2017 PLP 1639 (CLD)

SHAMS MEHMOOD MIRZA, J.

This is a suit filed under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) seeking recovery of Rs.280 Million from the defendant bank on account of damages the details whereof are mentioned in paragraph No.15 of the plaint. The suit is contested by the defendant bank by filing its application for leave to defend. The application for leave to defend was allowed on 01.02.2017 and following preliminary issue was framed: Whether the suit in its present form is maintainable against the defendant bank under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001? OP-Parties.

2. Today the learned counsel for the plaintiffs has not entered appearance despite repeated calls. Be that as it may, this Court has itself gone through the record particularly the contents of the plaint to ascertain the nature of the damages claimed by the plaintiffs. The suit claim arises out of following heads of damages: Damages due to defamation: Rs.200 Million Plaintiff in general: Damages for mental stress and humiliation Rs.35 Million Damages for opportunity lost: Rs.35 Million Damages to the suit property: Rs.10 Million Total: Rs. 280 Million It is clear that the damages claimed by the plaintiffs are tortious in nature and do not arise from the finances availed from the defendant bank. Section 2(e) defines obligations reads as under: "obligation" includes (i) any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment or extension of time in payment of any other amounts relating to a finance or liquidated damages; and (ii) any and all representations, warranties and covenants made by or on behalf of the customer to a financial institution at any stage, including representations, warranties and covenants with regard to the ownership, mortgage, pledge, hypothecation or assignment of, or other charge on, assets or properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfillment of a promise; and (iii) all duties imposed on the customer under this Ordinance; Section 9 of the Ordinance states that the Financial Institution or the customer, as the case may be, can institute a suit under the Ordinance in case default of obligation takes place by either of the parties. In a judgment reported as Mian Mehmood Ahmad v. Hong Kong and Shanghai Banking Corporation Limited and others 2010 CLD 293 a learned Division Bench of this Court held as under: However for the exercise of such jurisdiction, it is fundamental, imperative, essential and sine qua non that two conditions must be met, co-exist and fulfilled, firstly, the special Court should have jurisdiction over the subject-matter, which be for redressal of the grievance qua the enforcement of the right or the complaint about the breach of obligation on part of the defendant, but relatable to the "finance", this can be termed to the subject-matter jurisdiction. If the dispute inter se the "financial institution" and the "customer" or vice versa is not based upon "finance" and/or failure of an obligation in relation thereto, the special Court shall have no jurisdiction in the matter. The second facet of the jurisdiction is over the parties to the lis, which may be termed as jurisdiction over the parties, and connotes that the banking Court shall only have the jurisdiction in the cases, where the relationship of the "financial institutions" and that of the "customer" exists between the parties; considering both these aspects of jurisdiction, the broad question of jurisdiction shall be that the dispute should be between the "customer" and the "financial institutions" as defined in law, in respect of the failure of the defendant to fulfill its/his obligations in relation to the "finance", which is so specifically, lucidly and clearly mentioned in section 9 of the Ordinance, 2001, which is the key provision of the special law and can be termed as the jurisdictional clause of the enactment; if the relationship between the parties to the suit is not that of the "customer" and the "financial institution" and is not about the "finance", the special Court shall have no jurisdiction.

3. From the very nature of the damages claimed by the plaintiff bank it is clear that the suit filed by the plaintiff is not maintainable for the recovery of damages. In a judgment reported as Messrs Asmar Textile Mills (Pvt.) Limited v. Askari Commercial Bank Limited 2007 CLD 457, it was held that a claim on account of defamation does not come within the jurisdiction of the banking court. The plaint is accordingly returned in terms of Order VII, Rule 10 of C.P.C. Office is directed to do the needful. KMZ/I-15/L Order accordingly.