' TASSADUQ HUSSAIN JILLANI, J.--- Through this petition leave is sought against the judgment, dated 2-3-2000 passed by a learned Division Bench of the High Court of Sindh, Karachi vide which petitioner's High Court Appeal was dismissed and the order of the learned Single Judge of Sindh High Court dated 10-5-1999 in J.M. No,74 of 1994 was affirmed.
2. Facts necessary for the disposal of this petition are that one Haji Sharif Khan (since deceased and defendant/respondent No,1 in the suit) filed a suit for specific performance against respondents/defendants (1) A.Y. Construction Company Limited a private limited company (2) A.Y.
Construction Company, (3) Mr. Iqbal Nizamuddin and (4) Amsa House Enterprise Limited in which it was averred that respondent/defendant No,3 was Managing Director of respondent/defendant No,1 which was a private limited company incorporated under the Companies Act, 1913. The said Company was incorporated with the object of taking over all the assets and liabilities of A.Y.
Construction Company namely respondent/defendant No,2. The latter company had been allotted flat site No,ST-9C, Block No,7, K.D.A. Scheme No,16, Federal "B" Area. It was further averred that since the plaintiff was interested in developing the said plot of land he entered into an agreement with the respondents/defendants Nos.1 to 3 in terms of which it was that the entire share holding of the respondent/defendant No,1 would be transferred to the plaintiff for a consideration of Rs,12,00,000.
Pursuant to the said agreement photocopies of the allotment order, the possession order and other relevant documents were handed over to him. He also added that he had paid Rs,1,00,000 through Cheque No,022422 dated 9-12-1978 drawn on Allied Bank of Pakistan as earnest money. It was alleged that despite reminders the matter was not being expedited by respondent/defendant No,3 as according to the latter certain formalities in relation to K.D.A. Had to be complied with and that the plot was still in the name of A.Y. Construction Company (Private) Limited and had not been transferred to A.Y. Construction Company Limited. It was also alleged that the plaintiff had come to know that instead of complying with the terms of the agreement with him, respondent/defendant No,4 was attempting to take over the shares and the said plot and construct and sell apartments thereon. It was pleaded that the plaintiff was entitled to the shares of the respondent/defendant No,1 and that respondents (defendants 2 and 3) were not entitled to dispose of the said plot as the said plot was the only valuable asset of the company. In the afore-referred circumstances it was prayed that the respondents/defendants be directed to perform the contract in question, to restrain the defendants/respondents from transferring or dealing with the said plot in any manner or in the alternative a sum of Rs,50,00,000 be awarded as damages.
3. The suit was contested. The respondents/defendants namely (1) A.Y. Construction Company Limited, respondent/defendant No,1, (2) A.Y. Construction Company, respondent/defendant No,2, and (3) Mr. Iqbal Nizamuddin, respondent/defendant No,3 filed a joint written statement. It was contended in the written statement that there was no agreement for transfer of the share to the plaintiff. It was admitted that a sum of Rs,1,00,000 was given by the plaintiff to respondent/defendant No,1 as earnest money, but since the sale could not materialize the construction over the plot in question in terms of the approved plan was entrusted to defendant/respondent No,4 by respondent/defendant-No,2, the written statement was signed by Muhammad Yousuf Siddiqui on behalf of defendant No,2 i,e, A.Y. Construction Company and by Mr. Iqbal Nizamuddin on his own behalf as respondent/defendant No,3 as also on behalf of defendant No,1 of which he was the Managing Director. The written statement was signed on 9-9-1979. On 27- 5-1993 an application under Order XXXIII, rule 3, C.P.C. Was filed with the prayer that since the parties had compromised the suit be disposed of in terms of the said compromise stated in the application itself which reads as under:-- "It is prayed on behalf of the parties above named that this Honourable Court may be pleased to record compromise of the suit on terms appearing hereunder and to decree and dispose of the suit on the basis of this compromise.
(1) Plaintiffs have been adequately compensated for their claim in the present suit in consideration whereof the plaintiffs declare that they have no right, title or interest in the subject-matter of the suit namely, Flat Site No,ST-9C, Block 7, Federal "B" Area, Karachi, measuring 3794.77 sq. Yards.
(2) By virtue of the agreement between the defendants Nos.1 and 2 and defendant No,4 entered into before the filing of the suit the right to build and dispose of the flats on the aforesaid flat site shall exclusively vest in defendant No,4 and no party shall interfere or intermeddle with the said right. Defendant No,4 shall be entitled to appropriate the'sale proceeds of the flats to be built on the said flat site exclusively to themselves.
(3) Defendants Nos.1 to 3 herein shall, at the cost of defendant No,4, do and cause to be done all such acts, deeds and things with the various authorities and institutions as may be requisites for perfecting. The 4th defendant's title and right to the flat site and the constructions to be built thereon and to sell the same.
(4) All charges, fees, dues, taxes and other sums remaining to be paid to the authorities or payable in future whatsoever including transfer fee if any shall be paid exclusively by defendant No,4."
4. This application was signed by Mr. Iqbal Nizamuddin on behalf of defendants Nos.1, 2 and 3. This was done in purported exercise of his authority as Managing Director of defendant No,1 and as general attorney of defendant No,2 and on his own behalf and on behalf of defendant No,3. The application was presented before the Court by Mr. Shamsul Arfin, Advocate who submitted his power of attorney on behalf of defendants Nos.1 to 3. The compromise was allowed vide short order, dated 31-5-1993 but the judgment and decree was passed on 2-8-1993.
5. Petitioner moved an application under section 12(2), C.P.C. Alleging that decree had been procured through misrepresentation and fraud, that he had not authorized respondent/defendant No,3 to effect compromise, that he had neither signed the application nor he had authorized Mr. Shamsul Arfin, Advocate on his behalf and that on account of the said judgment and decree he has suffered loss and hevy damages. During the proceedings under section 12(2), C.P.C.
Statements of petitioner Muhammad Yousuf Siddiqui, respondent Iqbal Nizamuddin and Messrs Saleh Muhammad, Sardar Khan and Muhammad Suleman Khan were recorded. Following documents were tendered in evidence:--
(1) General Power of Attorney Exhibit 4/2.
(2) The following payment receipts:--
(i) Receipt dated 26-12-1978 for Rs,63,000 - Exh.4/3.
(ii) Receipt dated 26-12-1978 for Rs,37,000 - Exh.4/4.
(iii) Receipt dated 24-12-1978 for Rs,2,00,000 - Exh.4/5.
(iv) Receipt dated 24-12-1978 for Rs,1,00,000 - Exh.4/6.
(v) Receipt dated 8-1-1979 for Rs,100,000 - Exh.4/7.
(vi) Receipt dated 7-1-1979 for Rs,1,00,000 - Exh.4/4.
6. The learned Judge of the Sindh High Court, seized of the trial dismissed the application on the ground that since petitioner had not disowned having executed the general power of attorney, as also having filed the written statement, there was no misrepresentation or fraud and the compromise application merely reiterated what had already been averred in, para.8 of the written statement. This was vide a short order, dated 21-4-1999 and detailed order was passed on 10-5- 1999.
7. This order was impugned by way of High Court Appeal before a Division Bench which was dismissed and the learned Court found as under:-- "... Admittedly, the appellant as per general power of attorney had authorized the respondent No,3 Iqbal Nizamuddin to do what was considered necessary in the matter and now the former could not be permitted to deny what he had authorized the respondent No,3 to do consequently the impugned compromise decree could not be said to have been obtained by fraud or by misrepresentation of facts considering also that the L.Rs, of deceased plaintiff have also stated that they received due compensation from the respondents and also the fact that the appellant had received the sums as per acknowledgement receipts produced by the respondents in this matter.
From the evidence adduced it would appear that the appellant knew about the pendency of suit against him wherein he had also filed written statement. The learned Single Judge after thorough scrutiny of evidence on record has rightly held that the respondent No,3 had authority by virtue of general power of attorney executed by the appellant to sign the compromise application and further that no fraud or misrepresentation was practised upon the Court and we have also scrutinized the evidence minutely. We hold that no exception could be taken to the impugned order...."
8. Learned counsel for the petitioner submitted that both the learned Courts have not correctly appreciated petitioner's case, that respondent Iqbal Nizamuddin had no authority to effect compromise, that by virtue of the compromise he had been deprived of his total share in the plot in question which was the only property of defendant No,1 of which the petitioner was a Rartner, that he never engaged the advocate who filed application for compromise before the learned trial Court, that the suit property belong to registered partnership business, one of the two partners died in 1975, the said partnership stood dissolved (section 42 of the Contract Act) and in the said situation the property could not be alienated in the manner it was done that both the learned Courts did not appreciate' that at the time the compromise application was filed the plaintiff had died and only one out of 10 legal heirs of the plaintiff signed the said application which was not tenable and that the property is worthy millions of rupees which has been alienated without consideration.
9. Learned counsel for respbndents/defendants opposed the petition by submitting that defendant No,3 had valid general power of attorney on behalf of the petitioner who was arrayed as defendant No,2 in the suit to dispose of the suit property and to do all necessary acts for the said purpose, that petitioner had filed joint written statement along with defendants Nos.2 and 3 and the terms of compromise are strictly in accord with his stand as spelt out in the said joint written statement. He added that from the fact that he did not challenge it for months as he knew about it and had approved the compromise in terms of which the decree was passed. He lastly submitted that the concurrent judgments of learned Sindh High Court do not reflect any legal infirmity, misreading or non-reading of evidence to warrant interference.
10. To decide whether the judgment and decree had been procured through "fraud" and "misrepresentation" within the meaning of section 12(2), C.P.C. Three questions crop up for consideration. Those are as under:--
(1) Whether the respondent/defendant namely Iqbal Nizamuddin misrepresented before the Court qua the extent of authority given to him by the principal/ petitioner?
(2) Whether the terms of the compromise as spelt out in the application purported to have been filed by the respondents/defendants. Under Order XXIII, rule 3, C.P.C. Dated 27-5-1993 were in derogation to the case of the petitioner as spelt out in the joint written statement filed by him and respondents Nos.1 and 3 filed on 9-9-1979?
(3) Whether the general attorney could appoint on behalf of the Principal (petitioner/defendant No,2) an Advocate with the authority to file an application for compromise in absence of any specific authority delegated by the Principal in the general power of attorney?
11. For a proper appreciation of the questions raised in the preceding paragraph it is necessary to keep in mind the terms of the general power of attorney executed by petitioner on 24th June, 1978 which reads as under:-- "General Power of Attorney ' KNOW ALL MEN BY THESE PRESENTS THAT BY THIS POWER OF ATTORNEY, I, Muhammad Yousaf Siddiqui son of Mr. Muhammad Bashir Hussain Siddiqui, Muslim adult, residing at Karachi, do hereby constitute, make and appoint Mr. Iqbal Nazimuddin, son of Mr. Muhammad Yousafuddin, Muslim, adult, residing at 25 Keken Society, Karachi, whose specimen signatures are given below or its nominee, my true and lawful attorney for me in my name and on my behalf to grant leases upon such terms and conditions and in such manner as he shall think proper, of all the flats, or whole of the plot or any piece or part thereof bearing No,2-T/9-C, Federal '13' Area, Block No,7, Scheme No,16, measuring near about 3794 Sq. Yards, allotted to my sole proprietary concern, Messrs A.Y.
Construction Company, Karachi, which now do and hereafter shall belong to me, or wherein any person or persons or body of persons or body or bodies politic or corporate in trust from me, now have or has or hereafter or may have'any title or in trust for any person or persons of body or bodies politic or corporate whomsoever.
' AND ALSO to manage and improve the said whole plot or any part of the plot and also by him, or by such other person or persons as he, my said attorney, shall think proper from time to time, to appoint for that purpose, to construct flats, multi-storeyed, building or buildings, Town House or houses, Villa or Villas by him or by any person or persons, company or companies, as he may think proper from time to tome. (emphasis is supplied).
' AND ALSO to appear before K.D.A. And represent me, my proprietary concern Messrs A.Y.
Construction Company, Karachi, and do all such acts, deeds, things and matters, which may be required to be done on behalf of my firm in respect of the said plot.
' AND ALSO my said attorney shall have power and authority to appear in Government, Semi- Government and Private Offices and represent me and my said sole proprietary concern and do all those acts, things, deeds and matters which may be required to be done on behalf of me and my said sole proprietary concern.
' AND ALSO to sell, to construct himself or his supervisor, to sub-let the construction job or to sub-let the whole project to sell the whole of my proprietary concern Messrs A.Y. Construction Company to take all such lawful ways and means for obtaining the permission from the respective authorities required for construction of the flats etc. As fully and effectually as I myself might or could use or take, if I were personally present and did the same.
' AND ALSO to ask demand, sue for recovery and receive of and from all and every person persons and person and bodies and body politic or corporate, who are, is or shall or may or may be liable to pay, transfer and deliver the same respectively, all such sums of money, stocks, funds etc. ' AND ALSO my said attorney shall have all the powers and authorities to construct on the said plot by having the loans from Banks, Companies, House Building Finance Corp. And all loan riving agencies or agency and sign all the papers, forms, deeds, documents, etc. Which may be required to be signed for obtaining loans and admits execution of such documents before any of the above said authority. (Emphasis is supplied).
' AND ALSO my said attorney shall have all the powers and authority to complete the construction in any manner he likes but subject to the prescribed rules and regulations of Karachi Development Authority, and for that purpose, he shall have all the powers and authority to sign any agreement, contract etc. As well as apply for transfer of Plan or Plans, sanction etc. To authority concerned.
' AND ALSO my said attorney shall have power and authority to dispose of the plots in any manner he likes for that purpose, he shall have power and authority to sign contract agreement, receipts, challan, forms etc. (Emphasis is supplied).
' AND ALSO to sell, dispose off, call in and convert into money all the plot, flats or part thereof my proprietary concern etc. In any manner he likes for that purpose.
' AND GENERALLY TO do, execute and perform any other act, deed, matter, or thing whatsoever, which ought to be done, executed, or performed or which in the opinion of my said attorney ought to be done, executed, or performed, either in or about or concerning any trust, executor-ship or administration now reposed or hereafter to be reposed in me, or in or about my own concerns, engagements, and business of every nature and kind whatsoever, as fully and effectually to all intents and purposes as I myself could do if I were present, and did the same in my proper person, willing and declaring it to be my full intent, and that all matters and things respecting the same shall be under the full management and direction of the said Mr. Iqbal Nizamuddin. (Emphasis is supplied).
' AND for the further, better and more effectually doing, effecting, executing, and performing of all or any of the matters and things aforesaid, the said Mr. Muhammad Yousaf Siddiqui, do hereby give and grant to my said attorney full powers and authority from time to time to constitute and appoint, and in his place and stead, to put one or more attorneys to do, execute, and perform all or any of such matters, and things as aforesaid; and the same attorney at pleasure again to remove, and another or others in his or their place or places to substitute; and, all and whatsoever the said Mr. Iqbal Nizamuddin, my said attorney or his attorney or attorneys shall do or cause to be done in or about the premises, I, the said Mr. Muhammad Yousaf Siddiqui, do hereby for myself, my heirs, executors, or administrators agree with the said Mr. Muhammad Iqbal Nazimuddin, his executors or administrators to allow, ratify and confirm.
' In witness to whereof I, Muhammad Yousaf Siddiqui, set my respective hands on the date, month and year already mentioned above."
12. It is a common ground between the parties that petitioner Muhammad Yousuf Siddiqui mostly resided abroad and that necessitated the execution of general power of attorney in favour of Iqbal Nizamuddin with regard to the property bearing No,ST-9C Block-7, K.D.A. Scheme No,16, Federal "B"
Area, Karachi. It is further admitted by petitioner and respondent respondents/defendants that defendant No,1 i,e, A.Y. Construction Company Limited was a private limited company, four persons subscribed to Memorandum and Articles of Association and these persons were as under:--
(i) Mr. Iqbal Nizamuddin (general attorney and respondent/ defendant No,3).
(ii). Mr. Abu Muhammad Badar.
(iii) Mr. Yusuf Siddiqui (petitioner).
(iv) Mr. Sabir Ali.
13. It is also not in dispute that the said Company was registered inter alia for acquiring the assets and liabilities of the partnership firm namely A.Y. Construction Company and the only assets possessed by the said partnership firm was Flat Site No,ST-9C, Block-7, K.D.A. Scheme, Federal "B"
Area, Karachi which property is the subject-matter of this suit. It has further come in the written statement that since the sale 'in favour of the respondent/plaintiff could not materialize a contract given to respondent/defendant No,4 Amsa Housing Enterprise Limited to raise construction on the disputed site in accordance with the approved plan (para.8 of the written statement). Keeping in mind the afore-referred circumstantial background a bare perusal of the power of attorney would, indicate that the same was executed to manage the plot with a view to improve it, 'to construct flats, multi-storeyed building or buildings, Town House or Houses, Villa or Villas by him or by any person or persons, company or companies as he may think proper from time to time ... Attorney shall have power and authority to appear in Government, Semi-Government and Private Offices and represent me, my said sold proprietary concern and to do all these acts, things, deeds and matters which may be required to be done... And also to sell, to construct himself or through supervisors, to sub-let the construction job or to sub-let the whole project to sell the whole of my proprietary concern Messrs A.Y. ConstruCtion Company, to take all such lawful ways and means for obtaining the permission from the respective authorities required for construction of the flats etc. As fully and effectually as I myself might or could use or take, if I were personally present ... My said attorney shall have power and authority to dispose of the flats in any manner he likes for that purpose, he shall have power and authority to sign construct agreement, receipts, challan, forms etc. ... To do, execute and perform any other act, deed, matter or things whatsoever which ought to be done, executed or performed or which in the opinion of my said attorney ought to be done, executed or performed ... Do hereby give and grant my said attorney full powers and authority from time to time to constitute and appoint and in his place and stead, to put one or more attorneys to do; execute and perform all or any such matters, and things as aforesaid; and the same attorney at pleasure again to remove and another or others in his or their place or places to substitute...."
14. The recitals referred to in the preceding paragraph show that the primary object of the principal was the improvement of the said property. The raising of flats on the said property and to take all incidental and other necessary steps in order to sell, alienate the flats and to appoint attorney if the situation so required. The general power of attorney nowhere granted him authority to dispose of the entire property by way of a compromise in the pending suit in which petitioner along with two other defendants had filed a contesting joint written statement. In absence of any specific stipulation the general attorney could not assume that power to effect compromise and make a conceding statement in favour of respondent No,4 particularly when he had his own proprietary interest as a partner and Managing Director of respondent/defendant No,1 A.Y. Construction Company Limited. His own interest required that he should have sought special permission from the Principal to effect such a compromise. The act of respondent No,3, to effect compromise in Court in absence of any specific stipulation in the General Power of Attorney was misrepresentation and it had elements of fraud. While dilating on the construction and recital of general power of attorney in this regard this Court in Fida Muhammad v. Pir Muhammad Khan and others PLD 1985 SC 341 at page 344 held as under:-- "It is wrong to assume that every "general" Power-of-Attorney, on account of the said description, means and includes the power to alienate dispose of property of the principal. In order to achieve that object it must contain a clear separate clause devoted to the said object. The draftsman must pay particular attention to such a clause if intended to be included in the Power-of-Attorney with a view to avoid any uncertainty or vagueness. Implied authority to alienate property, would not be readily deducible from words spoken or written which do not clearly convey the principal's knowledge, intention and consent about the same. The Courts have to be vigilant particularly when the allegation by the principal is of fraud and/or misrepresentation.
' The second aspect which needs caution on question of validity of acts under a Power-of-Attorney is that notwithstanding an authority to alienate principal's property, the Attorney is not absolved from his two essential obligations, amongst others:-- --- firstly, in cases of difficulty (and it will be a case of difficulty if the Power-of-Attorney is susceptible to doubt about its interpretation) to use all reasonable diligence in communicating with the principal and seeking to obtain his instructions, and --- secondly, if the agent deals on his own account with the property under agency, e.g., if he purchases it himself or for his own benefit, he, in his own interest, should obtain the consent of the principal in that behalf after acquainting him with all material circumstances on the subject, failing which the principal is at liberty to repudiate the transaction."
' The afore-referred view was reiterated in yet another judgment of this Court in Haji Faqir Muhammad and others v. Pir Muhammad and another 1997 SCM R 1811.
15. Coming to the second proposition we note that petitioner/defendant in para. 8 of the joint written statement filed by him had strongly contested the claim of the plaintiff and had stated that respondent/defendant No,4 had been given a contract to raise construction over the plot in question. It was specifically averred "that defendant No,2 submits that second defendant has entrusted the construction of the flats on the disputed Flat Site in accordance with the approved plans to defendant No,4. This step was taken after the negotiations with the plaintiff fizzled out as explained above. The terms of the alleged compromise as given in the application under Order XXIII, rule 3, C.P.C. Purported to have been filed on his behalf are in derogation to the aforesaid averments made in the written statement inter alia the title of the plot had been ceded in favour of defendant No,4. It reads as under:- "6. That the contents of para. 8 of the plaint are denied. The construction work was started by defendant No,4 in 1977 in accordance with the approved plan and it is denied that the construction is being carried out by defendant No,4 as a result of which secret and collusive arrangement with the other defendants. The rest of the allegations are answered by defendants 1 to 3 as the same related to them. The plaintiff has failed to make out a case for specific performance of all damages inasmuch as that, he has failed to show that there was any agreement between him and defendants Nos.1 to 3 which could be enforced in the eye of law or as an alternative damages could be granted and on account of this suit itself is liable to be dismissed."
16. If the averments made in para.8 of the written statement and para.2 of the afore-referred application are put in juxtaposition, it is abundantly clear that whereas in the former the status of respondent/defendant No,4 was merely that of a contractor to raise construction on the plot, in the latter application for compromise petitioner/defendant No,2 divested himself of the ownership of the plot which was the sole proprietary concern of the firm (defendant No,2) in favour of respondent/defendant No,4 without any consideration. The finding of the learned Single Judge of the Sindh High Court which had been affirmed by Division Bench "that the compromise has only confirmed what has already been described in paragraph 8 of the joint written statement" is factually incorrect and amounts to misreading of material evidence on record.
17. There is yet another aspect of the matter. Defendant No,2 i,e, A.Y. Construction Company had two partners namely petitioner and Mr. Abdullah Khan. The latter had died before the institution of the suit. The testimony of respondent/defendant Iqbal Nizamuddin, the General Attorney, indicates, that neither the petitioner/principal nor the legal heirs of the said Abdullah Khan were appraised of the compromise. While appearing as D.W.3 respondent/defendant Iqbal Nizamuddin admitted as under:-- "....I did not 'inform in writing to Mr. Yusuf Siddiqui about the compromise. It is correct to say that I did not inform the legal heirs of other deceased partner, Abdullah Khan about this compromise. I cannot give any proof that Mr. Yusuf Siddiqui had this knowledge of compromise. It is correct that the compromise application was neither signed by any partner nor by any legal heir of the deceased partner. I did not pay any amount either to Mr. Yusuf Siddiqui or to any of the legal heirs of the deceased partner at the time of signing the compromise..."
' The afore referred statement further confirms the element of fraud and misrepresentation.
18. Coming to the third and last proposition "whether Iqbal Nizamuddin could appoint an attorney on behalf of petitioner/ defendant No, 2 of which he was general attorney to file an application for compromise" we have noted that in terms of the general power of attorney the principal had not delegated the authority to effect a compromise in a suit. That being so, the agent/attorney namely Iqbal Nizamuddin could not have engaged a counsel/attorney for a purpose for which he had not been vested the authority. An agent cannot sub-delegate a power, which is not delegated to him by the principal .
19. For what has been discussed above we are of the view that the concurrent judgments cannot be sustained in law as the finding rendered reflects misreading of evidence and non-application of law laid down by this Court. The judgment and decree dated 31-5-1993 indeed was procured through misrepresentation and is squarely hit by mischief clause of section 12(2), C.P.C. Resultantly this petition is converted into appeal and allowed. The impugned judgment is set aside. The civil suit shall be deemed pending and decided within six months from the receipt of this judgment. No order as to costs.