Wrongful Rejection of Plaint in Embezzlement Case

In C.R. No. 207 of 2004, the Lahore High Court (LHC) ruled on whether a civil suit challenging a forced deposit of funds in a banking dispute could be dismissed at the preliminary stage under Order VII Rule 11 CPC. The case arose when the National Bank of Pakistan (NBP) allegedly coerced a peon/Naib Qasid to deposit Rs. 2,481,298 under false allegations of embezzlement. The petitioner filed a suit for declaration and permanent injunction, claiming that he was wrongfully accused of embezzlement and arrested at NBP’s instigation.

Background:

The petitioner, a low-ranking employee of the National Bank of Pakistan (NBP), Sohawala Branch, Tehsil Daska, District Sialkot, was arrested on November 24, 1996, following an FIR accusing him of embezzlement. During his detention, he was allegedly pressured into depositing Rs. 2,481,298, an amount he arranged through his relatives. A criminal investigation later cleared him of any wrongdoing, confirming that record-keeping was the bank’s responsibility, not his.

The petitioner then filed a suit for declaration and permanent injunction on January 29, 2000, arguing that the bank had no legal right to retain the deposited money. NBP contested the suit, admitting that the money was deposited by the petitioner’s relatives but claiming it was done voluntarily. The Civil Court dismissed the suit at the stage of interim injunction, rejecting the plaint outright on June 5, 2000. The petitioner appealed to the Additional District Judge, Daska, who dismissed the appeal on October 16, 2003. The petitioner then filed this revision before the Lahore High Court.

Key Issues:

Legality of Forced Deposits in Banking Cases: Can an employee be coerced into depositing money during a criminal investigation, and does he have a legal right to recover it if found innocent?

Jurisdiction of Civil Courts Over Banking Disputes: Can a civil court entertain a suit against a bank seeking return of wrongfully obtained funds?

Application of Order VII Rule 11 CPC (Rejection of Plaint): Was the trial court justified in rejecting the plaint at the interim stage without recording evidence?

Requirement for Seeking Consequential Relief: Did the plaint become invalid merely because it did not explicitly seek recovery of the deposited money?

Right to Amend Plaint in Banking Litigation: Can a plaint be amended to seek monetary relief at a later stage, or must it be dismissed outright for lack of proper relief?

Court’s Analysis:

Forced Deposits and Banking Misconduct: The Court noted that the FIR against the petitioner was dismissed, proving that the embezzlement charges were false. The bank obtained Rs. 2,481,298 from him under duress, raising serious legal and ethical concerns. The bank’s defense that the deposit was voluntary was contradictory, given the circumstances of his arrest and detention.

Civil Court Jurisdiction Over Banking Disputes: The Court ruled that civil courts have jurisdiction over wrongful transactions involving banks, particularly where the dispute does not arise from a banking contract or financial agreement. The claim involves allegations of coercion, fraud, or misrepresentation.

Improper Application of Order VII Rule 11 CPC: The lower courts misapplied the law by rejecting the plaint at the interim stage without considering Whether the plaint disclosed a cause of action (which it did). Whether disputed facts required evidence (which they did). Whether the suit could be dismissed solely on technical grounds (which it could not).

Requirement for Consequential Relief (Monetary Recovery Claim): The Court acknowledged that the petitioner had not explicitly sought recovery of the deposited amount. However, this did not justify rejecting the plaint, as the plaint contained sufficient details about the forced deposit. A plaintiff is entitled to amend the suit at any stage to seek additional relief. The Court ruled that the plaint should have been allowed to proceed with an opportunity for amendment.

Plaintiff’s Right to Amend the Suit: The Court directed the trial court to allow the petitioner to amend the plaint, permitting him to include a claim for recovery of Rs. 2,481,298.

Court’s Conclusion:

The rejection of the plaint was illegal and unjustified, as it deprived the petitioner of his right to prove his case through evidence. The suit was restored and remanded for proper adjudication on merits. The petitioner was allowed to amend the plaint to formally include a recovery claim. The trial court was directed to expedite the case and decide it within six months. The bank’s actions were questionable, and the trial court was instructed to examine the allegations of coercion and forced deposit carefully.

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