JAWWAD S. KHAWAJA, J.- This suit has been filed by two plaintiffs, namely, Gharibwal Cement Limited and Topaz Holdings Limited. The plaintiffs claim damages for a sum of Rs. 20,00 Crores from the defendants, namely, English Leasing Limited and its Chief Executive Sh. Manzoor Elahi, jointly and severally. The plaintiffs also seek a direction requiring the defendants to return all original security documents including personal guarantees and 8.00 million original share certificates alongwith blank transfer deeds, which were deposited by the plaintiffs with defendant No. 1 to secure lease finance to be provided by the defendant Company to the first plaintiff.
2. A preliminary question relating to the jurisdiction of this Court has arisen during the course of arguments, It is the contention of learned counsel for the defendants that no finance has been provided to the plaintiffs and, as a consequence, the plaintiffs do not fall within the definition of customer as defined in the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (the. Act). 0n this basis, learned counsel has contended that the jurisdiction of the High Court under the Act, which can be invoked by a customer against a banking company is not available to the plaintiffs. The argument of learned counsel for the defendants is based on the circumstance that no amount, by way of finance, has, in fact, been disbursed to the first plaintiff.
Learned counsel for the plaintiffs, on the other hand, has argued that disbursement of finance is not a necessary condition for determining if finance has, indeed, been provided by a banking company to a customer. According to him, finance, as defined in the Act, can in certain situations, be said to have been provided by a banking company even though there may not have been any disbursement of funds.
3. In Order to appreciate the respective contentions of both learned counsel and for case of reference the provisions of the Act defining the terms "customer" and "finance" are reproduced below:-- "customer" means a person who has obtained finance under a system which is not based on interest from a banking company or is the real beneficiary of such finance, and includes a surety or an indemnifier. "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, equity support, lease, rent-sharing, licensing, charge or fee of any kind, purchase and sale of any property, including commodities, patents, designs, trade marks and copy-rights, bills of exchange, promisor notes or other instruments with or without by-back arrangement by a seller, participation term certificate, musharika or modaraba certificate, term finance certificate or any other mode other than an accommodation or facility based on interest and also include credit or charge cards, guarantees, indemnities, letters of credit 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.
4. From a bare reading of the above definitions, it would appear that finance can be provided by a banking company even without a disbursement of funds. Facilities for establishing letters of Credit and all non-fund based facilities including guarantee facilities are, by definition, types of finance which come into existence without an actual disbursement of funds by a banking company.
5. Even otherwise the word disbursement has not been used in the Act while defining the term "finance". Considering the wide scope of the wording employed to define the said term, it would be unjustified to restrict the definition to instances where disbursement has actually been made by a banking company finance can be said to have been provided by a banking company to a customer where both customer and banking company stand irrevocable committed by contract, respectively to receive and provide finance upon such conditions as may have been agreed upon between them. As such, a financing agreement, which obliges a banking company and Customer to do certain acts, may constitute the providing .Of finance by a banking company notwithstanding the fact that disbursement of funds is either deferred or is subject to fulfillment of certain conditions by a customer or is dependant upon the occurrence of a contingency, In this view of the matter, the argument of learned counsel for the defendants that actual disbursement of funds is a necessary attribute of finance, as defined in the Act, is without merit.
6. Having decided the legal contention between the parties, it next needs to be seen if in the circumstances of the present case it can be said that the defendant company had provided finance to the first plaintiff.
7. The admitted position is that the first plaintiff and the defendant company have executed an Equipment Lease Agreement (the "Agreement") dated 12.6.1998. It was argued by learned counsel for the plaintiffs on the basis of the Agreement that mere execution of the Agreement was sufficient to establish that the defendant company had, in fact, provided finance to the first plaintiff even though the disbursement of finance was subject to the fulfillment of certain conditions by the said plaintiff, In support of this contention, learned counsel referred to Article 1 of the Agreement which provides as under:- ARTICLE 1 (LEASED EQUIPMENT)
The Lessor hereby agrees to lease and let to the Lessee and the Lessee hereby agrees to take on lease and hire from the Lessor the equipment (hereinafter called "the Equipment" which expression shall be deemed to include all replacements and renewals thereof and all accessories and additions hereto whether made before or after the date of this lease agreement) more particularly described in Item (1) of the schedule attached hereto which schedule shall be deemed a part of this Lease Agreement (hereinafter called "the SCHEDULE") for the period and upon the terms and conditions herein set forth and SUBJECT ALWAYS to the due and punctual payment of the rent hereinafter mentioned and the due observance and performance of the covenants and conditions herein contained by the Lessee.
8. It was argued by learned counsel for the plaintiffs that the defendant company as lessor had agreed to lease certain equipment to the first plaintiff which had, as lessee, agreed to take the said equipment on lease. He therefore, contended that contractually enforceable commitments had been made by the parties, as set of in the Agreement and this fact, by itself, amounted to finance being provided by the defendant company to the first plaintiff.
9. Read by itself Article 1 of the Agreement, as produced above, does, indeed, tend to support the argument of learned counsel for the plaintiffs, It is, however, to be noted that the agreed finance was to be provided on terms and conditions which have been set of in the Agreement itself. The Agreement has to be read as a whole, In this context, it is necessary to examine Article 2 and Article 5 of the Agreement also.
ARTICLE 2 (INITIAL TERM)
Subject to the provisions for earlier termination as elsewhere provided in this Lease Agreement the initial term (hereinafter called "the Term") of the lease hereby created shall be the period described in Item (5) of the Schedule which term shall commence on the date when the Acceptance Receipt referred to in Article 5 hereof is issued. This lease agreement cannot be cancelled or terminated by the lessee during the initial term thereof.
ARTICLE 5 (DELIVERY OF EQUIPMENT)
(1) Lessee acknowledges that it has selected the equipment including- its design, model, size and capacity, the seller/manufacturer. The Lessee shall inspect the equipment and issue to the lessor an Acceptance Receipt (hereinafter called the Acceptance Receipt) hereof in such form as may be required by the lessor upon delivery of the equipment to the lessee either from the seller named in item (2) of the Schedule (hereinafter called the Seller) or from the lessor as the case may be.
Acceptance receipt shall form an integral part of this Lease Agreement.
(2) .....................................
(3)......................................
10. From the aforesaid provisions of the Agreement, it is clear that the acceptance receipt, mentioned therein, is a material requirement, the issuance of which will, in fact, create the obligation of the defendant company to provide finance. However, the issuance of the acceptance receipt is not an obligatory condition, which has to be fulfilled by the first plaintiff as lessee. There is, in fact, no provision in the Agreement requiring the plaintiff to issue the acceptance receipt. From the wording of the Agreement, it is apparent that the lessee may or may not (at its sole option) issue the acceptance receipt, It is a condition which the plaintiff is not obliged to fulfil although it may be a condition which, when fulfilled by the plaintiff, results in the obligation of the defendant company to provide finance to the plaintiff, In this way, the issuance of an acceptance receipt is materially distinct from the performance of a condition precedent to disbursement of funds, It may be noted that although the non-fulfillment of a condition precedent may result in the refusal of a banking company to disburse funds, a condition precedent is nonetheless a condition which, by contract, a customer has agreed to perform, In the present case, as noted above, there appears to be no contractual commitment by the first plaintiff that it will, in fact, issue an acceptance receipt.
11. The admitted position is that the first plaintiff has opted not to issue the acceptance receipt, envisaged in Articles 2 and 5 of the Agreement, In the circumstances, the only interpretation of the Agreement would be that the obligation of the defendant company to provide finance and that of the first plaintiff to take the equipment on lease has not, in fact, arisen. They are not locked into commitments or reciprocal promises which they are contractually obliged to perform and which, if performed, would lead to the disbursement of the agreed lease finance by the defendant Company. The at necessary for the aforesaid locking in viz. The issuance of the Acceptance Receipt is not itself a contractual commitment or reciprocal promise.
12. The defendant company, therefore, cannot be said to have provided finance to the first plaintiff merely because the two parties had signed the Agreement, It, therefore, follows that the first plaintiff cannot claim to be customer and is thus not entitled to invoke the jurisdiction of this Court under the Banking Companies (Recovery of Loans, Advances Credits and Finances) Act, 1997. The second plaintiff which claims to have deposited certain share certificates and transfer deeds with the defendant company has not made any assertion in the plaint which would establish its status as a customer.
13. Learned counsel for the plaintiffs then argued that the defendant Company had also filed a suit against the plaintiffs before a Banking Court for recovery of an amount claimed by it on the ground that the plaintiff was a customer on account of its having executed the Agreement, It is by now well settled that the actions of contracting parties cannot vest jurisdiction is a Court nor divest it of such jurisdiction in derogation of the provisions of a statute.
14. In the circumstances discussed above and having held that the plaintiffs are not customers, as defined in the Act, it follows that the High Court has no jurisdiction to try this suit. I would, therefore, return the plaint to the plaintiffs under Order VII, Rule 10, CPC for filing the same before a competent Court.