SALMAN CAPITAL INVESTMENTS (PVT.) LIMITED vs HABIB BANK LIMITED S — 2026 CLD 292 KARACHI-HIGH-COURT-SINDH

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SALMAN CAPITAL INVESTMENTS (PVT.) LIMITED VS HABIB BANK LIMITED S. 176---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 9---Suit for recovery of damages filed by the customer---Sale of pledged securities by Bank---Prior notice to customer / pawnor---Reasonability---Act(s) of Bank---Non-prudence / diligence alleged against Bank---Cause of action, accrual of---Banking Court dismissed the suit for recovery of damages filed by customer / company (appellant) for want of cause of action---Appellant availed a finance facility and ,in order to secure the financing, had pledged shares /securities, which were, after receiving permission from customer in wake of notice, sold by the Bank ; against said act (sale) the Appellant filed suit for recovery of damages of Rs.29.5 million---Plea of appellant ( plaintiff / customer) was that the bank did not act diligently in disposing of the pledged shares ; that the bank was required to dispose of the shares immediately in the wake of loss in the marginal requirements without even giving a notice to the appellant ; as in such eventuality, the appellant would have been saved from the loss of Rs.29.5 million---Validity---Section 176 of the Contract Act, 1872 stipulates a reasonable notice of the sale of pledged securities to be given to the pawnor---In the present case, the pledged shares were sold with permission of the appellant given to the bank vide aletter, wherein the appellant had shown its inability to either repay the finance facility or to pledge further shares in order to adjust the outstanding dues---Bank (defendant / respondent), in fact, acted wisely in adhering to the principles of natural justice by serving anotice to the appellant to makeup for the short fall and then by reminding him repeatedly about it---Appellant, on the contrary, always indulged in delaying performance of obligation in the contract and giving its clear-cut response to the bank to sell off the pledged shares in order to compensate the short fall---Having an option to dispose of the pledged shares on its own without giving anotice to the appellant would not mean that bank was restrained from giving a notice to the appellant before proceeding to sell off the pledged shares, or giving a notice meant that the bank acted mala fide---Said option in the agreement i.e. to sell off the pledged shares/securities without a notice to pawnor had been given to the bank to meet exigent situation, when otherwise all efforts and opportunities given to the borrower for recovery of amount etc. bore no fruit and no option was left to the bank to recover the defaulted amount except by selling off the pledged securities---However, before exercising such drastic step i.e. selling off the pledged share, if the bank had thought to give a notice to the appellant and thereby afford it an opportunity to adjust the outstanding dues, it could not be deemed to have acted negligently or imprudently, and more so, out of malafidely, nor the same could be construed as abreach of the contract enabling the appellant to sue for damages---Thus, the bank followed a normal recourse by giving notices to the appellant to top up the marginal requirement---Appellant in reply only kept on seeking time and ultimately gave permission vide aletter to the bank to sell off the pledged securities---At the time of giving such permission vide letter, the appellant did not take a pleaeither that the bank had acted malafidely by giving it notices rather than disposing of the pledged securities on its own---Subsequently, taking a U-turn and stating that the act of the bank in disposing of the pledged shares was rooted in mala fide was nothing but an afterthought---From a reading of the (permitting) letter, it was apparent that appellant was trying to arrange for further collateral to adjust the outstanding dues but when finally due to force majeure did not succeed, it allowed the bank to sell off the collateral available with it to recover outstanding dues---Banking Court rightly concluded that no cause of action had accrued to appellant to file the suit against the bank for recovery of damages, when availing of financial facility by it was admitted, its obligation to maintain the value of the pledged shares at 50% over and above outstanding liabilities was not disputed; failure of the appellant to make up for the loss was borne on the record; competency of the bank to sell off the pledged shares was not disputed; and the permission by the appellant to the bank to sell off the pledged shares was in blank and white through a letter which was a part of the record---High/Appellate Court upheld the impugned judgment passed by the Banking Court---Appeal, filed by the customer, was dismissed.

SALMAN CAPITAL INVESTMENTS (PVT.) LIMITED vs HABIB BANK LIMITED S — 2026 CLD 292 KARACHI-HIGH-COURT-SINDH

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