ORDER SHEET
IN THE HIGH COURT OF SINDH AT KARACHI
Suit No.B-114 of 2013
Al-Baraka Bank (Pakistan) Limited
Versus
Enshaa Holdings Ltd.
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Date |
Order with signature of Judge |
1. For hearing of CMA No.81/2013 (Leave to defend)
2. For hearing of CMA No.82/2013 (Leave to defend)
Date of hearing: 25.08.2016, 20.09.2016 and 03.11.2016
Mr. Abdul Sattar Lakhani for plaintiff.
Mr. Naveed-ul-Haq for defendants.
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Mohammad Shafi Siddiqui, J.- This suit has been filed by the plaintiff for recovery of Rs.251,680,000/- against the defendants under banking jurisdiction of this Court.
Plaintiff claims to be a banking company/financial institution within the meaning, as prescribed in Financial Institutions (Recovery of Finances) Ordinance, 2001, whereas defendant No.1 is a company limited by shares, organized and existed under the laws of Mauritius, being a group company of defendant No.2 and the defendant No.2 is a company duly established and existing under the laws of United Arab Emirates (UAE), having its registered office at U.A.E. Sharjah.
It is claimed that defendant No.2, its chairman and the other group companies of defendant No.1 and defendant No.2 were collectively the majority shareholders and sponsors of Emirates Global Islamic Bank Limited (EGIBL) which is the erstwhile name of the plaintiff. Presently the majority shareholding of the plaintiff is held by one Al-Baraka Islamic Bank of Bahrain and in pursuance of a merger agreement amongst Al-Baraka Bahrain, the plaintiff and defendant No.2, the Pakistan operations of Al-Baraka Bahrain were merged with EGIBL and the resultant merged entity is the plaintiff.
It is contended by counsel for the plaintiff that an investment was made by EGIBL by way of advance payment for purchase of two floors in the Karachi Financial Towers (KFT) to be constructed on Chundrigar Road, being a project of Enshaa NLC Developers Limited, a joint venture company of defendant No.1 and NLC. It is claimed that an amount of Rs.251 Million was paid. Defendant No.2 has assured the plaintiff and Al-Baraka Bahrain that the KFT Project will be revived. In consideration of plaintiff agreeing not to take any legal or other action to recover its total investment amount, including filing winding up proceedings against Enshaa NLC Developers (Pvt.) Limited and as a condition for and in consideration of Al-Baraka Bahrain agreeing not to reduce the consideration/share valuation of EGIBL as a part of the merger swap ratio and as a condition precedent to the Al-Baraka Bahrain’s obligation to proceed with the merger with EGIBL, a Deed of Indemnity was issued in favour of plaintiff by defendant No.1 for self and on behalf of defendant No.2. In pursuance of such Indemnity the plaintiff wrote letter on 16.12.2011 for the first claim followed by second claim on 08.05.2012 and some reminders in this regard. However, since the defendants have failed to respond they filed this suit for recovery of the amount.
As against above, the defendants have filed their separate leave to defend applications and have raised certain material questions of law and facts including but not limited to the jurisdiction of this Court. It is contended that in terms of Para 5 of the plaint itself EGIBL made an investment by way of advance for purchase of two floors in Karachi Financial Tower to be constructed on I.I. Chundrigar Road, being project of Enshaa NLC Developers (Pvt.) Limited, being a joint venture company of defendant No.1 and NLC called KFT Project, amounting to Rs.251 Million. The project however was suspended and defendant No.2 gave assurance to the plaintiff and Al-Baraka Bahrain that the aforesaid project shall be revived shortly and has executed Deed of Indemnity in favour of plaintiff for self and on behalf of defendant No.2. It is contended that various letters were issued wherein different amounts were claimed as losses at different times.
It is contended that there is no date of default and in fact wavering losses are being claimed by the plaintiff without any justification. It is urged that there is no relationship between parties as of customer and financial institution and no default has been pointed out. It is neither based on any finance agreement nor sanction advice or other supporting documents to bring the claim within the frame of financial institution.
Learned counsel further submitted that without prejudice there is no specific date of disbursement of the amount and the terms of section 9(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001 has also been violated. The plaintiff has not disclosed any material documents regarding such investment and invocation of indemnity clause without any actual loss allegedly sustained and being beyond the scope of Financial Institutions (Recovery of Finances) Ordinance, 2001 cannot be adjudicated under banking jurisdiction and that too summarily in the absence of such documents. There are no obligations on the part of the defendants under Financial Institutions (Recovery of Finances) Ordinance, 2001. In support of his conventions learned counsel for defendants has relied upon the cases of Pakistan General Insurance Company v. Muslim Commercial Bank Limited (2015 CLD 600), Bank Alfalah Limited v. Iftikhar A. Malik (2003 CLD 363), Procter & Gamble Pakistan (Pvt.) Ltd. v. Bank Al-Falah Limited (2007 CLD 1532) and Allied Bank of Pakistan Ltd. v. Safa Textile Limited (2013 CLD 2022).
I have heard the learned counsel for the parties and perused the material available on record.
Admittedly, it seems that it is an investment, which was apparently made by erstwhile EGIBL regarding which an indemnity was executed by defendant No.1 for self and on behalf of defendant No.2. Apparently on the basis of pleadings it seems that there are serious questions as to relationship of customer and financial institution and the default has also not been referred. The admitted documents placed on record suggest that it is an amount advanced towards investment in the KFT project and perhaps on this account no specific date of default has been stipulated by the plaintiff in the pleadings and also at the time of arguments by learned counsel appearing for it.
From a bare reading of the plaint itself would clearly indicate that the plaintiff has paid the subject amount to the defendants as an investment in the project and thereafter alleged to have suffered loss. Neither any date of disbursement and/or default of any finance has been pleaded by the plaintiff nor any supporting document such as finance agreement, sanction advice etc. are placed on record which prima facie makes the amount paid to the defendants as an investment and not a finance in terms of Financial Institutions (Recovery of Finances) Ordinance, 2001. The claim of the plaintiff is based on the losses that it alleged to have suffered but that too without any reasoning and/or documents in support thereof. Such claim and/or assertion cannot be adjudicated upon summarily without recording of evidence, which may ultimately define the defendants to be ‘customer’ in terms of section 2(c) of Financial Institutions (Recovery of Finances) Ordinance, 2001 or otherwise.
In the case of Pakistan General Insurance Company Limited (Supra) learned Division Bench of this Court has held that the relationship between the parties must be that of a financial institution and customer and such relationship must emanate from any finance, as defined in clause (d) of Section 2 of Financial Institutions (Recovery of Finances) Ordinance, 2001. Such relationship at this prima facie stage appears to be missing in the instant case. Similarly in the case of Procter & Gamble Pakistan (Supra) it has been held that no person, no matter in what other capacity he is connected with a financial facility, if he does not fall within the definition of a customer as defined under section 2(c) of Financial Institutions (Recovery of Finances) Ordinance, 2001, can neither sue nor be sued under section 9 of the ibid law.
In view of the above, I am of the view that on the basis of subject matter of this suit prima facie a case for grant of leave to contest the suit has been made out. Accordingly, the leave applications are allowed and the unconditional leave to defend the suit is granted.
Dated: Judge