IN THE HIGH COURT OF SINDH AT KARACHI
H.C.A.NO.187 OF 1991
Present:
Mr. Justice Khilji Arif Hussain
Mr. Justice Arshad Siraj Memon
Mrs. Gulshan Adamjee and others ………..……………Appellants
Versus
Muslim Commercial Bank Ltd .………………..………Respondent
Date of Announcement - 27.4.2009
Mr. Syed Mamnoon Hassan, advocate for the appellants.
Mr. Aziz-ur-Rehman, advocate for the respondent
JUDGMENT
KHILJI ARIF HUSSAIN, J: Aggrieved by judgment passed in Suit No.121 of 1974, dismissing the suit, the appellants preferred this appeal.
2. Brief facts to decide the appeal are that the appellants had deposited with the respondent's Branch at Motijheel, Dacca the then East Pakistan different fifteen amounts by way of Fixed Deposit in the year 1970 and 1971. Out of these fifteen Fixed Deposits Receipt (hereinafter referred to as FDR), ten FDR were issued in the year 1971, all in the name of appellant No.1, while the remaining FDRs were issued in the names of appellant No.2 to 6 on 20th April 1970. The first nine FDR's were issued in the name of the appellant No.1 for one year to mature on 12.1.1972. While the 10th FDR was to be matured on 8th February.1971. The remaining Five FDR’s were issued in the name of the appellant No.2 to 6 to be matured mature on 30th April 1973.
3. As per memo of plaint, the conditions in the then East Pakistan started deteriorating during the month of November 1971 and it was evident that East Pakistan would not remain the part of Pakistan thus, in such circumstances the appellant No.1 through her husband, namely, Hanif Adamjee and father of appellant No.2 to 6, who were minor at the relevant time wrote a letter from Washington to President of the Bank namely, Mustafa Ismail, who at that time was in London requesting him for transferring the FDR’s funds of the appellants to Karachi Office of the respondent's Bank for issuance of fresh F.D.R's. The 15 Fad’s were also enclosed alongwith the said letter. After receiving the letter, the President of the respondent Bank sent the letter alongwith F.D.R to Karachi Head Office of the respondent Bank to carryout the instructions but no action was taken by the respondent.
4. The appellants' case was that act of the respondent accepting FDR’s amounted to an undertaking and agreement by the respondent to issue fresh F.D.R's from Karachi and having failed to do so, the respondent would be liable to pay to the appellants amounts of FDR’s along with interest. The appellants further alleged that on account of negligence and deliberate omissions on the part of respondent appellants had been deprived of the amount of FDR’s. After exchange of correspondences on the issues, the appellants filed Suit. The appellant No.2 to 6 were represented through their natural guardian Mr. Hanif Adamjee being father.
5 The respondents contested the suit and filed written statement, wherein they have taken specific plea that the FDR’s were made at Dacca Branch and were to be presented to the branch issued the FDR for encashment, and could not send to the President of the Bank for the said purpose. On the basis of the pleadings between the parties, issues were framed and after recording the evidence, the learned Single Judge dismissed the suit.
6 Heard Mr. Syed Mamnoon Hassan, learned advocate for the appellants, Mr. Aziz-ur-Rehman, learned advocate for the respondent.
7 Mr. Syed Mamnoon Hassan, learned advocate for the appellants vehemently argued that after issuance of 15 F.D.R's, out of which five were deposits in the name of minors. Mr. Hanif Adamjee on behalf of husband of appellant No.1 & natural guardian of appellants No.2 to 6 requested the President of the respondent's Bank, who at the relevant time was in London that the amount pertaining to F.D.R’s may be encashed and invested in the fresh F.D.R’s issued by the respondent's office at Karachi. The respondent's President received F.D.R’s, which were issued by the respondent's branch at Dacca, sent the same for compliance of the instructions of the appellants to Head Office of respondent at Karachi. Due to in action on the part of the respondents. F.D.R’s could not be encashed in time resulting that the appellants have been deprived from the amount covered under the F.D.R’s and interest on it. It was contended by the learned advocate that the appellants served legal notice upon the respondent asking him to provide information that on which date President of the Bank asked the Head Office of the respondents Bank to carry out the appellants instructions to transfer the amount covered by the F.D.R’s and for issuance of fresh F.D.R’s from Karachi, the date on which advice was received by the Head Office , the date on which last communication was sent by the Head Office to Dacca, the date on which printed message was transmitted by the Head Office to Dacca, the date on which last telegram communication was received by the Head Office at Dacca, the date on which last communication was received through PIA by Head Office from Dacca Branch. Learned advocate argued that despite asking the informations, which were in possession of the respondents, the respondents not only deliberately conceded the informations but also failed to bring on record any evidence that on what date the respondents Bank has received the request of the appellant from the President of the Bank to carry out the appellants instructions for transfer of the amount covered by F.D.R’s and issue fresh F.D.R’s . Since the burden lies upon the respondents that they have to acted diligently as bank to protect the interest of the appellants customer/client which respondent failed to discharge, the appellant was entitled for the relief asked in the suit and the learned Single Judge committed error of law by dismissing the suit by holding that it was for the appellant to present F.D.R’s at Dacca. Learned advocate in support of his contentions relied upon a passage from Paget's Law of Banking 9th Edition.
8 On the other hand, Mr. Aziz-ur-Rehman, the learned advocate for the respondent argued that the F.D.R’s in questions were issued by Motijheel, Dacca Branch of the respondent and the said F.D.R’s can be encashed only on production of these receipts in the branch, which had issued the same. Since the appellants failed to present F.D.R’s for encashment to the branch concerned, they are not entitled for the amount covered by the said F.D.R’s. It was further argued by the learned advocate that the President of the respondent bank was at London on his personal visit and the correspondence with him in his personal capacity was not binding upon respondent bank. Learned advocate further argued that there was no privity of contract with the Head Office of the respondents Bank and the appellants. The learned Single Judge rightly dismissed the suit holding that the appellant has failed to present the F.D.R’s for encashment to the branch, who issued the same and was not entitled for the relief asked. The learned advocate in support of contentions, relied upon Section 48 and Section 56 of the Contract Act and 68 of Negotiable Instrument Act, relied upon the case of Delhi Cloth and General Mills Ltd. vs. Harman Singh and others, A.I.R 1955 SC 590, Valuegold & 2 others vs. United Bank Limited, P.L.D 1999 Karachi 1, Thorn vs. City Rice Mills 1940 Ch. D. 357.
9 We have taken in consideration respective arguments advanced by the learned advocates for the parties and perused the record. From the perusal of the record it appears that the respondents Bank through its branch at Motijheel, Dacca, issued fifteen F.D.R’s. The appellants requested the President of the Bank, who at the relevant time was in London that the said F.D.R’s may be encashed and invested by issuing fresh F.D.R’s by Karachi branch of the respondents. Admittedly, the President of the respondents Bank forwarded original F.D.R’s to Head Office of the respondent at Karachi to carry out instructions given by the appellant but apparently due to deteriorating conditions of the then East Pakistan at the relevant time and may be on account of some omission on the part of the respondents after the fall of East Pakistan the FDR’s were return to the appellant.
10 The question which required consideration is whether in the circumstances when it was not possible for the appellants to present F.D.R’s at Dacca branch of the then East Pakistan for encashment of the respondent Bank is not liable for the amount of FDR’s issued by its branch. The F.D.R in questions were issued by the respondent Bank through its Branch Dacca.
11 Dealing with the question involved in this appeal, we would like to observe that the deposits receipt were issued by the respondent's bank acknowledging that the amount mentioned in the deposit receipts were received by the bank for a specific period of time and to pay at the agreed rate of interest mentioned in it on the production of the receipt. The FDR’s were signed on behalf of the respondent bank by two offices but without any rubber stamp or seal of the branch. However, a rubber stamp affixed on the face of the receipt showing that the same was issued by the Motijheel, Dacca, branch of the respondent. No condition was mentioned on the FDR’s that only respondent's bank branch Motijheel will be liable to pay the amount mentioned in the deposit receipt.
12 The amount was deposited with the respondent bank as legal entity in a office maintained by them at Motijheel, Dacca and if for any reason it was not possible for the appellants by closure of the branch or by winding up of the business in a particular area by the respondent entity the same in our view not absolve the respondent's bank from his liability to pay amount which was deposited with the bank.
13 Section 5 (d) of the Banking Companies Ordinance, 1962, defines ‘branch’ as under:
"Section 5(d) "branch" or branch office", in relation to a banking company, means any branch or branch office, whether called a pay office or sub-pay office or by any other name, at which deposits are received, cheques cashed or moneys lent, and for the purposes of section 40 includes any place of business where any other form of business referred to in sub-section (1) of section 7 is transacted."
14 In the case of WAPDA v. Ghulam Bari P.L.D 1991 SC 780, while dealing with the matter where respondent's plaint was returned to him under Order 7 Rule 11 CPC, the Hon'ble Supreme Court held as under:
"It is true that in the second part of the explanation a scope has been left for filing of the suit of a place where a corporation has a subordinate office provided any cause of action arose at that place. But this part of explanation is preceded by another alternative; namely, that a corporation shall be deemed to carry on a business at its side or principal office. The use of the word "or" between the two is very significant. It means that the corporation shall be deemed to carry business at its sole or principal office as well as at any place where it has a subordinate office but in the latter case the cause of action should have arisen at that place."
15 In the case of United Bank Ltd. v. Sartazj Industries P.L.D 1990 Lahore 99, while dealing with the question that mortgage deed being in favour of the Dijkot Branch of the plaintiff as mortgagee same is not available for a loan advance by Samundari Road. The Hon'ble Lahore High Court held that the loan had been advanced by the United Bank Ltd as a juristic entity which has come into existence through its incorporation under relevant law. If a juristic entity carries on its business at a number of places and particular business is dealt with and documents are executed in favour of that juristic entity, then in the absence of specific clause to the effect that document is enforceable by a particular branch alone, the same will be available for enforcement by that entity through another branch
16 In the instance case, no clause or condition has been pointed out by the learned advocate for the respondent that F.D.R in question ought to have been presented for encashment at the branch, who issued it and further that if for any reason the said branch was not available for presentation then the corporate entity on whose behalf branch was doing the business was not liable for the same. The appellant has deposited amount with the corporate entity in the respondent's sub-office known as a particular branch in this case Motijheel Branch.
17 In a passage in Baking Law by Thomas Chambers Eighth Edition, the learned author recorded that a deposit receipt is an acknowledgment by a bank (or it may be an investment or trust company) of the receipt of money, which will be repaid in terms of the contract as evidenced, by the receipt itself.
18 In the instance case, admittedly due to deteriorating condition of the then East Pakistan the appellant requested the President of the respondent's bank to get amount under FDR’s encashed and reinvested in the fresh F.D.R to be issued by the branch office of the respondent at Karachi. The request of the appellant was accepted by the highest officer/President of the respondent's bank, and forwarded the same to respondent head office at Karachi for compliance. If for any reason the head office of the respondent at Karachi have any reservation in compliance of instruction for encashment of FDR’s then they ought to have been returned the original FDR’s handed over to them by their President to appellants immediately, but there is no evidence on the record that after receiving the original deposit receipts when the respondent has returned the same. The act of the respondent, accepting the F.D.R’s for encashment, even if there was any condition for presenting the same at the issuing branch tantamount the waiver of such condition by corporate entity and respondent is liable to pay amount covered by F.D.R together with agreed rate of interest.
19 Section 68 of Negotiable Instruments Act, is not attracted to the facts of the case for more than one reason. The respondent himself by his act waived condition for presenting the instruments for payment at specific place by accepting F.D.R at head office kept the same, made an attempt for encashment of it and further due to fall of East Pakistan, it was not possible for the appellant to present the F.D.R for encashment at the required place due to closure of the branch of the respondent and the corporate entity is liable for the payment as the amount was deposited with them through their branch at Motijheel at Dacca.
20 The respondent concealed the evidence pertaining to the date when F.D.R’s were received for compliance of the appellants instructions to transfer the amount covered by the relevant F.D.R’s to Karachi. What step the respondent's office has taken thereafter from the date of receiving F.D.R for transfer of the amounts, and whether there was any commutation with the branch and if so till what date said communication continued. Burden in this regard was heavily lies on the respondent and all these informations were available with the them which they have not placed on record. The only presumption in the circumstances, we can draw is that such evidence if brought on record, the same will go against them.
21 Apart from the above, the appellant No.2 to 6 were minors at that time when request for transfer of the amount covered under the F.D.R was made through their natural guardian i.e. father and it is always desirable that interest of the minor should be protected. Since the F.D.R’s was purchased in the name of minors, the father was rightly requested for the encashment of it on their behalf and there is no evidence that Mr. Hanif Adamjee being a father of the respondent No.2 to 6 has no authority on behalf of the appellant No.1 for dealing with the matter under the F.D.R in question. The appellant No.1 has not called in question that her husband has not requested for encashment under her authorities and on her request.
22 It is one of the principle that the credit balance on a current account with a bank is payable to the customer at the branch where the account is kept, where it must be remembered, the books of the bank are and where the signature card is kept, and where any cros-claims by the Bank would be known.
23. It is also one of the principle of law that a debtor must seek the creditor to make the payment, but in case of banking transaction the obligation of the bank to pay the cheques of a customer rests ‘primarily’ on the branch at which he keeps his account and bank can rightly refuse to cash a cheque at any other branch. There can be exception to this rule, for example deposit is made at a foreign office of a bank and that office is either closed down or is taken over the local government.
24 We find support in our view from the case of United Commercial Bank Ltd. vs. Okara Grain Buyers Syndicate Ltd. AIR 1969 SC 1115, Hon’ble Supreme Court of India while dealing with the question of a fixed deposit receipt in the Bank branch at Lyallpur which became after part partition of Pakistan order for the payment of the amount under receipt.
25 We would like to reproduce a passage from the Order of High Court Punjab in the case of Okara Grain Buyers Syndicate Ltd. vs. United Commercial Bank(1961) 31 Camp Case, which read as under:
“The bank closed its Okara branch soon after the partition of the country. There is no evidence that the assets and liabilities of that branch were transferred to the only two remaining branches in Karachi and Dacca. It will legitimate to presume that when a bank closes its branch, the assets and liabilities of that branch go over to the head office, and the persons who have claims on the branch have to lodge those claims with the head office. In the instant case, we are concerned that “bank deposits” and it may be mentioned that that the bank deposits were excluded from the definition of evacuee property in section 2(5) of the Evacuee Property Ordinance in Pakistan (See in this connection Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh). It is now more or less settled that in the case of a bank deposit, whether correct or otherwise, the demand for its return has to be made at the branch where the deposit was made and it the branch where the deposit was, made is no longer functioning, and the demand has to be made at the head office of the bank. At this stage, I may mention that the amount of the security deposit was at no time declared evacuee property in Pakistan and it was forfeited in 1949 in terms of the contract of clearing agency entered into between the appellants and the District Magistrate, Montgomery, in 1947. Neither the money has to be paid to, the Pakistan authorities nor has the same been recovered by them by any coercive process law. Therefore, in this situation, I must assume that the money is with the head office of the bank at Calcutta . I am forced to this conclusion also on the short ground that if the money was in Pakistan and amenable to Pakistan law, the bank would have raised the plea in defence that money is in Pakistan and the Indian courts have no jurisdiction to determine any dispute concerning it. This plea was never raised and, in my view, cannot be raised because in all probability such deposits were transferred to head office of the bank or to some of its Indian branches for the simple reason that they belonged to non-Muslims and there was no law in Pakistan prohibiting their transfer.
“This argument is based on the Supreme Court decision in Delhi Cloth and General Mill’s case, it is argued that the elements of the contract out of which the obligation to pay arises are most densely grouped at Okara, which is at natural seat and the place with which the transaction has its closest and the most real connection and, therefore, it will be governed by the law prevailing in Pakistan. This argument cannot be accepted in view of the peculiar facts and circumstances of this case. No doubt the security was given at Okara for the due performance of the contract entered into at Okara but for the closing of the bank’s branch at Okara, the obligation to pay back the deposit would also have arisen at Okara. All this would have, according to the Delhi Cloth and General Mill’s case., made the contract subject to the Pakistan law of contract at best. Even if the law of contract of Pakistan is applied the contract did come to an end by frustration as already held, and the deposit became free from the obligations, if any, which attached to it under the contract. The deposit being bank deposit and there being no law in Pakistan prohibiting the transfer of the bank deposits of non-Muslims from Pakistan to India, and the same having been transferred to India as held in the earlier part of this judgment, it became payable in India and the suit for its return is, therefore, cognizable by the civil courts of India. I have already held that Okara branch of the bank was closed after the partition of the country and according to banking law and practice, the liability to return the deposit fell on the head office, which is in Calcutta (India), and therefore,, the demand for its return could only be made in India and for that reason also the Indian courts will have jurisdiction to entertain the application.”
26 For the foregoing reason, we set-aside the impugned order and decree the suit as prayed, however, with no order as to cost.
JUDGE
JUDGE
HCA 187-1991