Judgment Sheet
IN THE HIGH COURT OF SINDH AT KARACHI
Suit No. B – 26 of 2007
Plaintiff : Mr. Yawar Faruqui in person.
Defendant No.1 : Standard Chartered Bank Limited, through
Mr. Neel Keshav Advocate.
Defendant No.2 : State Bank of Pakistan, called absent.
Dates of hearing : 07.12.2012, 20.05.2013 and 05.08.2013.
J U D G M E N T
NADEEM AKHTAR, J. – This Suit has been filed by the plaintiff under Section 9 of the Financial Institution (Recovery of Finances) Ordinance XLVI of 2001, against the defendants for declaration, injunction, recovery of money and damages.
2. The relevant facts of the case, as averred in the plaint, are that the plaintiff had been banking for several years with defendant No.1 bank and its predecessor ; namely, Standard Chartered Grindlays Bank Limited. The plaintiff had been maintaining a personal bank account No.08871056201 with the Clifton Branch of defendant No.1, and he was also issued a Visa credit card bearing No. 492124000084213 by defendant No.1 sometime in the year 2000. According to the plaintiff, he never obtained loan from any bank, and he never committed default in respect of any transaction that was carried out through his said credit card. In the end of July 2001, the plaintiff discovered that his credit card had been blocked, and upon enquiry, he learnt that about seven (07) transactions involving substantial amounts had been charged by defendant No.1 wrongfully against his credit card in July 2001. When the plaintiff disputed the said transactions and requested defendant No.1 to reverse the amounts thereof, defendant No.1 refused to do so by insisting that the plaintiff had reported loss of his credit card. Vide letters dated 03.05.2002 and 15.06.2002, defendant No.1 threatened the plaintiff that he will be declared as a defaulter. It was further averred by the plaintiff that in the year 2006, he applied for a credit card facility to ABN AMRO Bank Limited, who refused to grant such facility to the plaintiff, as his name had been placed in the year 2001 on the defaulters’ list (C.I.B.) / ‘Data Check List’, on defendant No.1’s advice to defendant No.2. It was also averred by the plaintiff that in the end of July 2006, he discovered from the statement of account issued by defendant No.1 in respect of his personal bank account No.08871056201, that an amount of Rs.125,491/= was debited on 26.04.2006 by defendant No.1 from his said personal account towards ‘credit card credit payment’, illegally, unauthorizedly, and without any notice to him.
3. In the above background, this Suit was filed by the plaintiff praying that forwarding his name by defendant No.2 on the advice of defendant No.1 for placing the same on the defaulters’ list be declared as unlawful, defamatory, and without lawful authority, as he is not a defaulter ; permanent injunction be granted restraining the defendants from displaying the plaintiff’s name on the defaulters’ list, and / or from declaring him as such ; mandatory injunction be granted directing defendant No.1 to rectify the plaintiff’s personal account to the balance existing on 25.04.2006 inclusive of Rs.125,491/=, which was unlawfully and arbitrarily debited therefrom by defendant No.1 as purported credit card payment ; a decree be granted in the sum of Rs.125,491/= with interest thereon at the rate of 18% per annum from 26.04.2006 ; and, a decree for damages be granted against defendant No.1 in the sum of Rs.100.000 million with interest thereon at the rate of 18%.
4. Defendant No.1 filed application bearing CMA No.8673/2007 in the form of written statement under Section 10 of the Ordinance of 2001, seeking leave to defend the Suit. The averments and allegations contained in the plaint as well as the claim made thereunder by the plaintiff, were denied by defendant No.1. It was averred by defendant No.1 that the plaintiff himself reported the loss of his credit card to defendant No.1 ; the transactions disputed by the plaintiff did take place as his credit card was used for the same ; since the plaintiff was liable to pay the amounts of the said transactions, defendant No.1 was fully justified in charging and debiting the same from his personal bank account as per the agreed terms and conditions ; the name of the plaintiff was rightly placed on the defaulters’ list in compliance of the Prudential Regulations of the State Bank of Pakistan / defendant No.2 ; the plaintiff’s claim for damages was baseless ; and, the Suit is malafide. In reply to the defendant No.1’s CMA No.8673/2007, a detailed replication was filed by the plaintiff, refuting the averments and allegations made therein by defendant No.1, and reiterating the contents of his plaint. No application for leave to defend the Suit was filed by Defendant No.2 / State Bank of Pakistan.
5. Vide order passed on 08.05.2008, it was observed by the Court that, as damages have been claimed in this Suit and the dispute between the parties appeared to be that of factual in nature, the same could not be decided without evidence. Accordingly, by the said order dated 08.05.2008, leave was granted to defendant No.1 to defend this Suit, subject to the condition that the disputed amount of Rs.125,491/- was to be deposited by defendant No.1 with the Nazir of this Court within four weeks ; the Nazir was directed to deposit the said amount in any profit bearing Government scheme ; and, the fate of the said amount was subject to the final decision of this Suit. The said amount was deposited by defendant No.1 with the Nazir in June 2008, but the same was invested by the Nazir in September 2012. On 15.10.2008, the Issues proposed by the plaintiff were adopted by the Court with the consent of the learned counsel for defendant No.1, which are reproduced in the subsequent paragraphs.
6. The plaintiff examined himself, and produced his affidavit-in-evidence (Exh. P/1) ; notice dated 02.02.2009 to the defendants under Order XII Rule 8 CPC (Exh. P/2) ; copies of his credit card and CNIC (Exh. P/3) ; discharge summary dated 10.08.2001 issued by South City Hospital along with his ECG and Cardiac Catheterization Laboratory Report dated 07.08.2001 issued by Cardiac Care Centre (Exh. P/4) ; his credit card account statement dated 30.07.2001 issued by defendant No.1 (Exh. P/5) ; the Merchants’ slips / receipts in respect of the disputed transactions (Exh. P/6) ; the defendant No.1’s letters dated 03.05.2002, 15.06.2002, 08.10.2005 and 15.08.2006 (Exhs. P/7, P/8, P/9 and P/10, respectively) ; letter dated 29.03.2006 addressed to him by ABN AMRO Bank N.V. (Exh. P/11) ; statement dated 30.06.2006 of his personal bank account (Exh. P/12) ; legal notice dated 21.08.2006 issued on his behalf to defendant No.1 and its Manager (Exh. P/13) ; his letter dated 18.01.2007 to the Governor and Deputy Governor, State Bank of Pakistan (Exh. P/14) ; and, reply dated 06.09.2006 by the defendant No.1’s counsel (Exh. P/15). The plaintiff was cross examined by the learned counsel for defendant No.1, whereafter, he closed his side. He was not cross examined by defendant No.2.
7. Defendant No.1 examined three witnesses ; namely, Mr. Aijaz Hussain, its Manager Litigation (DW-1), Mr. Mohammad Kashif Khan, its Charge Back Analyst (Dispute Resolution Analyst) (DW-2), and Mr. Asif Iqbal Siddiqui, its Manager Fraud and Risk Management Unit (DW-3). DW-1 produced BSD Circular No. 16 of 2004 dated 06.11.2004 issued by the State Bank of Pakistan (Exhs. D/1 and D/2) ; letter dated 31.01.2004 addressed by Data Check (Pvt) Ltd. to the Governor State Bank of Pakistan (Exh. D/3) ; BSD Circular No.06 dated 08.05.2006 issued by the State Bank of Pakistan along with Note on ‘Legal and Regulatory Frame Work for Credit Reporting’ (Exh. D/4) ; Agency Agreement dated 19.05.2000 between ANZ Grindlays Bank Limited and Data Check (Pvt) Ltd. (Exh. D/5) ; Prudential Regulations for Consumer Financing issued by the State Bank of Pakistan (Exh. D/6) ; credit card application form duly signed by the plaintiff, along with copy of his NIC (Exhs. D/7, D/8 and D/9) ; the defendant No.1’s pre-screener checklist (Exh. D/10) ; the defendant No.1’s terms and conditions for issuance of credit cards (Exhs. D/11, D/12 and D/13) ; the defendant No.1’s terms and conditions for opening of bank accounts (Exhs. D/14, D/15, D/16 and D/17) ; and, e-mails (Exh. D/19). DW-2 and DW-3 did not produce any document. All three witnesses produced by defendant No.1 were cross examined by the plaintiff, whereafter defendant No.1 closed its side. Defendant No.2 did not produce any evidence.
8. Mr. Yawar Faruqui, the plaintiff, submitted that he never obtained loan from any bank, nor did he ever commit default in respect of his credit card ; he was issued only one Visa credit card bearing No. 492124000084213 (Exh. P/3) by defendant No.1, which was never lost by him, nor was any such loss reported by him to defendant No.1 ; the said credit card always remained in his safe custody, and the same was voluntarily surrendered by him before this Court on 08.10.2007 for depositing the same with the Nazir of this Court ; he did not use his said credit card for any of the disputed transactions ; the copies of the merchants’ slips / recipts (Exh. P/6) in respect of the disputed transactions provided to him by defendant No.1, did not bear his signatures, and the same were completely different from his signature ; and, all the disputed transactions were carried out through another credit card bearing No. 4921240000323886, which was not issued in his name, nor was it owned by him. He specifically pointed out that defendant No.1 admittedly did not produce the other two credit cards allegedly issued in his name. He contended that all the disputed transactions, which were reflected in the statement issued by defendant No.1 on 30.07.2001 (Exh. P/5), were allegedly carried out with different merchants in different parts of southern Italy in a very suspicious manner within a short span of four days from 04.07.2001 to 08.07.2001. He pointed out that on his complaint and protests, six out of seven disputed transactions were resolved / rectified / reversed by defendant No.1 in his favour, and such partial rectification was confirmed by defendant No.1 in the same statement dated 30.07.2001 (Exh. P/5) individually against each of the said six transactions in the words “DISPUTE RESOLVED IN CH FAVOR”. He further pointed out that the letters “CH ” used by defendant No.1, stand for ‘card holder’. He submitted that, despite confirming resolution / rectification / reversal of six out of seven disputed transactions, defendant No.1, without any justification, issued letters dated 03.05.2002 (Exh. P/7) and 15.06.2002 (Exh. P/8), threatening to declare him as a defaulter. He further submitted that he kept on calling upon defendant No.1 through letters, reminders and legal notices to rectify the seventh disputed transaction, but defendant No.1 maintained its illegal stance. He contended that as defendant No.1 had realized its mistake by resolving / rectifying / reversing the disputed transactions, and the disputed amount was never claimed from him by defendant No.1, the dispute stood resolved / concluded, due to which the banking business continued between the parties.
9. Mr. Yawar Faruqui submitted that by debiting his credit card account with illegal charges, issuing incorrect bills in pursuance thereof, and by blocking his credit card, defendant No.1 acted with gross negligence and failed to perform its obligations towards him. He strongly alleged that such gross negligence and hostile attitude on the part of defendant No.1, and its failure in performing its obligations towards him, he suffered immense stress and mental torture, which resulted into an adverse cardiac condition causing irreparable damage to his heart. It was specifically alleged by him that, as a result of the above, he had to undergo the procedure of angioplasty in emergency, whereby stent was inserted into his heart. In this regard, he referred to and relied upon the hospital’s discharge summary and medical reports produced by him as Exhibit P/4.
10. The plaintiff further submitted that in the year 2006, he applied for a credit card facility to ABN AMRO Bank Limited, who, vide Exhibit P/11, refused to grant such facility to him ; and, it came as a shock to him that, without any intimation or notice to him, his name had been placed in the year 2001 on the data check defaulters’ list (C.I.B.) on the advice of defendant No.1 to defendant No.2. He argued that after admitting that the disputed amounts had been wrongfully charged against his credit card and after reversing such charges, defendant No.1 was not justified at all to place his name on the said list. He submitted that the said list is accessible to the public, and the news of placement of his name on the defaulters’ list was known to all in banking circles. It was alleged by him that this caused not only a rude shock to him, but was also a direct adverse smear on his fair name and reputation as, being a senior Advocate of the Supreme Court and High Courts, he is well known in the legal fraternity having held prestigious posts of Joint Secretary and Honorary General Secretary of the Sindh High Court Bar Association, Karachi. It was urged that despite his protests, defendant No.1 did not cooperate, and his name was not removed from the said list. He submitted that his name was removed from the said list by defendant No.1 under the orders of this Court after fling of this Suit by him, therefore, his name remained on the said list for over six years without his knowledge and without any justification. It was alleged by the plaintiff that such action on the part of the defendants put his health and reputation at stake ; caused irreparable damage to his reputation, goodwill and integrity amongst the legal fraternity and public at large, and above all to his health ; and, also caused huge embarrassment and humiliation to him as he had been stigmatized and labeled by defendant No.1 as a defaulter.
11. It was stated by the plaintiff that in the end of July 2006, he discovered from the statement of account (Exh. P/12) issued by defendant No.1 in respect of his personal bank account No. 08871056201, that an amount of Rs.125,491/= was debited on 26.04.2006 by defendant No.1 from his said personal bank account towards ‘credit card credit payment’. It was urged by him that his said personal bank account had no nexus to his credit card, and the above amount was debited by defendant No.1 therefrom illegally, arbitrarily, without any notice, and after five years of the disputed transactions that took place in July 2001, which in any event was barred by limitation. It was pointed out by him that his credit card statement of July 2001 (Exh. P/5) issued by defendant No.1, admittedly did not reflect the amount which was illegally debited from his personal bank account in the year 2006 towards ‘credit card credit payment’. He asserted that defendant No.1 committed gross breach of trust and committed grave criminal and civil illegality by permitting such willful bank fraud against him, and by advising defendant No.2 to place his name on the defaulters’ list ; and, such unlawful and malafide actions on the part of defendant No.1 completely destroyed and shattered the trust and confidence which he had in defendant No.1 as a prudent, reliable and trustworthy banker. He alleged that because of the said illegal and malafide action taken by defendant No.1, he once again suffered tremendous physical and mental anguish due to which he was advised complete bed rest as his medical condition again got aggravated. According to him, the embarrassment, humiliation, financial loss, and physical and mental anguish caused to him by defendant No.1, still continues. To sum up his submissions, the plaintiff argued that the evidence produced by him is more than adequate to discharge his burden successfully to prove his claim ; the burden so discharged by him had shifted on defendant No.1, who miserably failed to discharge the same ; there are important admissions and serious contradictions in the evidence of the defendant No.1’s witnesses ; and, the evidence produced by him has remained unrebutted. The plaintiff prayed that in view of his above submissions, this Suit be decreed in his favour as prayed by him.
12. In support of his submissions, the plaintiff cited and relied upon the cases of (i) Islamic Republic of Pakistan through Secretary, Ministry of Railways and others V/S Abdul Wahid and others, 2011 SCMR 1836, (ii) Municipal Corporation of Dehli V/S Association of Victims of Uphaar Tragedy and others, 2012 SCMR 1549, (iii) Abdul Majeed Khan V/S Tawseen Abdul Haleem and others, 2012 CLD 6 (Supreme Court of Pakistan), (iv) Muhammad Malik V/S Fazal Karim and another, 1999 MLD 935 (Supreme Court AJ&K), (v) Muhammad Ibrahim and others V/S Sui Northern Gas Corporation and others, PLD 2012 Peshawar 132, (vi) Nasreen Firdous V/S Tanweer Kishwar Siddiqui and 5 others, 1991 CLC 907 (Karachi), (vii) Messrs Habib Bank Ltd. V/S Messrs Publix Industries Ltd, 1991 CLC 1907 (Karachi), (viii) Chief Administrator Auqaf, Hyderabad V/S Ghulam Shabbir Shah alias Dini Ali Shah, 1992 CLC 1263 (Karachi), (ix) Messrs Pak Suzuki Motor Co. Ltd. V/S Muhammad Jumshad Saeed, 2009 CLD 503 (Karachi).
13. Mr. Neel Keshav, learned counsel for defendant No.1, strongly opposed the plaintiff’s claim and the submissions made by him. He asserted that the debits made by defendant No.1 from the plaintiff’s credit card account in relation to the disputed transactions, were fully justified as the plaintiff was liable to pay the same as per the terms and conditions agreed and signed by him. He submitted that the credit card was not blocked by defendant No.1 as alleged by the plaintiff, but the same was actually reported as lost by the plaintiff himself, and in such an event too, he was liable to pay the amounts that were charged on his credit card. He further submitted that the plaintiff had obtained three credit cards from defendant No.1, including the one through which the disputed transactions were carried out ; the plaintiff intentionally and deliberately concealed this fact from this Court ; and, all the disputed transactions were carried out by the plaintiff himself through the said credit card. He also submitted that the plaintiff has not come to this Court with clean hands ; no cause of action has accrued to him for filing this Suit ; the Suit is malafide ; and, by filing this Suit, the plaintiff has attempted to pressurize and harass defendant No.1, and to wriggle out from his contractual and financial liability towards defendant No.1.
14. Regarding placement of the plaintiff’s name on the C.I.B. List, the learned counsel for defendant No.1 submitted that defendant No.1 was duty-bound to do so under the Prudential Regulations of the State Bank of Pakistan. In this context, he referred to and relied upon BSD Circular No.16 (Exh. D/1) and ‘Prudential Regulations For Consumer Financing’ (Exh. D/6), issued by the State Bank of Pakistan. The debit of Rs.125,491/= from the plaintiff’s personal bank account towards ‘credit card credit payment’, was also defended by the learned counsel by submitting that, since the plaintiff had committed default, his outstanding liability was deducted from his personal bank account under ‘auto debit system’ as per the agreed terms and conditions of the credit card (Exh. D/11). He contended that defendant No.1 had the authority to merge and [1]consolidate the plaintiff’s credit card account with his personal bank account. In support of this submission, the learned counsel relied upon Clauses 17.2(d) and 18 of the said terms and conditions (Exh. D/11). The learned counsel argued that credit card was issued by defendant No.1 to the plaintiff on his application, and the plaintiff had not only agreed to the terms and conditions proposed by defendant No.1, but had also signed the same. He further argued that the contract between the parties was a concluded and binding contract, which was duly acted upon by both the parties. It was urged that after enjoying the credit card facility granted by defendant No.1, the plaintiff cannot turn around and dispute the agreed terms and conditions on which the credit card was admittedly issued to him. It was also urged that defendant No.1 is a financial institution of international repute, and it throughout acted in good faith strictly in accordance with the terms and conditions of the contract and in strict compliance of the Prudential Regulations issued by the State Bank of Pakistan. In the end, it was prayed on behalf of defendant No.1 that this Suit be dismissed.
15. After perusing the pleadings of the parties, carefully examining the evidence on record and hearing the learned counsel at length, my findings on the issues involved in this Suit are as under :
16. ISSUE No.1 :
“1. Whether the defendant arbitrarily and unlawfully had placed the plaintiffs name on the data check defaulters list ? If so, what is its effect ? ”
The disputed transactions were not carried out through the credit card issued to the plaintiff, as the number of his credit card and the number of the credit card used for the disputed transactions, were different, which is evident from the Merchants’ slips / receipts (Exh. P/6). For this reason alone, defendant No.1 was not justified in placing the plaintiff’s name on the defaulters’ list. Be that as it may, in paragraph 12 of its written statement, it was admitted by defendant No.1 that “certain disputed bills ” were reversed, and only “one small bill ” was debited from the plaintiff’s account. The statement of account dated 30.07.2001 issued by defendant No.1 in respect of the plaintiff’s credit card, was produced by the plaintiff as Exhibit P/5, wherein amounts of six out of seven disputed transactions were reversed by defendant No.1 in favour of the plaintiff. The plaintiff also produced reply dated 06.09.2006 of the defendant No.1’s counsel as Exhibit P/15, which was issued in response to the plaintiff’s legal notice. In Exhibit P/15, there was a categorical admission that certain disputed transactions caused some problem, but the same was resolved ; and, it transpired that out of seven disputed transactions, six were wrongly charged to the plaintiff’s credit card, which were reversed. Rest of the contents of Exhibit P/15 pertained to the auto debit of Rs.125,490/- from the personal bank account of the plaintiff. Defendant No.1 never denied that Exhibits P/5 and P/15 were not issued by it or on its behalf, nor did defendant No.1 dispute any of the amounts that were shown by it to have been reversed through Exhibit P/5. In fact, the plaintiff was not confronted at all by defendant No.1 with regard to Exhibits P/5 and P/15, and / or the entries of reversal of amounts of any of the disputed transactions. Moreover, no suggestion or question was put to the plaintiff that defendant No.1 was justified in placing the plaintiff’s name on the defaulters’ list in view of his default. Therefore, the entire contents of Exhibits P/5 and P/15 produced by the plaintiff and the implications thereof against defendant No.1, remained un-rebutted and admitted to the above extent. Resultantly, the plaintiff has successfully discharged his burden to prove that the disputed transactions, to the extent of the amounts reversed by defendant No.1 through Exhibit P/5 and confirmed vide Exhibit P/15, were not carried out by him, and also that he was not liable to pay the same to defendant No.1.
17. Defendant No.1’s witness DW-1 produced an Agency Agreement dated 19.05.2000 as Exhibit D/5, and also the Agent’s letter dated 31.01.2004 to the Governor, State Bank of Pakistan, as Exhibit D/3. Exhibit D/5 shows that Data Check (Pvt.) Limited was appointed by defendant No.1 as its Agent “to collaborate with the Bank to provide the Bank confidential information regarding the credentials and credit worthiness of customers and potential customers of the Bank”. Exhibit D/3 shows that the said Agent made a representation to the Governor, State Bank of Pakistan, that the Consumer Credit Bureau to be set up by the State Bank of Pakistan, would be a severe blow to the credit bureaus operated by the private sector. It is to be noted that in Exhibit D/3, the Agent had acknowledged the importance and existence of the customer’s consent in the words “Additionally, according to legal experts a customer’s consent is ample legal cover to proceed in the matter of sharing banking information. Most of our members are already obtaining consent from their customers and all legal concerns can be put to rest if the State Bank mandates financial institutions to invariably obtain such consent.”. In paragraph 3 of its written statement, defendant No.1 had stated that “the fundamental purpose to report the status of the customer to Credit Bureaus is only share the status of the customer whereby all the Financial Institutions / Banks at least remain vigilant while extending financial facilities to such customers who having the history of making default in the past.”. It was further stated by defendant No.1 in paragraph 9 of its written statement that “…...…. whenever a person commits a default in payment of facility extended to him by the Bank the Bank always report such fact to the Credit Bureau Agency who generates the data and give access to all Banks who extend financial facility to their customers and wanted to confirm the status of past history of such customers.”. It was, therefore, the defendant No.1’s own case that information with regard to its customers used to be reported by defendant No.1 to its Agent / Credit Bureau Agency, and the Agent used to generate the data on the basis of the information provided to him by defendant No.1 for giving access to all banks who intended to extend finance facilities to their customers and wanted to confirm the past history and status of such customers.
18. Much emphasis was made on behalf of defendant No.1 that the name of the plaintiff was placed on the defaulters’ list by defendant No.1 in compliance of the Prudential Regulations issued by the State Bank of Pakistan. In support of this assertion, DW-1 produced BSD Circular No.16 of 2004 dated 06.11.2004 issued by the State Bank of Pakistan, as Exhibit D/1, which pertains to ‘Reporting To Credit Bureaus’. After closely examining the contents of Exhibit D/1, I feel that the following portions thereof are extremely relevant for deciding this issue :-
“ ……….. The State Bank has been receiving an increasing number of complaints from the customers of the banks / DFIs regarding misreporting of their names to the private credit bureau(s). Upon probing the matter, we have learnt that the banks / DFIs are, inter alia, reporting the amounts reversed in their books, on negotiated settlement with customers, as “write-offs” and the amounts under dispute as “defaults” to the private credit bureau(s). ……….
In order to curb this tendency on the part of banks / DFIs, the following instructions are being issued :-
(i) …………….
(ii) The amounts in dispute with the customers, substantiated with the documentary evidence, should be reported as “amounts under dispute” and not as “defaults” to a private credit bureau(s).
(iii) The banks / DFIs shall send an intimation letter to the concerned borrower before reporting his name as “defaulter” to a private credit bureau. Such letter shall, inter alia, inform the borrower about the implications of reporting his/her name to a private credit bureau(s) as defaulter, and allow a reasonable time period (at least 15 days) for reconciliation / settlement of over due liability.
(iv) …………….
(v) .…………….
All banks / DFIs are advised to ensure meticulous compliance of the above instructions. Failure to comply with these instructions shall render them liable for a punitive action under the Banking Companies Ordinance, 1962.”
(Emphasis added).
19. It is clear from the perusal of the directions issued by the State Bank of Pakistan through BSD Circular No.16 of 2004 (Exh. D-1) for ‘Reporting To Credit Bureaus’, that defendant No.1 was duty-bound to ensure ‘meticulous compliance’ of Exhibit D-1, which was produced by defendant No.1 itself. In this backdrop, I have noticed that defendant No.1 had failed to comply with the mandatory directions contained in Exhibit D/1, such as, the amounts disputed by the plaintiff were reported straight away as “defaults” by defendant No.1 to the Agent in violation of direction No.(ii) instead of reporting the same, substantiated with documentary evidence, as “amounts under dispute” ; and, before reporting the plaintiff’s name as “defaulter” to the Agent, no intimation letter under direction No.(iii) was sent by defendant No.1 to the plaintiff, informing him about the implications of reporting his name to the Agent as defaulter, nor did defendant No.1 allow a reasonable opportunity of at least 15 days to the plaintiff for reconciliation / settlement of the alleged overdue liability. The said directions (ii) and (iii) contained in Exhibit D-1 were mandatory in nature because of the word “shall” used therein. Accordingly, as per defendant No.1’s own admission in paragraph 9 of its written statement, the data was generated by the Agent on the basis of the such reporting by defendant No.1, which was in violation of the mandatory directions issued by the State Bank of Pakistan vide Exhibit D-1. Before placing the plaintiff’s name on the defaulters’ list on the advice of defendant No.1, it was the duty of State Bank of Pakistan / defendant No.2 to ensure and verify as to whether such advice / information was correct or not, and also whether ‘meticulous compliance’ of Exhibit D-1 had been made by defendant No.1 or not. It is noted with concern that State Bank of Pakistan failed in discharging such duty. Moreover, the plaintiff’s consent was also not obtained, which was necessary as per defendant No.1’s own Exhibit D-3. In view of the discussion in paragraphs 16 to 19, the finding on this issue is that the name of the plaintiff was arbitrarily and unlawfully placed by defendant No.1 on the data check defaulters’ list ; and, the effect of such action is that defendant No.1 is liable to all such consequences that have or that may arise therefrom.
20. ISSUE Nos. 2 & 3 : These two issues are inter-linked, therefore, they are being dealt with together.
“ 2. Whether the plaintiff’s personal account was unlawfully debited by the defendant on 14.04.2006 for credit card payment ? If so, what is its effect ?
3. Whether the plaintiff is not liable for the alleged Rs.125,000/- claimed by the defendant as credit card payment ? ”
It is an admitted position that the amount of Rs.125,491/- was debited by defendant No.1 from the personal bank account of the plaintiff on 26.04.2006, as reflected in Exhibit P-12 produced by the plaintiff. It is also an admitted position that the said amount was debited by defendant No.1 towards ‘credit card credit payment’. Defendant No.1 has claimed that since the plaintiff had committed default in respect of his credit card payments, his outstanding liability was deducted from his personal bank account under ‘auto debit system’ as per the agreed terms and conditions of the credit card. It is also an admitted position that six out of seven disputed transactions alleged to have been carried out through the plaintiff’s credit card, had been rectified / reversed by defendant No.1 in favour of the plaintiff, and according to defendant No.1, there was only one transaction that had not been rectified / reversed. There is nothing on record to show, nor had defendant No.1 pleaded so, that after rectifying / reversing the said six transactions in July 2001, the amounts thereof were demanded from the plaintiff by defendant No.1 till 26.04.2006, or the plaintiff had admitted his liability to such extent during such period. Thus, deduction of any amount on 26.04.2006 on account of such transactions, which were rectified / reversed by defendant No.1 itself in July 2001, was not justified at all. As far as the seventh transaction was concerned, Mr. Yawar Faruqui rightly pointed out that there was no disputed transaction of Rs.125,491/- ; even the grand total of all the seven disputed transactions was much less than Rs.125,491/- ; and, his credit card statement (Exh. P/5) never reflected the said amount of Rs.125,491/-. Exhibit P/15 produced by the plaintiff, which was the reply of the defendant No.1’s counsel to the plaintiff’s legal notice and which has remained un-rebutted as already held by me, clearly stated that the amount of “Rs.125,490/= ” debited from the plaintiff’s account, was in respect of only one transaction. It is to be noted that in Exhibit P/15, it was not claimed by defendant No.1 that the plaintiff had been using three credit cards, or that the amount of Rs.125,491/- was deducted from his personal bank account on account of outstanding charges of his other card(s). No evidence was led by defendant No.1 in support of its assertion that the plaintiff was issued or he was using more than one credit card. Thus, there was no possibility that the amount of Rs.125,491/- was deducted by defendant No.1 from the personal bank account of the plaintiff on account of his other credit card(s).
21. In his deposition, the plaintiff strongly reiterated that his personal bank account had no nexus with his credit card, and the amount debited by defendant No.1 from his personal bank account to recover the alleged outstanding amount of the disputed transactions, was unauthorized and illegal. In his cross-examination, the plaintiff was not confronted by defendant No.1 that he was liable to pay Rs.125,491/- from his personal bank account under ‘auto debit system’, even after rectification / reversal of the disputed transactions. The plaintiff’s cross-examination clearly shows that defendant No.1 completely failed in dislodging his assertions, stand or claim on these Issues. Regarding the evidence produced by defendant No.1, I have noticed that in his cross- examination, it was admitted by DW-1 that he was not aware of the exact disputed transactions ; the transactions were reversed in favour of the plaintiff within few months ; the personal account of the plaintiff was debited in April 2006 without notice to him the plaintiff ; he was not aware of the transaction against which the debit was made ; and, he did not see the investigation report on the basis of which the amount was debited. DW-2 had admitted in his cross-examination that he did not produce the findings of the inquiry carried out by defendant No.1 in December 2001 ; the amount of six transactions was Rs.125,491/- ; and, there was no documentary evidence to show that loss of credit card had been reported by the plaintiff. DW-3 had admitted in his cross-examination that the disputed amount was debited after four years from the personal account of the plaintiff. Mr. Yawar Faruqui was correct in saying that the claim of July 2001, if any, of defendant No.1 had become miserably barred by time on 26.04.2006.
22. It was never denied by defendant No.1 that credit card No. 492124000084213 (Exh. P/3) claimed by the plaintiff, was not issued to him, or the same was not in the plaintiff’s use. The statement of account (Exh. P/5), reflecting the disputed transactions and the rectification / reversal thereof, was admittedly issued by defendant No.1 in respect of the same credit card No. 492124000084213 (Exh. P/3). It is an admitted position that all the disputed transactions were carried out through credit card No. 4921240000323886, and not through Exhibit P/3, which is evident from the merchants’ slips / receipts (Exh. P/4). It was alleged by defendant No.1 that the plaintiff was using three credit cards, which has all along been denied by the plaintiff. If this allegation of defendant No.1 is accepted for the sake of argument, defendant No.1 ought to have issued a separate statement of account for credit card No. 4921240000323886, showing the disputed transactions therein and debiting the same therefrom. There was no justification whatsoever for debiting such amounts from Exhibit P/3, which were admittedly not charged through Exhibit P/3, but were actually charged from some other credit card. As observed earlier, no material was produced by defendant No.1 to show that any other credit card, or credit card No. 4921240000323886, was issued in the name of the plaintiff. Defendant No.1 thus failed to justify this malpractice, and such blatant and gross violation of the Prudential Regulations and the banking practice. The above aspect becomes more important when seen in the context of the Issues in hand, because when the amounts of the disputed transactions were wrongfully shown in a wrong statement of account (Exh. P/5) belonging to the plaintiff, there was no question of their debit, adjustment or deduction from the personal bank account of the plaintiff. This was a clear breach of the obligations by defendant No.1 in respect of the finance facility granted to the plaintiff through credit card.
23. I would like to observe here that all credit cards bear a specimen signature of the card holder. This is because of security reasons to enable the merchant to compare and verify the card holder’s signature when the credit card is presented to the merchant for swiping the same for clearance of payment of the transaction at the time of the transaction. It is to be noted that in the instant case, as a different credit card was admittedly used for the disputed transactions, there was no question of comparing or verifying the plaintiff’s signature, as his credit card bearing his specimen signature, was not presented to the merchant. I may further observe that by issuing credit card, the financial institution allows the customer to enjoy / use the facility through merchants all over the world, up to the limit sanctioned to him. Under the banking practice, there is an agreement between the financial institution and the merchant, whereby the merchant agrees to honour payments on behalf of the financial institution, and in consideration of such services, the financial institution agrees to pay a fixed commission to the merchant on every transaction. The interest of both the parties and the risk of fraudulent transactions, are duly secured through insurance. The merchant acts on behalf of the financial institution, as he accepts and honours the payments of transactions carried out through him. Thus, it is the duty of the merchant to compare and verify the card holder’s signature when the credit card is presented to him for swiping and clearance at the time of the transaction. If the merchant fails or neglects in discharging his said duty, the liability of the transaction would fall on the financial institution. The principle is the same as that of a cheque, that is, when a cheque is presented to a banker, it is the primary and foremost duty of the banker to compare and verify the signature appearing on the cheque with that in his record. If the cheque is honoured by the banker, despite discrepancy in the signature, the banker shall be solely responsible for the consequences, and not only the account holder / customer shall not be held liable, but the banker shall also be liable to reimburse the amount debited from his account through such cheque. The views expressed by me above are fortified by a Full Bench authority of the Hon’ble Supreme Court in the case of The Official Assignee of the High Court of West Pakistan and others V/S The Lloyds Bank Ltd., Karachi and others, PLD 1969 Supreme Court 301. In the cited authority, the Hon’ble Supreme Court was pleased to hold inter alia that even if it was assumed that the bank had acted innocently, there was another innocent party involved in the transaction whose interest had to be put into the balance and safeguarded ; while the bank could prevent the loss by a little more care and caution, the customer who was completely in the dark as to how the transaction went through the bank, could do nothing in the matter ; and, the rule of equity which applies as between two innocent persons in such cases is that the one who could prevent the loss must suffer and not the other who was powerless to do so.
24. Except for the terms and conditions (Exh. D-11), no other material was produced by defendant No.1 to show that the impugned deduction towards credit card payment, was justified from the personal bank account of the plaintiff. Moreover, no Prudential Regulation or any provision of law was referred in order to substantiate that defendant No.1 had the lawful authority to do so. Reliance on Exhibit D-11 by the learned counsel for defendant No.1 is, therefore, irrelevant and misplaced. In any event, such lop-sided terms and conditions cannot be enforced. In view of the admissions made by the defendant No.1’s witnesses and the un-rebutted evidence produced by the plaintiff, as highlighted in the preceding paragraphs ; as the debit made from the plaintiff’s personal bank account was hopelessly barred by time ; and, also in view of my findings on Issue No.1, I have no hesitation in deciding Issue Nos. 2 and 3 in favour of the plaintiff, by holding that his personal bank account was unlawfully debited by defendant No.1 towards his credit card payment, and he is not liable to the amount so debited. The effect of such unlawful debit would be that defendant No.1 shall be liable to pay / return the entire said amount to the plaintiff with markup thereon at the same rate that is charged by defendant No.1 from its customers.
25. ISSUE No. 4 :
“4. Whether the plaintiff (!) fair name, reputation and health has suffered on account of the banking malpractice of the defendant ?”
While deciding Issue No.1, I have already held that the petitioner’s name was placed on the data check defaulters’ list by defendant No.1 arbitrarily and unlawfully, and defendant No.1 is liable to all such consequences that have or that may arise because of such action. It was strongly alleged by the plaintiff that because of gross negligence and hostile attitude on the part of defendant No.1, and its failure in performing its obligations towards him, he suffered immense stress and mental torture, which resulted into an adverse cardiac condition causing permanent damage to his heart. It was specifically alleged by him that, as a result of the above, he had to undergo the procedure of angioplasty in emergency, whereby stent was inserted into his heart. In support of this assertion, the plaintiff produced the discharge summary dated 10.08.2001 issued by South City Hospital along with his ECG and Cardiac Catheterization Laboratory Report dated 07.08.2001, issued by Cardiac Care Centre (Exh. P/4). The record shows that the credit card account statement (Exh. P/5), reflecting the disputed transactions, was issued by defendant No.1 on 30.07.2001, and the plaintiff was admitted in hospital on 07.08.2001 and was discharged therefrom on 10.08.2001. The dates mentioned above show that, within seven days of issuance of Exhibit P/5 by defendant No.1, the plaintiff was admitted in hospital, and he remained admitted there for four days. The record further shows that stent was inserted into the plaintiff’s heart in emergency through the procedure of angioplasty, during the said period of four days.
26. Regarding the plaintiff’s fair name and reputation, it was asserted by the plaintiff that data check defaulters’ list was accessible to the public and the news of placement of his name on the said list was known to all in banking circle. In his plaint as well as in his evidence, it was consistently asserted by the plaintiff that, because of the illegal placement of his name on the data check defaulters’ list by defendant No.1, irreparable damage was caused to his fair name and reputation, as the same caused humiliation, embarrassment and disgrace to him in the eyes of public and banking circle, and particularly in the legal fraternity. The plaintiff also produced Exhibit P/11 to show that ABN AMRO Bank Limited had declined his request for issuance of credit card in his favour due to this reason. The burden to prove that the banking circle was fully aware about placement of the plaintiff’s name in the said list, was not on the plaintiff in view of the categorical admissions made by defendant No.1 in its written statement that financial institutions share such list / information so that all the financial institutions should be aware of the names of defaulters. It is a matter of record that the plaintiff’s name remained on data check defaulters’ list till June 2007, as the learned counsel for defendant No.1 gave an undertaking before this Court on 19.06.2007 in this Suit that the plaintiff’s name shall be removed from the said list within three days.
27. It is to be noted that in his cross-examination, the plaintiff was not confronted by defendant No.1 about being admitted in hospital, or undergoing the procedure of angioplasty, or contents of Exhibit P/4 were incorrect, or if he had previous history of heart disease, or if defendant No.1 was not responsible for the mental stress and agony and the heart condition suffered by him. Similarly, the plaintiff was not confronted in his cross examination by defendant No.1 about not enjoying good and sound reputation and goodwill, or he was not well known in the public or in the legal fraternity, or he did not suffer any humiliation or embarrassment because of placement of his name on the said list by defendant No.1, or ABN AMRO Bank Limited did not refuse to issue credit card in his favour, or the said list is not accessible to general public and is not shared by financial institutions. It is well-established that if facts deposed or stated in examination-in-chief are not questioned in cross-examination, presumption would be that such part of the evidence was deemed to have been admitted by the party against whom that evidence was given ; and, onus of issues stand amply discharged by the statement of the plaintiff, especially when there is no evidence in rebuttal. Therefore, my finding on Issue No.4 is in the affirmative.
28. ISSUE No. 5 :
“5. Whether the plaintiff has cause of action in the present Suit and is entitled to the relief / damages claimed in the suit ? ”
In view of the findings on the first four Issues, I am of the firm view that the plaintiff had the cause of action for filing this Suit. In view of the un-rebutted evidence produced by the plaintiff, the admissions made and breach of obligations and serious illegalities and malpractice committed by defendant No.1, the plaintiff is entitled to the relief / damages claimed in this Suit. It is well-settled that, while determining quantum of damages, the background, social status, position, life expectancy, and the nature of the damage caused to the above, must be kept in mind. In the case of Abdul Majeed Khan (supra), it was held inter alia by the Hon’ble Supreme Court that the petitioner therein had brought on record a number of official documents, which were neither objected to nor were their contents challenged by the respondents before the trial Court at the stage of evidence ; though the petitioner had failed to quantify damages claimed by him as required under the law, but this did not mean that he was not entitled to the grant of general damages under the rule of thumb on the face of the material brought on record by him during trial ; on the basis of the documentary evidence brought on record, the petitioner was entitled to the grant of general damages for the mental agony which he had suffered on account of the conduct of the respondents ; and, the pleadings and the evidence brought in support of the claim of damages, were sufficient to award general damages to the petitioner. In paragraph 7 of the cited authority, it was further held as under :-
“ 7. In case of general damages, the well-established principle is that damages must be such, which would compensate the injured. As far as money is concerned, it is true that loss arising out of injury to reputation of a person cannot be compensated in terms of money and other non-pecuniary losses may not be accurately calculated in terms of coins, but for this reason alone, courts do not decline to grant compensation and the courts have formulated certain parameters and devised principles for evaluation or assessment of such general damages. Ordinarily in such cases just, fair and reasonable compensation is assessed and awarded to the victim. From the preponderance of authorities on this issue of quantification, it emerges that there is no yardstick or definite principle for assessing damages in such cases and it becomes difficult to assess a fair compensation. In these circumstances, it is the discretion of Court, which may on facts of each case and considering how far society would deem it to be a fair sum, determine the amount to be awarded to a person, who has suffered such damage. The general damages are those, which law will imply in very violation of legal rights. They need not be proved by strict evidence as they arise by inference of law, even though no actual pecuniary loss has been or can be shown. The vital canon followed by judicial mind in such cases is that the conscience of Court should be satisfied that damages awarded would, if not completely, satisfactorily compensate the aggrieved party. However, adequate care should be taken in this regard while dilating on the quantum of awards and the Courts should be vigilant to see that claim is not fanciful or remote, the award should never rise to be reflective of lavish generosity and must also obviously not dwindle down to be an indicator of abstemious parsimony, but the Court should give the aggrieved party what it considers in all the circumstances a far and reasonable compensation for his loss.”
29. The plaintiff belongs to a respectable, well known and educated family. His late grandfather was a respected and honourable Judge of this Court, and his late father was a respected, successful, renowned and very senior advocate of the Supreme Court and High Courts. The plaintiff himself is a well-educated and respectable member of the society, and is a successful senior advocate of the Supreme Court and High Courts. He has also held the prestigious posts of the Joint Secretary and Honorary General Secretary of the Sindh High Court Bar Association, Karachi, which fact alone is sufficient to show his popularity and liking amongst the members of the Bar. His name admittedly remained on the defaulters’ list for more than six years at the behest of defendant No.1, due to which he not only suffered mental stress and agony, humiliation, embarrassment and disgrace, but his image, reputation, goodwill and credit worthiness in the eyes of public, banking circle and legal fraternity, were are also tarnished. He was only 36 years of age when his heart was damaged, and he was subjected to undergo the procedure of angioplasty in emergency when stent was inserted into his heart. It is indeed true that loss arising out of injury to reputation of a person cannot be compensated in terms of money. However, keeping in view the facts of this case, the background, social status, position, and life expectancy of the plaintiff, the un-rebutted evidence produced by him to substantiate permanent damage caused to his heart, the mental torture, stress and agony suffered by him, and the humiliation, embarrassment and disgrace faced by him, the admissions made by defendant No.1, and by applying the above principles laid down by the Hon’ble Supreme Court for quantifying and assessing general damages, in my humble opinion a just, fair and reasonable amount of Rs.5,000,000/, if not completely, would satisfactorily compensate the plaintiff for the gross illegalities and breach of obligations committed against him by defendant No.1. Issue No.5 is answered in the above terms.
30. ISSUE NO.6 : “ 6. What should the decree be ? ”
In view of the above discussion and findings, and also as the plaintiff has successfully proven his case, the Suit is decreed with costs against defendant No.1 in the following terms :
I. Prayers ‘A’, ‘B’ and ‘C’ are granted as prayed.
II. Prayer ‘D’ is granted by ordering that the amount of Rs.125,491/- deposited by defendant No.1 with the Nazir shall be paid to the plaintiff. Defendant No.1 shall pay markup on the said amount to the plaintiff with effect from 25.04.2006 to 19.09.2012, when the said amount was deposited with the Nazir, at the same rate that is charged by defendant No.1 from its customers ; and, defendant No.1 shall pay markup on the said amount to the plaintiff at the rate of 14% per annum with effect from 19.09.2012 till payment of the entire said amount along with markup.
III. Prayer ‘E’ is granted by ordering that defendant No.1 shall pay a sum of Rs.5,000,000/- (Rupees five million only) to the plaintiff with markup thereon at the rate of 14% per annum with effect from the date of filing of this Suit, till payment of the entire said amount along with markup.
31. Before parting with this case, I deem it necessary to observe that this was a fit case for awarding heavy damages against defendant No.2 / State Bank of Pakistan also. Despite being the regulatory authority, State Bank of Pakistan failed in exercising its powers, functions and duties by not ensuring or verifying, before placing the plaintiff’s name on the defaulters’ list on the advice of defendant No.1, as to whether such advice / information was correct or not, and also whether ‘meticulous compliance’ of the directions contained in BSD Circular No. No.16 of 2004 had been made by defendant No.1 or not. I would have awarded damages to the plaintiff against State Bank of Pakistan also, but I have refrained myself from doing so as the plaintiff has not prayed for such relief.
32. It has been observed in a number of cases between customers and financial institutions in which the State Bank of Pakistan is a party, that State Bank of Pakistan is not represented and no assistance is provided to the Court from its side. Such indifferent attitude on its part encourages the banks / DFIs to commit breach of their obligations towards their customers, due to which the parties are compelled to indulge into litigation. In the instant case also, there was no representation or assistance by the State Bank of Pakistan, although it has been cited as defendant No.2. The office is directed to serve a copy of this judgment upon the State Bank of Pakistan / defendant No.2, through its Governor, who is directed to issue written instructions / directives to all banks / DFIs to ensure compliance of their obligations towards their customers as per law and Prudential Regulations in letter and spirit. The Governor, State Bank of Pakistan, is further directed to formulate proper rules, regulations, policies and guidelines for banks / DFIs, for streamlining their functions and operations in order to fulfil their obligations towards their customers strictly in accordance with law. The Governor, State Bank of Pakistan, is also directed to submit compliance report to this Court through MIT-II within 30 days, along with copies of such written instructions / directives and the rules, regulations, policies and guidelines.
J U D G E
*Suit- B-26 of 2007 Banking-2.doc/Judgments Single/Court Work/ARK*