Jehangir Khan Vs N.B.P

Judgment Sheet

PESHAWAR HIGH COURT, ABBOTTABAD BENCH

JUDICIAL DEPARTMENT

Civil Revision No.327-A/2025 with CM No. 536-A/2025

Jehangir Khan. ... (Petitioner) versus N.B.P. ...(Respondent)

Present: Mr.Sarmad Faraz Abbasi, Advocate for petitioner.

Nemo for respondent being a motion case.

Date of hearing: 19.09.2025.

JUDGMENT

SYED MUDASSER AMEER, J.- This single judgment shall decide this as well as the connected Civil Revision No.331-A/2025 titled “Jehangir Khan vs N.B.P” as both of them have arisen out of two identical orders of Additional District Judge-VII, Abbottabad dated 03.07.2025 whereby applications filed by the present petitioner under order VII rule 11 CPC in two (S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

suits instituted by Respondent Bank (N.B.P) have been dismissed.

2.N.B.P instituted civil suits No.8/1 and 9/1 of 2022 before District Court, Abbottabad against present petitioner (Ex-Branch Manager, NBP Khanspur Branch, Ayubia Abbottabad) and others (proforma respondents) for recovery of allegedly embezzled amounts (detailed therein) alongwith 15 % interest since 27.08.2019 till realization of the amount besides recovery of five million rupees as expenditure. Petitioner (defendant No.1) submitted written statements raising therein various legal and factual objections alongwith applications under Order VII rule 11 CPC for rejection of plaints which were contested by N.B.P by filing replications. After hearing arguments, learned trial Court, dismissed aforesaid applications through orders dated 03.07.2025. Aggrieved, petitioner challenges the same before this Court through these civil revisions.

(S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

3.Arguments of learned counsel for the petitioner heard and record perused.

4.The main thrust of arguments of learned counsel for petitioner is that N.B.P has got no cause of action and the Court below lacks jurisdiction under section 9 Code of Civil Procedure, 1908 to proceed with these suits. He further contended that the suits are barred by law as N.B.P being financial institution could file suit for recovery of the disputed amount under the Financial Institutions (Recovery of Finances) Ordinance, 2001 (‘The Ordinance 2001’) which is a special law and has overriding effect. Learned counsel for petitioner while canvassing his arguments referred to the definitions of ‘Financial Institution’ and ‘Customer’ as defined in section 2 subsection (a) and (c) of ‘the Ordinance 2001’ and submitted that these cases would fall within the ambit of section 8 of ‘the Ordinance 2001’ and therefore, by virtue of the overriding effect contained in section 29 of ‘the Ordinance 2001’, jurisdiction of civil Court is barred. Thus, his application under (S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

Order VII rule 11 CPC ought to have been accepted and the plaints of respondent respondents rejected on this score alone. He further contended that the plaints also do not disclose cause of action against petitioner as it has been stated in the plaints itself that defendants No.12 to 74 (in both suits) are the direct beneficiaries of the embezzled amount. It was contended that as defendants No.1 and 2 are not the direct beneficiaries of the embezzled amount, therefore, suits for recovery against them would not lie and since the plaints cannot be rejected in piecemeal, their names should have been omitted from the calendar of defendants if the plaints are not rejected in toto.

5.The contention of learned counsel for the petitioner regarding cause of action is not sustainable, as the law in this respect is clear.

While deciding an application under Order VII rule 11 CPC, the Court is not to consider whether cause of action has been, or could be, established or not, rather it is merely the disclosure of cause of (S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

action which has to be considered. In the case titled “Akhtar Nawaz and others v. Azra Begum and others” reported as 2025 YLR 544, this Court held as follows:-

“5. It is relevant to mention here that while deciding the application filed under Order VII Rule 11, C.P.C., the Court has just to see that as to whether the plaintiff has disclosed a cause of action or not and as such at this initial stage it should not be the concern of the Court to record any finding that the plaintiff is not having a cause of actionor htat he would not be able to prove the cause of action, as such aspect of the case is to be determined after recording of pro and contra evidence. In the present case it was noted that the respondents/plaintiffs have successfully disclosed a cause of action, therefore, in the given facts and circumstances, the suit of the respondents/plaintiffs is liable to the proceeded in accordance with law.”

In the case titled “Misree Khan and others v. Abdul Ghafoor and others” reported as PLD 2025 SC 24, apex Court held as follows:- “3. ...Before proceeding further, we take a pause to say that rejecting the plaint under Order VII, Rule 11, C.P.C. is a drastic power conferred on the Court to terminate a civil action at the (S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

threshold. Therefore, the conditions precedent to exercising power under Order VII, Rule 11, C.P.C. are stringent. This Court has consistently held that the averments in the plaint must be read as a whole to determine whether it discloses a cause of action or whether the suit is barred under any law. This includes a bar created due to the lapse of the limitation period. At the stage of exercise of power under Order VII, Rule 11, C.P.C., if the averments in the plaint ex-facie do not disclose a cause of action or on a reading thereof, the suit appears to be barred under any law; the plaint can be rejected. In all other situations, the claims will have to be adjudicated in the course of the trial...”

It is clear from the averments contained in the plaints that the embezzlement was allegedly made by defendants No.1 and 2 who were the employees of the bank through the accounts of the remaining defendants, therefore, the bank seeks to establish its liability against all the defendants jointly and severally in order to succeed in its claim for recovery of the embezzled amount.

Thus, this contention of the petitioner regarding non-disclosure of cause of action against defendants No.1 and 2 is untenable.

(S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

6.So far as the contention of petitioner regarding applicability of ‘the Ordinance 2001’ by placing reliance on section 8 of ‘the Ordinance 2001’ and the consequent ouster/bar of the jurisdiction of the civil Court is concerned, the said contention also holds no water. For convenience of reference, section 8 of ‘the Ordinance 2001’ is reproduced below:

“8. Suit for recovery of written off finances, etc.-

(1)Subject to sub-section (2), and notwithstanding anything contained in the Limitation Act, 1908 (IX of 1908) or any other law, a financial institution may, within three years from the date of coming into force of this Ordinance, file a suit for the recovery of any amount written off, released or adjusted under any agreement, contract, or consent, including a compromise or withdrawal of any suit or legal proceedings or adjustment of a decree between a financial institution and a customer on any day on or after the first day of January, 1990 and before the coming into force of this Ordinance, if it can establish that the amount was written off, released or adjusted for political reasons or considerations other than bona fide business considerations.”

(underlying supplied)

(S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

It is clear from bare reading of the above reproduced section that it pertains to any amounts “written off, released or adjusted under any agreement, contract, or consent etc”. The amounts being sought to be recovered by the bank in these cases fall in none of the categories mentioned in the above quoted section 8 of ‘the Ordinance 2001’ nor do they fall within the ambit of section 9 of the said Ordinance which deals with other suits that may be instituted before the Banking Courts under ‘the Ordinance 2001’ by a customer or financial institution.

7.The Ordinance, 2001 being a special statute, ousting the jurisdiction of civil Court it must not only be strictly construed but also be accordingly applied. In the case titled “Syed Mukhtar Hussain Shah v. Mst.Saba Imtiaz and others” reported as PLD 2011 SC 260, the apex Court held that”-

“..It is settled law that the civil courts are the courts of inherent and plenary jurisdiction competent to adjudicate all the disputes of the (S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

civil nature between the litigating parties. However, such jurisdiction stands ousted in. terms of section 9, C.P.C., either expressly or by necessarily implication. But in order to evaluate whether such jurisdiction has been taken away, the special law under which it is so done, must not only be strictly constructed but also be accordingly applied...”

Thus the scope and application of ‘the Ordinance, 2001’ has to be confined to the parties and purpose provided therein. Section 9 thereof provides that “where a customer or a financial institution commits a default in the 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...”. It is clear that only a ‘customer’ or a ‘financial institution’ may invoke the jurisdiction of the Banking Court under ‘the Ordinance 2001’ and that too only regarding a dispute pertaining to ‘finance’. ‘Financial Institution’ is defined section 2(a), ‘Customer’ in 2(c), ‘Finance’ in 2(d), while ‘Obligation’ in 2(e) of ‘the Ordinance, 2001’. An (S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

account holder is not necessarily a ‘customer’ under Section 2(c) of ‘the Ordinance, 2001’, because as per its definition given in ‘the Ordinance, 2001 ‘customer’ is a person to whom ‘finance’ (a loan, facility, or financial accommodation) has been extended by a financial institution. An account holder, in his capacity as such, does not fit this definition unless he has also availed of a financial facility from the bank. The definition of ‘Customer’ under Section 2(c) of ‘the Ordinance, 2001’ explicitly states that a ‘customer’ means a person to whom finance has been extended, while ‘Finance’ as per definition provided in section 2(d) of ‘the Ordinance, 2001, includes financial accommodation or facility provided by a financial institution, such as loans, leases, letters of credit, or other financial arrangements. Simply holding an account does not automatically make someone a ‘customer’ for the purposes of ‘the Ordinance, 2001’. The key is whether he has obtained a financial facility from the institution. Thus, a person who is merely an (S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

account holder or an employee but has not availed any finance facility cannot seek remedies under ‘the Ordinance, 2001’. Similarly, the Financial Institution can also not invoke the provisions of ‘the Ordinance, 2001’ against him/them.

8.There has been much debate and scrutiny of the said definitions over the years by the superior Courts including the cases titled “Dr.Bhagwan Dass and another v. Habib Bank Limited” reported as 2021 C L D 406 [Sindh], “Marahaba Pakistan International and others v. Habib Bank Limited and another” reported as 2017 C L D 995 [Lahore], “Muhammad Shoaib Arshad v.

Federation of Pakistan” reported as 2020 C L D 638 [Lahore], “Invest Capital Investment Bank Limited and another v. Messrs House Building Finance Corporation” reported as 2015 C L D 1828 [Sindh], “Shahzada Akhtar v. Bank Alfalah Ltd and others” reported as 2013 CLD 1817 [Lahore], “Messrs Habib Bank Ltd. through Attorneys and 2 others v. Messrs Schon Textile Ltd. through Director and 8 others” reported as (S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

2010 C L D 1819 [Sindh]. An overview of the aforesaid case-law further confirms the conclusion one reaches on a bare reading of the said provisions of law:

 that employees or account holders do not fall in the definition of ‘customer’;

 that an amount stolen, misappropriated or embezzled by employees, with or without the connivance of the account holders, does not fall within the definitions of ‘finance’ or ‘obligation’; and  that the defendants in the instant case have not committed ‘default in fulfillment of any obligation’ rather it is averred by the plaintiff that they illegally and unlawfully embezzled/ withdrew the amount in question.

9.In view of foregoing discussions, petitioner’s applications filed under order VII rule 11 CPC in the aforesaid suits have rightly been dismissed by the Court below through the impugned orders, which do not need interference by this court in revisional jurisdiction.

(S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer

Accordingly, these petitions being devoid of merits are dismissed in limine.

CM No. 536-A/2025

SYED MUDASSER AMEER, J.- Since main civil revision has been dismissed, therefore, instant CM for suspension of impugned order having become infructuous is dismissed.

ANNOUNCED.

(Jamil)

Sd/J U D G E

(S.B.) Hon’ble Mr.Justice Syed Mudasser Ameer