 1997 rather than on the original side of this Court.
3. ' Briefly, the facts of the matter are that in-between 10-10-1973 to 18-4-1982, the plaintiffs took loans from the defendants under various agreements for the purpose of construction of the Avari Hotels at Karachi and Lahore. On 30-12-1989 a re-structuring agreement was entered into between the plaintiff and the defendants whereby the plaintiff agreed to pay back a portion of the defendants' loan in installments and for the remainder issue fully paid-up shares in the plaintiff-Company to the defendants.
4. ' According to the learned counsel under the re-structuring agreement the debts were to be paid in installments and now as of 5-8-1999 the entire debts of defendants Nos.1 to 7 have been fully satisfied under the re-structuring agreement and nothing remains to be paid and the said agreement has come to an end as it stands fully performed. Consequently, the plaintiff is entitled to the discharge of the securities being held by the defendants for the repayment of such debt which the defendants are refusing to do despite numerous notices sent to them for this purpose by the plaintiff and hence the suit on inter alia the above cause of action for a declaration that the securities given by the plaintiff to the defendants in lieu of the loans advanced by the latter stand discharged and a mandatory injunction directing the defendants to return all such securities to the plaintiff including property documents etc. It is further prayed that a perpetual injunction be issued restraining the defendants from carrying out any propriety audit into the affairs of the plaintiff or otherwise exercising any rights, authority or power under the now defunct re-structuring agreement dated 30-12-1989.
5. ' Based on the above facts Mr.Muhammad Ali Sayeed for the plaintiff has submitted that as the entire debts of the plaintiffs towards the defendants have been satisfied therefore, there is no relationship of borrower/customer and banker between the parties and consequently the matter should proceed on the original side of this Court. Learned counsel is of the opinion that the provisions of the Banking Companies (Recovery of Loans) Act, 1997 are not applicable at all to the facts of the matter as the same disclose that the suit has not been filed either for damages/accounts against the defendants arising from a loan or finance but only for the purpose of redeeming mortgaged security which was given by the plaintiff to the defendants and for certain other ancillary relief.
6. ' Dr. Farogh Naseem who also appears for the plaintiff has supported the arguments of Mr.Muhammad Ali Sayeed and has referred to certain annexures filed alongwith the plaint whereby the various defendants have certified that their dues have been satisfied by the plaintiff. In his opinion too there must be a relationship of borrower/customer and banker between the parties before the matter can come within the purview of the Act. In this regard learned counsel has relied upon the following case law:-- ' Mst. Parveen Jaffer v. Bankers Equity Ltd. NLR 1998 UC 567; Nasimuddin Siddiqui and another v. U.B.L.
7. And another 1998 CLC 1718; Mst. Bor Bibi and others v. Abdul Qadir and others 1996 SCM R 877; Messrs Conforce Limited v. Messrs Rafique Ind. Ltd. PLD 1989 SC 136 and Muhammad Rafique v.
8. Messrs H.B.L. 1994 SCM R 1012.
9. ' Mr. Mehmood Mandviwala learned counsel for the defendants has also supported the views of the learned counsel for the plaintiff. He has frankly conceded that the dues of the defendants have been satisfied. However, he supports the proposed impugned propriety audit of the plaintiff to be conducted by the defendants in terms of the re-structuring agreement. Learned counsel further submits that section 9 of the Act contemplates that before any proceedings can be filed in Banking Court, the borrower/customer or the Banking Company must commit a default in fulfilling any obligation with regard to any loan or finance. Consequently, it is the learned counsel's view that no default has been committed by the defendants in fulfilling any obligation with regard to the loan extended by them to the plaintiff. In fact as per the learned counsel as all the obligations of the plaintiff towards the defendants stand discharged there cannot be any question of commission of any default in fulfilling any obligation with regard to any such loan or finance and hence it is quite evident that the suit should proceed on the original side. Learned counsel has referred to the prayer clause of the suit and submitted that basically the suit is one for redemption, of the securities/mortgages given by the plaintiff to the defendants.
10. ' I have heard all the learned counsel and my opinion is as follows:-- ' It would be seen that the jurisdiction of a Banking Court established under the Act is given in section 7(4) of the said Act which unfortunately is not very comprehensive or for that matter precise. It reads as follows:-- "(4) No Court other than a Banking Company shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Banking Court extends under this Act, including a decision as to the existence or otherwise of a loan or finance and the execution of a decree passed by a Banking Court."
11. ' From a bare perusal of the aforementioned provision of the Act it appears that the jurisdiction given to a Banking Court begs the question. In these circumstances recourse would have to be made t the other provisions of the Act in order* discover as to what is the precise jurisdiction of a Banking Court. In this respect the title of the Act suggests that it has been enacted for the purpose of recovery of loans, advances, credits and finances and prescribes a summary procedure for the same except in cases where leave to defend has been given to the defendant. Similarly, the object for which the Act has been promulgated is to repeal and with certain modifications to consolidate and enact the Banking Companies (Recovery of Loans) Ordinance, 1979 and the Banking Tribunals Ordinance, 1984. Consequently, the objects clause of these two Statutes (now repealed) would have to be examined which would be helpful in reaching a conclusion as to the objects of the Act.
12. Again a bare reading of the objects clause of these two laws would indicate that they were enacted for the purpose of recovery of loans under a system based upon interest and one based upon mark-up respectively.
13. ' A further indication of the jurisdiction of a Banking Court is found in section 9(1) of the Act which provides as follows:-- "Procedure of Banking Courts. ---Where a borrower or a customer or a Banking Company commits a default in fulfilling any obligation with regard to any loan or finance the Banking company or, as the case may be, the borrower or customer, may institute a suit in the Banking Court by presenting a plaint duly supported by a statement of account which shall be verified on oath in the case of a banking company by the Branch Manager or such other officer as the Board of Directors of a banking company may authorize in this behalf. Copies of the plaint shall also be filed along therewith in sufficient numbers so that there is one copy for each defendant and once extra copy."
14. Again from a bare reading of the above section it is clear that the jurisdiction of a Banking Court is only attracted where a borrower/customer or a Bank commits a default in fulfilling any obligation with regard to any loan or finance. Only then could they institute a suit in the Banking Company by presenting a plaint duly supported by statement of account etc. So also it would be seen that the definition of the word "borrower" as per section 2(c) means a person who has obtained a loan under a system based on interest from a Banking Company and "customer" as per section 2(d) means a person who has obtained finance under a system which is not based on interest from a Banking Company. Of course, the definitions of the terms "Finance" and "loan" as given in section 2(e) and (f) of the Act are very wide and include not only an outright loan of money but involve numerous financial instruments as well including bills of exchange, promissory notes etc., the purpose of which is to cover all possible forms of banking and financial transactions.
15. ' In view of all the above provisions of the Act, in my opinion, in order that a Banking Court may assume jurisdiction in any particular matter it first must be established that there is a present relationship of borrower/customer and banker between the parties and further that some default has been committed by either party with regard to any loan or finance, obtained by the borrower/customer from the Bank as a consequence of such relationship. In the present matter it is admitted by all concerned that although it may be that in the past there was a relationship of borrower/customer and banker between the parties but at present there is none as all the amounts owed by the plaintiff to the defendants have been fully paid back. In fact, the suit has not been filed by the plaintiff against the defendants for any alleged default in fulfilling any obligation by the defendant with regard to any loan or finance. On the other hand, the suit has been filed by the plaintiff for the purpose of redeeming securities deposited with the defendants as consideration for the loans extended by the defendants to the plaintiff. An ancillary prayer of the plaintiff is that the propriety audit proposed to be conducted by the defendants into the financial affairs of the plaintiff be injected against. Such propriety audit is referred to in clause 21 of the Restructuring Agreement dated 30-12-1989 the purpose of which is to give some financial control over the affairs of the plaintiff-Company to the defendants. Such purpose is manifest in the letter addressed to the plaintiff by ICP (defendant No,1) a copy of which has been filed as Annexure JJ-1 to the plaint, which is critical of the financial affairs of the plaintiff-Company as regards its indebtedness to various banks/financial institutions, its debt servicing, failure to pay dividents, huge accumulated losses and unpaid tax demands etc. However, again the fact is that the said letter does not refer to any overdue loans at all as far as the defendants are concerned. In my view, therefore, the letter under reference addresses the defendants rights as shareholders in the plaintiff-Company and not as their Bankers and does not at all concern the rights and obligations between the parties as to any financial engagement in their capacity as banker and customer respectively. As to the cases relied upon by Dr. Farogh Naseem, in Nasimuddin Siddiqui and another v. U.B.L. And another and Mst. Parveen Jaffer v. Bankers Equity Limited (supra) my learned brother Rasheed Ahmed Razvi, J. Has also come to the same conclusions as myself and accordingly I fully concur with these conclusions, For all the foregoing reasons, in my opinion, this suit is not a banking suit within the meaning of the Banking Companies (Recovery of Loans) Act, 1979 as neither is there any relationship of borrower/customer and Banker between the parties and nor has any default been committed by either party with regard to any loan or finance obtained by the plaintiff from the Bank as a consequence of such relationship. In the circumstances, this suit shall proceed on the original side of this Court. . Office to list C.M.A. 6685/99 in due course and till such time status quo to continue.