' Plaintiffs i,e, Messrs Grace Textile Mills (Pvt.) Limited and another filed a suit for recovery of Rs,5,78,70,468.40 as 'Insurance claim alongwith damage" against the following:--
(1) Habib Bank Limited.
(2) Messrs Platinum Insurance Company Limited.
(3) Messrs Silver Star Insurance Company.
(4) Messrs National General Insurance Company.
(5) Messrs Pakistan General Insurance Company Limited.
(6) Messrs Cooperative Insurance Society of Pakistan Limited.
' It was pleaded in the plaint that land, building, machinery and other assets of the plaintiff- Company were required to be insured under the finance agreement. And that it was upon defendant No,1' (Habib Bank Limited) recommendation that plaintiff-Company obtained insurance from defendant No,2 i,e, Messrs Platinum Insurance Company Limited vide Policy No,LHR/MA/ FP/058/09/95 for a sum of Rs,3,50,000 against damage by fire or lightening etc. And that premium of the policy for the period 15-6-1995 to 14-6-1996 was paid by the plaintiff-Company. And that it was upon receipt of documents of insurance policy that plaintiff-Company discovered Co- Insurance Clause by which defendants Nos,3 to 6 (other insurance companies) were included in the list of Insurers with insurance liability particularized in para.5 of the plaint. And that premium of Rs,57,000 paid by the company was statedly proportionately shared by defendants Nos,2 to 6 i,e, the insurance companies. And that at the time of insurance, defendant No,2 (the leading insurer) did not disclose to the plaintiff-company by the clause relating to co-insurance by defendants Nos,3 and 4. As per pleadings on the morning of 3-4-1996, fire broke out in the factory of the plaintiff No,1, causing extensive damage to the machinery/ fittings/fixtures, building etc., which the plaintiffs evaluated at Rs, 143,82,868.40. And that the damage caused by fire was surveyed by the surveyors of defendant No,1 as well as other surveyors, who assessed the loss at Rs,21,79,173, which after deduction was shown at Rs,14,58,060. As per plaintiffs, the surveyors dishonestly assessed the loss on the instructions of defendant No,2 at a lower amount, though the plaintiff had suffered gigantic loss as stated above. And that an application under section 20 of the Arbitration Act was filed which was later withdrawn to maintain the present suit. And that despite all efforts neither defendant No,2 nor defendants Nos, 3 to 6 (the insurance companies) paid the insurance money as defendants Nos,3 to 6 denied their liability by claiming that no co-insurance was executed with them and the documents thereto had been forged. And that as a consequence of non-settlement of the claim, the factory had to be closed down .w,e,f, 4-6-1996, causing recurring loss to the plaintiffs and, thus, eliminating the entire investment made by the plaintiff. In para. 13 of the plaint, it was particularly pleaded that "the losses accrued to the plaintiffs due to non-settlement of their insurance claim by the defendants". And that the plaintiffs, thus, gave the break-up of the damages and compensation purportedly claimed by them against the defendants at Rs,5,78,70,468.40, for which amount decree was sought against the defendants with costs.
3. PLAs were filed by the defendants. The same were unconditionally allowed. Following 11 issues were framed on 12-10-2001:--
(1) Whether the plaint does not disclose any cause of action against the defendants and the same is liable to be rejected under Order 7, Rule 11, C.P.C.? OPD
(2) Whether this Court lacks the jurisdiction to try and adjudicate the suit as against the defendants? OPD
(3) Whether the suit has been competently filed. If not to what effect? OPP
(4) Whether the present suit is a counterblast to the suit bearing C.O.S. No,97 of 1998 titled "Habib Bank Limited v. Grace Textile Mills (Pvt.) Limited etc."? OPD
(5) Whether defendant No,1 Bank has committed any 'fault in fulfilment ' of any obligation with regard to the finance facility? OPD
(6) Whether the suit is barred by limitation? OPD
(7) Whether the suit is liable. To be stayed in view of the proceedings filed by the plaintiff-company under section 20 of the Arbitration Act, 1940 before the Civil Courts at Lahore? OPD
(8) Whether the suit is not maintainable against defendant No,6 for non-compliance of section 70 of the Cooperative Societies Act, 1925? OPD
(9) Whether the suit is premature? OPD
(10) Whether the plaintiff is entitled to the decree for damages. If so, to what amount? OPD
(11) Relief.
3-A. After framing of issues, parties were put to proof through evidence. Evidence was led by the parties and the case came up for final arguments.
4. As per information supplied by the learned counsel for the parties, C.O.S. No,97 of 1998 titled Habib Bank Limited v. Grace Textile Mills (Pvt.) Limited etc., was decreed for a sum of Rs,35,925,558.05 against the plaintiffs vide judgment and decree dated 9-2-2000. After the decree the project/ matter was taken over the C.I.R.C. And the project thereto is stated to have been sold under the provisions of relevant law.
4-A During arguments,. The main stress was laid by the learned counsel for the defendants on Issues Nos,1 and 2. They emphasized that the plaint does not disclose any cause of action against defendant No,1 i,e, Habib Bank Limited, as this suit for damages does not arise out of the finance, wherefor, this Court does not enjoy the jurisdiction to try and adjudicate upon the present suit. They pleaded for rejection of the plaint under Order VII, Rule 11, C.P.C. Learned counsel for defendants relied upon the cases of "E.F.U. General Insurance Limited v, Chairman, Banking Tribunal No, 1" PLD 2001 Lahore 313 and "Messrs United Bank Limited v. Messrs Adamjee Insurance Company Limited "1988 CLC 1660.
4-B Contrarily, the learned counsel for the plaintiffs submitted that the suit as filed arose out of the finance agreement, whereunder, plaintiff No,1 was obligated to-obtain insurance. And that since the insurance Company (defendant No,2) was recommended by the Bank, therefore, the Bank alongwith other insurance companies is liable to pay damages as claimed by the plaintiffs. And that the insurance companies fall within the definition of indemnifiers to bring them within the scope of Financial Institutions (Recovery of Finances) Ordinance, 2001 or the Act of 1997.
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5. I have considered the submissions of the learned counsel for, the parties and have also attended to the record as well as evidence. The plaint has been structured . To implead Habib Bank Limited as defendant No,1 alongwith insurance companies (defendants Nos, 2 to 6) on the basis of pleadings contained in para. 4 of the plaint. The only bridge between defendant No,1 and other defendants is the purported "recommendation" by defendant No,1 to the plaintiffs to obtain insurance from defendant No,2". It is, however, an admitted case of the plaintiffs that the insurance policy was obtained by plaintiff No, 1 itself and the premium thereunder was also paid by plaintiff No,
1. The plaintiff has not shown as to how mere recommendation by defendant No,1 places the burden of acts and omissions of insurance companies (defendants Nos, 2 to 6) upon Habib Bank Limited.
6. Even otherwise, no document whatsoever has been tendered in evidence to prove even the purported recommendation. Be that as it may, it has not been pleaded by the plaintiffs in the plaint that the so-called recommendation by defendant No,1 can bring into existence any contractual relationship between defendant No,1 and other defendants to make defendant No, 1 /the Bank liable to pay the insurance amount for or on behalf of the insurance companies upon their failure to settle the insurance claim of the plaintiff. Even in evidence, no privity of interest or contract has been proved against defendant No,1 to bring the Bank in the position of insurance company or to make it liable to pay damages/compensation to plaintiffs on the basis of their insurance claim against defendants Nos, 2 to 6. The law is well settled that a Banking Company or a customer can bring a suit against each other for defaults arising out of the 'finances'. The default agitated in the present plaint, obviously, does not arise out of the 'finance'.
' The insurance companies were not Insurers of plaintiff's obligations under the finance agreement towards Habib Bank Limited. The insurance' companies extended insurance against losses through fire or otherwise of building, machinery etc. Under the contract of insurance between the plaintiffs and defendant No,2 etc. Plaintiffs have not been able to show that financial obligations under the finance agreement between them and defendant No,1/Bank were undertaken by defendants Nos,2 to 6 to be settled by them upon default of the plaintiffs. In view thereof, defendants Nos, 2 to 6 cannot be held to be guarantors or indemnifiers to fall within the definition of the 'Customers' under section 2(c).Of the 2001 Ordinance. These insurance companies (defendants Nos, 2 to 6) also admittedly are not financial institutions in terms of section 2(a) or other provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001.
8. I am fortified in my above view by celebrated judgment of an Honourable Division Bench of the Karachi High Court, pronounced in the case of "United Bank Limited v. Messrs Adamjee Insurance Company Limited" (1988 CLC 1660). The same view was adopted by this Court on the b psis of said judgment in the case of "E.F.U. General Insurance Limited v. Chairman, Banking Tribunal No,1" PLD 2001 Lahore 313, wherein, it was held that the insurance company is an indemnifier for the loss of the insured, but it is not an indemnifier in the sense of definition of "borrowers or customers" as set out in the Banking Laws.
9. Since I have come to the conclusion that plaintiff's claim for damages and compensation does not arise out of the 'Finance' and no default under the Insurance Act was committed by defendant No,1 to indemnify the plaintiffs or to pay their insurance claim or otherwise any damages on that basis. And that the insurance claimed was based upon indemnity of the insurance companies to the plaintiffs and not to Habib Bank Limited. It is, thus, obvious that this Court has no jurisdiction to proceed with the present suit and pronounce a judgment therein. I shall, therefore, abstain from giving any opinion on other issues as framed by this Court lest case of the parties is prejudiced by opinion of the Court, which lacks jurisdiction in the matter.
10. As a result, the present case falls within the scope of Rule 10 of Order VII and not within the ambit of Rule 11 of Order VII, C.P.C. Thus the plaint is ordered to be returned for presenting the same if so advised, to the Court of competent jurisdiction. Office shall complete the necessary formalities for return of the plaint. There shall be no order as to costs. Disposed of as above.