1. ' Plaintiff filed suit for declaration, injunction and damages against the defendants and sought fc following reliefs:--
(1) That the judgment and decree be passed against the Defendant No,1 and in favour of the Plaintiff for US$ 98,385.00 with mark-up at the rate of 17% per annum from the date of the suit till the realization of the amount and for Rs,25 million and damages.
(2) That an order declaring the purported appointment of any other person/party as agent in respect of the Contract/Tender No, 1073-3(Lot-I) is illegal, mala fide, and unethical and ineffective.
(3) Permanent injunction restraining the Defendant. No,1 from appointing/engaging any other person/ persons as agent in respect of the Contract/Tender No,1073-3 (Lot-I).
(4) Injunction restraining the defendants No,2 to 5 from passing any order or taking any action for the payment/release/remittance and disbursement of the retention money and to stop payment pertaining to the Contract/Tender No,1073-3 (Lot-I) to the Defendant No,l.
(5) Cost.
(6) Any further better relief which deems approve to by this Hon'ble Court.
2. ' In the plaint it is stated that by an agreement, dated 29-8-1990 with defendant No,1, who appointed plaintiff, a private limited company, as sole and exclusive agent to handle the sale of ACSR Drake Conductors for TarbelaLahore 500 KV Transmission Line Project (Contract/Tender No,1073-3 (Lot-I). In terms of the agreement, defendant No,1 undertook to pay plaintiff 4% of the total contract including escalation in the price as commission to plaintiff, which was subsequently reduced to 2.9%. The Total contract price was US$ 11,565,024. The plaintiff filed the suit for recovery of US$ 98,385, being the outstanding amount of commission due and payable by the defendant No,1 with mark-up at the rate of 17% per annum. Defendant No,1 filed written statement and while denying the allegations stated that the defendant No,1 has paid US$ 247,632 to the plaintiff and a balance US$ 87,754, payable to plaintiff, has been withheld by the defendant No,1 as plaintiff failed to extend requisite cooperation or assistance for completion of the contracted work. The defendant No,5 also filed written statement, but no relief has been claimed against the said defendant.
3. ' On the basis of the pleadings following issues were framed:
(1) Whether by agreement, dated 29-8-1990, executed by the Plaintiff and the defendant, the Plaintiff is appointed sole and exclusive agent of the defendant No,1, in respect of items manufactured/exported by the defendant No,1, for Pakistan?
4. (2} What is the amount of commission already received by the plaintiff?
(3) Whether the Plaintiff committed breach of Clause 5 and 6 of the Agreement, dated 29-8-1990, and if so to what effect?
(4) Whether the Plaintiffs are not entitled to the balance outstanding amount of commission?
(5) Whether the defendant No,1 has appointed some other party as its agent in respect of Contract/Tender No,1073/3 (Lot-I), if so, its effect?
(6) To what amount of damages and compensaticth, if any, the Plaintiff is entitled from the Defendant No,1?
(7) What should the decree be?
5. ' On behalf of the plaintiff, plaintiff's Managing Director, namely, Syed Najmul Hassan appeared and gave evidence and produced agreement as Exh.5/ 1, telex message as Exh.5/2, contract agreement as Exh.5/3, telex message as Exh.5/4, four bills-of-lading as Exs.5/5 to 5/8, four invoices as Exhs. 5/9 to 5/12, four telexes as Exhs.5/13 to 5/16, letters, dated 7-10-1991, 8-10-1991, 10-10-1991, 15,10-1991 and 17-10-1991 as Exhs. 5/17 to 5/21, 13 telegrams as Exhs. 5/22 to 5/34, letters, dated 28-12-1991 and 8-2- 1992 as Exhs. 5/36 and 5/37, telegram as Exh. 5/38, letter, dated 13-4-1992 as Exh.5/39, 5 invoices as Exhs.5/40 to 5/44 and legal notice as Exh.5/45. The plaintiff's witness was cross-examined by the learned counsel for defendant No, 1.
6. ' After recording of the evidence, the learned counsel for defendant No,1 filed an application under section 151, C.P.C. (C.M.A. No, 5887/03) and prayed that additional issue "Whether the suit has been instituted by authorized person? Be framed. The learned counsel for the plaintiff waived notice of the said application and stated that the plaintiff has no objection if the additional issue be framed.
7. After framing the additional issue, the parties were asked whether they want to lead any additional evidence in support of the additional issue framed on 22-10-2003. The learned counsel for the plaintiff stated that the plaintiff may be allowed to place on record Memorandum and Articles of Association, to which the learned counsel for the defendant No,1 gave his no objection and with the consent of the parties Memorandum and Articles of Association was exhibited as Exh.5/49 and placed on evidence filed. The learned counsel for defendant No,1 stated that defendant No, 1 does' not want to produce any evidence and closed the defendant No, l's side.
8. ' Heard Mr. Rizwan Ali Dodani, learned counsel for the plaintiff and Mr. Zia-ul-Makhdoom, learned counsel for defendant No,1.
9. ' My findings on the issues are as under:- Issue No,1-A: ' Mr. Zia-ul-Haq Makhdoom, learned counsel for defendant No,1 mainly argued on the additional issue and contended that the plaintiff has failed to produce resolution passed by the Board .Of Directors whereby the plaintiff-Company decided to institute the suit and authorized its Managing Director to sign and verify the plaint. In support of his contention the learned counsel for defendant No,1 relied upon the cases reported in 2003 CLD 1497, PLD 1997 Karachi 62, PLD 2003 Karachi 156, PLD 1999 Karachi 260, PLD 1991 SC 550(sic) and PLD 1959 SC 258.
10. ' On the other hand, learned counsel for the plaintiff argued that the Managing Director of the company has been authorized by the Memorandum and Articles of Association to manage the business and affairs of the company and he' has been authorized to institute the suit, therefore, there is no need of any separate resolution to be passed by the Board of DirectoRs, The learned counsel in support of his contention relied upon the cases reported in PLD 1969 SC 684 and 1987 CLC 367.
11. ' I have gone through the case-law relied upon by the learned counsel for the parties as well as their respective arguments.
12. There is no cavil to the proposition that a company, who is a juristic person and not natural person, administer its business affairs by its Board of DirectoRs, The principles laid down in the case-law relied upon by the learned counsel for defendant No,1 can be summarized that a company can institute the suit by passing a resolution and by authorizing any of its officers/directors to file, sign and verify the same, however, no case-law has been cited by the learned counsel that even if any person or director has been authorized to institute suit, sign and verify plaint by Articles of Association, still instituting suit, company ought to have passed fresh resolution in this regard.
13. ' In the present case the position is a little different. The .Plaintiff-Company is a private limited company and all the directors of the company are members of same family. From Exh.5/49 it appears that the company has four directors and wife and two sons of the Chief Executive are its directoRs, ' In order to appreciate the point in question I would like to reproduce clause 16 of the Memorandum of Association and clause 86 of the Articles of Association, which read as under:-- "(16) To institute, conduct, defend, compromise. Refer to arbitration or abandon legal and other proceedings and claims by or against the company."
14. "(86) The Chief Executive shall have the powers of engagement and dismissal of Managers, and other officers, assistants, clerks, labourers and employees of the Company and shall have powers and control over the management of the business of the Company with full power to do all acts, matters and things deemed necessary proper or expedient for carrying out the business and concerns of the Company and to make and sign all contracts and to draw, sign, accept, endorse and negotiate, on behalf of the Company all bills of exchange, promissory notes, hundies, cheques, drafts. Government Promissory Notes and other Government paper and securities and all other instruments as shall be necessary, proper or expedient for carrying on the business of the Company and to exercise all the powers, authorities and discretion of the Company except only such of them as by the Companies Ordinance for the time being in force, or these presents are expressly directed to be exercised by the Board of Directors, as by the shareholders in the General Meeting. All moneys belonging to the Company shall be paid to such bankers as the Directors shall deem expedient and all receipts for moneys paid to the Company and all vouchers of payments made by the Company shall be signed by the Chief Executive whose signatures shall be effectual discharge for the moneys therein stated to have been received or paid.
15. The Chief Executive may delegate all or any of the Powers to such other Directors, Managers, Accountants 'or other persons as he may think fit, and shall have power to grant to any such persons such Powers of Attorney as he may deem expedient and such powers at pleasure to revoke."
16. From a perusal of the above clauses and on heading the same together, it appears that the Chief Executive of the plaintiff-Company had been authorized by the Memorandum and Articles of Association with almost all, the powers to manage the affairs of the company including powers to control the management of the business of the company with full power to do all acts, deeds and things deemed necessary, proper and expedient for carrying out the business and concerns of the company and to exercise all powers, authorities and discretions of the company except only such of them as by the Companies Ordinance for the time being in force, are expressly directed to be exercised by the Board of director's, ' To institute a suit or take legal action for the recovery of outstanding debts of the company is also one of the main affairs of the company and if a director has been authorized specifically by the Memorandum and Articles of Association to manage the business of the company and to institute the legal proceeding then in my humble opinion there is no need that a separate resolution ought to have been passed by the Board of Directors for instituting the suit and authorizing the same person who has been authorized by Memorandum and Articles of Association, again to institute the suit.
17. ' In the instant case the plaintiff-Company is a private limited company, between the members of the same family. The plaint has been signed by the Managing Director of the company, who is also happened the head of the family. Article 86 of the Articles of Association if read alongwith clause 16 of the Memorandum of Association, which clearly provided that the company can institute, conduct, defend, compromise, refers to the arbitration or abandon legal or other proceedings and claims by or against the company, the Managing Director can institute the suit on behalf of the plaintiff-Company without passing any resolution of the Board of Directors as he has been authorized by the Memorandum and Articles of Association itself.
18. The Articles of Association have a contractual force between the company and its members as also between members inter se in relation to other rights as such members and accordingly parties are bound by such contractual obligations, however, in case there is any conflict between any provision of Memorandum and. Articles of Association and Act itself, then Act would override provision in the Memorandum or Articles to the extent of repugnancy between the two.
19. The Memorandum and Articles of Association is like a' constitution of the company and all the directors of the company have to act within the parameters fixed by it and if certain powers have not been conferred expressly by the Memorandum and Articles of Association, then the Board of Directors can, in their meeting, take decision in this regard, and if decided, can delegate powers to any director or any other person of their choice and in some case decision can be taken in the general meeting of shareholders, However, if any person already has such authorities or powers under Memorandum and Articles of Association, then there is no need of again delegating the same powers by resolution.
20. ' For the foregoing reasons I answer this issue in affirmative.
21. ' ISSUE No,2: ' The defendant had admitted execution of agreement (Exh.5/3). The plaintiff stated in his evidence that plaintiff was appointed as sole and exclusive agent to handle the sale of ACSR Drake Conductors to defendant No,2 for Tarbela-Lahore 500 KV Transmission Line project and same has not been denied by the defendant by producing evidence. I, therefore, decide this issue in affirmative.
22. ' ISSUES Nos. 2 TO 5: ' The plaintiff's witness in his cross-examination admitted the receipt of US$ 247,632 as commission from the defendant and defendant also stated that defendant had paid only US$ 247,632 as commission to plaintiff. The plaintiff failed to produce any evidence that plaintiff had given US$ 11,000 as loan to defendant and adjusted the same from the amount received from the defendant. I accordingly answer these issues in negative.
23. ' ISSUE No,6: ' The burden to prove damages lies upon the plaintiff. Plaintiff failed to produce any evidence that plaintiff suffered any damages due to cancellation of contract. Accordingly the issue is answered in negative.
24. ' ISSUE No,7: ' For the foregoing reasons the plaintiff's suit 'is decreed for the sum of US$ 87,754 with no order as to costs. I am not granting interest on the decretal amount as amount was retained by the defendant No,5 under the order of the Court on the application filed by the plaintiff.