Jurisdiction of Banking Court and Obligations of the Bank

Jurisdiction of Banking Court and Obligations of the Bank Banking Case Laws Corporate Law Industrials Interpretation of Statutes Jurisdiction Knowledge – Corporate Law Lahore High Court Litigation & Arbitration Solutions - Corporate Law Mr. Justice Shahid Karim in his judgment has decided the issue regarding jurisdiction of banking court and “obligations” of the bank in Civil Original Suit (Banking) No. 25 of 2011.

1. This is a suit for declaration, cancellation of documents, permanent injunction and damages filed under the special jurisdiction conferred upon this Court under the Financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance, 2001).

2. The plaint has the following prayer:

In view of the above, it is most respectfully prayed that this Honourable Court may pass a decree in favour the Plaintiff and against the Defendants in the following terms:

a) Declare that the Undertaking dated October 09, 2007, all provisions relating to purchase of Sukuk units at a pre-determined price of the Sukuk Units and the Guarantee are void, unlawful and illegal documents being opposed to law, public policy, principles of Shariah and Islam and the Letter dated February 07, 2011 issued by the Defendant No.1 in pursuance of the same is illegal and unlawful.

b) The Defendants No.1 to 8 may permanently be restrained from enforcing the Undertaking, any provision relating to purchase of Sukuk units at a pre-determined price and Guarantee against the Plaintiff and raising any demand there under.

c) Declare that in view of the nature of the transaction and amounts admittedly paid by the Plaintiff, the obligations of the Plaintiff towards the Defendant No.1 to 8 stands satisfied and discharged and the said defendants be permanently restrained from raising any demand there under and the transaction documents may kindly be cancelled.

d) Damages to the tune of Rs.562 million may kindly be awarded in favour of the Plaintiff and against the Defendant Nos.1 to 8, jointly and severally from the date of such damage, pendente lite and till realization.”

3. On 24.11.2015, an application for leave to defend was accepted and leave was granted to the defendants as substantial questions of law and fact were held to arise in the suit, vide order dated 21.12.2015, the following issues were framed:

“Issues

1) Whether the plaint discloses any cause of action? OPD

2) Whether the suit is maintainable in terms of Section 9 of the FIO, 2001 and the plaint is liable to be rejected? OPD

3) Whether the plaintiff is entitled to a declaration that the undertaking dated October 09, 2007, all provisions relating to purchase of Sukuk units at a pre-determined price of the Sukuk Units, the Bank Guarantee issued by the defendant No.9 securing the purchase of the Sukuk Units and the letter dated February 07, 2011 issued by defendant No.1 are void, unlawful and illegal documents being opposed to public policy, principles of Shariah and Islam? OPP

4) Whether the plaintiff is entitled to a decree for permanent injunction restraining the defendants No.1 to 8 to enforce the undertaking dated October 09, 2007 any provision relating to purchase of Sukuk units at a pre-determined price and the Guarantee against the plaintiff and raise any demand thereunder? OPP

5) Whether the plaintiff is entitled to a decree for declaration that in view of the nature of the transaction and amounts admittedly paid by the plaintiff, the obligations of the plaintiff towards the defendant No.1 to 8 stands satisfied and discharged and as a consequence the transaction documents stand cancelled? OPP

6) Whether the plaintiff is entitled to a decree for recovery of damages as prayed for in the plaint? OPP

7) Relief.”

4. The learned counsel for the defendants urges that issues No.1 and 2 be determined ahead of the other issues as in his estimation any determination on these issues would have the effect on the determination of the entire suit. According to Mr. Salman Akram Raja, Advocate, learned counsel for the defendants No.1 to 8, the instant suit could be decided on issues of law only and thus requests that issues No.1 and 2 be treated as issues of law and this Court tries those issues first. The parties were, therefore, called upon to advance their arguments on issues No.1 and 2 as this Court is of the opinion that the suit may be disposed of on the issues of law only and a regular trial on the issues of fact may not be necessary. This course is permissible under Order XIV, Rule 2 read with Order XV, Rule 3 of the Code of Civil Procedure (CPC).

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