2005 PLP 510 (CLD)

Office has raised objections, regarding the maintainability of the suit on the ground that the suit is to be governed under the provision of Financial Institution (Recovery of Finances) Ordinance, 2001, hereinafter referred as the Ordinance , and since the amount which is subject-matter of the suit does not exceed Rupees Five Million, hence it is exclusively triable by a Banking Court. Learne3d counsel for the plaintiff has contested the office objections by stating that neither the plaintiff is a customer nor the defendant is a financial institution within the meaning of the Ordinance and as such section 15 of the Ordinance also does not stand attracted under the circumstances of the case. Learned counsel has further submitted that in fact this suit for declaration and permanent injunction under sections 42 and 56 of the Specific Relief Act has rightly been filed before this Court in view of its original civil jurisdiction. In response to the notice issued to the defendant, Mr. Aijaz Ahmed, Advocate has appeared and supported the office objections by asserting that the defendant is a Financial Institution and the plaintiff is a Customer within the meaning of section 2(a) & (c) respectively of the Ordinance, hence the proceedings initiated by the defendant under section 15 of the Ordinance are legal and fully justified under the circumstances of the case. I have heard Mr. Mahmood Habibullah learned counsel for the plaintiff and Mr. Aijaz Ahmed learned counsel for the defendant. It is not denied that in order to obtain Pre-Shipment Finance Guarantee, plaintiff approached the defendant for grant of such facility which was provided by the defendant to the plaintiff against mortgage of his immovable property by deposit of title deeds as disclosed in para. 4 of the plaint and the plaintiff has failed to square up his liability. Learned counsel for the plaintiff mainly urged that though the defendant is a public limited company incorporated under the Companies Ordinance 1984, with its corporate mission to materially enhance new emerging and growing company access in Pakistan and to export trade finance related credits, through provision of a complete cycle of actuarially sound repayment guarantees and associated with services; Pre-shipment concept, and though it issues bankable guarantees on behalf of new or smaller exporters in favour of financing banks who will be providing trade finance facilities, but cannot be said to be Financial Institution under the Ordinance. To substantiate his contention that defendant is not a financial institution, learned counsel has referred to the case of National Bank of Pakistan v. Punjab Road Transport Board 2003 CLD 653 where State Life Insurance Company has not been considered to be a financial institution within the meaning of section 2(a) of the Ordinance. On the other hand Mr. Aijaz Ahmed learned counsel for the defendant while referring to various paragraphs of the plaint has argued that even according to the case as set up by the plaintiff, the defendant stood/furnished guarantee for the plaintiff as against mortgage of his property made by the plaintiff through deposit of title deeds and in this respect section 2(a)(i) of the Ordinance is clear on the point that a financial institution means and includes a company whether incorporated within or outside Pakistan which transacts the business of banking or associated or ancillary business in Pakistan through its branch within or outside Pakistan and includes a Government savings bank but excludes the State Bank of Pakistan; (Emphasis made). Similarly under subsection (iii) to section 2(a) of the Ordinance, "financial institution" also includes "any company authorized by law to carry on any similar business, as the Federal Government may by notification in the official Gazette, specify;". Learned counsel for the defendant has laid much emphasis upon the words "financing company and credit or investment", and further argued that it is not the case of the plaintiff that defendant company is not authorized to carry on such business. Again section 2(d)(iii) which relates to facility of guarantees, indemnities, letters of credit or any other financial engagement which a financial institution may give is or undertake on behalf of a customer, with corresponding obligation by the customer to the financial institution; as it is a case itself pleaded by the plaintiff makes it abundantly clear that defendant is a "financial institution" and the plaintiff is a "customer" within the meaning of section 2(a) and (c) of the Ordinance. In order to appreciate the contentions of the learned counsel for the parties it will be beneficial at this stage to reproduce the definition of "Financial Institution" and "Customer" as envisaged in section 2(a) and (c) of the Ordinance:‑‑ (a) "Financial institution" means and includes‑‑‑ (i) any company whether incorporated within or outside Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan‑ through its branches within or outside Pakistan and includes a Government savings bank, but excludes the State Bank of Pakistan; (ii) a Modaraba or modaraba management company, leasing company, investment bank, venture capital company, financing company, unit trust or mutual fund of any kind and credit or investment institution, corporation or company; and (iii) any company authorized by law to carry on any similar business, as the Federal Government may by notification in the official Gazette, specify; The word customer as defined in section 2(c) reads follows:‑‑ 2(c) "customer" means a person to whom finances has been extended by a financial institution and includes a person on whose behalf a guarantee or letter of credit has been issued by a financial institution as well as a surety or an indemnifier; I have given due consideration to the arguments advanced by the learned counsel for the parties and carefully perused the contents of plaint as well as the case -law cited by M. Mehmood Habibullah. The facts of the case reported as National Bank of Pakistan v. Punjab Road Transport Board (supra) are distinguishable, as the nature of business being transacted by State Life Insurance Company is altogether different from that as being performed by the defendant and it is not the case of the plaintiff that the defendant company has not authorized by the Federal Government to carry on such business. In view of discussion made above, I have come to the conclusion that the defendant company is a financial institution and the plaintiff is a customer within the meaning of the Ordinance. So far the office objection regarding the valuation of the suit being less than Rs. Five million, it is evident from Para. 17 of the plaint itself which shows that suit has been valued only at Rs.40, 00,

000. Resultantly, the plaint is ordered to be returned for presentation before the Court having jurisdiction. The above are the reasons for the short order announced on 20‑9‑2004. M. B.A./M‑175/K Order accordingly.