2003 PLP 856 (CLD)

MAULVI ANWARUL HAQ, J.

On 30-6-1998 the appellant filed a suit against the respondent purporting to be a suit under section 7 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 read with section 9, C.P.C. for the recovery of Rs.10,000,000 on account of defamation. A permanent injunction was also sought restraining the respondent from resorting to any defamatory act as against the plaintiff/ appellant. The relevant allegation on which the suit is based is contained in para.6 of the plaint which are reproduced hereunder:-- "

6. However the defendant in its report to the Credit Information Bureau of the State Bank of Pakistan, Boulton Market Bldg., Karachi carved out a picture depicting the plaintiff-company as suffering from 'overdues' and `defaults'. In the context of circumstances aforesaid, in lieu whereof no overdues/defaults could be countenanced, the report was out and out defamatory, the transmission/publication whereof resulted in loss of prestige of the plaintiff that was refused finance facility in consequence. This act by the defendant was all the more reprehensible for the reason that it (the defendant) was otherwise adequately covered. The plaintiff-company had created an Equitable mortgage as well as Registered Mortgage to cover the finance facilities by the defendant. The plaintiff company has been irretrievably damaged in reputation. Assessed at a most conservative estimate, the compensation to which the plaintiff company is entitled to Rs.10,000,000 which it claims." The learned Judge, Banking Court examined the plaint and proceeded to return the same under Order VII, rule 10, C.P.C. finding that Banking Court has no jurisdiction to try the suit. This was done vide order dated 13-3-1999.

2. Learned counsel for the appellant argues with reference to section 7 and section 9 of the said Act XV of 1997 that Banking Court for all purposes is a Civil Court and as such his suit, based as it is on Torts, was competent under section 9, C.P.C. read with said provisions. Learned counsel for the respondent, on the other hand, also with reference to section 9 of the said Act XV of 1997 argues that the suit of instant nature was not cognizable by the Banking Court. He also draws our attention to a judgment of learned High Court of Sindh at Karachi in the case of Nasimuddin Siddiqui and another v. United Bank Limited and others 1998 CLC 1718 to support to his contention. 2-A. We have examined the plaint with the assistance of the learned counsel for the parties. There is no manner of doubt in our mind that the suit is for recovery of damages on account of alleged defamatory act committed by the respondent.

3. Coming to the said contention of the learned counsel for the appellant. We find that right to institute a suit in a Banking Court established under section 4 of the said Act XV of 1997 is conferred by section 9 of the said Act. Subsection (1) of the said section 9 is in the following terms:-- "

9. Procedure of Banking Courts.

(1) Where a borrower or a customer or a banking company commits a default in fulfilling any obligation with regard to any loan or finance the banking company or, as the case may be, the borrower or customer, may institute a suit in the Banking Court by presenting a plaint duly supported by a statement of account which shall be verified on oath in the case of a banking company by the Branch Manager or such other officer as the Board of Directors of a banking company may authorize in this behalf. Copies of the plaint shall also be filed along therewith in sufficient numbers so that there is one copy for each defendant and one extra copy." A bare reading of the said provision would show that a banking company, a borrower or customer may institute a suit in the Banking Court in the circumstances stated in the said section 9(1) of the said Act. These are:-- (i) A default in fulfillment of any obligation by a borrower, or customer or a banking company (ii) With regard to any loan or advance. We are afraid the plaint does not at all disclose that a default has been committed by the banking company i.e. the respondent in fulfilling any obligation with regard to any loan or finance. On the other hand, the complaint being made has already been reproduced by us above with reference to para.6 of the plaint.

4. The judgment cited by learned counsel for the respondent fully supports the case. His Lordship with reference to excerpts from "Oxford Companion to Law" by David M. Walker" and "The Law of Torts" by Ratanlal and Dhiraj Lal (23rd Edition) has drawn distinction between a case of damages arising out of a contract and one arising out of Tort. Needless to state that matter of loan or finance is governed by terms of the contract between customer or borrower on the one hand and Banking Company on the other. It is only upon breach of an obligation or to use words of the Statute, upon commission of default in fulfilling any obligation, that a suit would be competent before the learned Banking Court. The alleged defamatory act committed has no nexus with any terms of the loan or finance or any obligation arising under the same.

5. So far as the reliance by the learned counsel on section 7 of the Act XV of 1997 is concerned, we find the same to be rather misplaced. As stated by us above, the substantive right to file the suit has been conferred by section 9 of the said Act. Section 7 defines powers of the Banking Court and obviously these powers in exercise of civil jurisdiction would be exercised while dealing with a suit which squarely falls within the meaning of section 9 of the said Act. If we were to accept the said arguments of the learned counsel, that by virtue of section 7 the Banking Court stands converted into a Civil Court with plenary jurisdiction to entertain and try suits under section 9, C.P.C., the entire law so enacted is liable to become redundant.

6. For all that has been discussed above, this F.A.O. is without any force and is dismissed leaving the parties to bear their own costs. M.B.A./N-286/L Appeal dismissed.