2009 PLP 1215 (CLD)

SYED HAMID ALI SHAH, J.

Plaintiff is private company limited by shares and borrower/customer of defendant No.1. It is asserted in the plaint that defendant No.1 procured from plaintiff blank documents and subsequently filled the same, without knowledge and concurrence of the plaintiffs. The defendant on the basis of fake documents, prepared a mark up basis agreement of Finance, for a sum of Rs.31 million approximately. It is also asserted in the plaint that only 44 Marlas of land in the ownership and possession of respondent No.1, but false and fictitious mortgage was created to include total land Measuring 282 Marlas. Various documents namely Finance Agreement, promissory notes, facility letters, letters of hypothecation, memorandum of deposit of title deeds and letters of guarantee are result of fraud and forgery and liable to be cancelled. The plaintiff claimed damages in respect of loss of business to the tune of Rs.40 Million; Rs.30 million towards mark up overcharged; Rs.0.1 million as expenses and Rs.20 Million as loss of reputation while Rs.10 million on account of mental agony and shock.

2. Defendant in response to the notice, entered appearance, filed application for leave to defend the suit (PLA 109-B of 2003) wherein the assertions of plaint were controverted and various preliminary objections were raised. Defendant was granted leave to defend the suit and the leave application was treated as written statement. Following issues were framed by concurrence, vide order 15-4-2004:-- (1) Whether the plaint does not disclose any cause of action ? OPD (2) Whether the plaintiff was defrauded and was made to sign on a blank documents? OPP (3) Whether the suit is within time? OPP (4) Whether the plaintiffs availed the finance facility and in lieu thereof guarantees were executed and the properties were mortgaged ? OPD (5) Whether the document creating liability against the plaintiffs including finance agreement and memorandum of deposit and title deed dated 1-9-2000 are fraudulent/forged and thus are liable to be cancelled? OPP (6) Whether plaintiffs are entitled to the decree claimed by way of damages ? OPP (7) Whether the defendant has committed any default in performance of its part of contract? OPP (8) Relief.

3. An application under Order VII, Rule 11, C.P.C. was filed by the defendant C.M.A. No.145-B of 2006. It was observed in order dated 5-7-2006 that defendant No.1, objected to maintainability of the suit on the grounds that claim in the suit, is hit by res judicata, and the relationship of banker and borrower is denied which divests jurisdiction of this Court and claim of tortuous damages is not amenable to the jurisdiction of banking Court constituted under the Ordinance, 2001. The plaintiff through order dated 21-9-2006, was asked once again, to answer these objections.

4. Learned counsel for the plaintiff in answer to objections raised and in response to the application under Order VII, Rule 11, C.P.C., contended that plaintiff has impugned the validity and legality of documents, whereby the liability against the plaintiff was created. It is the Banking Court constituted under Ordinance, 2001 which has the jurisdiction to entertain and adjudicate upon the suit of plaintiff. Learned counsel supported this contention by referring to the cases of Al-Rehman Chemicals v. Akhtar Asaleem Syed 2008 CLD 856, Naeem-ud-Din v. Allied Bank of Pakistan and 2 others 2006 CLD 484, ADBP and others v. Yar Muhammad and others 2004 CLD 1084 and State Bank of Pakistan v. Chiragh Son Engineering Ltd. and other 2000 YLR 1198. Learned counsel further submitted that appeal against the decree in the banking suit, is pending therefore no finality is attached to the decree. Instant suit is therefore not barred by res judicata. Learned counsel supported his contention by placing reliance on the cases of Commissioner of Income Tax/Wealth Tax Faisalabad Zone v. Messrs Shehzad and Co. Faisalabad 2006 PTD 2436 and Muhammad Mumtaz Masood and 2 others v. H.B.F.C. and 2 others 1994 SCMR 2287.

5. Learned counsel for defendant on the other hand contended that assertions of the plaint are contentions which the plaintiff raised in application for leave to defend the suit (PLA No.7-B of 2005). Learned Court heard the plaintiff on all the issues raised and dismissed the applications vide order dated 3-2-2006. The suit of the defendant (COS No.35 of 2004) was decreed vide judgment and decree dated 9-3-2006 for an amount of Rs.31.662 million. The plaintiffs on the same assertions, have filed instant suit which is barred by res judicata. The documents which the plaintiff claims to be void were found authentic by the Court and then a decree was passed.

6. Heard counsel for the parties and record perused.

7. The suit of the defendant for recovery Rs.3,16,76,549 (COS No.35 of 2005) consequent upon dismissal of application for leave to defend the suit (PLA 7-B of 2005) through order dated 3-2-2006 was decreed by this Court on 16-3-2006 for a sum of Rs.31.662. It was observed by the Court that defendants (plaintiffs herein) have admitted availing of the Finance Facility and their respective signatures on the scrutiny document are also admitted. It was also observed that entries in the statement of account, tally with the disbursements, as per agreement of finance. The plea that documents were delivered to the defendant Bank, in blank, about 20 years ago was held by the Court, as vague and general plea, not capable of consideration. Learned Judges in chamber found that substantial grounds on fact or on law, for which recording' of evidence is necessary are not made out. The grounds raised in the PLA, are repeated in the instant suit. The decree was passed in Suit No.35 of 2005, therefore, present suit is barred by res judicata: Defendants Nos.3 to 5 have only assailed the decree dated 16-3-200,6 but not the plaintiffs herein. It is final against the plaintiffs and principle of res judicata will apply with its vigor and force, to the case in hands.

8. Additionally, no suit by itself can be barred as res judicata but only the matters or issues involved in it may be barred. To constitute res judicata, within the contemplation of section 11, C.P.C., subject matter of two suits is required, under law to be directly and substantially in issue to warrant application of section 11, C.P.C. The plaintiff seeks cancellation of loan documents, on the plea that same were procured in blank and fake loan facility was created thereupon. The same plea was raised in leave application and was turned down by the Court. The suit was decreed. Instant suit, at this stage, if entertained, it will nullify the effect of decree.

9. There is another angle to view the instant controversy. The claim of the plaintiff, in this suit is that blank documents were procured 20 years ago and fake facility has been created thereupon. There was no legal bar, for the Financial Institution, to procure loan documents in blank. Prohibition on obtaining the signatures on the banking document in blank, was imposed firstly through the provisions of Banking Companies (Recovery of Loans, Credits and Finances) Act, 1997 (now repealed) and then through section 18 of Financial Institutions (Recovery of Finances) Ordinance, 2001. The documents which were executed prior to the enforcement of the Ordinance, 2001, are saved and their validity cannot be challenged, as envisaged in subsection (3) of section 18 of the Ordinance, 2001, which reads:-- Sec.18 "Banking Documents:-- (1) No financial institution shall obtain the signature of a customer on banking document which contains blanks in respects of important particulars including the date, the amount, the property or the period of time in question. (2) Finance agreements executed by or on behalf of a financial institution and a customer shall be duly attested in the manner laid down in Article 17 of the Qanun-e-Shahadat Order, 1984 (P.O.10 of 1984)' (3) Nothing contained in subsections (1) and (2) shall affect the validity of any document executed prior to the date of enforcement of this Ordinance; (4)

10. The blank documents which the customer has signed in blank, prior to the enforcement of Ordinance, 2001 are valid document. The Bank can fill such documents. Signing of blank document amounts to agreeing on implied terms, authorizing the Bank to fill in the date and the amount to a later point of time. Reference in this regard can be made to the cases of Messrs United Bank Ltd. v. President Bazm-e-Salat and another PLD 1986 Karachi 464 Messrs Bank of Oman Ltd. v. East Asia Trading Co. Ltd and 4 others 1987 CLC 288, Habib Bank Ltd. v. Messrs Waheed Textile Mills Ltd. PLD 1989 Karachi 371, National Bank of Pakistan v. Messrs M. Ismail Thakur and sons Ltd. and another 1988 CLC 700 and United Bank Ltd. v. Messrs Sartaj Industries through Isar Iqbal Managing Partner and 6 others PLD 1990 Lah. 99.

11. The plaintiffs have raised whole structure of his case on the foundation that fake finance facility was created, on the basis of blank documents. Their claim of damages is also based on the same foundation. The Bank had the authority to obtain signatures on the blank documents, at the relevant time. Therefore, the whole suit raised on such shaky foundation, has to fall to the ground. The suit, as per assertions of the plaint and on the basis of document filed therewith, does not disclose a cause of action.

12. For the foregoing, the plaint does not disclose a cause of action, is rejected under Order VII, rule 11, C.P.C. Parties to bear their own costs. S.A.K./N 49/L Plaint rejected.