P L D 1990 Peshawar 17 (PLP)

NAZIR AHMED BHATTI, J.‑‑Haji Nabiullah and another, appellants herein, had obtained a loan of Rs.2,00,000 from M/s. Habib Bank Limited, Respondent No.l and pledged their tobacco worth Rs.4,00,000 on 2‑7‑1986 as a security for the said loan. The tobacco was lying in the godown in the possession of respondents where it caught fire on 29‑1‑1987. On the demand of the respondents the appellants pledged in lieu of the loan more tobacco weighing 42,000 kilograms on 14‑2‑1987, but this tobacco was damaged by rain water which had seeped into the godown due to the negligence of the respondents. The appellants, therefore, filed a suit in the Court of Special Judge (Banking Companies) N: W.F.P. Peshawar for recovery of Rs.3,59,490 as compensation for the said tobacco and also claimed that the respondents had illegally deducted an amount of Rs.23,490 as mark up from them. The respondents submitted an application to the Court for leave to defend the suit which was resisted by the appellants. After hearing arguments of the learned counsel for the parties the learned Special Judge by judgment, dated 5‑4‑1989 came to the conclusion that admittedly the loan was on mark up basis and as such he had no jurisdiction and instead the Banking Tribunal had jurisdiction. He, therefore, ordered the return of the plaint to the appellants to file the same in the proper forum. By the appeal in hand the plaintiffs‑appellants have challenged the aforesaid judgment.

2. We hake heard learned counsel for the parties and have also gone through the record of the case.

3. It is admitted by both the parties that the appellants had obtained loan from respondent No.l and the same was also on mark up basis. However, the learned counsel for the appellants has contended that the suit was triable by the Special Judge, Banking Companies constituted under the Banking Companies (Recovery of Loans) Ordinance, 1979 (hereinafter referred to as the Banking Companies Ordinance and the Tribunal constituted under the Banking Tribunals Ordinance, 1984 (hereinafter referred to as the Banking Tribunals Ordinance) had no jurisdiction in the matter. His contention was that the appellants had correctly filed the suit before the learned Special Judge exercising jurisdiction under the Banking Companies Ordinance. On the contrary the learned counsel for the respondents contended that since the loan was on mark up basis, the Tribunal established under the Banking Tribunals Ordinance had the jurisdiction to entertain and adjudicate upon the matter in dispute.

4. We have very minutely considered contentions of both the learned counsel for the parties and have also perused provisions of both the aforesaid Ordinances.

5. The Banking Companies Ordinance was promulgated for the purpose of recovery of loans including finances provided on the basis of participation in profit and loss, mark up in price, higher purchase, lease or, otherwise. On the contrary the Tribunal under the Banking Tribunals Ordinance has been established to provide a machinery for recovery of finance provided by banking companies under a system of financing which is not based on interest. According to the provisions contained in clause (a) of sub‑clause (1). of section 6 of the Banking Companies Ordinance a Special Court has civil jurisdiction to adjudicate upon a claim filed by a banking company against a borrower or by a borrower against a banking company in respect of, or arising out of, a loan like a Civil Court under the Code of Civil Procedure whereas according to the provisions contained in clause (a) of subsection (1) of section 5 of the Banking Tribunals Ordinance, a Tribunal can exercise civil jurisdiction in respect of a claim filed by a banking company against a customer in respect of, or arising out of, finance, provided by it like a Civil Court under the Code of Civil Procedure, 1908. It is further provided in subsection (1) of section 6 of the Banking Tribunals Ordinance that where a customer commits default in fulfilling any obligation to a banking company, the banking company may file against such customer with the Banking Tribunal a plaint which shall be verified on oath by the Branch Manager or an officer of the rank of Assistant Vice‑President or Assistant Manager or such other officer as the Board of Directors of the banking company may authorise in this behalf.

6. It shall 'thus be seen that there are two kinds of loans which are granted by banking companies. One loan is of such a type of finance that includes finances provided on the basis of participation in profit and loss, mark up in price, hire? purchase, lease or otherwise as defined in clause (d) of section 2 of the Banking Companies Ordinance whereas the other loan is a type of finance which 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, 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, promissory notes or other instruments with or without buy‑back arrangement by a seller, participation term certificate, musharika certificate, modaraba certificate, term finance certificate or any mode other than an accommodation or facility based on interest and also includes guarantees, indemnities 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 as defined in clause (e) of section 2 of the Banking Tribunals Ordinance. It is thus clear that both these loans are of different types and different forums have been provided for the recovery of these loans.

7. It shall also be seen that Special Court established under the Banking Companies Ordinance, in the exercise of its civil jurisdiction can entertain and adjudicate upon a claim filed by a banking company against a borrower or by a borrower against a banking company which will clearly indicate that claims in respect of, or arising out of, a loan can be filed before a Special Court by both the banking company or by a borrower whereas a Tribunal established under the Banking Tribunals Ordinance, in the exercise of its civil jurisdiction, can entertain and adjudicate upon a claim in respect of, or arising out of, loan filed by a banking company only and the provisions of section 5 do not confer any right 'upon a borrower to file such a claim or upon the Tribunal to entertain such a claim in respect of a loan recoverable under the provisions of the Banking Tribunals Ordinance.

8. The learned Special Judge was misled erroneously by the words "mark up" used in the definition of the word "loans" specified in clause (d) of section 2 of the Banking Companies Ordinance as taken from the definition of the word "loan" from the Banking Companies Ordinance, 1962. Actually the question of mark up or any participation in profit and loss is not the criterion for the determination of the forum where the appellants should have gone. Under the Banking Companies Ordinance the borrower can also file a claim before the Special Court constituted thereunder in respect of, or arising out of, a loan irrespective of the fact whether the loan includes any mark up or not while on the contrary it is only the banking company which can file a claim before a Tribunal constituted under the Banking Tribunals Ordinance.

9. From the above discussion we have arrived at the clear conclusion that the suit filed by the appellants before the learned Special Judge constituted under the Banking Companies Ordinance was properly filed before him and he had the exclusive jurisdiction to adjudicate upon it and the suit was neither entertainable by the Tribunal constituted under the Banking Tribunals Ordinance nor it had jurisdiction to adjudicate upon the claim in dispute. We will, therefore, accept this appeal, set aside the impugned judgment of the learned Special Judge and remand the case back to him with the direction that he shall proceed in the matter in accordance with the provisions of the Banking Companies Ordinance there shall, however, be no order as to costs. M.B.A./956/P????????????????????????????????????????????????????????????????????????????????????? Appeal accepted.