IN THE LAHORE HIGH COURT, MULTAN BENCH MULTAN ...

Stereo H.C.J.D.A 38

Judgment Sheet

IN THE LAHORE HIGH COURT,

MULTAN BENCH MULTAN

JUDICIAL DEPARTMENT

FIRST APPEAL AGAINST ORDER NO. 49 OF 2008

Muhammad Waris

Versus United Bank Ltd. etc.

JUDGMENT

Appellant by: Mr. Shafqat Raza Thaheem,

Advocate.

Respondents by: Nemo

Date of Hearing: 24.02.2022

MUHAMMAD SHAN GUL, J.- Through this judgment, the

titled First Appeal against Order as also Civil Misc. Applications No.

931-C & 932-C of 2019 are sought to be decided.

C.M.Nos. 931-C & 932-C of 2019

2. Civil Misc. Application No. 931-C/2019 has been filed for

seeking restoration of the titled First Appeal against Order which

was dismissed on account of non-prosecution on 11.11.2013. Since

this application was moved on 22.3.2019, naturally it was

accompanied by an application seeking condonation of delay under

FAO No.49-2008

Muhammad Waris vs. UBL etc. 2

section 5 of the Limitation Act, 1908. The ‘sufficient cause’

explained in the application reveals that the original counsel for the

petitioner passed away in the year 2013 and since the petitioner

resides abroad as also in Karachi he was never informed about the

appeal being dismissed for non-prosecution and therefore was never

in the know about the dismissal of his appeal. These applications

were taken up for hearing for the first time on 26.03.2019 and notice

was issued to the respondents. Since the respondents were not

appearing even after issuance of notices, it was ordered on

20.10.2021 by this Court that respondent No.2 i.e. the concerned

chapter of United Bank Limited, at Vehari would be proceeded

against ex-parte. Insofar as respondent No.1 i.e. Head Office of the

concerned bank is concerned, repeated notices were issued in the

Appeal as also in these applications but no one came forward to

represent the bank and therefore, respondent No.1, too, is being

proceeded against ex-parte today.

3. When these applications came up for hearing before this

Bench, an inquiry was put to the office of this Court whether any

notice pervi was issued to the then counsel for the petitioner for the

fateful date i.e. 11.11.2013 on which date the appeal under

consideration was dismissed for non-prosecution. This was

considered necessary and imperative because it is the case of the

petitioner that his counsel passed away in the first half of the year

2013 and that it is therefore that the petitioner was never informed

about the date of hearing or for that matter about the dismissal of his

FAO No.49-2008


appeal for non-prosecution. The office of this Court reported that

notice pervi had been issued to the then counsel for the petitioner

Mr. Khalid Pervaiz, Advocate but was not received back and

therefore, the office established that notice pervi had been issued.

However, the point that arose in the circumstances was about the

date of death of the counsel for the petitioner and whether if the

counsel had died and passed away prior to the fateful date of

11.11.2013 then the issuance of notice pervi became meaningless.

4. The notice pervi in question was issued on 02.11.2013 for the

fateful date of 11.11.2013. Learned counsel for the petitioner has

placed on record the death certificate of the then counsel, Mr. Khalid

Pervaiz, Advocate who passed away on 30.04.2013 which is atleast

5½ months before the present appeal was dismissed for non-

prosecution. Hence, there is no gainsaying that a notice pervi

issued to a dead counsel is meaningless and of no value. After

having confirmed the fact that the then counsel for the petitioner had

passed away in April, 2013 and that a notice pervi issued to him was

therefore meaningless, the context in which the petitioner had moved

the application under consideration became clear and it is therefore,

that this fact is being taken as a sufficient cause to condone the

delayed approach of the petitioner before this Court. If the notice for

the date of hearing was issued to a dead counsel then there is no way

that anyone could have appeared and, likewise, there is no way that

the petitioner could have learnt either about the fixation of the matter

or about its dismissal. The petitioner claims that he arrived in Multan

FAO No.49-2008


in March 2019 and tried to contact his counsel and it is then that he

learnt that the counsel had passed away and that his appeal had been

dismissed for non-prosecution and which is what prompted the

petitioner to approach this Court immediately and file the

applications under consideration.

5. Restoration of an appeal dismissed for non-prosecution is

governed by Article 168 of the Limitation Act, 1908 for the purpose

of gauging limitation. While a period of 30 days has been ordained

in the said section as the period of limitation, section 5 of the

Limitation Act has also been made applicable thereto and therefore,

in terms of the law laid down in the case of Sindh Industrial

Trading Estates vs. West Pakistan Water and Power

Development Authority (PLD 1991 SC 250), if it is proved that the

appellant was prevented by any sufficient cause then the Court shall

readmit the appeal. It has also been acknowledged in the case of

Abdur Raheem vs. Mubarak Ali (2006 MLD 1064) that section 5

of the Limitation Act is applicable and has to be read alongwith

section 168 while considering the question of condonation of delay.

Kindly also see PADSC vs. Pakistan National Industry (2004

YLR 1417)

6. The benchmark or criteria for readmission beyond the period

of limitation remains that of ‘sufficient cause’. Therefore, any

prudent or reasonable individual having applied his mind to the facts

of the instant case will indeed confirm that after the death of the then

counsel for the petitioner in April 2013, notice pervi issued for

FAO No.49-2008


11.11.2013 was meaningless and of no value and hence the appeal

had been dismissed for non-prosecution on account of no fault of the

petitioner. Since the counsel for the petitioner had passed away, there

was no way that the petitioner who now lives in Karachi could have

learnt about the dismissal of his appeal.

7. It is trite that where an order is a nullity (as is the case with the

order under challenge in FAO No. 49/2008, the present appeal) then

challenge can be laid to such an order even after the period of

limitation. The Hon’ble Supreme Court of Pakistan in the case of

Mst. Yasmeen Bibi vs. Muhammad Ghazanfar Khan and others

(PLD 2016 SC 613) at paragraph 19 has clearly held that “where an

important point of law of public importance was involved delay

could be condoned”. In the case of Dr. Syed Sibtain Raza Naqvi

vs. Hydrocarbon Development and others (2012 SCMR 377) at

paragraph 8, it has been held that if an application was barred by

time, then provisions of section 5 of the Limitation Act could be

invoked by showing ‘sufficient cause’.

8. Furthermore, the postulates of Article 10-A of the Constitution

also demand that the appellant should not be condemned unheard

and should rather be afforded due process in the matter of

determination of his civil rights.

9. In view of what has been noted above, both these applications

are accepted and the delay in filing application for restoration of this

appeal is condoned on account of the ‘sufficient cause’ discussed

FAO No.49-2008


above and the application seeking restoration is allowed and the

appeal is being taken up for hearing today.

FAO No. 49 of 2008

10. This First Appeal against Order is directed against an order

dated 28.01.2008 passed by a learned Civil Judge Ist Class,

Burewala whereby he returned the plaint filed by the appellant under

Order VII Rule 10 CPC so as for the appellant to present the plaint

before the court of proper jurisdiction. The order dated 28.01.2008 is

being reproduced hereunder:-

“28.1.08 Present: Leaned counsel for the parties.

From the contents of the pleadings it

become clear that this court has no jurisdiction

to adjudicate upon this suit in the presence of

the special law and special court under special

law. So, the plaint is returned U/O 7 Rule 10 of

CPC with the direction to file the same in the

court of proper jurisdiction. File be consigned

to the record room after its due completion.”

Announced. Muhammad Tariq,

28.1.08 Civil Judge Ist Class,

Burewala.

11. Facts in brief as spelt out in the plaint are that the appellant

had deposited 700 prize bonds in the lockers of respondent bank

(respondent No.2) and on account of negligence of the respondent

bank, the prize bonds were stolen and it was prayed that a decree for

payment of Rs. 67,50,000/- with profit be passed in favour of the

FAO No.49-2008


appellant as against the respondent bank. As is evident, the Civil

Court returned the plaint on the basis that the appellant ought to file

the same before the Banking Court established under Financial

Institutions (Recovery of Finances) Ordinance, 2001 and hence

returned the plaint.

12. While the merits of the order shall be alluded to in the latter

half of this narrative, what is immediately discernable from a bare

perusal of the impugned order is the fact that the order does not

qualify the test of a judicial order since it is a non speaking order and

except for a bald reference to one reason, and that too, in a

lackadaisical manner, there is no discourse whatsoever. It may also

be mentioned here that the order under challenge does not allude to

any facts presented by the appellant either and therefore, does not

qualify the judicially acknowledged criteria of a judicial order.

13. On the legal plain, the order under challenge is erroneous and

warrants to be declared to be of no legal effect on the following

amongst other considerations:-

JURISDICTION OF BANKING COURT:

Jurisdiction of Banking Courts established under Financial

Institutions (Recovery of Finances) Ordinance, 2001 (“FIO, 2001) is

provided in Section 9(1) and the exclusive availability of such

jurisdiction is governed by Section 7(4);

FAO No.49-2008


9. Procedure of Banking Courts.- (1) Where a customer or a

financial institution commits a default in fulfillment of any

obligation with regard to any finance, the financial institution or, as

the case may be, the customer, may institute a suit in the Banking

Court by presenting a plaint which shall be verified on oath, in the

case of a financial institution by the Branch Manager or such other

officer of the financial institution as may be duly authorized in this

behalf by power of attorney or otherwise.

2 (c) “customer” means a person to whom finance has been

extended by a financial institution within or outside Pakistan and

includes a person on whose behalf a guarantee or letter of credit has been

issued by a financial institution as well as a surety or an indemnifier;

2 (d) “finance” includes

(i) an accommodation or facility provided on the basis of participation in

profit and loss, mark-up or mark-down in price, hire-purchase, equity

support, lease, rent-sharing, licensing charge or fee of any kind, purchase

and sale of any property including commodities, patents, designs, trade

marks and copy-rights, bills of exchange, promissory notes or other

instruments with or without buy-back arrangement by a seller,

participation term certificate, musharika, morabaha, musawama, istisnah

or modaraba certificate, term finance certificate;

(ii) facility of credit or charge cards;

(iii)facility of guarantees, indemnities, letters of credit or any other

financial engagement which a financial institution may give, issue or

undertake on behalf of a customer, with a corresponding obligation by

the customer to the financial institution;

(iv)a loan, advance, cash credit, overdraft, packing credit, a bill

discounted and purchased or any other financial accommodation

provided by a financial institution to a customer;

(v) a benami loan or facility that is, a loan or facility the real beneficiary

or recipient whereof is a person other than the person in whose name the

loan or facility is advanced or granted;

(vi) any amount due from a customer to a financial institution under a

decree passed by a civil court or an award given by an arbitrator;

(vii) any amount due from a customer to a financial institution which is

the subject matter of any pending suit, appeal or revision before any

court;

(viii) any amount of loan or facility availed by a person from a financial

institution outside Pakistan who is for the time being resident in

Pakistan.

FAO No.49-2008


(ix) any other facility availed by a customer from a financial Institution.

2 (e) “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

7. Powers of Banking Courts.-

(4) Subject to sub-section (5), no Court other than a Banking Court shall

have or exercise any jurisdiction with respect to any matter to which the

jurisdiction of a Banking Court extends under this Ordinance, including

a decision as to the existence or otherwise of a finance and the execution

of a decree passed by a Banking Court.

(5) Nothing in sub-section (4) shall be deemed to affect--

(a) the right of a financial institution to seek any remedy before any court

or otherwise that may be available to it under the law by which the

financial institution may have been established; or

(b) the powers of the financial institution, or jurisdiction of any court

such as is referred to in clause (a); or

require the transfer to a Banking Court of any proceedings pending

before any financial institution or such court immediately before the

coming into force of this Ordinance.

14. In order to avail jurisdiction provided by a banking court there

has to be a dispute between a Bank and its Customer regarding

failure to fulfil obligations arising out of a finance or loan facility.

Messrs Summit Bank Limited through Manager vs. Messrs Qasim

and Co. through Muhammad Alam and another (2015 SCMR 1341)

17. As regards the appellant's contention that only the

Banking Court, established under the Act had jurisdiction in

the matter, it may be noted that, as is now clear from the above

discussion, neither there was any question pertaining to

FAO No.49-2008


"finance" as defined by section 9 of the Act, nor the

question as to whether the respondents were "customers" in

the context of the Act involved in the matter, and no

documents were executed by the respondent securing re-

payment of the alleged liability. The suit for recovery was

filed by the respondents for the amount that was deducted

out of their monies lying in their account, illegally and

unauthorizedly and thus the Banking Court had no

jurisdiction in the matter as the same was constituted to

adjudicate upon the matter pertaining to "finance" between

bank and its customer, we therefore, did not find any

jurisdictional error in the matter.

Muhammad Ismail vs. Muhammad Adil (2021 CLD 586) (LHC-

DB)

7. ……. It is settled law that suit for permanent and

mandatory injunction cannot be filed before the Banking

Court rather to institute a suit before the Banking Court,

requirement of Section 9(1) of the Ordinance has to be

fulfilled.

8. From the above provisions of law, it is clear that under

the Ordinance only those issues can be solved which are

between the customers and the financial institutions in

respect of finance and that too on the ground that any

obligation has not been fulfilled. When the definitions,

mentioned above, are read with the facts of the present case it

is clear that the Appellant was not the customer of the Bank

rather it was the Respondent who availed the loan facility in

respect of the Vehicle and paid the monthly installments and

in this respect NOC was issued in his favour by the Bank on

18.06.2013. Reliance is placed on "Marhaba Pakistan

Internatinoal and others v. Habib Bank Limited and another"

(2017 CLD 995) where it has been held that "any person other

than as defined in section 2(c) of Financial Institutions

(Recovery of finances) Ordinance, 2001 did not come within

the definition of a 'customer'".

Marhaba Pakistan International and others vs. Habib Bank Limited

and another (2017 CLD 995 (LHC)

8. In the above definitions, the word "customer" is

limited to a person to whom finance has been extended and

FAO No.49-2008


includes a person on whose behalf a guarantee or letter of

assurance has been issued by a financial institution. It means,

any persons, other than defined in section 2(c) of the

Ordinance, do not come within the definition of a "customer".

Merely being account-holders of the Respondent-Bank, the

Appellants cannot be considered as customers. And the

amount allegedly credited in the account of the Appellants on

deposit of a cheque also does not come within the purview of

"finance". Similarly, any facility defined in the definition

provided by a financial institution covers within the ambit of

"finance". Hence, opening of an account and deposition of

amount by an account holder would not be considered as

finance.

12. In view of what has been discussed above, the

Banking Court had no jurisdiction to try the suit between an

account holder and the Banking Company when there was

no dispute with the banking company in fulfilling any

obligation with regard to any loan or finance. Sections 7(4)

and 9(1) of aforesaid Ordinance provides that any dispute with

regard to fulfilment of conditions of loan and liability arising

out of the contract executed by the bank and the customer can

be agitated in Banking Court but in the instant case the

Appellants availed no financial facility from the Respondent

No.1-Bank and was merely an account holder.

Amtex Limited through Director vs. Bank Islami Pakistan Ltd. and 8

others (2016 CLD 2007)

31. While putting a construction on the term 'obligation',

the purpose of defining the term in a certain manner has to be

kept in view. Obviously, had the legislature intended the

representations and covenants made by the financial institution

to be part of 'obligation' so as to premise and found the suit

under section 9, it would have spelt it out clearly and without

equivocation. The intent of the legislature is not in doubt. It is

that any alleged default in fulfillment of any obligation

regarding any representation, warranties and covenants

by a financial institution is not enforceable in the special

jurisdiction under Ordinance, 2001. This construction also

lends credence to the scheme and policy of the Ordinance,

2001 which has been enacted primarily to act as an engine of

recovery of defaulted finance by the financial institutions and

not vice versa. The customers may have a cause of action

but that is enforceable in the Courts of general jurisdiction

only. The definition of the term 'obligation' in fact restricts

the meaning of the term within a certain periphery. Rather

than expanding it, the meaning is exhausted and limited. It is

FAO No.49-2008


limited to only two facets of obligation. A contextualist

approach will have to be employed here. It is equally true that

rules of interpretation are merely tools employed by Courts to

ascertain the true meaning of a provision in a statute in case of

ambiguity. These rules are not immutable and are subject to

exception. Every rule, in a given situation, is capable of being

administered differently and according to context, with

necessary variations.

Avari Hotels Limited and others vs. Investment Corporation of

Pakistan and 6 others (2000 YLR 2407)

Again from a bare reading of the above section it is clear

that the jurisdiction of a Banking Court is only attracted

where a' borrower/customer or a Bank commits a default in

fulfilling any obligation with regard to any loan or finance.

Only then could they institute a suit in the Banking Company

by presenting a plaint duly supported by statement of account

etc. So also it would be seen that the definition of the word

"borrower" as per section 2(c) means a person who has

obtained a loan under a system based on interest from a

Banking Company and "customer" as per section 2(d) means a

person who has obtained finance under a system which is not

based on interest from a Banking Company. Of course, the

definitions of the terms "Finance" and "loan" as given in

section 2(e) and (f) of the Act are very wide and include not

only an outright loan of money but involve numerous financial

instruments as well including bills of exchange, promissory

notes etc., the purpose of which is to cover all possible forms

of banking and financial transactions.

In view of the above provisions of the Act, in my opinion, in

order that a Banking Court may assume jurisdiction in any

particular matter it first must be established that there is

relationship of borrower/customer and banker between the

parties and further that some default has been committed by

either party with regard to any loan or finance, obtained by

the borrower/customer from the Bank as a consequence of

such relationship. In the present matter it is admitted by all

concerned that although it may be that in the past there was a

relationship of borrower/customer and banker between the

parties but at present there is none as all the amounts owed by

the plaintiff to the defendants have been fully paid back. In

fact, the suit has not been filed by the plaintiff against the

defendants for any alleged default in fulfilling any obligation

by the defendant with regard to any loan or finance.

FAO No.49-2008


Atlantic Carpets through Partner vs. Messrs Emirates Bank

International and another (2000 MLD 1850)

“……the customer can only file a suit under the applicable

Act if there is some dispute with the banking company in

fulfilling any obligation with regard to any loan or finance.

Plaintiff in his entire suit has not stated a single word that the

defendant-bank has committed default of this nature.”

15. A customer operating a locker with a bank does not obtain a

finance (as defined in Financial Institutions (Recovery of Finances)

Ordinance, 2001) while the jurisdiction of a banking court is limited

to a dispute arising out of a finance facility between a customer and a

Bank, hence, a banking Court cannot adjudicate the dispute of a

bank’s liability regarding theft from its lockers under the jurisdiction

conferred by Financial Institutions (Recovery of Finances)

Ordinance, 2001.

16. After a careful consideration of the facts involved in the

present matter and after perusing the precedent cases on the

subject, it is clear that there is no question pertaining to any loan

or finance involved in the present matter. Likewise, there is no

question of non-fulfillment of any obligation pertaining to any

loan or finance involved in the present matter. There is, equally,

no customer to whom any facility of finance or loan has been

extended. Any other default in fulfilling warranties, covenants

etc. by a bank in a matter not involving finance or loan is not

enforceable under the special jurisdiction conferred by Financial

Institutions (Recovery of Finances) Ordinance, 2001. There must

be a relationship of a borrower/customer with a bank in respect

FAO No.49-2008


of some finance or loan and some default in fulfilling obligations

with respect to such facility of finance or loan and which is what

attracts the jurisdiction of a banking Court established under

Financial Institutions (Recovery of Finances) Ordinance, 2001.

Such jurisdiction is not available in respect of any other matter

and in this regard the following precedent case is very

instructive!

17. The nature of relationship between a customer holding his

possessions in a bank locker and the respective Bank is explained in

PLD 2021 Sindh 28 in which the Sind High Court while functioning

as a Court of plenary jurisdiction (trial Court) held:

Mahmooda Tapal and another vs. Standard Chartered Bank

(Pakistan) Limited and 5 others (PLD 2021 Sind 28)

15. Deposit for safe custody is a branch of the law of bailments. A

bailment is the delivery of movable property by one person (the

bailor, to another, the bailee) on condition that it shall, in due

course, be redelivered to the bailor on his order. It may be stated

that the person who hires a locker retains some control over it by

having one key with himself but if the locker can be operated

without any key then at once any impediment in the way of control

and possession of the Bank to whom the locker belonged and in

those strong-room it was to be found, would be removed and it

could be said that the bank was in the position of a bailee. Keeping

banker as bailees, one may say that the care which a banker is

obliged to take is such care as an ordinarily efficient and prudent

person can take in similar circumstances. The bank will not be

liable if property held in safe custody is destroyed by fire or

otherwise, lost or stolen unless there is negligence on the part of the

bank, and the degree of negligence required to establish liability

will depend on the relevant circumstances of the case.

In view of the above discussion, I am of the view that the

defendant-Bank has owed a duty of protection and safety in

respect of plaintiffs' subject locker, however, whether the same

has been breached or not and any negligence could be attributed

towards the defendant-bank, and further whether the plaintiffs

suffered any loss due to missing of their contents of the locker,

FAO No.49-2008


would only be possible after discussion of the evidence, led by the

parties in the present case, which has been done in the later part of

this judgment.”

18. Evidence having not been allowed to be led in the present

matter the order under challenge cannot be sustained.

19. Banking Courts can only adjudicate upon disputes regarding

obligations arising out of a Finance facility extended by a Bank to its

customer and the nature of duty cast upon the bank regarding the

contents placed in a safe locker does not attract the provisions of

Section 2(d) resultantly keeping the petitioner out of the sweep of the

definition of a Customer under Section 2(c) of FIO, 2001. Hence, the

banking Court does not have jurisdiction to decide the claim of the

Petitioner.

20. For what has been discussed and noted above this appeal is

allowed and the order dated 28.01.2008 passed by a Civil Judge First

Class is set-aside and declared to be of no legal effect. The appellant

is at liberty to file a suit before the Civil Court with respect to the

present subject matter.

(MUHAMMAD SHAN GUL)

JUDGE

Announced in open Court on

2nd

of March, 2022.

JUDGE

APPROVED FOR REPORTIN G

JUDGE

Riaz

IN THE LAHORE HIGH COURT, MULTAN BENCH MULTAN ...

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