W.P. No.

20346/09
M/s Askari Leasing Ltd.

03.10.2014.

Presiding Officer etc.

Sardar Mashkoor Ahmad, Advocate for the petitioner.

Mr. Muhammad Baleegh uz Zaman, Ch., Advocate for the
respondents.
Through

this

constitutional

petition,

the

petitioner challenges an order dated 04.09.2009 passed by

the learned Judge Consumer Court, Sargodha. Through the
impugned order, the learned Judge has rejected a
preliminary objection raised by the petitioner regarding
jurisdiction of the District Consumer Court to adjudicate
the matter.
2.

The brief facts of the case are that respondent

No.2 approached the petitioner-company with the request

to avail a lease finance facility for purchase of a car. The
request was accepted and the petitioner agreed to allow a
lease finance facility for purchase of a Toyota Corolla-XLI
vehicle. Respondent No.2 executed the required lease
finance agreement, which envisaged a three years lease
period with monthly rental of Rs.25823/-. The payment of
monthly rentals was to commence from 15.05.2007 and
terminate o 01.05.2010. As per terms of the lease
agreement, the vehicle was to be insured, which was done.

W.P.No.20346 of 2009.

3.

It appears that respondent No.2 defaulted in his

payment obligation after paying only two monthly rentals

on time. The rest were recovered with great difficulty and
delay. While the vehicle was in possession of respondent
No.2, it met an accident. As a result, respondent No.2
lodged a claim of Rs.1,28,000/- with SICL Insurance
Company. The respondent dealt with the Insurance
Company himself and get the vehicle repaired. It is alleged
that from 01.03.2008, respondent No.2 continuously
committed default in payment of monthly rentals, in
consequence of which a legal notice was served on him.
On his failure to respond, the petitioner re-possessed the
vehicle on 20.03.2009 in terms of the Lease Finance
Agreement . At the relevant time, respondent No.2 was in
default for about a year.
4.

On 20.03.2009, the petitioner served a notice on

respondent No.2 to call upon him to clear the rental dues,

failing which the vehicle would be put to auction. The
vehicle in question was parked in the warehouse of the
petitioner in Faisalabad.
5.

In response to the legal notice, respondent No.2

paid the outstanding rentals, where-after he was asked to

take delivery of the vehicle. However, he refused to do so,
alleging that certain parts including doors, dash-board,
headlights, bonnet and trunk of the vehicle had been

W.P.No.20346 of 2009.

replaced. He claimed that on account of the alleged

replacement, he had suffered a loss of Rs.400,000/-, which
was denied by the petitioner. At this stage, respondent
No.2 filed a complaint under section 28 of the Punjab
Consumer Protection Act, 2005 in the Consumer Court
Sargodha. The petitioner was summoned, who filed its
reply to the complaint. In its reply, the petitioner raised a
preliminary objection regarding jurisdiction of the
Consumer Court on the ground that where theft had been
alleged the case did not fall under the head of defective
product or defective service, as defined under the
Punjab Consumer Protection Act, 2005. As such the
Consumer Court lacked jurisdiction in the matter. The
stance taken by the petitioner was that in case there was
any default of any obligation on the part of either side, the
Banking Court under section 7(iv) of Financial Institutions
(Recovery of Finances) Ordinance, 2001 had the exclusive
jurisdiction to adjudicate the matter. Vide order dated
04.09.2009 the Consumer Court rejected the objection and
held that it had jurisdiction in the matter. Hence, this
petition.
6.

The learned counsel for the petitioners submits

that there is a relationship of Financial Institution and

Customer between the parties. In case of any alleged
default of any obligation on the part of the parties, the

W.P.No.20346 of 2009.

Banking Court has exclusive jurisdiction to adjudicate

upon such alleged default. He further maintains that the
Consumer Court established under section 26 of the
Punjab Consumer Protection Act, 2005 can take
cognizance of a claim or damages arising out of
contravention of the provisions of the said Act if the
Product as defined under section 2(j) of the Punjab
Consumer Protection Act, 2005 or Services as defined
under section 2(k) of the said Act are defective. He
maintains that petitioner is neither manufacturer of the
vehicle in question nor has it provided any service in
relation to the said vehicle. He argues that relationship
between the petitioner and respondent No.2 arises out of a
lease finance agreement, regarding which a Banking Court
of competent jurisdiction has the exclusive jurisdiction.
Further, at best, the allegation against the petitioner-bank
relates to failure on its part to take care of the vehicle
while in its custody. At best such failure can be termed as
breach of an obligation that the petitioner bank owed to its
customer in terms of the lease finance agreement. The
learned counsel further argues that the learned Consumer
Court fell in error in ignoring paragraph-3 of the petition,
in which respondent No.2 alleged that parts of the vehicle
in question were stolen while in custody of the petitioner.
He maintains that loss of parts of vehicle while in custody
of the petitioner does not fall in the definition of defective

W.P.No.20346 of 2009.

products or services. He finally argues that the learned

Consumer Court has illegally assumed jurisdiction in the
matter and has also lost sight of the fact that the claim
having been filed beyond 30 days period of limitation
could not have been entertained.
7.

The learned counsel for respondent No.2 on the

other hand submits that Consumer Court had the

jurisdiction in the matter. Admittedly, the vehicle in
question was re-possessed by the petitioner and certain
parts of the car were removed while in custody of the bank
on account of its negligence. Therefore, the Consumer
Court was the correct forum for redressal of the grievances
of respondent No.2, as the petitioner-bank had provided
defective services.
8.

The question requiring determination by this

Court is whether the Banking Court established under the

provision of the Financial Institutions (Recovery of
Finances) Ordinance, 2001 has the exclusive jurisdiction to
adjudicate upon the dispute between the parties. In order to
answer the said question one has to keep in mind following
material facts:i.

The petitioner is a financial institution, as

defined in FIO, 2001. In section 2(a)(ii), the word

Financial Institution has been defined as follows:Financial Institution means and includes:-

W.P.No.20346 of 2009.

A Mudarba or Mudarba management company,

investment bank.
ii.

Respondent No.2 is admittedly a customer,

who has been defined to mean a person to whom

finance has been extended by a financial institution
iii.

Respondent No.2 had availed finance by way of

a lease arrangement from the petitioner. The term

finance as defined in section 2(d) of the FIO includes a
lease.
iv.

Section 4 of the FIO provides that the provisions

of the Ordinance shall have effect notwithstanding any

inconsistent therewith contained in any other law for
the time being in force.
v.

Section 7(4) of the FIO provides that no Court

other than a banking shall have or exercise any

jurisdiction with respect to any matter to which the
jurisdiction of a banking court extends under the
Ordinance.

9.

It is also significant to note that the relationship between the

parties was rooted in a vehicle lease agreement, which was duly

signed by respondent No.2 and has not at any stage been denied.
Both parties were bound by the terms and conditions of the vehicle
lease agreement and any violation on the part of either would
constitute default in fulfilment of any obligation with regard to any
finance as envisaged in section 9 of the FIO. Such default, if
alleged to have been committed by the financial institution
empowers the customer to institute a suit in the banking court by
presenting a plaint and following the procedure prescribed in section
9 of the FIO.

W.P.No.20346 of 2009.

10.

Perusal of the Punjab Consumer Protection Act, 2005 makes

its abundantly clear that the Consumer Courts have been set up to
protect consumers from manufacturers of defective product or
providers of defective services. Section 4 of the Act provides as
follows:4.

Liability for defective products.

(1)

The manufacturer of a product shall

be liable to a consumer for damages

approximately caused by a characteristic
of the product that renders the product
defective when such damage arose from a
reasonably anticipated use of the product
by a consumer.
(2)

A product shall be defective only if(a)

it is defective in construction

or composition as provided in
section 5;
(b)

it is defective in design as

provided in section 6;
(c)

it is defective because an

adequate warning has not been

given as provided in section 7; and
(d)

it is defective because it does

not conform to an express warranty

of the manufacturer as provided in
section 8.
The words product and service have been defined
in section 2(j) & (k) of the Act. For ease of reference the
same are reproduced below:(j)

Product has the same meaning as assigned to

the word goods in the Sale of Goods Act, 1930, and

W.P.No.20346 of 2009.

includes products which have been subsequently

incorporated into another product or an immovable but
does not include animals or plants or natural fruits and
other raw products, in their natural state, that are
derived from animals or plants.
(k)

Services includes the provision of any kind of

facilities or advice or assistance such as provision of

medical, legal or engineering services but does not
include
(i)

the rendering of any service under a

contract of personal service;

(ii)

the rendering of non-professional services

like astrology or palmistry; or

(iii)

a service, the essence of which is to

deliver judgment by a Court of law or arbitrator;

11.

It may be seen that the case of respondent No.2 is not that the

petitioner provided a defective product or that it was under an

obligation to provide services, which it either failed to provide or if
provided, were defective and not of the standard that had mutually
been agreed. The petitioner could not have complained of a
defective product for the reason that the petitioner was not
manufacturer or dealer of the vehicle in question. Likewise, no
claim for defective services could be raised for the reason that the
petitioner had not undertaken any obligation to provide services
having direct nexus or connection with the leased vehicle. The claim
of the petitioner is that the bank failed to fulfill its obligation
towards him as a customer, when it failed to take proper care of the
vehicle, which the petitioner bank had lawfully re-possessed insofar
as certain parts were allegedly replaced or stolen. I am, therefore, of

W.P.No.20346 of 2009.

the opinion that the claim of the petitioner is based on the lease
agreement between the parties and his cause of action arises out of
failure on the part of the bank to fulfil an obligation towards him to
keep the vehicle safe after it was repossessed. That being so, the
case of the petitioner is covered by section 9 of the FIO, on the basis
of which he can file a claim against the petitioner. Such claim in
terms of section 7(4) of the FIO can be filed only in a banking court,
for which such court has exclusive jurisdiction. This conclusion is
further supported by the provisions of section 3 of the Punjab
Consumer Protection Act, 2005, which envisages that the provisions
of the Act shall be in addition to and not in derogation of provisions
of any other law for the time being in force. Even otherwise where a
specific remedy is available under a Special Law, General Law
cannot be resorted to. It is also clear that in disputes between
customers and Financial Institutions where breach of any obligation
is alleged on the part of either party resort to Courts other than a
Banking Court constituted under the provisions of the FIO is barred.
12.

I am, therefore, in no manner of doubt that the relationship

between the petitioner and respondent No.2 is that of financial

institution and customer. The alleged replacement/theft of certain
parts of the vehicle while in custody of the bank, if proved may
constitute default in fulfilment of an obligation on the part of the
petitioner for determination of which dispute exclusive jurisdiction
lies with the banking court established under the provisions of the
Financial Institutions (Recovery of Finances) Ordinance, 2001.

W.P.No.20346 of 2009.

13.

10

For reasons recorded above, this petition is allowed.

The impugned order dated 04.09.2009 passed by the learned Judge

Consumer Court, Sargodha in case titled Malik Ahmad Nawaz Vs.
Askari Leasing Ltd. is set aside. The plaint in the matter shall be
returned to the respondent for filing the same in the competent court.

(IJAZ UL AHSAN)
JUDGE

Announced in open Court on 20.10.2014.

JUDGE
Approved for reporting.

*Mumtaz*