Order Sheet
IN THE HIGH COURT OF SINDH AT KARACHI
Suit No. 1380 of 2007
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Date |
Order with signature of Judge |
M/S Zahid F. Ebrahim and Liaquat Hussain Khan,
Advocates for the plaintiff.
M/S Sajid Zahid, Mansoor Shaikh and Safdar Mehmood,
Advocates for the defendants.
Dates of hearing : 10.12.2013 and 02.09.2014.
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ORDER ON C.M.A. No.1424 OF 2012
NADEEM AKHTAR, J. – This application has been filed by the defendants under Order VII Rule 11 CPC for rejection of the plaint on the grounds that the Suit is hopelessly barred by time ; this Court has no jurisdiction against the defendants as they do not carry on any business or work in Pakistan ; there was / is no privity of contract between the plaintiff and the defendants ; this Suit based on the Umpire’s Award dated 31.08.2002 in arbitration proceedings between the plaintiff and another entity, which was admittedly the wholly owned subsidiary of defendant No.1, is not maintainable as the said proceedings initiated by the plaintiff without joining the present defendants attained finality upto the level of the Honourable Supreme Court ; and, the Suit is also barred under the doctrines of res judicata and estoppel.
2. This Suit has been filed by the plaintiff Civil Aviation Authority seeking a direction that the defendants be directed, jointly and severally, to compensate it to the tune of Rs.556,833,034.00 for the loss and damage suffered by it due to the misrepresentations made by the defendants and the subsequent fraud played upon it. Mr. Sajid Zahid, learned counsel for the defendants, contended that the plaint is liable to be rejected on several grounds, which are summarized below.
3. The first ground urged by the learned counsel was that the Suit is hopelessly barred by time as the alleged cause of action, that is, the alleged breach of non-payment of the license fee by Aer Rianta International Pakistan (Private) Limited (‘ARIP’) of the three license agreements accrued in the year 1994 as per the averments made in the plaint, but the Suit was instituted in the year 2007. He submitted that by virtue of Article 115 of the Limitation Act, 1908, Suit for compensation for the alleged breach of the license agreements could be filed within three years from the date of the alleged breach, that is, upto the year 1997 ; but the Suit was instituted in the year 2007 after ten years of the alleged cause of action. He argued that if it is assumed that the case of the plaintiff is that defendant No.1 was impliedly responsible under the said agreements and the three years’ period of limitation is not applicable, then Article 120 of the Limitation Act, 1908, shall apply which provides a period of six years for filing a Suit for which no period of limitation is provided elsewhere in the said Act. He further argued that even under Article 120 ibid, the Suit is barred by limitation as the six years’ period prescribed therein expired in the year 2000. The learned counsel relied upon General Investment Limited V/S Karachi Municipal Corporation and 3 others, 1993 MLD 1550, and Parnamchand Chandiram Marwadi V/S Kashinath Deoram Lonari and others, AIR 1922 Bombay 257(1), in support of his above submission.
4. The second ground urged by the learned counsel was that disputes arose between the plaintiff and ARIP in relation to the license agreements, whereafter the plaintiff filed Suit No.48/1994 before this Court for specific performance against ARIP, and ARIP filed Suit No.689/1995 before this Court against the plaintiff for damages and compensation. Vide order passed on 19.04.1999 in both the said Suits, this Court referred the dispute to arbitration by appointing two retired learned Judges as arbitrators. After hearing the parties at length, the learned arbitrators rendered their respective Awards by differing from one another. Due to this reason, their lordships referred the matter to another learned retired Judge as the Umpire, who rendered the Award on 31.08.2002 (‘the Award’). The Award, which was filed in this Court, was made Rule of the Court on 29.01.2003, and was maintained right up to the Honourable Supreme Court. The learned counsel contended that this Suit has been filed by the plaintiff on the basis of the Award which attained finality long ago. He submitted that the present defendants were not made parties by the plaintiff in its earlier Suit / arbitration proceedings, nor was any attempt made by it to do so. He argued that the Award and the decree drawn in pursuance thereof against ARIP cannot be enforced in law against the present defendants either through this Suit or otherwise in view of the above reason, and also as defendant No.1 was not a party to the license agreements which were the subject matter of the earlier Suit, arbitration proceedings, the Award and the decree.
5. The third ground on which the defendants are seeking rejection of the plaint is that the Suit is barred under the doctrines of res judicata and estoppel. In this context, the learned counsel strongly relied upon the submissions made by him in support of the aforementioned second ground. He submitted that under the garb of this Suit, the plaintiff is seeking trial of the issues that have already been decided conclusively through the decree of this Court which has attained finality long ago, and the same cannot be reopened or re-agitated.
6. The fourth ground urged by the learned counsel for the defendants was that there was / is no privity of contract between the plaintiff and defendants. He contended that the defendant No.1-company was not a party to any of the three license agreements which have throughout remained the basis of the dispute between the plaintiff and ARIP. It was strongly urged that no cause of action, as alleged or otherwise, ever accrued to the plaintiff against the defendant No.1- company due to this reason. The learned counsel relied upon Javed Iqbal V/S Passco and another, 2004 CLC 478, and Pak American Commercial (Pvt.) Ltd. through Director V/S Humayoun Latif and 7 others, PLD 2008 Karachi 540, in support of this submission.
7. The last ground urged by Mr. Sajid Zahid was that this Court has no jurisdiction in relation to any of the defendants, as the defendant No.1-company is incorporated in Ireland and it does not carry on any business or work in Pakistan ; defendants 2 and 3, who are foreign nationals, being the former officers of the defendant No.1-company, have retired long ago ; and, defendant No.4, who is also a foreign national, was an officer of another entity (Aer Rianta International Middle East), and he neither had / has any concern with defendant No.1 nor does he reside or work in Pakistan. In addition to the above, the learned counsel submitted that it is a settled law that defendants 2, 3 and 4, admittedly being the employees, cannot be held liable or responsible for any act of their employers. He further submitted that in view of the above, no cause of action, as alleged or otherwise, has accrued to the plaintiff against defendants 2, 3 and 4. In support of this submission, the learned counsel relied upon (1) Arshad Saleem V/S Civil Aviation Authority through Airport Manager and another, 2011 CLD 1171, (2) Ehtesham Ghazi V/S Izharuddin and another, 2001 YLR 526, and (3) Habib Bank Limited V/S Shafiq Textile Mills Ltd. and others, 2000 CLC 787.
8. After submitting the above grounds for rejection of the plaint, the learned counsel, in order to sum up his arguments, submitted that an application for rejection of the plaint must be decided on a meaningful and not formal reading of the plaint, as held in Diamond Rubber Mills V/S Pakistan Television Corporation Ltd. and 2 others, 1989 CLC 1989 ; it is mandatory under Order VII Rule 11(d) CPC that where the Suit appears from the statements made in the plaint to be barred by any law, the plaint must be rejected as followed and held in Mst. Khalida Khatoon and another V/S Askari Bank Limited and 2 others, 2012 CLD 194 ; where the question of limitation is apparent on the face of the record, the Court can proceed further without any further inquiry, and the same cannot be left on the pleadings of the parties, but a duty is cast upon the Court to take notice of the point of limitation, irrespective of the fact whether the same was pleaded or not, as held in Government of NWFP and others V/S Akbar Shah and others, 2010 SCMR 1408, and Haji Abdul Karim through attorney and 4 others V/S Messrs Florida Builders (Pvt.) Ltd. Karachi, 2009 YLR 451 ; in view of the word “shall” used in Order VII Rule 11 CPC, it is mandatory on the Court to reject the plaint if one or more of the four Clauses of Rule 11 ibid is found to be applicable, as laid down by the Honourable Supreme Court in Haji Abdul Karim and others V/S Messrs Florida Builders (Pvt.) Limited, PLD 2012 Supreme Court 247 ; and, the expression “barred by any law” appearing in Order VII Rule 11(d) CPC includes the law of limitation, as laid down by the Honourable Supreme Court in Maulana Nur-ul-Haq V/S Ibrahim Khalil, 2000 SCMR 1305.
9. On the other hand, Mr. Zahid F. Ebrahim, learned counsel for the plaintiff, emphatically opposed this application and the submissions made in support thereof by the learned counsel for the defendants. He contended that the cause of action for filing this Suit accrued to the plaintiff on 09.03.2007 as specifically pleaded in paragraph 34 of the plaint, when in Execution No.52/2007 filed by the plaintiff before this Court it transpired that the defendants had abandoned ARIP after stripping off its assets and funds. He further contended that the defendants had misrepresented with the plaintiff and had played fraud upon it, the details whereof have been pleaded in the plaint by the plaintiff. He submitted that the period of limitation is to be reckoned from the date of knowledge, which in this case was 09.03.2007, when the fraud and misrepresentation committed by the defendants came to the plaintiff’s knowledge. It was urged that before 09.03.2007, the plaintiff was pursuing its claim against ARIP diligently and vigilantly, and was not at all aware about the misrepresentation and fraudulent acts committed by the defendants in relation to ARIP, and as soon as this fact came to the plaintiff’s knowledge, the present Suit was filed. The learned counsel submitted that in view of his above submissions, the plaint cannot be rejected on the grounds that no cause of action has accrued to the plaintiff, or that the Suit is barred by limitation.
10. Before responding to the other grounds urged by the learned counsel for the defendants, Mr. Zahid F. Ebrahim submitted that, in order to appreciate the case of the plaintiff, it is necessary that the Court may look into the circumstances in which the plaintiff was constrained to file this Suit. In this context, he referred to the affidavits-in-evidence filed by defendants 2 and 3 before the learned arbitrators, wherein, according to him, they deliberately misrepresented and made misleading and fraudulent statements in collusion with and under the instructions of defendant No.1. He also referred to several letters addressed to the plaintiff on the letterheads of defendant No.1 and ARIP, reiterating inter alia that “Aer Rianta International are committed to Pakistan and our Duty Free Business”. He contended that at all material times defendant No.1 was at the forefront of operations of the duty free shops and was running and managing the same ; and, was in direct and exclusive contact with the plaintiff through correspondence on its own letterheads as well as on the letterheads of ARIP. It was urged that the conduct of the defendants before the dispute as well as after the dispute and during the arbitration proceedings made the plaintiff believe that ARIP would be in a position to discharge its financial obligations towards the plaintiff with the support of defendant No.1.
11. The learned counsel submitted that this Suit has been filed in the above background in view of the breach of assurances and undertakings given by defendant No.1 to discharge all the liabilities and obligations of ARIP, as defendant No.1 instead of honouring its said assurances and undertakings, siphoned off all the funds of ARIP by committing fraud and misrepresentation rendering ARIP completely incapable of making any payment to the plaintiff. He argued that the cause of action of the Suit filed by the plaintiff against ARIP, wherein the Award was rendered and a decree was drawn in pursuance thereof, and the cause of action of the instant Suit, are completely different and distinct, as the Suit against ARIP was filed by the plaintiff in view of breach of the license agreements committed by ARIP ; whereas, the present Suit is for damages against the defendants for committing fraud and misrepresentation with the plaintiff. It was urged that this Suit is not a Suit for recovery of the outstanding dues under the license agreements, but is a Suit for damages against a third party that has caused massive losses to the plaintiff due to misrepresentation and its fraudulent acts. It was further urged that if the defendants in both the said Suits were the same, even then there was no bar in filing the present / fresh Suit as the causes of action of both the Suits are different and distinct. It was also urged that the ground of res judicata raised by the defendants is misconceived as admittedly parties in both the said Suits are not the same.
12. By inviting my attention to the orders passed on 22.11.2010 and 03.10.2011 in this Suit, Mr. Zahid F. Ebrahim contended that as many as nine issues were framed in this Suit on 22.11.2010 with the consent of the learned counsel for the defendants, out of which the first four issues fully cover all the grounds that have been urged by the defendants in the present application for rejection of the plaint ; and, the application filed by the defendants for the review of the said order was dismissed vide order passed on 03.10.2011. He submitted that the plaint cannot be rejected in view of the above orders, and also as issues have been framed and the process of recording the evidence of the parties has already commenced before the commissioner appointed by this Court.
13. In his rebuttal, Mr. Sajid Zahid, learned counsel for the defendants, submitted that an application for rejection of the plaint can be filed at any stage of the Suit, and even after settlement of issues, and likewise the plaint can be rejected at any stage of the Suit. In support of this submission, he relied upon (1) Muhammad Shafi V/S Punjab Province through Collector, Vehari and another, 1982 CLC 55, (2) Abdul Zahid V/S Mir Muhammad and 10 others, 1999 CLC 246, and (3) M. Moosa V/S Mahomed and others, PLD 1954 Sind 70. He contended that after failing in recovering its dues from ARIP, which is admittedly a separate entity, uncalled for, baseless and malafide allegations of misrepresentation and fraud have been levelled by the plaintiff against the defendants, which is not permissible in law. He further contended that defendant No.1 was / is not responsible in any manner whatsoever to discharge the obligations or liabilities of ARIP, as alleged or otherwise, and in any event, defendant No.1 sold its 89% shareholding in ARIP in the year 1995, that is twelve (12) years prior to the filing of this Suit, whereafter its entire management and control was taken over by the new management.
14. I have heard the learned counsel for the parties at length, and with their able assistance have also examined the material available on record as well as the law cited at the bar. The principle of res judicata, as embodied in Section 11 CPC, is that no Court shall try any Suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former Suit between the same parties or between parties under whom they or any one of them claim, litigating under the same title, in a Court competent to try such subsequent Suit or the Suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court. One of the essential requirements for invoking the bar contained in this principle is that the former Suit must have been a Suit between the same parties or between parties under whom they or any one of them claim, and they must have litigated under the same title in the former Suit. It is an admitted position that the defendants were not parties in Suit No.48/1994 filed by the plaintiff against ARIP, and ARIP is not a party to the present Suit. Therefore, the ground of res judicata urged by the learned counsel for the defendants is not sustainable. The principle of estoppel will also not apply in the instant case due to the above reason.
15. In order to appreciate the submissions made by the learned counsel for the parties, and to ascertain whether the plaint is liable to be rejected or not on the other grounds urged by the learned counsel for the defendants, the contents of the plaint and the averments, assertions and allegations made therein were carefully examined by me. Since some of such averments, assertions and allegations are relevant and important for the purpose of the just and proper decision of this application, the same are briefly highlighted below (emphasis is added) :
i) In paragraph 7 of the plaint, the plaintiff has admitted that the tender bid was submitted to the plaintiff on 29.05.1992 by defendant No.1.
ii) In paragraph 8 of the plaint, it has been admitted by the plaintiff that as a part of the bid proposal, defendant No.1 proposed to incorporate a local private limited company for the purposes of the duty free shops ; and, defendant No.1 named itself as the tenderer in the tender documents and ARIP was named as the operator of the project subject to its incorporation after acceptance of the tender bid.
iii) In paragraph 11 of the plaint, the plaintiff has admitted that defendant No.1 incorporated ARIP as its 100% wholly owned subsidiary.
iv) In paragraph 9 of the plaint, the plaintiff has claimed that at all material times defendant No.1 assured the plaintiff that all obligations, duties and liabilities owed by ARIP towards the said project, would be discharged, borne and satisfied by defendant No.1 ; these representations, guarantees and assertions were also manifested in the tender proposal ; defendant No.1 repeatedly assured the plaintiff that ARIP was being created in pursuance of its global business policy, however, irrespective of the same, defendant No.1 shall remain liable for all obligations incurred by ARIP.
v) In paragraph 10 of the plaint, it has been stated that the bid proposal submitted by defendant No.1 was accepted by the plaintiff after due evaluation taking into consideration the defendant No.1’s global repute and substantial experience in duty free operations as well as relying upon its said representations.
vi) In paragraph 11 of the plaint, the plaintiff has further stated that relying upon the said assurances and guarantees extended by defendant No.1, the plaintiff entered into a license agreement with ARIP on 25.07.1992.
vii) In paragraph 12 of the plaint, the plaintiff has admitted that the dispute between the plaintiff and ARIP arose in the year 1994 when ARIP defaulted in payment of the license fee and electricity charges. In this paragraph, details about filing of the Suits by the parties against each other and reference of the dispute to arbitration, have also been disclosed.
viii) In paragraph 13 of the plaint, the plaintiff has once again admitted that at all material times defendant No.1 represented to plaintiff that ARIP was merely a corporate vehicle created to facilitate ground operations at the Jinnah International Airport, and as such all liabilities and obligations owed by the same would be borne and discharged by defendant No.1 ; and, defendant No.1 led the plaintiff to believe that the project was undertaken by defendant No.1 as its business opportunity, therefore, all liabilities incurred by ARIP in relation to the project would be met and satisfied by defendant No.1. In this paragraph it has been further stated by the plaintiff that the evidence led by defendants 2, 3 and 4 in the arbitration proceedings clearly asserted the above position.
ix) In paragraph 14 of the plaint, it has been stated that the plaintiff had no reason to doubt the veracity of the representations and assertions made by defendant No.1 as the same were maintained and repeated not only throughout the subsistence of the contract, but also during the arbitration proceedings. It has also been stated in this paragraph that the defendant No.1’s Annual Report and Accounts for the year 1993 also clearly showed the duty free shops in question as one of its own ventures in the Middle East thereby further inducing the plaintiff to rely on the said assertions and representations made by the defendants.
x) In paragraph 15 of the plaint, it is stated that a presentation on operational details of the project was made to the plaintiff on 07.08.1994 by the executives of defendant No.1, who reiterated therein the defendant No.1’s involvement and stake in and ownership of the project.
xi) In paragraph 16 of the plaint, it is stated that even subsequent to institution of the legal proceedings, defendant No.1 continued with its said assurances and went upto the extent of inducing the plaintiff by assuring that even though ARIP was the ostensible respondent in the arbitration proceedings, evidence on behalf of ARIP was led by defendants 2, 3 and 4 who were prima facie employees of defendant No.1. In this paragraph, it is also stated that defendant No.1 time and again made periodic references to its international repute to reassure the plaintiff of its commitment to fulfil the obligations of ARIP under the agreements.
xii) In paragraph 17 of the plaint, it is once again admitted that at all material times defendant No.1 was at the forefront of operations of the said project and was running and managing the same ; and, the deposition made on oath by defendant No.3 in the arbitration proceedings clearly reflected that the de-facto management and control along with all pertinent human resource was with defendant No.1.
xiii) In paragraph 18 of the plaint, it is stated that at all material times defendant No.1 was in direct and exclusive contact with the plaintiff through letters written on the letterheads of defendant No.1 and ARIP ; most of these letters were authored by defendant No.2 as the employee of defendant No.1 ; and, each of such letters referred to the previous letter, irrespective of the letterhead used, depicting an unbroken chain of communication from a single entity, that is, defendant No.1.
xiv) In paragraph 21 of the plaint, it is stated that from the very inception of the project, defendant No.1, despite having proffered explicit assurances and representations to the plaintiff of its commitment to discharge all debts and obligations of ARIP and with full knowledge that the same were relied upon by the plaintiff, slowly, maliciously and without any information and knowledge by the plaintiff, had started retracting and backing away from the project. The learned Umpire also made some observations in this behalf, which are reproduced in this paragraph and have been strongly relied upon by the plaintiff.
xv) In paragraphs 22, 23, 24, 25 and 26 of the plaint, the plaintiff has stated that subsequent scrutiny of the ARIP’s annual returns and financial statements revealed that the “lack of patience” referred to by the learned Umpire in the Award, was clearly manifested in changes in accounting policies made by defendant No.1 in the said accounts of ARIP ; the said changes were undertaken as early as 1994 without the plaintiff’s knowledge; the plaintiff believed defendant No.1 in good faith and relied on its assurances and promises ; on close scrutiny of “astronomical administrative expenses” it transpired that from 1993 to 2001 losses were incurred by ARIP as U.S. $ 4,579,775 were charged by defendant No.1 and one of its subsidiaries (Aer Rianta International Middle East) towards ‘management fee’ and ‘contract cost’, which was highlighted in the auditor’s report as well; scrutiny of financial statements and accounts of ARIP further revealed a glaring disparity in its financial statement of 1999 explicitly unveiling the defendants’ malicious exploitation of the funds of ARIP ; and, reservations about the veracity of the accounts were expressed by the auditors in Note 1 of the annual accounts for the year 2000.
xvi) In paragraph 28 of the plaint, the plaintiff has admitted that during the arbitration proceedings, the plaintiff discovered that one of the share-holders of ARIP [M/S Asia Pacific Hotels International (Pvt.) Ltd.] had created lien over the stocks and assets of ARIP, and this act was done in collusion with the defendants to frustrate the Award.
xvii) In paragraph 29 of the plaint, the plaintiff has admitted that the fact that 49% shares of ARIP were held by Chesterfield Commercial Limited, came to its knowledge during the arbitration proceedings, and also that no satisfactory details thereof were revealed in the arbitration proceedings. It has been alleged by the plaintiff that “the said company is non-existent and fictitious entity conjured for the sole purpose of facilitating Defendants No.1’s siphoning off funds from ARIP”.
xviii) In paragraph 32 of the plaint, the plaintiff has again admitted that at all material times defendant No.1 was at the forefront of the project and was responsible for the same. In this paragraph, the plaintiff has also relied upon the learned Umpire’s observation in the Award that “in terms of the bid documents ARI was to name the person through whom it would execute its commitment under the contract and in answer ARI said that it would have a company incorporated in Pakistan for the purpose. That precisely was done when ARIP came into being, through which entity ARI has maintained its presence at the Jinnah Terminal and in Court proceedings including those in Arbitration. ARIP was and remains an arm of ARI. Liabilities of ARI and ARIP are co-extensive, joint and several and one is unequivocally responsible for the other.” In the above-quoted observation, the learned Umpire had referred to the present defendant No.1 as ‘ARI’.
16. A bare perusal of the plaint shows that it is the plaintiff’s own case that the tender of the project was submitted by defendant No.1 and not by ARIP ; in the tender documents, defendant No.1 named itself as the tenderer and ARIP was named merely as the operator of the project ; at the time of submission of the tender, ARIP was not even in existence ; it was a clear understanding between the plaintiff and defendant No.1 that a company will be incorporated by defendant No.1 as its 100% wholly owned subsidiary to carry on the business of the project ; it was only after acceptance of the bid by the plaintiff and incorporation of ARIP by defendant No.1 for this purpose, that the license agreements were executed by the plaintiff and ARIP ; there were repeated representations and assurances at all material times by defendant No.1 that all obligations, duties and liabilities owed by ARIP towards the plaintiff in relation to the project would be borne, satisfied and discharged by defendant No.1 ; the plaintiff was made to believe on the said representations and assurances by defendant No.1, and it was only due to this reason that the plaintiff accepted the bid of defendant No.1 and continued its relationship and business with ARIP ; and, at all material times defendant No.1 was at the forefront of the operations of the project and was running and managing the same. Therefore, it is not the case of the plaintiff that it was discovered by the plaintiff during or after conclusion of the arbitration proceedings that defendant No.1 was responsible to bear, settle and discharge the liabilities and obligations of ARIP. Despite this admitted position, the defendants were not sued or impleaded by the plaintiff in Suit No.48/1994 filed by it against ARIP, although defendant No.1 was a necessary party to the said Suit in view of the representations, assurances and guarantees extended by defendant No.1 according to the plaintiff to bear, settle and discharge the liabilities and obligations of ARIP. If the contention of the learned counsel for the plaintiff is accepted that causes of action against ARIP and the present defendants were different and distinct, even then the plaintiff was required to institute the Suit against the present defendants when the cause of action had allegedly accrued against them.
17. As alleged and admitted in the plaint, the alleged default was committed by ARIP in the year 1994 ; the changes in accounting policies of ARIP alleged to have been undertaken by defendant No.1, also took place in the year 1994 ; losses were allegedly incurred by ARIP from 1993 to 2001 as defendant No.1 had allegedly charged ‘contract cost’ and ‘management fee’, which was highlighted in the auditor’s report as well ; financial statement of ARIP in the year 1999 revealed a glaring disparity explicitly unveiling the defendants’ alleged malicious exploitation of the funds of ARIP ; and, reservations about the veracity of the accounts were expressed by the auditors in the year 2000. The statements, averments and allegations made in the plaint clearly establish that the plaintiff came to know during the arbitration proceedings through the Annual Reports and Accounts of ARIP that ARIP had sustained huge losses which were caused due to the alleged siphoning off the funds of ARIP by defendant No.1. In case defendant No.1 was responsible or obliged for bearing, settling and discharging the obligations, duties and liabilities owed by ARIP towards the plaintiff in view of the representations, assurances and guarantees, as alleged by the plaintiff, the cause of action, if any, against the defendants had accrued to the plaintiff for the first time in the year 1993, and it continued till the year 2001 as per the averments and allegations made in the plaint by the plaintiff itself.
18. In paragraph 24.15 of the Award, the learned Umpire had observed that defendant No.1 (ARI) did not have patience ; the moment they encountered lack of expected profitability from the new source of business (the Jinnah Terminal), the stocks were allowed to go somewhat dry ; funds were withheld ; and, in about three years’ time they (defendant No.1) reduced their own stake substantially, taking in local and other participants. Likewise, in paragraph 24.20 of the Award, it was noted by the learned Umpire that by referring to a legal notice, the learned counsel for the plaintiff had pointed out that defendant No.1 had packed up and left the venture in other hands, and necessary documents to confirm the above position were placed on record by the learned counsel for defendant No.1. The contention of the learned counsel for the plaintiff was recorded in this paragraph that bulk of the so called losses consisted of payment by ARIP to defendant No.1. Another important observation was made in this paragraph by the learned Umpire that defendant No.1 maintained its presence through ARIP at the Jinnah Terminal and in Court proceedings, including those in arbitration. Finally, it was observed in this paragraph by the learned Umpire that ARIP was and remains an arm of defendant No.1, and liabilities of defendant No.1 and ARIP are co-extensive, joint and several, and one is unequivocally responsible for the other. All these vital facts and the above observations, on which the plaintiff has heavily relied upon in paragraph 32 of the plaint, certainly came to the knowledge of the plaintiff when the Award was rendered by the learned Umpire on 31.08.2002.
19. The above discussion shows that the facts regarding the alleged siphoning off the funds of ARIP and making its stocks dry by defendant No.1, which are the basis of the instant Suit and which amount to fraud and misrepresentation on the part of defendant No.1 according to the plaintiff, admittedly came to the plaintiff’s knowledge during the arbitration proceedings. Not only the said facts came to its knowledge, but the learned Umpire also made categorical observations in this regard in the Award dated 31.08.2002, which were also in the knowledge of the plaintiff. Thus the assertions made in the plaint that the plaintiff came to know about the alleged fraud and misrepresentation “subsequently”, or on 09.03.2007 when Execution Application No.52/2007 was filed by the plaintiff, do not appear to be correct.
20. Admittedly, this Suit has been
filed for recovery of compensation / damages for the losses allegedly suffered by
the plaintiff because of the misrepresentation and fraud allegedly committed by
the defendants. It is also an admitted position that the plaintiff has alleged
that there were verbal and implied representations, assurances and guarantees
by defendant No.1 to bear, settle and discharge the liabilities and obligations
of ARIP towards the plaintiff, and that there was no written agreement in this
behalf. In view of this admitted position, Article 115 of the Limitation Act,
1908, shall apply to the instant case which provides that a Suit for
compensation for the breach of any contract, express or implied, not in writing
registered and not specifically provided for in the Schedule of the said
Act, is to be filed within three years from the time when the contract is
broken, or where there are successive breaches, when the breach occurs in
respect of which the Suit is instituted. My view that Article 115 ibid
shall apply to the instant case is fortified by the law laid down by the
Honourable Supreme Court in the case of Fakir Spinning Mills Ltd.,
Karachi V/S Abdul Aziz Khan & others, 1972 SCMR 129. Same
view was followed by a learned single Judge of this Court in General
Investment Limited (supra) relied upon by the learned counsel for the
defendants. The word “compensation” used in Article 115 ibid also
includes a claim for damages as held by a learned Division Bench of the Madhya
Pradesh High Court in Mohammad Hussain V/S Firm Andani Co., AIR
1959 Madhya Pradesh 30.
21. The exact dates of knowledge of any of the facts alleged to have taken place between the years 1993 to the year 2001, constituting misrepresentation or fraud on the part of the defendants, have not been disclosed by the plaintiff. However, if the year 2001 is considered as the last date / year for computing the period of limitation under Article 115 ibid for filing the Suit for compensation and damages against the defendants on the basis of breach of the alleged representations, assurances and guarantees, the Suit ought to have been instituted by the plaintiff latest by the year 2004. As noted above, the learned Umpire’s observation that the liabilities of defendant No.1 and ARIP were co-extensive, joint and several and one was unequivocally responsible for the other, came to the knowledge of the plaintiff when the Award was rendered by the learned Umpire on 31.08.2002. If defendant No.1 had promised and was liable to bear, discharge and satisfy the obligations and liabilities of ARIP towards the plaintiff, as claimed and alleged by the plaintiff, the plaintiff, immediately upon acquiring such knowledge, ought to have sued defendant No.1 for recovery of the amount that was liable to be paid by ARIP. If maximum benefit is given to the plaintiff and the limitation for instituting Suit against the defendants is reckoned not from the plaintiff’s earlier knowledge during arbitration proceedings, but from the date of the Award, even then the Suit / claim ought to have been instituted / made by the plaintiff latest by 30.08.2005. However, the present Suit was instituted on 25.10.2007, which is miserably barred by limitation.
22. Another aspect of this case is that Rule 4 of Order VI CPC provides that in all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default or undue influence, particulars with dates and items, if necessary, shall be stated in the pleading. In the present case, fraud and misrepresentation have been alleged by the plaintiff against the defendants in general and vague terms ; for instance, the alleged misrepresentation and fraud came to the plaintiff’s knowledge “on subsequent scrutiny” of ARIP’s accounts, it has “now become evident”, “it transpired”, etc. Full particulars of the alleged misrepresentation and fraud and the dates thereof have not been disclosed in the plaint. The exact date when the plaintiff purportedly came to know in execution proceedings about the alleged misrepresentation and fraud, has also not been disclosed in the plaint. Suffice it to say that disclosure of relevant dates, especially the date of knowledge, by the plaintiff is necessary in every Suit in order to ascertain whether the Suit is within time or not. It has been claimed that the plaintiff came to know on 09.03.2007 about the misrepresentation and fraud allegedly committed by the defendants, when Execution Application No.52/2007 was filed before this Court. This statement does not appear to be true as the plaintiff could not have acquired such knowledge on the date of filing of the Execution Application because such facts cannot come to surface unless efforts are made to serve and trace the judgment debtor.
23. It is well-settled that where a party levels allegations of misrepresentation or fraud, it must specify and mention the details of the fraud, including dates, and further that the same was required to be proved beyond reasonable doubt and not on the basis of surmises, conjectures or suspicion. The effect of failure to comply with the mandatory requirement of Order VI Rule 4 CPC was discussed in depth by the Honourable Supreme Court in the case of Ghulam Shabbir V/S Mst. Nur Begum and others, PLD 1977 Supreme Court 75. It was held in the cited authority that as a rule the pleadings must contain material facts on which a party relies for his claim or defence ; in particular, Rule 4 of Order VI CPC lays down that in all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default or undue influence, and in all other cases in which particulars may be necessary beyond such as are in the form exemplified aforesaid, particulars with dates and items if necessary shall be stated in the pleadings. The case of Bal Gangadhar Tilk and others V/S Shrinivas Pandi and others, AIR 1915 Privy Council 7, was also discussed in the cited authority, wherein it was held by their lordships of the Privy Council that general allegations in pleadings, however strong may the words in which they are stated be, are insufficient even to amount to an averment of fraud of which any Court ought to take notice. In view of the law laid down by the Honourable Supreme Court in the case of Ghulam Shabbir (supra), it can be safely concluded that the plaint of this Suit and the claim made thereunder, which are based solely on the allegations of misrepresentation and fraud, are not compliant of the mandatory requirement of Rule 4 of Order VI CPC.
24. Rule 11 of Order VII CPC provides that the plaint “shall” be rejected in any of the four eventualities mentioned therein, including where the Suit appears from the statement in the plaint to be barred by any law. I have already held that this Suit is barred by limitation and also that the plaint is not compliant of the mandatory requirement of Rule 4 of Order VI CPC. Therefore, the plaint is liable to be rejected. In Raja Ali Shan V/S Messrs Essem Hotel Limited and others, 2007 SCMR 741, the Honourable Supreme Court was pleased to hold that it is the duty of the Court to reject the plaint if, on a perusal thereof, it appears that the Suit is incompetent ; and, the Court is not only empowered, but under an obligation to reject the plaint, even without any application from a party, if the same is hit by any of the clauses mentioned under Rule 11 of Order VII CPC. In Pakistan Agricultural Storage and Services Corporation Ltd. V/S Mian Abdul Latif and others, PLD 2008 Supreme Court 371, it was held by the Honourable Supreme Court that the object of Rule 11 of Order VII CPC is primarily to save the parties from rigors of frivolous litigation at the very inception of the proceedings, and if the Court on the basis of averments made in the plaint and documents available, comes to the conclusion that even if all the allegations made in the plaint are proved, the plaintiff would not be entitled to the relief claimed, the Court would be justified in rejecting the plaint in exercise of powers available under Rule 11 of Order VII CPC.
25. In view of the law laid down by the Honourable Supreme Court in the authorities referred to in the preceding paragraph, I am not inclined to agree with the learned counsel for the plaintiff that the plaint cannot be rejected in view of the orders passed in this Suit on 22.11.2010 and 03.10.2011, or that issues have been framed and the process of recording the evidence of parties has already commenced. The cases of Muhammad Shafi (supra), Abdul Zahid (supra) and M. Moosa (supra) relied upon by the learned counsel for the defendants, also support the view taken by me. In the above cases, it was held inter alia that an application for rejection of the plaint can be filed at any stage of the Suit ; even after settlement of issues ; and, the plaint can be rejected at any stage of the Suit.
26. The upshot of the above discussion is that from the averments made in the plaint and in view of the relevant admitted material on record, I have come to the conclusion that this Suit is barred by limitation and also that the plaint is not compliant of the mandatory requirement of Rule 4 of Order VI CPC. Accordingly, the plaint is hereby rejected with no order as to costs. Consequently, C.M.A. No.1423/2012 filed by the defendants Under Order XIV R 2 CPC is dismissed as having become infructuous.
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