2003 PLP 1843 (CLD)

The defendant in their written statement took the pleas of law and facts and denied the claim of the plaintiff. On 3‑4‑2000 the proposed issues on behalf of the defendant were filed and it was emphasized that exercise in trying the suit is likely to turn to be futile by raising the jurisdiction of the Court on the plea that relationship of customer and banker between the parties exists and it was found appropriate to decide the preliminary issues on the point. As a consequence, the issues referred to above were framed. I have heard Mr. Liaquat Merchant, learned counsel for the plaintiff and Mr. Mahmood. A. Khan, learned counsel for the defendant. The main thrust of the arguments of the learned counsel for the defendant was that in view of the existence of relationship of customer and the banker, the Banking Court has the jurisdiction. His further contention was that once a statute creates a right and also provides machinery for the enforcement of that right, resort is to be had to the procedure prescribed in the statute creating the right for its enforcement and the jurisdiction of the general Civil Court is barred and to support his contention, referred the view of Division Bench in Syed Mushtaq Hussain Shah v. Riaz Muhammad Hazarvi PLD 1978 Karachi

612. Second limb of the arguments of the learned counsel for the defendant was that the Banking Court has the power to transfer the case only. Conversely, Mr. Liaquat Merchant, learned counsel for the plaintiff's contention was that the cause of action for the suit is the negligent and careless act of the defendant, a tortuous act and not based on breach of the contract/ agreement. His further contention was that it is not necessary that each and every suit between the Banker and Customer be a Banking suit triable by Banking Court under the provisions of Repeal Act, 1997 or under the Ordinance, 2001. To enforce his contention, Mr. Liaquat Merchant, has cited the case of Nasimuddin Siddiqui v. United Bank Limited 1998 CLC 1718 with contention that the suit for damages based on tort is outside the jurisdiction of Banking Court. Mr. Liaquat Merchant has also taken me to the definitions of term `obligation' as defined in clause (e) of section 2 of the Ordinance, 2001, to support his arguments that the act complained is outside the jurisdiction of .the Banking Court. The jurisdiction of a Banking Court is found in section 9(1) of the Ordinance which is also para materia to the provisions of section 9(1) of Repealed Act, which reads as follows:‑‑ "

9. Procedure of Banking Courts.‑‑‑(1) Where a customer or a financial institution commits a default in fulfilment of an obligation with regard to any finance the ,financial institution or; as the case may be, the customer, may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath in the case of a financial institution by the Branch Manager or such other officer of the financial institution as may be duly authorized, in this behalf by power of attorney or otherwise." It is manifest from the perusal of section 9(1) that the jurisdiction of a Banking Court is only attracted where a customer or a financial institution commits a default in fulfilment of any obligation with regard to any finance then the suit in a Banking Court could be instituted by presenting the plaint. Likewise, subsection (4) of section 7 excludes the jurisdiction of any Court with regard to any matter to which the jurisdiction of Banking Court extends under the Ordinance including a decision as to the existence or otherwise of a finance. Section 7(4) is controlled by section 9(1) which contemplates the presence of three pre conditions for the exercise of jurisdiction by the Banking B Court:‑‑ (i) The plaintiff be either financial institution or the customer. (ii) Cause of action on default in fulfilment of any obligation. (iii) With regard to the finance i.e. subject‑matter. The `damages' means pecuniary compensation determined by the Court according to circumstances of each case, payable by the `wrongdoer' to the `wronged' for the injury, loss, or damage caused by one to the other by breach of legal duty, normally by breach of contract or commission of tort. There is a marked distinction between the damages arising out of a contract and a tort. Even the test by which the amount of damages is to be ascertained in contract and in tort may differ as it is to be judged in the circumstances of the case. In tort the intention of wrongdoer is considered .to be fair in assessing the quantum of damages. Likewise, in cases arising out of breach of contract the evidence of malicious motive may be held not to be relevant but it is admissible in the case of tort. A fine distinction has been drawn between a contract and a tort in the celebrated commentary on the subject. The Law of Torts; by Ratanlal and Dhiraj Law, edited by Justice (R) G.P. Singh, 23rd Edition at page No.5, in the following manner:‑‑ "A contract is founded upon consent: a tort is inflicted against or without consent. A contract necessitates privity between the parties: in tort no privity is needed. A tort must also be distinguished from a pure breach of contract. First, a tort is a violation of right in rem, i.e., of a right vested in some determinate person, either personally or as a member of the community, and available against the world at large: whereas a breach of contract is an infringement of a right in personam, i.e. of a right available only against some determinate person or body, and in which the community at large has no concern. The distinction between the two lies in the nature of the duty that is violated. In case of a tort the duty is one imposed by the law and is owed to the community at large. In the case of a contract, the duty is fixed by the will arid consent of the parties, and it is owed to a definite person or persons." In the instant case, the claim of the plaintiff for damages is based on tortuous act and not on contract such suit does not fall within the jurisdiction of the Banking Court, in view of dictum in Nasimuddin Siddiqui and another v. United Bank Limited and others 1998 CLC 1718, wherein learned Judge illustrated the nature of the cases within the competence of the Banking Court established under section 2(b) of the late Act, 1997 (which is para meteria of section 2(b) of the Ordinance, 2001), inter alias (a) all suits filed by the Banking Companies against borrower or customer for recovery of Loan or Finance, either based on interest for mark‑up as defined in the Act, 1997. (b) All suits or claims filed by a borrower or customer against the Banking Company claiming any adjustment, set off or setting up a counterclaim either through an independent suit or in a suit filed by a Banking Company. (c) Suits for accounts arising out of a Loan or Finance as defined in the Act, 1997: (d) Suits for specific performance seeking enforcement of an agreement or contract to pay or repay any Loan or Finance or to perform any obligation arising out of such agreement. (e) All the suits for declaration as to legality, validity or otherwise of a document which creates Loan or Finance as defined in the Act, 1997. (f) All the suits for cancellation of any instrument through which any liability to pay or repay a Loan or Finance may arise. (g) All the suits for prohibitory injunction which may restrain any of the parties namely, Banking Companies, borrower or customer from performing their obligations and duties arising out of such business pertaining to Loan or Finance. In the manner, all suits in the nature of mandatory injunction. (h) All the suits for damages (excluding tort cases) arising out of the breach of contract executed in respect of Loan or Finance between the Banking Company on the one hand and the borrower or customer on the other." In the instant case, no doubt, the credit card falls within the terms of 'finance' but the case is based on the tort and neither on such contract, where one party claims that the amount is unpaid and the other party claims repayment, nor the damages have not been claimed in terms of section 73 of the Contract Act. I have no reason to differ from the view taken in Nasimuddin Siddiqui case (supra) that the Banking Court has the jurisdiction over the matters arising out of non‑fulfillment of the obligation with regard to the finance between the customer and the banker (financial), excluding the suit for damages based on Tort. In view of the above discussions, I am of the view that instant suit with the cause i.e. damages based on tort, is civil matter and is triable in terms of section 9 of the C.P.C. by Civil Court. M.B.A./A‑489/K Order accordingly.