PLJ 2022 Lahore 51 (DB)
Present: Sohail
Nasir and Ahmad Nadeem Arshad, JJ.
INAMULLAH KHAN
MAZARI--Appellant
versus
BANK AL-FALAH
and 3 others--Respondents
R.F.A. No. 259
of 2013, heard on 6.9.2021.
Financial Institutions (Recovery of Finances) Ordinance, 2001 (XLVI
of 20021)--
----Ss. 9 & 22--Suit for recovery--Dismissed--Special
law--Ordinance is a special law that regulates relationship between Financial
Institution and Customer---It is a complete code providing the procedure of
banking Courts, with regard to recovery of loan from customers making default
and at the same time it gives a right to customers making default and at the
same time it gives a right to customers also to knock the door of the court in
certain eventualities. [P. 53] A
Financial Institutions (Recovery of Finances) Ordinance, 2001 (XLVI
of 20021)--
----S. 22--Maintainability of suit--Jurisdiction of Court--Claim for
damages caused on commission of tort or by breach of a contract has nothing to
do with default in fulfillment of an obligation arising from a financial
facility--Such plea cannot be agitated before Banking Court--A claim for
damages, on account of an injury or loss, caused by Financial Institution in
fulfillment of its obligation in relation to finance, certainly falls within
domain of Banking Court--Maintainability of suit for recovery of damages is not
within jurisdiction of said Court--If officials of Bank had taken into
possession car from appellant, no question arises to hold that said action was
wrong or unjustified--Appeal was dismissed.
[Pp.
54 & 56] B, C & E
2007 CLD 571, 2006 CLD 1147, 2013 CLD 2030, 2017
CLD 1639 ref.
Financial Institutions (Recovery
of Finances) Ordinance, 2001 (XLVI of 20021)--
----S. 13(a)(b)--Powers
of financial constitution-- a financial institution has been empowered to
exercise direct power of recovery of property with or without intervention of
the Banking Court.
[P.
56] D
Mr.
Muhammad Suleman Bhatti Advocate for Appellant.
Nemo
for Respondents.
Date of hearing: 6.9.2021.
Judgment
Sohail Nasir, J.--This Regular First Appeal under Section 22 of the
Financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance) filed
by Inam Ullah Khan Mazari (appellant) is directed against the
judgment and decree dated 04.09.2013 passed by the learned Judge Banking Court
Multan on the basis of which suit for recovery of Rs. 2,00,00,000/- (twenty
millions) as damages instituted by appellant against respondents was dismissed.
2. By filing the suit on 28.02.2007, version of appellant was that he
obtained financing facility from the Bank Al-Falah Limited (contesting
respondent) for the purchase of car Toyota Corolla subsequently
registered as MLJ-89; it was under a higher purchase agreement and monthly
installment was Rs. 25789/-; he paid the instalments regularly for ten months
and thereafter due to personal engagements he could not contact the contesting
respondent for three months; on 5.9.2006 he approached Asad Khan Tareen, the
Manager Car Finance/Respondent No. 3 and informed him that he will pay the
outstanding dues on 14.09.2006 which was agreed by him; on the relevant day
appellant along with his friends went to the bank for payment of outstanding
instalments and when he arrived there, his vehicle was snatched; he was also
humiliated and insulted by the bank officials; appellant immediately approached
the Respondent No. 3 but of no consequence; appellant insisted for return of
the car as he had visited the bank for payment of outstanding installments but
his efforts remained in vain; thereafter appellant had been continuously
visiting the contesting respondent as well as Respondent No. 3 who prolonged
the matter on one pretext or the other; on 29.09.2006, the bank officials
informed the appellant that his car has been auctioned. Ultimate version of
appellant was that due to the act of respondents he faced loss to his
reputation as he was disgraced and humiliated therefore, he was entitled for
damages of rupees 20 millions.
3. An application for leave to defend in terms of Section 10 of the Ordinance
was filed by contesting respondent which was allowed vide an order dated
14.04.2008. Their version was that as appellant had committed default in
payment of installments, therefore, the Bank acted in accordance with law hence
suit was liable to be dismissed.
4. From the pleadings of partiers, the learned trial Court had framed
following issues:
ISSUES:
1. Whether the plaintiff has no cause of action against the
defendants? OPD
2. Whether the plaintiff has no locus standi
to institute the suit? OPD
3. Whether the plaintiff is estopped to
bring the suit? OPD
4. Whether the plaintiff is defaulter of the
defendant bank and the defendants have rightly repossessed the vehicle in
dispute? OPP
5. Whether the plaintiff is entitled to the
decree as prayed for? OPP
6. Relief.
5. In evidence Syed Mujahid Ali
Assistant Manager TCS, Ejaz Hussain Record Keeper of ETO Office Multan, Idrees
Incharge Recovery Bank Al-Falah, Inam Ullah Khan (appellant), Sher Zaman
Khan and Zubair Ahmad came in witness box as PW-1 to PW-6
respectively. The documents Ex-P-1
to P-9 were also produced.
6. On the other hand, Mohammad Umar
Sheikh, General Attorney of the contesting respondent attended the witness box
as DW-1.
7. The learned trial Court after
hearing both the sides and taking into consideration their contentions
proceeded to dismiss the suit for the reason that a suit for recovery on
account of damages was beyond the jurisdiction of the Banking Court constituted
under the Ordinance.
8. Learned counsel for appellant
contended that learned trial Court was not able to appreciate that the suit
filed by the appellant was not in terms of Section 9 but Section 16(3) of the Ordinance, because appellant had
demanded compensation on the wrong and unjustified exercise of the direct
powers by respondents for recovery of car. He further maintained that to do the
complete justice, the learned trial Court was having the powers to consider the
matter as an application for compensation, if the plaint was not properly
drafted.
9. HEARD
10.
The Ordinance
is a special law that regulates the relationship between Financial Institution
and Customer. It is a complete code providing the procedure for banking Courts,
with regard to recovery of loan from customers making default and at the same
time it gives a right to customers also to knock the door of the Court in
certain eventualities. Study of the Ordinance further shows that
following are the possible instances when either of the parties can approach
the Banking Court:
i. Suit for recovery of amount written off, released or adjusted
under any agreement, contract, or consent, including a compromise or withdrawal
of any suit or legal proceedings or adjustment of a decree between a financial
institution and a customer. (S.8)
ii. Suit in case of where customer or
Financial Institution commits a default in fulfillment of any obligation with
regard to any finance. (S.9)
iii. Application of the Financial Institution
or purchaser for putting in possession of the mortgaged property. (S.15(6)).
iv. Application by customer for compensation
in case the Financial Institution wrongly or unjustifiably exercises the direct
power of recovery (S.16(3)).
11.
A claim for damages seeking pecuniary compensation is a relative term. It may
arise on account of injury or loss caused by one to the other due to commission
of tort or by breach of a contractual obligation. The claim for damages caused
on commission of tort or by breach of a contract has nothing to do with the
default in the fulfillment of an obligation arising from a financial facility
and covered under the definition of finance as provided in Section 2(d) of the Ordinance.
Obviously such plea cannot be agitated before the Banking Court. Whereas, a
claim for damages, on account of an injury or loss, caused by the Financial
Institution in the fulfillment of its obligation in relation to finance,
certainly falls within the domain of Banking Court.
12. We have gone through the contents
of plaint and have no doubt in our mind that case of appellant is based on a
civil wrong because of actions of respondents causing him injuries, pain and
suffering therefore he has asked for compensatory damages. So it was a suit for
recovery of damages from all angles and not under any of the provisions of the Ordinance referred earlier.
13.
The question of maintainability of the suit for recovery of damages on account
of defamation before the Banking Court has already been answered on different
occasions that such claim is not within the jurisdiction of said Court.[1]
14. Reverting to the contentions of learned counsel for
appellant that it was an application under Section 9 of the Ordinance, we will
like to reproduce the said provisions and that is as under:
“16. Attachment before judgment,
injunction and appointment of Receivers.(1) Where the suit filed by a financial institution is for the
recovery of any amount through the sale of any property which is mortgaged,
pledged, hypothecated, assigned, or otherwise charged or which is the subject
of any obligation in favour of the financial institution as security for
finance or for or in relation to a finance lease, the Banking Court may, on application
by the financial institution, with a view to preventing such property from
being transferred, alienated, encumbered, wasted or otherwise dealt with in a
manner which is likely to impair or prejudice the security in favour of the
financial institution, or otherwise in the interest of justice--
(a) restrain the
customer and any other concerned person from transferring, alienating, parting
with possession or otherwise encumbering, charging, disposing or dealing with
the property in any manner;
(b) attach such
property;
(c) transfer
possession of such property to the financial institution; or
(2) An order under sub-section (1) may also be passed by the Banking
Court in respect of any property held benami in the name of an ostensible owner
whether acquired before or after the grant of finance by the financial
institution.
(3) In cases where a customer has obtained property or financing
through a finance lease, or has executed an agreement in connection with a
mortgage, charge or pledge in terms whereof the financial institution is
authorized to recover or take over possession of the property without filing a
suit, the financial institution may, at its option:
(a) directly
recover the same if the property is movable; or
(b) file a suit
hereunder and the Banking Court may pass an order at any time, either
authorising the financial institution to recover the property directly or with
the assistance of the Court:
Provided that in the
event the financial institution wrongly or unjustifiably exercises the direct power
of recovery hereunder it shall be liable to pay such compensation to the
customer as may be adjudged by the Banking Court in summary proceedings to be
initiated on the application of the customer and concluded in thirty days.
(4)….
(Emphasized)
15.
Under Section 13(a) and (b) a financial institution has been empowered to
exercise the direct power of recovery of property with or without the
intervention of the Banking Court. The wisdom of law cannot be challenged that
having been cognizant of the fact that as this power may not be taken as a
license to kill by the financial institution, so in case of misuse of said
power a check has been placed giving right to customers to ask for compensation
if the power of direct recovery with or without intervention of the Court has
been exercised wrongly or unjustifiably. Therefore we hold that case of
appellant by no stretch of imaginations was under Section 16(3) of the
Ordinance.
16. For the sake of arguments, we consider the plaint as an
application for compensation even then appellant has no good case in his favour
for the reason that under Section 3 of the Ordinance, it shall be the duty of a
customer to fulfill his obligations to the financial institution otherwise he
has to face the music. Appellant has admitted in plain that he made default in
payment of installments. According to the agreement between appellant and
contesting respondent for availing financial facility duly signed by him bank
has the authority for repossession and the relevant condition therein is as
under: -
“The Bank shall at all times in its sole and unfetters discretion have
the right to repossess the vehicle for non-payments of installment or other
breach of agreement or for the vehicle being rented out or other misuse of the
vehicle for any other purpose contrary to law, public order and safety”
17.
Appellant never took any exception to the agreement between two sides, so he
cannot challenge the powers of contesting respondent for repossessing the
vehicle. Therefore if the officials of the Bank had taken into possession the
car from appellant, no question arises to hold that the said action was wrong
or unjustified.
18. We therefore, conclude our discussion by holding that no
case for interference in a well-reasoned judgment and decree is made out. Hence
this appeal is dismissed.
(K.Q.B.) Appeal
dismissed