Banker and Customer

Amount deposited was invested in profit-bearing schemes as a remedial mechanism against inflation etc., and had support by the parties

Such deposited amount along with profits invariably followed disbursement thereof either to the decree-holder or on the basis of final outcome of the legal proceedings of the suit, to any of the parties as per final adjudication or settlement, if any, arrived at between them

High Court system was silent with regard to mechanism to resolve such issue and no direction could be issued to respondent Bank who was under no obligation to issue certificates of tax-deduction concerning earned profit on petitioner's deposited amount inasmuch as the same could only be issued in the name of account holder with description of particulars of the depositor along with the amount of deducted/ deposited tax

High Court directed Additional Registrar (Judicial) of High Court to obtain necessary certificates in his name as account holder

High Court further directed that those original certificates would be placed on and retained in suit file of every case and certified copy thereof be issued to the party concerned for the purpose of its presentation before income tax department, as and when so required

Constitutional petition was disposed of accordingly.

Petitioner sought direction against seizure of her account which contained funds, which were transferred to her account from a joint-account, after death of joint-account holder as a "one-time transaction" allowed by respondent Bank as per its Standard Operating Procedures (SOPs)

Validity

Contention of respondent Bank that funds were seized/blocked after application was filed by deceased's brother, was not tenable as no proper procedure had been adopted by Bank after issuance of notice by court of competent jurisdiction

Brother of deceased had not adopted the legal requirements therefore funds could not have been seized/blocked

High Court directed respondent Bank to unfreeze/unblock funds in favour of petitioner under terms and conditions of respondent Bank established between the deceased and petitioner

Constitutional petition was disposed of, accordingly.

Settled practice that any prospective buyer of an item demanded original documents for such item, therefore a person having original documents could not be put at par with a person who did not have original documents

Such customer of a Bank suffered from inefficiency and negligence of the Bank and had to be compensated

For determination of quantum of compensation, no yardstick could be laid as the same depended on facts of each case.

Company went into liquidation and certain part of the finance facility remained unpaid, prompting the financial institution to file a recovery suit

Suit was decreed along with markup

Since there was no likelihood that the financial institution could recover the decretal amount from the company, the decree was also executable against the directors of the company (appellants), who were treated as guarantors under a Sponsors' Undertaking ('the Undertaking') executed contemporaneously by them with the agreement of finance

Directors argued that the courts below erred in treating them as guarantors on the basis of the Undertaking as their liability was that of indemnifiers and that too confined to what had been set out in Clauses 1 to 4 of the Undertaking ('the subject clauses') and nothing more; that as the directors neither committed any breach of the subject clauses of the undertaking nor could it be read as a guarantee towards financial obligation of the company under the agreement of finance, therefore, the courts below erred in ordering recovery of decretal amount from them

[Per Faisal Arab, J (Majority view): Clause 6 of the Undertaking stipulated that the directors shall indemnify and keep the financial institution always safe, harmless and indemnified, whereas Clause 7 stipulated that directors' obligations thereunder were joint and several and binding on them until the investment made by the financial institution in the company was fully satisfied

Text of the Sponsor's Undertaking, made it clearly apparent that it was intended to further secure the finance by seeking personal undertaking from the directors in case it no more remained possible for the financial institution to recover it from the company

Hence it could be said that the directors did give personal assurance to the financial institution that in the event it became impossible for it to recover from the company, it could have recourse against them for the loss so incurred

Sponsors' Undertaking was executed by the directors contemporaneously with the agreement of finance so it could be conveniently said that both the documents were part of the same scheme under which financial institution provided finance to the company

Obligation of an indemnifier was not co-extensive with that of the principal debtor and came into existence only when it no more remained legally possible to recover from the principal debtor

From the contents of Clauses 6 and 7 of Sponsors' Undertaking it was evident that the liability of the directors was not made co-extensive with the company, hence it was a contract of indemnity

In liquidation proceedings, the company had been wound-up and the sale proceeds of all its assets had apparently gone to settle claim of a creditor and the financial institution's decree remained unsatisfied

In such circumstances proper stage to initiate recovery against the directors in their personal capacity as indemnifiers under the Sponsors' Undertaking had thus matured

Only avenue left for the financial institution was to recover its loss from the directors in their capacity as indemnifiers under the Sponsors' Undertaking, which the financial institution could now do by seeking execution of its decree]

[Per Munib Akhtar, J (Minority view): Obligations of the directors were contained in the Clause 5 of the Sponsor's Undertaking which made them "personally liable to all the monetary obligations, detriments, losses that may be sustained by [the financial institution] due to any breach of the covenants herein"

Liability of the directors as regards the monetary losses etc. suffered by the respondent was, thus, conditional upon, and limited to, such being sustained on account of any breach of the covenants i.e. Clauses 1 to 4 contained in the Undertaking

Evidence led at the trial did not show any breach at all of the said Clauses, therefore, insofar as both the directors and the company were concerned, their obligation and liability under Clause 5 was never actualized

No (deemed) event of default occurred under the Undertaking as would, under the Agreement, have allowed the financial institution to demand immediate repayment of the finance from the company, nor were there any monetary obligations, detriments etc. incurred or suffered by the financial institution (on account of the breach of Clauses 1 to 4) as would make the directors liable to it

Clause 6 of the Undertaking was an indemnity clause, but it was ambiguous and uncertain as it neither specified the conduct of the directors or the company which would trigger the application of the said clause, nor specified the conduct against which the financial institution was indemnified

Clause 6 was ambiguous, and that uncertainty left its scope indeterminate

Court did not have to find ways to breathe life into the said provision so as to enable the financial institution to look to the directors in addition to the company for payment of any amounts defaulted by the latter

Sponsor's Undertaking and the finance agreement were part of the same transaction, but only in the sense of relating to the finance that the financial institution proposed to give to the company

Undertaking was not in any legal sense "part" of the finance agreement

Equally, the Undertaking had to be construed and applied on its own terms

Financial institution's obligation to disburse the finance under the finance agreement was, inter alia, conditional upon the directors giving the Undertaking, but that did not make the Undertaking a part of the finance agreement, nor could it affect the legal nature and the proper construction and application of the former

Suit of financial institution against the directors should have been dismissed]

Appeal was dismissed accordingly.

When no finance directly disbursed to the loanee under the finance agreement, question as to whether the finance agreement was of any legal consequence

Exporter executed a finance agreement with the respondent-Bank to avail a running finance facility

To secure the financial facility, exporter pledged its goods, hypothecated its machinery, assigned the proceeds of its life insurance policy, and created an equitable mortgage on subject property

After the exporter failed to repay the finance facility, respondent-Bank filed a suit for recovery in the Banking Tribunal

Exporter claimed that after execution of finance facility, no amount was disbursed and all documents executed in such regard were forged

Banking Court dismissed the suit after holding that no amount was disbursed under the finance agreement

Exporter filed its own suit claiming damages contending that recoveries made under the finance agreement, when no finance was disbursed, caused a huge loss of business to the exporter since subject property was sold for a meagre amount, and proceeds of insurance policy were appropriated by the respondent-Bank

Suit for damages filed by exporter was decreed by the Banking Court

On appeal, the High Court decreed the suit for recovery filed by the respondent-Bank and dismissed the suit for damages filed by exporter

Validity

Case record showed that exporter had been availing various financial facilities under the State Bank's Export Refinance Scheme through the respondent Bank

Export Re-Finance Scheme allowed the exporters to avail finance from State Bank to finance their exports, which was adjustable against export proceeds

Where no exports were made or there was a shortfall, the State Bank imposed a penalty

When the exporter failed to meet its export target a penalty was imposed on it by the State Bank

For purposes of repaying such penalty, financial facility was sanctioned by respondent-Bank to facilitate the exporter to adjust its liability towards the State Bank, and ultimately, it was from the financial facility that the penalty was paid to the State Bank on behalf of exporter

Exporter in such circumstances could not claim that no amount was disbursed after the finance agreement with the respondent-Bank

In its evidence exporter did not deny either the finances availed by it from the State Bank against the Export Refinance Scheme nor the penalty imposed by State Bank under such Scheme

Exporter for four years never protested against adjustment of proceeds of its insurance policy and sale of subject property by the respondent-Bank

High Court had rightly decreed the recovery suit filed by respondent-Bank and dismissed the suit for damages filed by the exporter

Appeal was dismissed accordingly.

When no finance directly disbursed to the loanee under the finance agreement, question as to whether the finance agreement was of any legal consequence

Exporter executed a finance agreement with the respondent-Bank to avail a running finance facility

To secure the financial facility, exporter pledged its goods, hypothecated its machinery, assigned the proceeds of its life insurance policy, and created an equitable mortgage on subject property

After the exporter failed to repay the finance facility, respondent-Bank filed a suit for recovery in the Banking Tribunal

Exporter claimed that after execution of finance facility, no amount was disbursed and all documents executed in such regard were forged

Banking Court dismissed the suit after holding that no amount was disbursed under the finance agreement

Exporter filed its own suit claiming damages contending that recoveries made under the finance agreement, when no finance was disbursed, caused a huge loss of business to the exporter since subject property was sold for a meagre amount, and proceeds of insurance policy were appropriated by the respondent-Bank

Suit for damages filed by exporter was decreed by the Banking Court

On appeal, the High Court decreed the suit for recovery filed by the respondent-Bank and dismissed the suit for damages filed by exporter

Validity

Case record showed that exporter had been availing various financial facilities under the State Bank's Export Refinance Scheme through the respondent Bank

Export Re-Finance Scheme allowed the exporters to avail finance from State Bank to finance their exports, which was adjustable against export proceeds

Where no exports were made or there was a shortfall, the State Bank imposed a penalty

When the exporter failed to meet its export target a penalty was imposed on it by the State Bank

For purposes of repaying such penalty, financial facility was sanctioned by respondent-Bank to facilitate the exporter to adjust its liability towards the State Bank, and ultimately, it was from the financial facility that the penalty was paid to the State Bank on behalf of exporter

Exporter in such circumstances could not claim that no amount was disbursed after the finance agreement with the respondent-Bank

In its evidence exporter did not deny either the finances availed by it from the State Bank against the Export Refinance Scheme nor the penalty imposed by State Bank under such Scheme

Exporter for four years never protested against adjustment of proceeds of its insurance policy and sale of subject property by the respondent-Bank

High Court had rightly decreed the recovery suit filed by respondent-Bank and dismissed the suit for damages filed by the exporter

Appeal was dismissed accordingly.

Plaintiff (customer) filed suit for recovery of damages against defendant Bank on allegation of malicious prosecution, when earlier suit for recovery filed by Bank was dismissed

Single Judge of High Court dismissed suit for recovery of damages

Validity

Defendant Bank, due to some dispute with regard to recovery, filed suit against plaintiff and that earlier suit filed by Bank was not without any probable cause and based upon personal grudge, animosity or some personal benefit

Nothing existed on record to establish any wrongful act committed by Bank or that on account of act of Bank some loss was occasioned by plaintiff

Mere dismissal of suit of defendant Bank for recovery against plaintiff was not a 'legal wrong'

Ingredients to prove malicious prosecution were not fully established

No question had arisen for grant of damages on ground that plaintiff had suffered mental torture, agony and loss of his good health

No medical certificate and expenses for treatment of mental torture, agony or loss of good health was produced in evidence to prove allegations

Division Bench of High Court declined to interfere in the judgment and decree passed by Single Judge of High Court as there was no illegality or error in the same

Intra court appeal was dismissed in circumstances.

Law relating to letters of credit was founded on two principles: (i) autonomy of credit; and (ii) doctrine of strict performance

According to first principle, credit was separate and independent from underline contract of sale or other transaction; second principle was that Bank was entitled to reject documents which did not strictly conform with terms of credit

Only case in which Bank could refuse to pay under letter of credit was where it was proved to its satisfaction that documents were fraudulent and beneficiary/seller was involved in fraud

Bank issuing or confirming letter of credit was not concerned with underline contract between buyer and seller

Obligations of Bank under a letter of credit were created by document itself

Bank was subject to limitations which were given or imposed by provisions in letter of credit

High Court declined to interfere in order passed by Trial Court, as documents on record did not make a prima facie view that fraud was committed by respondent.

Complainant, while getting activation of his new credit card, was informed by the Bank the transactions having been made through his old credit card, which the complainant denied on ground that he had lost the old card and those transactions had not been made by him

Consumer Court allowed the claim by restraining the Bank to recover amount of the disputed transactions

Validity

Complainant had requested the Bank for blockade of his credit card after the card had already been used for alleged unauthorized transactions

Bank could be held responsible for the unauthorized use of the card only after the Bank had been told about misplacing of the same

Bank could neither stop the transactions nor be held responsible for the same, as there was no intimation to the Bank about loss of the card

Matter in question was between the Bank, which was financial institution, and its customer, which could only be taken up and decided by Banking Court, as provided under S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Consumer Court did not have unfettered powers, and certain restrictions existed as embedded in S. 3 of Punjab Consumer Protection Act, 2005

Consumer Court had no jurisdiction to deal with the matter, and had transgressed its powers and erred in law while assuming jurisdiction in the present matter

Financial Institutions (Recovery of Finances) Ordinance, 2001, being Federal statute, had precedence over Punjab Consumer Protection Act, 2005, as provided under Art. 143 of the Constitution

Claim in question had been filed with delay of about one year after cause of action had arisen on pretext that complainant used to issue notices or letter to the Bank in that regard

Mere issuance of subsequent notices after specific denial by the Bank in response to the first notice did not extend period of limitation

Complainant had only thirty days to file his grievance petition in terms of S.28 of Punjab Consumer Protection Act, 2005; whereas, Consumer Court might allow extension of time for filing the same, which had not been done, in the present case

Complaint, being barred by time, should have been dismissed

High Court, setting aside impugned order, dismissed the complaint

Appeal against order was allowed.

Complainant, while getting activation of his new credit card, was informed by the Bank the transactions having been made through his old credit card, which the complainant denied on ground that he had lost the old card and those transactions had not been made by him

Consumer Court allowed the claim by restraining the Bank to recover amount of the disputed transactions

Validity

Complainant had requested the Bank for blockade of his credit card after the card had already been used for alleged unauthorized transactions

Bank could be held responsible for the unauthorized use of the card only after the Bank had been told about misplacing of the same

Bank could neither stop the transactions nor be held responsible for the same, as there was no intimation to the Bank about loss of the card

Matter in question was between the Bank, which was financial institution, and its customer, which could only be taken up and decided by Banking Court, as provided under S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Consumer Court did not have unfettered powers, and certain restrictions existed as embedded in S. 3 of Punjab Consumer Protection Act, 2005

Consumer Court had no jurisdiction to deal with the matter, and had transgressed its powers and erred in law while assuming jurisdiction in the present matter

Financial Institutions (Recovery of Finances) Ordinance, 2001, being Federal statute, had precedence over Punjab Consumer Protection Act, 2005, as provided under Art. 143 of the Constitution

Claim in question had been filed with delay of about one year after cause of action had arisen on pretext that complainant used to issue notices or letter to the Bank in that regard

Mere issuance of subsequent notices after specific denial by the Bank in response to the first notice did not extend period of limitation

Complainant had only thirty days to file his grievance petition in terms of S.28 of Punjab Consumer Protection Act, 2005; whereas, Consumer Court might allow extension of time for filing the same, which had not been done, in the present case

Complaint, being barred by time, should have been dismissed

High Court, setting aside impugned order, dismissed the complaint

Appeal against order was allowed.

Even under the law which provided for recovery through coercive process such as land revenue, determination of amount due is an essential pre-requisite

Bank cannot be conferred with judicial powers for determination of amount due against its customer/borrower

Right/power to sell off is available only where amount claimed is due and is certain and determined by competent judicial forum.

Even under the law which provided for recovery through coercive process such as land revenue, determination of amount due is an essential pre-requisite

Bank cannot be conferred with judicial powers for determination of amount due against its customer/borrower

Right/power to sell off is available only where amount claimed is due and is certain and determined by competent judicial forum.

To provide commodities as security for credit facility involving physical delivery of goods to be taken out only with permission of Bank on cash payment, whenever so needed; bailment of goods as security for payment or a debt or performance of a promise; a delivery of goods or documents of title by debtor to creditor as security to be returned on discharge of debt; holding goods, its possession and title, till debt was discharged; Banks could release part of pledged goods on payment for it and commitment taken from the applicant on obtaining a credit that covered the issuing bank for satisfaction of the claim without appointment of liquidators to distribute the proceeds of the goods sold under credit to creditors.

Constructive delivery of goods without involvement of actual possession of goods given as security for advance; charge on goods without its ownership or possession by the Bank and flexible security in which possession remained with the borrower, lender however could check stocks at intervals to verify payments of installments.

Petitioner had sought relief that the inquiry pending against him before the NAB be declared illegal, mala fide and an abuse of process

Initiation of criminal proceedings for "wilful default" by the NAB being dependant upon the result of civil litigation, criminal court, during pendency of civil suit for recovery of defaulted amount, to keep its hands away until the civil litigation was disposed of; as the dispute between the Banker and customer, was to be decided by the Banking Court, under the Financial Institutions (Recovery of Finances) Ordinance, 2001, which was promulgated after the promulgation of National Accountability Ordinance, 1999

Competent Banking Court had the domain to determine the rights and liabilities of the parties to suit

Proceedings under National Accountability Ordinance, 1999, ought to be stayed until it was found that the petitioner was liable to pay any amount to the bank through decree of the court.

Duties and liabilities of financial institution and merchant stated.

Defendant/ Insurance Company contended that it could not be impleaded as necessary party in the proceedings between the plaintiff and the defendant/bank-Validity

Plaintiff being customer of defendant bank, relief claimed by him could only be granted in banking jurisdiction

In order to settle the claims of policy holders against insurance companies, S.122 of the Insurance Ordinance, 2000 created a special court/Insurance Tribunal vested with the powers of civil court in terms of Civil Procedure Code, 1908

Defendant Insurance Company was not necessary party in the present proceedings which were initiated under Financial Institutions (Recovery of Finances) Ordinance, 2001

Plaintiff was held to be at liberty to initiate proceedings before appropriate forum and seek condonation of delay under S.14 of the Limitation Act, 1908

Application of defendant was allowed with direction to plaintiff to file amended plaint.

Petitioner was Director of company which had obtained financial facility from respondent-bank which had filed recovery suit and criminal complaint against the petitioner and his company

Petitioner challenged inclusion of his name in Exit Control List without any notice or information to him

Validity

Right to travel abroad was an important feature of citizen's liberty

Putting someone on Exit Control List was serious infringement of citizen's liberty

Provision of notice must be read as an integral part of each statute unless specifically excluded

Person concerned must be heard before passing an adverse order against him

Show-cause notice must follow the order which should disclose reasons for the action taken against a person

Order barring a person from going abroad without reasons was liable to be set aside

If there was provision in the substantive law under which a person was being proceeded against (that his name be paced on exit control list) it would not be permissible to put his name in the exit control list

Pendency of criminal cases did not, ipso facto, disentitle a person from travelling abroad

Obtaining sufficient security against an ultimate order of recovery was more appropriate than barring a person from exercising his right

Petitioner's leave to defend in recovery suit had yet to be decided

Placement of petitioner's name on the Exit Control List was clumsy exercise of power in circumstances

Constitutional petition was allowed setting aside the order putting petitioner's name on Exit Control List.

Petitioner was Director of company which had obtained financial facility from respondent-bank which had filed recovery suit and criminal complaint against the petitioner and his company

Petitioner challenged inclusion of his name in Exit Control List without any notice or information to him

Validity

Right to travel abroad was an important feature of citizen's liberty

Putting someone on Exit Control List was serious infringement of citizen's liberty

Provision of notice must be read as an integral part of each statute unless specifically excluded

Person concerned must be heard before passing an adverse order against him

Show-cause notice must follow the order which should disclose reasons for the action taken against a person

Order barring a person from going abroad without reasons was liable to be set aside

If there was provision in the substantive law under which a person was being proceeded against (that his name be placed on exit control list) it would not be permissible to put his name in the exit control list

Pendency of criminal cases did not, ipso facto, disentitle a person from travelling abroad

Obtaining sufficient security against an ultimate order of recovery was more appropriate than barring a person from exercising his right

Petitioner's leave to defend in recovery suit had yet to be decided

Placement of petitioner's name on the Exit Control List was clumsy exercise of power in circumstances

Constitutional petition was allowed setting aside the order putting petitioner's name on Exit Control List.

Statutory law covering all the disputes between the customer and the Bank, both Civil and Criminal, surveyed.

Statutory law covering all the disputes between the customer and the Bank, both Civil and Criminal, surveyed.

Exceptions stated.

Defendants shown as guarantors in the agreement had availed Clean Over Draft Facility, Loan Against Trust Receipt, Local Bill Discounted Letter of Credit, Payment Against Document and Letter of Guarantee

Such transactions pertained to "finance" as defined in S.2(e), Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and created "Banker and Customer" relationship-Transactions inter se the parties and also the subject-matter of the agreement fell within the ambit of definition "finance" as defined in S.2(e) of the Act.

Contention of the Banks was that reduction in the agreed rate of profit was resorted to in the terms of "Account Opening Form" which authorized the Banks to bring variation in the rate of profit and reduce the same according to changed circumstances

Such plea did not justify the action of the Bank

Bank had widely advertised through scheme payment of profit at a stipulated rate

Certificates purchased by the depositors contained the condition of payment of profit at the said rate

Brochure,. the public notices cited in print media and Certificates (MMC) nowhere provided for reduction of rate of agreed profit unilaterally

Condition, in Account Opening Form, in circumstances, had no precedence over the conditions incorporated in the certificate itself which was paramount document

Investors could purchase certificates, without being an account-holder, therefore, any condition mentioned in the form will not override the express stipulation in the Certificates

Term of unilateral reduction in the agreed rate of profit, mentioned in the "Account Opening Form" was un­conscionable, discriminatory and against the public policy and was therefore, unenforceable under S.23, Contract Act, 1872

Impugned action of the Banks whereby the rate of return/profit on Investment Certificates had been reduced unilaterally, was declared to be without lawful authority and of no legal effect

Banks were legally bound to pay the depositors the profits, on the agreed terms, as expressly incorporated in the Certificates

Depositors were entitled to profit at the agreed rate, till final payment in respect of their investments.

In the present case, determination of factual controversy was not involved and the only question raised by the depositors was legality or otherwise of the reduction of agreed profit

Such question being legal, had direct bearing on the investment of large number of depositors, therefore; its resolution through invoking constitutional jurisdiction of High Court, was proper and imperative

Present situation was not the breach of contract which was complained of, rather the issue involved was breach of statutory obligation and breach of public trust

Writ of mandamus would lie to compel the performance of public duty, no matter what was the source, it could be statute, contract or charter etc.

Construction of a written contract involved the question of law, true construction of contract was to be decided by courts and none else

Objection to maintainability of constitutional petition, in the present case, was thus, overruled as constitutional jurisdiction of High Court was rightly invoked.

Grievance of the depositors was not only that Banking Company had breached the terms of contract but the contract involved the public interest and Bank and under the cover of act of omission on the part of State Bank of Pakistan, was running the banking business detrimental to the interest of public as well as the depositors

Whenever it was found that a banking company was conducting its affairs in a manner, detrimental to the interest of its depositors, the State Bank of Pakistan being regulatory body, was bound to issue directions in the public interest

Transaction of banking business, by a company licensed by State Bank of Pakistan to do so, was a "public purpose", and a Bank was performing this function-Delayed action or inaction on the part of State Bank of Pakistan, in the affairs of such companies could be judicially reviewed in the exercise of powers conferred under Art.199 of the Constitution

Principles.

Conditions contained in the Certificates of schemes were concluded contract and the obligations of parties were to be performed according to these conditions

Depositors in the schemes, could invest without being an account-holder, which fact, by itself, signified that conditions contained in the Account Opening Form" had no application to the investments under the Scheme

Fixed deposit for a fixed period on fixed rate of profit on fixed mode of payment, could not be stretched to fall within the "Profit and Loss Sharing System" of the Banks

Principles.

Loan allows customer to pay less than total amount due every month and whatever balance is carried forward into following month is subject to agreed upon finance charge

No typical charge for line of credit when it is not in use.

Revolving credit is system where someone can borrow money at any time up to agreed amount and continue to borrow while still paying off the original loan.

Mark-up in running finance facility is a revolving credit which renews until exhaustion of amount of credit and customer has the facility to draw it again when limit is reached

Credit is automatically reinstated after each drawing within the limit and limit is renewable credit until it's full utilization.

Background of provision of S.15, Financial Institutions (Recovery of Finances) Ordinance, 2001 and peculiar and special features stated.

Statement of account cannot be taken as gospel's truth and not sufficient to prove the claim of the Bank; the presumption of correctness attached to its entries is rebuttable and corroboration is necessary.

Rights and obligations of Banker and customer.

Statement of account cannot be taken as gospel's truth and not sufficient to prove the claim of the Bank; the presumption of correctness attached to its entries is rebuttable and corroboration is necessary.

Interest is not static but variable as being fixed from time to time by the State Bank of Pakistan which was binding on both the parties, therefore, no agreement could subsist on the fixed interest basis and as such the rates are variable as fixed by the State Bank of Pakistan-Bank was entitled to reduce the agreed interest on the customer's long term fixed deposit.

High Court directed Bank not to create undue harassment against petitioner; and that Bank, if needed, could take legal action against him yet.

Principle.

Under Lease finance the liability of hirer arises only when leased assets are delivered by hire grantor.

Normal transac­tion of documentary credit was fundamentally a contract by which a payment teas to be made in exchange for documents

Transaction of documentary credit embodied three agreements to which parties were (a) buyer and issuing bank; (b) issuing bank and intermediary bank; (c) intermediary bank and beneficiary.

Different branches or branch office of a bank are not separate or distinct personality and they cannot be considered as a separate entity

All officers of a banking company transacting business at any particular branch or branch office are acting on behalf of the banking company which is answerable for their acts while they are acting in normal course of duties

Bank is vicariously liable for the acts of its officers and cannot evade responsibility for damages

No exception can be taken to the acts where it can be established that the complaining party himself is a privy to forgery or beneficiary and had knowledge of the same.

At the time of issuance of cheque, the payee got endorsement from Bank Manager with regard to availability of amount in the account

Bank Manager also endorsed that the cheque was good for payment

Later on, at the time of presentation of the cheque, the bank refused to encash the same

Payee invoked jurisdiction of Wafaqi Mohtasib, who directed the Bank to release the amount mentioned in the cheque to the payee

Plea raised by the Bank was that the Manager was not competent to make such endorsement on the cheque

Validity

Branch Manager, who was the highest officer in the branch, and was supposed to deal with all the affairs of the branch, not only endorsed on the reverse of the post dated cheque “good for payment” but also put seal of the Bank on it

Branch Manager also gave assurance on the letterhead of the Bank that the cheque would be certainly encashed on the date mentioned thereon

Endorsement on the back of the cheque alongwith the assurance given by the Bank on its letterhead for the encashment of the cheque on due date was a guarantee given by the Bank that the cheques would be encashed on the date, irrespective of whether amount would be available in the account or not

Plea of the Bank that the officer, who made the endorsement was not authorized by the Bank, was not acceptable

Every prudent businessman had to take reasonable care while dealing with any individual and a businessman in normal course had to rely upon the Manager of the branch who was holding the highest post in the branch and to accept his commitment as a commitment on behalf of the Bank

Bank could not deny its liability towards its customers who deal with the officers of the Bank by taking the plea that the officer was not authorized by the Bank as it was not possible for a customer that on each and on every occasion he should ask from officer of the Bank about his authority

Bank did not allege that the payee was party to the alleged or unauthorized acts of its Manager

It was normal course of events and perfectly reasonable for a businessman to rely upon a representation made by a Manager of the Bank rather to investigate the extent of the powers of the Manager

Manager was expected to be conscious of the limits of his authority

Jurisdiction of High Court under Art.199 of the Constitution being discretionary, interference could be refused even if the order was illegal but otherwise just and fair

High Court declined to interfere with the order passed by Wafaqi Mohtasib in favour of the payee

Constitution of Pakistan (1973), Art.199.

Such duty was not absolute, but qualified being subject to reasonable restrictions, such as compulsion by law; duty to public, Bank's own interest justifying disclosure and disclosure with customer's consent

Danger to the State or public duty might supersede duty of agent to his principal

Compulsion by law must be confined to regular exercise by proper officer to actual legal power to compel disclosure, thus, every enquiry made by Governmental functionary would not fall within its ambit

­Breach of such duty, if resulted in substantial injury, would give rise to a claim of damages against Banker.

Bank deals only with documents and not with underlying goods or services which may be subject matter of any agreement between a foreign supplier and a local importer of such goods or services

Opening of letter of credit by the Bank is only required to see the documents conforming to the letter of credit.

Services rendered by a bank discussed.

Material and qualitative difference exists between .a demand for repayment of running finance and a demand founded on a counter-guarantee or indemnity.

Bank had not raised objections to certain averments and payments made by the respondent at any stage of the proceedings at the lower forum

Held, the Bank was not allowed to raise a new plea before the appellate forum, which had not been agitated before the lower forum.

Banker's lien was a right of retaining things delivered into his possession as a banker if and so long as the customer to whom they belonged or who had the power of disposing them when so delivered was indebted to the banker on the balance of the account between them, provided the circumstances in which the banker obtained possession did not imply that he had agreed that this right shall be excluded-Where securities or other properties of the customer were in the hands of the bank, the bank could exercise the right of retaining those securities or documents until the whole amount due to it was paid by the customer

When a customer pays money into his bank's account, the amount ceases to be the property of the customer and becomes the property of the bank and the bank is thereafter under a contractual obligation to repay or give credit to the customer for the amount.

Definition of.

Instalment decree, in the present case, contained a penalty clause, giving option to the decree holder to invoke the same in case of default

Such clauses, doubtless, being for the benefit of the decree-holder, decree holder could take out execution of the decree for the full amount if there was a default in the payment of any instalment

Where, however, the decree-holder had elected not to refuse a delayed payment, and had received the same without objection, 'it would constitute waiver of his right

Waiver meant forsaking the assertion of a right at the proper time an intentional relinquishment of a right man was entitled to "an intentional relinquishment of a known right"

Waiver might consist either of a positive act of relinquishment or of conduct such as would warrant an inference of relinquishment of a right

Waiver, thus was meant to forego, to waive a claim or right, or not to put forward the same

Decree-holder/Bank having not exercised its right by invoking the penalty clause in compromise deed, at the relevant time, was deemed to have waived its right, consequently the execution petition being not maintainable was dismissed by the High Court.

Banking Court issued notice to the defendants at the cost of the plaintiff for 7-6-1993 and plaintiff was directed to deposit the expenses of Talbana within a week

Said order was repeated by the Court till 4-12-1993, plaintiff failed to deposit the process fee within prescribed period i.e. 3 days in view of order dated 4-12-1993 and the case was adjourned to 7-2-1994

Banking Court dismissed the suit as the plaintiff failed to deposit the process fee vide its order dated 9-4-1994

Validity

Service of the defendant was not effected in terms of the notice issued by the Court

When the notice was issued by the Court then the plaintiff was not supposed to deposit the process fee

Subsequent order of the Banking Court after 21-12-1992 for issuance of notice to the defendant with a direction to the plaintiff to deposit process fee was not valid on the well founded principle of law that nobody should be penalised by the act of the Court

Provision of O.IX, R.2, C.P.C. being not of imperative nature, rigid application thereof was not warranted and Court was not bound to pass order of dismissal

Last order passed by the Banking Court to deposit process fee within 3 days was unwarranted, in law

When the basic order was not sustainable in the eye of law then superstructure shall have to fall on the ground

Imposition of penalty prescribed under OJX, R.2, C.P.C. rested in the discretion of the Court which was to be exercised only in case of grave injustice and not in routine.