2003 PLP 653 (CLD)

(2) Habib Bank Limited. (3) United Bank Limited. (4) Muslim Commercial Bank Limited. (5) Allied Bank Limited; and (6) State Life Insurance Corporation of Pakistan.

2. Upon settlement of claims of plaintiffs Nos. 1, 2, o and 4 against the defendants, the learned counsel for the parties jointly requested for dismissing the suit of the said plaintiffs as not pressed. Accordingly, by order, dated, 4-7-2002, suit/claim of plaintiffs Nos.1 to 4 was dismissed as per joint request of the learned counsel for the parties.

3. It is to be noted that State Life Insurance Corporation of Pakistan is one of the plaintiffs to the extent of its own separate claim, though arising out of a consortium agreement. Question thus arose as to whether State Life Insurance Corporation (State Life) could fall within the definition of. "Financial Institution" as given in section 2-A of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

4. The learned counsel for the plaintiffs stated that under sub-clauses (i), (ii) and (iii) of section 2-A of the Ordinance. 2001, Financial Institution includes any company transacting the business of Banking or any associated or ancillary business and a financing company or a credit investment institution or any company authorized by law to carry out any similar business. Reference thereupon was made to Life Insurance (Nationalization) Order, 1972, whereunder, State Life Insurance Corporation was established and business of the Corporation was defined in section 14(2)(e) of the Order of 1972 to include advancing or lending money on security or otherwise. Learned counsel for the plaintiffs thereupon, stated that the words employed in the above-said section 14(2)(e) ibid are almost synonymous to the words used in section 7-A of the Banking Companies Ordinance, 1962, which defines the business of Banking "as the borrowing, raising or taking up of money; the lending or advancing of money either upon or without security ...." It was thus stated that State Life Insurance Corporation falls within the definition of financial institution to sue a customer or a borrower under Financial Institutions (Recovery of Finances) Ordinance, 2001. It was further asserted that the finance/loan disbursed through all the plaintiffs by one agreement, wherefore, exclusion of State Life would have exposed the parties to a risk of conflicting judgments, hence the present suit.

5. I have considered the arguments of the learned counsel for the plaintiffs and have also examined the provisions of law referred to by him. Section 7(1) of the Banking Companies Ordinance, 1962 defines the forms of business in which Banking company may engage. It reads as under:-- "

7. Forms of business in which banking companies mat engage.

(1) In addition o the business of banking, a banking company may engage in any one or more of the following forms of business, namely.-- (a) the borrowing, raising or taking up of money; the lending or advancing of money either upon or without security..."

6. The abovesaid section has been reproduced for containing the definition of business of Banking allowed to Bank. Endeavour of plaintiff No.6 i.e. State Life Insurance Corporation is to reinforce its case by stating that under section 14(2)(e) of the Life Insurance (Nationalization) Order, 1972, State Life has the power and function to advance and lend money either upon or without a security which is the same function as that of a Banking Company defined under section 7(1)(a) of the Banking Companies Ordinance, 1962. By raising this argument, learned counsel for the said plaintiffs has overlooked the opening words of section 7(1) of the Ordinance of 1962, which only empower a Banking Company to engage in any one or more of the businesses defined in the said section. State Life insurance Corporation is obviously and admittedly not a Banking Company falling within the provisions of Banking Companies Ordinance, 1962 as regards its incorporation establishment, approvals, licences, sanctions, functions, powers, business etc. etc.

7. Similarly, sanctity has been attached to the entries in the Statement of Account or Bankers' Books under the Bankers' Book Evidence Act, 1891. Bankers books have been defined in subsection (3) of section 2 of the Act of 1891 to include "ledgers, day books, cash books, account books and all other books used in the ordinary business of Banks". Upon certification as per subsection (8) of section 2 above, the certified copy of any entry in a Bankers' book becomes receivable as prima facie evidence in all legal proceedings under section 4 (ibid). It has not been argued that the books of State Life Insurance Corporation are the books "used in the ordinary business of Bank". This argument obviously was not available to the learned counsel for the plaintiff because business of Insurance Corporation is not the business of the Bank.

8. Under section 9(1) and (2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, no suit can be instituted through a plaint without the support" of a statement of account which is not duly certified under the Bankers' Books Evidence Act, 1891. Since books of the Insurance Corporation are not the nooks of the Bank used in its ordinary business, State Life cannot claim similar sanctity for its Statement of Account, is has been allowed to that of a bank under the Bankers' Books Evidence Act, 1891. It is thus obvious that State Life Insurance Corporation cannot institute a suit under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 in absence of statutory authority, to certify entries in its books under the Bankers' hooks Evidence Act.

9. The entire thrust of the definition of financial institution is on the business of Banking or any associated or business ancillary thereto. Merely on the strength of section 14(2)(e) of the Life Insurance (Nationalization) Ordinance, 1972 allowing State Life power to advance or lend money with or without security, it cannot be said that it is one of those companies which can transact business of Banking or that of a Modarba, Leasing, Investment Bank or Venture Capital etc. etc. to fall within the definition of financial institution.

10. In view of the above. I hold that State Life Insurance Corporation of Pakistan (plaintiff No.6) had no locus standi to institute the present suit under the Financial Institutions (Recovery of Finances) Ordinance, 2001. The name of plaintiff No.6 and its claim is thus deleted and struck off the plaint under Order 1, rule

10. C.P.C. The suit thus shall proceed only for the claim of Allied Bank Limited against the defendants. This suit shall proceed in this Court as the subject-matter thereof is above Rs.50 million.

11. To come up for further proceedings on 29-10-2002. Q.M.H./N-245/L Order accordingly.