1. ' GULZAR AHMED, J.---C.M.A. No,219 of 2004 is filed by the plaintiff with prayer to restrain the defendant No,1 from selling/transferring or agreeing to sell/transfer the suit shares to any 3rd party or from dealing with aforesaid shares in any manner whatsoever that defeats or intended to defeat the plaintiffs right, title or interest in the said shares and also to restrain the defendant No,2 from registering the sale/transfer of the said share in the name of defendant No,1 or in the name of any person claiming any right, title or interest in the said shares through or under the defendant No, 1.
2. Counter-affidavit to this application has been filed by the defendants Nos.1, 2 and 3 separately. No rejoinder is filed by the plaintiff.
3. ' The facts alleged in the plaint shows that defendant No,1 possessed vast experience in petroleum refinery having worked in Gulf Oil, Singapore and also in Attock Refinery Limited. The sponsors of defendant No,2 company have decided to establish a petroleum refinery in Pakistan but had no experience of this business and therefore, desired to enlist the expertise of the defendant No,
1. The sponsors through letter dated 1-3-1994 invited the defendant No,1 to join them in the establishment and running of petroleum refinery in Pakistan and offered to defendant No,1 a joining-in-incentive consisting of 1,085,000 fully paid ordinary shares of Rs,10 each of proposed company to be issued either in the name of defendant No,1 or his nominee. The sponsors also desired defendant No,1 to join the Board of Directors and to head the company as its Chief Executive Officer for which the compensation package will be settled by mutual consent at the time of financial closure.
4. ' This letter also contained stipulation that "It should by noted that would you or your nominee at any stage decide to dispose off any of shares the undersigned will have the right of first refusal to purchase these shares". The letter was signed by defendant No,3.
5. ' It is alleged in the plaint that defendant No,2 was incorporated on 9-1-1995 by the name of Arkchon Petroleum Company Limited which name was subsequently changed to Bosicor Pakistan Limited. The defendant No,1 joined the defendant No,2 in April, 1995. In June, 1995 defendant No,1 gave certain reason for delivery of the agreed shares to him pursuant to which share Certificate No,000031 bearing distinctive numbers 25187312-26272311 being 1,085,000 shares (hereinafter referred to as the said shares) of plaintiff s shareholding together with verified transfer deed, were d 'livered to the defendant No, 1.
6. ' The defendant No,2 wrote letter dated 21-5-1995 to the defendant No,1 saying that the said shares have been allocated to him on the condition that he will remain actively involved in the management of the company for at least five years from the commencement of production. The defendant No,1 was required to confirm his acceptance to the above term. Again defendant No,2 addressed letter dated 22-5-1995 to the defendant No,1 informing him that it has been decided to pay remuneration of Rs,50,000 per month to the defendant No,1 from 1-4-1995 which will be credited to his name in books of the company and allowed to accumulate until the financial close when it will become due and paya,ble. Thereafter the remuneration shall be determined by the Board of Directors. On 28-8-1996 the defendant No,2 wrote letter to the defendant No,1 whereby the terms and conditions of the letter dated 21-5-1996 (the year perhaps is 1995 refer para.2.10 of the plaint) were modified. The condition of defendant No,1 being actively involved in the management of the company for at least five years from the commencement of production was dropped. The matters with regard to salary are then mentioned. The defendant No,1 was required to sign this letter in confirmation of acceptance of modified terms and conditions. The defendant No,1 wrote letter dated 30-8-1996 wherein he complained that he is working for the project at zero real compensation; the manner in which the project was being handled, loss of opportunities to him and even creditability in the industry by associating in the project which is still adrift and faces horrendous obstacles. For these reasons and for the reasons of recent letters of the company, he resigned from the post of CEO and stated that his service will be available at a price that needs to be negotiated and that the sign up bonus has already been earned by him. The defendant No,2 vide its letter dated 30-9-1996 did not accept that the defendant No,1 has earned the sign-up bonus as he has not served for a minimum period of five years until the commencement of production. He was therefore, asked to surrender the share certificate and blank transfer deed forthwith and in return offered to pay him Rs,850,000 which stood accumulated towards his remuneration. The defendant No,1 through his letter dated 7-10-1996 did not agree with the defendant No,2's letter dated 30-9-1996 and made reference to letter dated 1-3-1994. After this, there is complete lull between the parties until the defendant No,1 wrote his letter dated 22-12-2003 to the Chairman of defendant No,2 stating that he would like to dispose of his shareholding of 1,085,000 fully paid shares immediately and as per communication of 1-3-1994, offered right of first refusal to purchase them and asked for reply in 3 days whereafter he will consider himself free to sell them to third party/parties.
7. ' The defendant No,3 responded through his letter dated 26-12-2003 where he took the stand that the letter dated 1-3-1994 was written by him in his personal capacity before company was incorporated or he became Chairman of the company. The terms of defendant No, 1 's contract with the company are laid down in the letter dated 21-5-1995. The said shares are registered in books of the company in the name of plaintiff and he has no title to them and any attempt to sell them will amount to fraud as he has failed to deliver to the company the benefit of the consideration. This suit was then filed on 15-1-2004 with the application in consideration.
8. ' Mr. Salman Talibuddin, learned counsel for the plaintiff took me through the record of the case and contended that the defendant No,1 has not earned the joining-in-incentive shares that were delivered to him as he has failed to fulfil the terms of his employment that was for the period of 5 years from the date of commencement of production by the defendant No,2. He stated that the plant was imported in 1999 and the refinery was established in 2002 and public offering of shares of defendant No,2 company was made on May 17th and 18th 2002. The defendant No,1 having resigned on 30-8-1996 practically did no work for the defendant N6.2 and therefore, the shares lying with him are without consideration.
9. ' On the other hand Mr. Munib Akhtar, learned counsel for the defendant No,1 contended that the suit is time-barred; that the plaintiff has approached for equitable relief after much delay; that the suit is collusive between the plaintiff and defendants Nos.2 and 3; that the shares are good under the Sale of Goods Act and their title passed on delivery; plaintiff could have sued for money compensation; and that the suit is barred, under section 42 of the Specific Relief Act as there is no consequential relief of possession of shares. On merits lie has stated that the defendant No,1 has joined employment of the defendant No,2 and performed his part and therefore, has earned the said joining-in shares. He further stated that the condition of first refusal for selling of the share has been complied with inasmuch as the defendant No,3 has refused to purchase the said shares from the defendant No,
1. He has stated that the injunction application is liable to be dismissed. In support of his submission he has relied upon the cases (1) Muhammad Buta v. Habib Ahmed PLD 1985 SC 153; (2) Zeba v. Member-III Board of Revenue 1986 CLC 233; (3) N. Y. Corporation (Pvt.) Ltd. v. Messrs. Erum Developers and 2 others PLD 2003 Kar. 222; (4) Iqbal Ahmed v. Col. Abdul Kabir 2005 YLR 1916; (5) Mst. Khurshid Bibi v. Province of Punjab and another 1987 CLC 242; (6) Messrs Petrocommodities (Pvt.) Ltd. v. Rice Export Corporation of Pakistan PLD 1998 Kar.1; (7) Haji Abdul Sattar Chapri v. Secretary, Karachi Grains and Seeds Merchants Group and another 1991 MLD 2697;
(8) Muhammad Saeed v. Syed Munawar Shah and 5 others PLD 1973 Peshawar 80; (9) Farmanullah and others v. Qalandar and 5 others 1999 YLR 1610; (10) Kamud Ranjan Banerjee v. Manabendra Banerjee AIR 1974 Calcutta 342 (V61 C 890) and (11) Official Assignee, Bombay v. Madholal Sindhu AIR (34) 1947 Bombay 217 (C.N. 67).
10. ' In rebuttal Mr. Salman Talibuddin, learned counsel for the plaintiff has contended that the suit is not time-barred as the limitation for suit for declaration under Article 120 of Limitation Act is 6 years and that the right to sue is accrued to the plaintiff on 22-12-2003 when the defendant- No,1 intended to sell the said shares. The learned counsel further argued that there is no delay in seeking equitable relief and further asserted that there is no collusion between the plaintiff and defendants Nos.2 and 3; that monitory compensation is not an adequate relief and that there is no requirement for the plaintiff to seek relief for possession of the said shares. In support of his submission he has relied upon the cases of (1) Sardar Muhammad and 2 others v. Haider Zaman and 3 others PLD 1993 Peshawar 81; (2) Muhammad Ali and 7 others v. Sakar Khanoo Bai PLD 1984 Kar. 97; (3) Wali and 10 others v. Akbar and 5 others 1995 SCMR 284 and (4) Adamjee Insurance Company Limited and others v. Muslim Commercial Bank Ltd. 2005 SCMR 318.
11. ' I have considered the submissions of the learned counsel and gone through the record.
12. The question which needs determination is whether prima facie the defendant No,1 has acquired title to the said shares or they continue to vest in the plaintiff. Admittedly, the said shares were offered by the sponsors of the defendant No,2 to the defendant No,1 as joining-in-incentive for establishment and running of a petroleum refinery in Pakistan. Besides, the sponsors desired the defendant No,1 to join the Board of Directors and to head the company as its CEO for which the compensation package was to be settled by mutual consent. There was provision that if the defendant No,1 or his nominee decide to dispose of any shares, the defendant No,3 will have the right of first refusal to purchase these shares. These stipulations were continued in letter dated 1-3- 1994 written by the defendant No,3 on behalf of the sponsors of the company. The defendant No,1, as it appears from the record accepted the offer made in the letter dated 1-3-1994 and joined the company in April, 1995. The effect of joining of the defendant No,1 with the company prima facie entitled him to the said shares. The letter dated 21-5-1995 of the company signed by the defendant No,3 by which the allocation of the said shares was made to the defendant No,1 with a condition that the defendant No,1 will actively remain involved in the management of the company for at least 5 years from the commencement of production, on its face appears to be a unilateral one and purports altogether to change the nature of contract i,e, in place of the said shares being joining-in-incentive to that of making it a consideration for a bond for service of 5 years. I have said this change to be unilateral as the record does not say that it was asked by the defendant No,1 nor there is any acceptance of his to this change in contract and no inference in this respect, can justifiably be made. Similarly, by letter dated 22-5-1995 the defendant No,1 was informed that the company has decided to remunerate him as working Director from 1-4-1995 till the opening of the letter of credit in a sum of Rs,50,000 per month which will be credited to his account in the books of the company and allowed to accumulate until the financial close when it will become due and payable and thereafter the remuneration shall be determined by the Board of Directors. This too was in apparent violation of the initial contract between sponsors and defendant No,1 as contained in the letter dated 1-3-1994 which provided that the compensation package of the defendant No,1 will be settled by mutual consent.
13. ' By further letter dated 28-8-1996 the company again on its own tried to change the contract between sponsors and the defendant No,1 by which the bonding period of 5 years was omitted while the remuneration was kept the same as communicated in the letter dated 22-5-1995. In response to this letter, the defendant No,1 resigned from the position of CEO and took up a stand that sign-up bonus has been earned by him. The company disputed this position by its letter dated 30-9-1996 but thereafter took no steps whatsoever for retrieving the said shares from the defendant No,1 until the suit was filed on 15-1-2004.
14. As is stated in the plaint the share certificates comprising of the said shares were delivered to the defendant No,1 along with blank verified transfer deed in the month of June, 1995. The shares are the goods as defined in subsection (7) of section 2 of the Sale of Goods Act, 1930 and the property in them passes in the same manner as is provided in the Act for the passing of property in the goods. In the case of Maneckji Pestonji Bharuch v. Wadilal Sarabhai & Company AIR 1926 Privy Council 38, the rule laid down regarding the transfer of the property in the share is as follows:- "So soon, therefore, as Arajania, acting for charucha, handed Gora the certificates and transfers, and Gora accepted them and gave the cheque, the goods became ascertained goods; the sale was complete and the property passed. From that time onward Bharucha and Arajania could only sue Gora for the cheque, or for the price of the shares unpaid in respect that the cheque had not been honoured. They had no longer any j us in re of the certificates and transfers. They had no statutory lien, for they had parted with possession, and, consequently as they had no contract with defendants Nos.2 and 3, they could not sue them for delivery of the shares, whether the defendants had got good title as against Gora or had not."
15. ' Similar view was also followed in the case of Official Assignee, Bombay v. Madholal Sindhu AIR (34)
16. 1947 Bombay 217.
17. As discussed above, insofar as the question of transfer of the shares and their acquiring title, it is clear that on delivery of share certificates along with blank transfer deeds comprising of the said shares, the property in the said shares stood transferred by sponsors to the defendant No,1 They had no lien or jus in re (a right in a thing) in the said shares and cannot seek their return but can sue the defendant No,1 merely for its consideration. This is the apparent position of law emerging from the transaction that has been effected between sponsors and the defendant No, 1.
18. ' In the plaint the plaintiff has made the following prayer:--
(i) Make a declaration that legal and beneficial right, title and interest in the shares vests in the plaintiff and not the defendant No,1;
(ii) Issue a permanent injunction restraining the defendant No,1 from selling/transferring or agreeing to sell/transfer the aforesaid shares to any third party or from dealing with the aforesaid shares in any manner whatsoever that defeats or is intended to defeat the plaintiffs right title and interest in the aforesaid shares;
(iii) Issue a permanent injunction restraining the defendant No,2 from registering the sale/transfer of the aforesaid shares in the name of the defendant No,1 or in the name of any person claiming any right title or interest in the aforesaid shares through or under the defendant No,1;
(iv) Grant any other better or further relief as may be deemed appropriate by this Honourable Court in the facts and circumstances; and
(v) Grant costs."
19. It may be noted that in the sponsors' letter dated 1-3-1994 whereby the offer of the said shares was made to the defendant No,1 the stipulation that should the defendant No,1 or his nominee at any stage decide to dispose of any shares, the defendant No,3 will have right of first refusal to purchase the shares, further makes clear the transaction that on delivery of shares with blank transfer deeds, the property in them will pass to the defendant No,1 and the defendant No,3 will have a right of first refusal to purchase the shares. The word "purchase" is of much significance as it provided for payment of consideration for the shares by the defendant No,3 to the defendant No,1 as owner of the said shares.
20. ' The main contract between the sponsors and defendant No,1 was contained in letter dated 1-3- 1994 and the subsequent letters of the company dated 21-5-1995, 22-5-1995 and 28-8-1996 being all unilateral without mutual consent of the parties prima facie had no bearing to the original contract dated 1-3-1994 and this even also appears from the record as the defendant No,1 has given no consent to the letters dated 21-5-1995, 22-5-1995 and 28-8-1996. On tentative assessm ent as it appears that no sooner the defendant No,1 joined the employment of the company, the company started unilaterally fixing defendant No, l's terms of employment by successive letters without at all bothering to look back and see as to what actually was the contract with the defendant No, 1.
21. It may be noted that prayer made in the suit is in respect of the shares and not in respect of the consideration which was to flow from the transfer of the said shares. It has already been noted above that on delivery of the shares with blank transfer deeds, the property in the shares stood transferred to the defendant No,1 and the sponsors cease to have any lien or jus in re in the said shares and even cannot claim their return. What they can sue for was only for the consideration that was to be delivered by the defend ant No,
1. The suit is not filed for delivery of such considera Hon. The defendant No,1 has asserted his right to the ownership of said shares on 30-8-1996 and despite request of the company contained in its letter dated 20-8-1996 to surrender the said shares, no further steps were taken by the company and no legal proceedings initiated by it against the defendant No,
1. It was only after the defendant No,1 wrote its letter dated 22-12-2003 to the defendant No,3 in which he desired to dispose of the said shares and offered the defendant No,3 right of first refusal to purchase them that the plaintiff immediately rushed to the Court and filed this suit on 15-1-2004. The plaintiff has filed the suit for declaration that legal and beneficial right, title and interest in the shares vest in it and not defendant No,
1. Such relief of declaration will be governed by Article 120 of Limitation Act which provides 6 years when right to sue accrues. The right to sue accrued to the plaintiff on 30-8-1996 when the defendant No,1 took a categorical stand that he has already earned the sign-up bonus. The period for F filing of the suit for declaration will thus expire on or about 31-7-2002. The plaintiffs stand that the limitation period should be counted from the date i,e, 22-12-2003 on which the defendant No,1 wrote his letter offering right of first refusal to purchase the said shares to the defendant No,3, in my view is not correct as by this letter the defendant No,1 only complied with his own contractual obligation as contained in letter dated 1-3-1994. As stated above, the title to the said shares stood acquired by the defendant No,1 when they were delivered with blank transfer deed in or about June, 1995 and even if any claim was to be made by the plaintiff in respect of the said shares against the defendant No,1 the same has to commence within 6 years from 30-8-1996 the date on which not only the defendant No,1 resigned from the position of CEO of the company but also asserted that he has earned the said shares.
22. Obviously the suit filed on 15-1-2004 was hopelessly out of time.
23. ' For what has been discussed above, not only I find that the application under consideration is altogether misconceived and not maintainable and is dismissed, at the same time I find that the plaint is hit by the provisions of Order VII, rule 11, C.P.C. For two reasons as has been discussed above i,e, that the plaintiffs remedy was only to sue for consideration the said shares and not in respect of the said shares and that the suit is hopelessly time-barred. I, therefore, reject the plaint under Order VII, rule 11, C.P.C.
24. ' The plaintiffs' counsel during his submission has requested that in the event the Court decides against the plaintiff, the order may be suspended for a period of months. In my view, the suspension of the order cannot be made for such a long period and allowing of three week's time will suffice. This order therefore, will not become operative until expiry of three weeks from its announcement.