J U D G M E N T

MAHMOOD AHMED KHAN – J : This is a suit for cancellation of agreement dated 24.08.1994.

2. Abridging but with the required details as per the contents of the plaint, it is contended that the plaintiff was having 600 shares of Rs.100/- each with the defendant No.4-company and by virtue of holding the said shares he was the Chief Executive of the said defendant till the month of August 1994. It is further contended that the plaintiff originally held 200 shares of the said defendant and thereafter purchased 200 shares of his father Mr. Rahim Khan Kandhari and had also purchased 200 shares from his wife Mrs. Mehrun Nisa. That in the month of August 1993 defendant No.1 persuaded the plaintiff to sell and transfer the plaintiff’s 600 shares of the said defendant to defendant No.1 and the agreement of the said dated of 24.08.1994 was executed between the parties wherein the said 600 shares were agreed to be sold with the following consideration :-

a) Rs.2,000,000/- (Rupees twenty lac only) payable by the defendant No.1 to the plaintiff by postdated two cheques No.32654508 dated 10.10.1994 and No.32684507 dated 30.12.1994, of Rs.1,000,000/- (Rupees ten lac only) each, drawn on Allied Bank of Pakistan, main University Road Branch, Gulshan-e-Iqbal, Karachi.

b) To get the leasehold and ownership rights and possession of Plot No.RA-5, measuring 120 square yards with house constructed thereon, in the project known as Owais Homes, in Scheme No.36, Gulistan-e-Jauhar, Karachi, transferred in favour of the plaintiff, and

c) Transfer of leasehold and ownership rights of office premises measuring 1500 square feet, at Mezzanine floor of Faisal Centre, Shahra-e-Faisal, Karachi in favour of the plaintiff who is already in possession thereof prior to the execution of aforesaid agreement.

In pursuance to the said agreement the defendant No.1 obtained the plaintiff’s signature on the relevant documents and issued postdated cheques bearing No.32684508 dated 10.10.1994 and No.32684507 dated 30.12.1994, of Rs.1,000,000/- (Rupees ten lac only) each. That the defendant No.1 acquired right and interest in the matter upon the documents as were got executed being the cheques along with withdrawal from operation of the bank account of the company on 3^rd and 5^th October 1994. It is further contended that the shares were sold by the plaintiff on as is basis. The said cheques bounced and remained un-cashed. In the circumstances the defendant No.1 is liable to restore the plaintiff’s status/membership and directorship etc. of the company and also liable to pay share of income of business of the defendant No.4-company from which the plaintiff was deprived. The plaintiff as such as made prayers accordingly which included damages also in the sum of Rs.5,000,000/- (Rupees fifty lac only).

3. The defendant No.1 in the written statement objected to the proceedings on the ground of jurisdiction of this Court and restriction of Section 7 of the Companies Ordinance 1984. It is further alleged that the said 600 shares were legally transferred in his name. The agreement in this regard was also denied and it was further submitted that the postdated cheques were in consideration of 600 shares and only after the transfer of the same were liable to be paid. It is further alleged that the plaintiff had voluntarily resigned from the directorship of the company and divested himself of all his rights, title, claims, assets and goodwill of the company along with interest in Plot Nos.186/1 and 186/2, measuring 1210 square yards Deh Safooran, Shahra-e-Faisal, Karachi. It is further alleged that a sum of Rs.2,000,000/- (Rupees twenty lac only) was payable on account of adjustment of account between the parties.

Defendant No.4 also filed written statement wherein it is stated that the plaintiff was having 200 shares of defendant No.4 and subsequently his father transferred 200 shares in favour of the plaintiff, however, 200 shares are still in the name of the plaintiff’s wife and as such only 400 shares stood transferred. It is further denied that the plaintiff was in possession of any office independently and that after the transfer of 400 shares the plaintiff had resigned from the company.

Defendants 2, 3, 4 and 5 have also filed their written statement wherein it is contended that the plaintiff has got 600 shares of defendant No.4 and that the plaintiff only transferred 400 shares to defendant No.1. The possession of the office as alleged by the plaintiff was also denied and that after transfer of 400 shares he was not entitled to hold the position of director and it was further submitted that other directors/share holders of the company namely Mrs. Anwar Barlas and Mrs. Kafia Begum have transferred their entire 600 shares of defendant No.4 in favour of defendants 2, 3, 4 and 5.

4. Issues were framed by this Court by adopting the suggested issues on behalf of defendants 2, 3, 4 and 5, which are as follows :-

1. Whether the suit is barred under Section 7 of Companies Ordinance, 1984 to be tried on the original side of this Court ?

2. Whether the plaintiff has any cause of action against defendants No.2, 3, 4 and 5 ?

3. Whether the plaintiff voluntarily without any coercion transferred the shares in favour of defendant No.1, resigned from the Directorship of the company and inconsequences whereof his signature was withdrawn from the operation of Bank Account ?

4. Whether the corporate law authority legally transferred 400 shares of defendant No.4 belonging to the plaintiff firstly in favour of defendant No.1 and thereafter in favour of defendant No.5 ?

5. Whether the plaintiff misrepresented in the agreement dated 24.08.1994 that he was holding 600 shares of defendant No.4 ? If yes its effects ?

6. How many shares the plaintiff actually transferred in favour of defendant No.1 ?

7. Whether the plaintiff is entitld to the reliefs claimed for him against defendants 2 to 5 ?

8. What should be the decree ?

5. The plaintiff Rafiq Ahmed examined himself as PW-1 as Ex:P/4, who produced his affidavit-in-evidence as Ex:P/5, photocopies of agreement dated 24.08.1994 as Ex:O/1, two cheques bearing No.32684508 dated 10.10.1994 and No.32684507 dated 30.12.1994 as Ex:O/2 and O/3 respectively, letter dated 23.10.1994 as Ex:O/4, letter dated 28.10.1994 as Ex:O/5, bank statement dated 17.10.1994 and dated Nil in respect of two cheques as Ex:O/6 and O/7 respectively. He was cross examined.

The defendant No.5 Tariq Ahmed Khan Lodhi examined himself as DW-1, who produced his affidavit in evidence as Ex:D/1, photocopies of Board Resolution dated 15.02.2001 as X/1, Memorandum and Articles of Association of defendant No.4 company as Ex:D/2, Forms dated 17.01.1995 as X/2, Form 29 dated 12.06.1995 as X/3, Form dated 31.01.1995 as X/4, Form dated 29.07.1997 as X/5, Form dated 29.07.1998 as X/6, sale agreement dated 19.04.1989 as X/7, Deed of Revocation of Sub-Power of Attorney dated 29.10.1996 as X/8.

Both the witnesses were cross-examined by the other sides.

6. Contentions of learned counsel for the plaintiff were recorded on 11.10.2017, for the sake of continuity reads as under :-

“Learned counsel for plaintiff has concluded his arguments according to which the plaintiff had proved that the agreement in matter which is been put up for cancellation remained without consideration. It is further contended by the learned counsel that the defendant has not been able to show even after availing the opportunity of evidence that he can rebut the claim of the plaintiff and that consideration in the matter was made by him for acquisition of the share in respect of which the case is filed by the plaintiff. It is further contended by learned counsel that the matters were in the initially stage thrashed when the proceedings were taken up on injunction application by way of High Court Appeal wherein matter of maintainability also came up. Learned counsel in support of his contention apart from that also relies upon 2014 CLD page 1039, PLD 2005 Karachi page 50. In respect of unjust enrichment he relies upon 2016 SCMR page 1637 and PLD 2013 Sindh page 290. In respect of definition of “as is” learned counsel relies upon the reported case as 2006 CLC page 822.”

Written arguments have also been filed on 21.03.2018 wherein it is further contended that in the evidence it has come up that in rebuttal the defendant has failed to prove that consideration has been paid in any amount, unjust enrichment has occurred, matter of jurisdiction stood decided in High Court appeal No.242/1998 by order dated 11.03.1999.

At the final stage I would prefer to recast the issues as under alongwith the reasons/discussion :

ISSUE NO:1. Whether the suit is maintainable ?

ISSUE NO.2. Whether the plaintiff is entitled to the decree as to entitlement of the shares, if so, in what number/s ?

ISSUE NO.3. Whether the plaintiff is entitled to the prayers made ?

ISSUE NO.4. What should the decree be ?

My findings on the above issues are as under along with the resource/descrsion:-

+ ISSUE NO.1. ………….. Affirmative.

ISSUE NO.2. ………….. As discussed.

ISSUE NO.3. …………... As discussed.

ISSUE NO.4. …………… Suit decreed with cost for 400 shares.

ISSUE NO.1.

Record reflects that although the defendant has taken the defence that the suit is not maintainable under the provision of Section 7 of the Companies Ordinance, 1984. The matter was dealt with in High Court Appeal No. 242/1998 by order dated 11.03.1999, wherein the contention was repelled as the subject matter of the suit pertains to the sale of shares by agreement and do not pertain to the affairs of the company as are dealt with under the Companies Ordinance, 1984, as such there is nothing found in advertence to the maintainability of the suit. This issue is as such answered in affirmative.

ISSUE NO.2.

It appears on the record that only 400 shares were got acquired by the defendant in the matter and as such although the claim of the plaintiff is made in respect of 600 shares, but only 400 shares having been acquired, the plaintiff is entitled to the decree for the same only irrespective to the agreement. The defendant having been unable to establish that the consideration of the said shares was ever paid in any quantum, the agreement in question is liable to be treated as cancelled and as such the plaintiff is entitled to the return of the said 400 shares. This issue as such is decided in affirmative.

ISSUE NO.3.

That the plaintiff in the matter has not adduced any evidence in respect of the other properties nor any evidence has come forward in respect of the claim of damages. The plaintiff has also unable to come forward with the annual balance sheet of the company which are required to be maintained, as such nothing coming forward as to any benefit acquired by the defendant by virtue of acquisition of said 400 shares the prayer of the plaintiff to this extent is entertained whereas the other prayers stands unavailable on account of of proving the same. This issue is answered accordingly.

ISSUE NO.4.

The suit of the plaintiff is decreed for the said 400 shares acquired from the plaintiff by the defendant/s for which this suit is decreed. The said 400 shares as such shall remain the property of the plaintiff and shall be so recorded accordingly. The suit stands decreed to this extent only along with costs.

Office to prepare the decree accordingly.

J U D G E

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