2026 PLP 693 (CLD)

JAWAD HASSAN, J.

This suit under Section 9 of the Financial Institutions (Recovery of Finance) Ordinance, 2001 (the "Ordinance of 2001") was instituted by the Plaintiffs/M/s. Sadiq Feeds (Pvt.) Ltd. and others (the "Plaintiff/Company") against the Defendant No. 1 / Meezan Bank Limited (the "Defendant/Bank"), for recovery of Rs.120 Million along with up-to-date profit. I. CONTEXT

2. Brief facts of this case are that the Plaintiff being a Private Limited Company is engaged in the business of manufacturing, sale, production, etc. of feeds and articles related thereto. The Plaintiff/Company is in very good working condition and is regular taxpayer. That in order to maintain and expand its business, the Plaintiff/Company had been enjoying fiduciary relationship with various Financial Institutions. The Defendant/Bank on the basis of a facility letter dated 19.04.2023 agreed to provide disbursement of finance facility to the Plaintiff/Company details of which is mentioned in the plaint. It is averred in the plaint that despite of fulfillment of all the requisite formalities by the Plaintiff/Company the Defendant/Bank miserably failed to act in terms of offer/sanction letter and did not disburse the amount of finance facility; rather issued notices dated 27.07.2023 regarding demand of disputed amount and repossession of leased vehicles. II. LEAVE TO DEFEND

3. To refine the claim of the Plaintiff/Company, the Defendant/Bank filed petition under Section 10 of the Ordinance for grant of unconditional leave to defend the suit ("PLA"). The Defendant/Bank though denied the liabilities alleged by the "Plaintiff/Company" yet objected to maintainability of suit before this Court on the basis of territorial jurisdiction. III. PLAINTIFFS' SUBMISSIONS

4. Learned counsel for the Plaintiff/Company has submitted that the Defendant/Bank failed to disburse the sanctioned amount to the Plaintiff/Company in accordance with the agreed terms and conditions of the finance facility offer letter dated 19.04.2023. Therefore, the impugned notice and so-called adjustment of the purported finance facility by the Defendant/Bank, through crediting and debiting the account of the Plaintiffs and its claim to be the owner, charge-holder and mortgagee in respect of the movable and immovable properties of the Plaintiffs, allegedly offered as security, is illegal, unlawful and without any legal justification. IV. DEFENDANTS' SUBMISSIONS

5. Learned counsel for the Defendant/Bank, submitted that the suit is not maintainable on the score of territorial jurisdiction of this Court because the lease agreement (10360/2) was made at Islamabad. Added that the amount of finance facility i.e. PKR 37.2 Million was disbursed in the Account No. 0101741622 of the Plaintiff/Company, maintained at MBL, I-9 Markaz Branch, Islamabad on 09.05.2023. The Plaintiff never disputed the disbursement of such amount or raised any claim in relation to any purported incorrect entry in the account statement in respect of the said account.

6. Heard. Record perused. V. DETERMINATION BY THE COURT

7. The main point in this case is whether this suit is maintainable for want of territorial jurisdiction or not. It is a well-settled principle that where an objection to the jurisdiction of a Court has been raised, the same is required to be determined in the first instance. In order to decide the lis in hand, this Court has to first decide the preliminary objection qua territorial jurisdiction as raised by the counsel for the "Defendants".

8. As per record, the undisputed position is that the entire loan amount of PKR 37.2 Million was disbursed to the Plaintiff/Company in its Account No.0101741622, maintained at Meezan Bank Limited, I-9 Markaz Branch, Islamabad on 09.05.2023. This fact is clearly evident from the statement of account annexed by the Plaintiff/Company itself with the plaint as Annex-D. The Plaintiff/Company has never denied receipt of the said amount nor alleged any incorrect entry in the relevant account statement. It is evident from a holistic reading of the contents of the Plaint that the only allegation that could even arguably construed as a default in respect of obligations in relation to finance is non-disbursement of the amounts by the Defendant/Bank to Plaintiff No.1 in terms of letter dated 19.04.2023. Notwithstanding the fact that such assertion is contradicted by the admitted facts and documents placed on record by the parties and as such no cause of action has arisen at all, and the cause of action, if any, in respect of the alleged non-disbursement of finance has arisen solely at Islamabad. Moreover, the Defendant/Bank has its Head office at Karachi as is evident from the address provided at page 1 of the Plaint. Impugned Notices, though delivered in Rawalpindi yet do not constitute facts giving rise to cause of action as the subject matter jurisdiction of this Court is limited to default in respect of obligations relating to finance. In furtherance of the facts stated above, in determining where the cause of action has arisen, it is settled law that it is only those facts which are related to the dispute involved in the case which give rise to the cause of action. Accordingly, the issuance of Impugned Notices, which relates to recovery of vehicles, in respect of which this Court lacks subject matter jurisdiction, is not a fact giving rise to the cause of action and would be disregarded for the purposes of determining territorial jurisdiction. Reliance in this regard is placed on the case of Bahoo Dying Industries (Private) Ltd. v. Sui Northern Gas Pipelines Ltd. (PLD 2021 Lahore 1861) wherein it has been held at paragraph 21 as follows: "

21. It is settled law that only those facts which have a bearing upon the lis or the dispute involved in the case, give rise to a cause of action so as to confer territorial jurisdiction on the Court concerned. All other facts which have no nexus or relevance with the lis are to be ignored for the purpose of determination of territorial jurisdiction. In the present case, the facts, which have a nexus with the lis or the dispute, have all arisen in Lahore, which is within the territorial jurisdiction of the Gas Utility Court, Lahore...." [Emphasis supplied] Furthermore, in light of the principles laid down in the judgment of this Court, reported as MCB Bank Limited v. Adeel Shahbaz Steel Mills [2023 CLD 655] it is well settled principle that where an objection to the jurisdiction of a Court has been raised, the same is required to be determined in the first instance. Relevant portions of the aforesaid judgment are reproduced hereunder for ease of reference: "(ii) Legal anatomy of jurisdiction of Banking Court under the Ordinance. 15. ... In order to decide the lis in hand, this court has first to decide the preliminary objection qua territorial jurisdiction as raised by the counsel for the "Defendants".

19. It is added that section 20 of the "C.P.C." contains a general rule regarding territorial jurisdiction which inter alia, enjoins that a suit must be instituted in a court within the local limits of whose jurisdiction the Defendant actually and voluntarily resides, or carries on business, or personally works for gain, or where the cause of action wholly or in part arises. The explanation to said section prescribes that a corporation shall be deemed to party on business at its sole or principal office, or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. Since this provision primarily keeps the Defendant in perspective, the corporation spoken of in the Explanation, obviously refers to the Defendant. A plain reading of the said section arguably allows the Plaintiff a multitude of choices in regard to where it may institute its lis, suit or action. Corporations and partnership firms, and even sole proprietorship concerns, could well be transacting business simultaneously in several cities. If subsections (a) and (b) of said Section are to be interpreted disjunctively from subsection (c), as the use of the word 'or' appears to permit the Plaintiff to file the suit at any of the places where the cause of action may have arisen regardless of whether the Defendant has even a subordinate office at that place. However, if the Defendants' location is to form the fulcrum of jurisdiction, and it has an office also at the place where the cause of action has occurred, then the Plaintiff is precluded from instituting the suit anywhere else. Obviously, this is also because every other place would constitute a forum non conveniens. ..

24. In view of above-mentioned facts and circumstances of the instant case it is obvious that finance facilities were extended to the "Defendant Company", its partners and mortgagors after execution of agreements which were executed at Islamabad and Hattar, the Defendants are the residents of Islamabad and Hattar, correspondence for applying and approving the finance facilities were made by the parties at Islamabad and Haripur, mortgaged properties were situated at Islamabad and Haripur, hence, this Court has no territorial jurisdiction to pass any judgment and decree against the Defendants. As a sequel, the plaint is hereby returned under Order VII, Rule 10 of the "C.P.C." for presenting it before a Court of Competent Jurisdiction, if the "Plaintiff Company" so desires." [Emphasis supplied]

9. In view of the discussion made hereinabove and the settled principles of law laid down in the judgments of this Court supra, it is evident that the cause of action in the present case, if any, has arisen at Islamabad, where the finance facility was sanctioned, disbursed and operated; and where the relevant contractual obligations were performed. No part of the cause of action has arisen within the territorial limits of this Court. Consequently, this Court lacks territorial jurisdiction to adjudicate upon the matter.

10. Resultantly, this suit is hereby dismissed for want of territorial jurisdiction. However, the Plaintiff/Company, if so advised, may institute a fresh suit before the Court of competent jurisdiction in accordance with law. No order as to costs. UN/S-4/L Suit dismissed.