ANWAR ZAHEER JAMALI, J.--- This appeal under section 15 of Ordinance X of 1980 is directed against the order, dated 14-4-2005 passed in Judicial Miscellaneous No,14 of 2005 (Messrs Gama Silk Mills (Pvt.) Ltd. v. Abdul Salam and others), whereby an application under section 12(2) read with section 151, C.P.C. moved by the appellant, praying therein to set aside the compromise decree, dated 17-1-2005 passed in Suit No,126 of 2004 was dismissed.
2. Relevant facts leading to this litigation are that on 12-2-2004 respondent No,1 filed a suit for specific performance and injunction against respondents Nos,2 and 3 in respect of factory built over Industrial Plot bearing No,F-424, measuring 0.65 acres, plus extended land of 0.11 acres, along with all the machinery installed thereon. Such claim of respondent No,1 was based on the agreement dated 22-12-2003, with the respondent No,2, which provided the sum of Rs,5,50,00,000 as total sale consideration.
3. During the pendency of this suit respondent No,4, being supplier of machinery on lease, was also joined as defendant No,3 in the suit.
4. On 17-1-2005, an application under Order XXIII, rule 3, C.P.C. duly signed by the respondents Nos,1, 2 and 4 was submitted before the learned Single Judge on the basis whereof the suit for specific performance and injunction instituted by respondent No,1 was decreed in the terms contained in the said application, which read as under:-- "Accordingly, it is hereby ordered that the suit be and is hereby decreed against defendants Nos,1 and 3.
"(1) That the defendant No,1 shall transfer the subject property, being a factory built on Industrial Plot of land bearing No,F-424 measuring C.65 acres plus extended land of 0.11 acres situated within the jurisdiction of S.I.T.E., with complete construction thereon and machineries installed therein, as inspected and listed by the Nazir under his report dated 20-2-2004 (hereinafter referred to as the "Subject Property") to the plaintiff for the total agreed sale consideration of Rs,55,000,000 (Rupees fifty-five million only) (hereinafter referred to as the "total sale consideration").
(2) That the defendant No,1 acknowledges that he has already received an amount of Rs,5,500,000 (Rupees five million five hundred thousand only) as part payment towards the total agreed sale consideration of the subject property.
(3) That an amount of Rs,31,100,140 (Rupees thirty-one million one hundred thousand and one hundred forty only) out of the total sale consideration shall be paid by the plaintiff to the defendant No,3 for settlement of the liabilities of defendant No,1 towards defendant No,3 in respect of the lease rentals for the leased assets, and on receipt of this payment by defendant No,3, the defendant No,3 undertakes to transfer the title and ownership of all the leased assets in favour of the plaintiff. The defendant No,3 further confirms that on receipt of the said amount of Rs,31,100,140 no further amount shall be outstanding in respect of the leased assets and the same shall stand transferred in favour of the plaintiff. It is further clarified that the amount deposited by the plaintiff with the Nazir of this Honourable Court in the present suit shall be res to ensure that the total amount paid to the defendant No,3 is Rs,31,100,140.
(4) That the balance sale consideration of Rs,18,399,860 (Rupees eighteen million three hundred ninety-nine thousand eight hundred sixty only) shall be leased to the defendant No,3 and the difference shall be paid by the plaintiff to defendant No,3 so apaid by the plaintiff to defendant No,1 on simultaneously transfer of the subject property, free from all claims and encumbrances in favour of the plaintiff within a period of 25 days from the date of this compromise application. It is clarified that the amount of Rs,31,100,140 as suggested above, shall also be paid to the defendant No,3 simultaneously on the transfer of the subject property in favour of the plaintiff.
(5) That the break-up value of land and building for the purpose of registration and transfer is as under:-- Rs,12,500,000 (Rupees twelve million five hundred thousand only) for Land and Building for which a deed of assignment will be registered by the defendan Rs,42,500,000 (Rupees forty-two million five hundred thousand only) for plant and machinery.
(6) That defendant No,1 shall assist and fully cooperate with the plaintiff for mutation of the subject property including extended land of 0.11 acres in favour of the plaintiff with defendant No,2 i,e, Sindh Industrial Trading Estate Limited, Karachi.
(7)That the defendant No,1 shall clear all outstanding dues of the subject property and convey in favour of the plaintiff with clear and marketable title and hand over its vacant and peaceful possession together with original documents of title.
(8)That the costs of stamp duty, registration and transfer fees shall be borne by the plaintiff.
(9) That on failure of the defendants to transfer the subject property in favour of the plaintiff, the Nazir shall be empowered to take necessary steps for transfer of the subject property in favour of the plaintiff on the plaintiff depositing the balance amount of total sale consideration with the Nazir of this Honourable Court."
It is hereby further ordered that the suit is hereby dismissed against defendant No,2."
5. Subsequent to the passing of such decree on 28-3-2005, an application under section 12(2) read with section 151, C.P.C. was moved by the appellant before the learned Single Judge, being Judicial Miscellaneous No,14 of 2005. In nutshell, case of the appellant in the said application was that initially factory plot of land belonged to the respondent No,2, but in the year 1987, on formation of registered partnership firm "Messrs Gama Industries" respondent No,2 ceased to be the owner of said plot, where machinery was installed by other partners of the firms, and respondent No,1 had acquired 40% share in the firm, while three partners held shares as per their investment. On 30-6- 1994 the partnership firm was dissolved and outsider partners were given their shares but one partner Mst. Tasneem Bagi issued notice to respondent No,2 for settlement of her share through Arbitrator, upon which respondent No,2 filed Suit No,939 of 1999 in the High Court, which is still pending.
6. As a further development, in the year 1996 appellant-Company Messrs Gama Silk Mills (Pvt.) Ltd. was incorporated having respondent No,2 its Chief Executive with 70% share, while his four sons as Directors and shareholders, having 7.5 % share each in the company. Thus, all assets of the firm i,e, plot of land, building and machinery vested with the company. It was also stated in the application that other machinery available in the factory was on loan/lease from Saudi Pak Leasing Company and Orix Leasing Company, therefore, the respondent No,2 being Chief Executive of the appellant- Company Was not authorized to dispose of the assets of the company in the manner as detailed in the compromise application, but by suppression of these material facts compromise decree was managed by respondents Nos,1 and 2 through fraud and misrepresentation.
7. On notice of Judicial Miscellaneous No,14 of 2005, without waiting for filing of written objections, learned counsel for the parties were heard in the matter and the impugned order was passed, whereby the said application was dismissed with directions to the three Directors of the appellant- Company to compensate the respondent No,2 by paying Rs,25,000 each by depositing the same within seven days with the Nazir of this Court. It was further observed that defiance of this order will be treated as contempt of order of this Court for which they would be exposed to contempt proceedings.
8. We have been informed that compliance of this order has been made by the appellant's three Directors, who were signatories to the Board Resolution of appellant-Company dated 22-3-2005.
9. Mr. Munirur Rehman, Advocate for the appellant has advanced his detailed arguments in the matter. The crux of his arguments is that the learned Single Judge was not justified in scraping/discarding the claim of the appellant-Company in a summary manner, without framing of issues and affording proper opportunity to the appellant to prove their assertions that the assets sold under compromise decree, belonged to the appellant-Company therefore, respondent No,2 in his individual capacity was not competent to enter into any compromise or to dispose of the assets of the company to the respondent No,1 on any terms. Making reference to the sale consideration agreed between the respondents Nos,1 and 2 Mr. Munirur Rehman also averred that the appellant-Company had earlier received an offer of Rs,13.5 crores for the said plot and its building, along with machinery and fixtures etc. after its closure in August, 2003, which was not accepted, as the appellant was demanding Rs,17.00 crores. Learned counsel however, did not dispute that as per Memorandum and Articles of Association of the appellant-Company, its formation consist of five (5) Directors/ shareholders, including Ch. Shahid Mehmood, Ch. Khalid Mehmood, Ch. Asim Mehmood, who are instrumental in moving the application under section 12(2), C.P.C., each one of them holds'7.5% share in the company, while Ch. Ghulam Rasool respondent No,2 holds 70% share in the appellant-Company and the other son Ch. Kashif Mehmood, who is supporting the case of respondent No,2 also holds 7.5% share in the company. Learned counsel also did not dispute that respondent No,2 is real father of all the Directors of the company, including those three Directors, who have conceded before the learned Single Judge that in the appellant-Company no investment was made by them.
10. In reply to the above submissions, Mr. Kazi Faez Isa, Advocate for respondent No,2 has submitted that indeed the respondents Nos,1 and 2 have not submitted any written objections to Judicial Miscellaneous No,14 of 2005 before the learned Single Judge, but as evident from the impugned order, to refute the claim of the appellant, they had relied upon the documents produced by the appellant themselves before the learned Single Judge, which were sufficient to dislodge their claim that the decree in Suit No,126 of 2004 was obtained by any misrepresentation, fraud or concealment of material facts. Learned counsel further contended that the agreement dated 22- 12-2003 executed between the respondents Nos,1 and 2 is not disputed; it is established from the record that respondent No,2 is the sole owner of plot of land and building constructed thereon; under the cover of private limited company all investments have been made by him; and on record he also holds 70% share in the appellant-Company, therefore, in making sale agreement or compromise no fraud was committed by the parties to the suit. Mr. Kazi Faez Isa referred various paragraphs from the impugned order to show that the learned Single Judge while rejecting the claim of the appellant and dismissing their application under section 12(2), C.P.C. has examined the case from each and every angle in a judicious manner and relying on the documents produced by the appellant themselves and their admissions before the Court rightly held that under the veil of the appellant-Company the appellant is a sole proprietorship concern owned by respondent No,2 and thus, all objections on the premises of company assets are unwarranted by law.
11. Mr. Arshad Tayebally learned counsel for respondent No,1 in his brief arguments has stated that the agreement in respect of sale of factory with its plot, buildings, machinery and equipments was validly entered into between respondents Nos,1 and 2 and has been lawfully decreed by this Court in terms of the compromise application dated 17-1-2005. The appellant-Company's Director Ch. Asim Mehmood has filed the application under section 12(2), C.P.C. only with the object of causing harassm ent to his old father/respondent No,2, without any just cause and that on execution of registered sale-deed in favour of the respondent No,1 and delivery of possession of the factory now it is a past and closed transaction. In case there is any dispute between Ch. Asim Mehmood and respondent No,2 regarding distribution of the sum deposited by the respondent No,1 towards sale consideration of the factory then on that account decree passed in Suit No,126 of 2004 cannot be set aside/disturbed.
12. Mr. S.A. Samad Khan learned counsel for respondent No,3 has stated on the last date of hearing that no interest of respondent No,3 is involved in this appeal as it is purely a dispute between the appellant and the other respondents, therefore, he has nothing to say in this appeal on behalf of respondent No,3. He has however, confirmed that the lease of Plot No,F-424, S.I.T.E., Karachi is still in the exclusive name of the respondent No,2 and not in the name of the appellant-Company.
13. Mr. Naveedul Haq learned counsel for respondent No,4 has supported the impugned order and rightly so as to respondent No,3 is also signatory to the compromise application dated 17-1-2005, and will be entitled to receive the settled price of their machinery leased out to appellant- Company.
14. Mr. Munirur Rehman in his reply arguments reiterated the plea of non-affording of due opportunity to the appellant by the learned Single Judge before deciding the fate of their application under section 12(2), C.P.C. He also extended proposal on behalf of the appellant that let the judgment and decree challenged by the appellant through application under section 12(2), C.P.C. remain intact, so also the settlements between the respondent No,4 and Orix Leasing Company with the respondents Nos,1 and 2, and accordingly their payments may be released to them from the sale consideration amount available with the Nazir of this Court, and further registered sale-deed in favour of respondent No,1 and delivery of possession may also be allowed to remain intact but at least the remaining payment which is to be released to the respondent No,2. after adjustment of all other claims shall be ordered to be withheld with the Nazir of this Court and the case may be sent back to the learned Single Judge for deciding the issue whether respondent No,2 will be exclusively entitled for the payment of such amount or the appellant's other Directors will also be entitled for their respective shares from this amount.
15. During the hearing of this appeal it was brought to our notice that not only full sale consideration amount in terms of the decree has been deposited by the respondent No,1 with the Nazir of this Court, but even registered sale-deed has been executed in favour of the respondent No,1 and possession of the factory has also been delivered to him. In order to verify all these facts, on 20-12-2005 we had directed the Nazir of this Court to submit his report confirming various aspects of the case in this regard. The Commissioner has submitted his report mentioning therein about, the total deposit of sale consideration in his office in addition to profit of Rs,21,52,458 accrued on the earlier sum of Rs,2,20,00,000 available with the Nazir of this Court. The total sum as per report of the Nazir now available with him is Rs,5,16,52,458. In addition to it in his report Nazir has also made reference about the claim of respondent No,1 in the sum of Rs,34,03,534 towards outstanding dues over the factory under sale and claim of Orix Leasing, which has been settled vide Deed of Settlement, dated 21-12-2005 executed between the said company and appellant- Company through respondent No,2, showing final sum payable to Orix Leasing Pakistan in the sum of Rs,17,00,000 if paid on or before 28-12-2005.
16. We have carefully considered the arguments advanced by the counsel for the parties and perused the material available on record. Indeed, the submission of Mr. Munirur Rehman that where substantial factual controversy is raised by some party through averments made in the application under section 12(2), C.P.C., going to the root of the decree passed in the suit, then the proper course available to the Court would be to frame issues in the matter and provide full opportunity to the parties to prove their respective case and then to decide that whether on the basis of material brought on record during the proceedings of application the decree challenged through application under section 12(2), C.P.C., on the basis of fraud and misrepresentation is liable to be set aside or not, is not without substance. Nevertheless, it is, not a universal rule, which is to be applied mechanically in each and every case, where application under section 12(2), C.P.C. is moved by some party. Moreover, it is well-settled principle of law that a party cannot go beyond its own pleadings/averments made in the application. Keeping in view this important legal aspect, when the contents of the application under section 12(2), C.P.C. and the material placed on record by the appellant along with their application Judicial Miscellaneous No,14 of 2005 is perused, it is evident that the learned Single Judge while passing the impugned order has applied his mind judiciously, he has carefully examined each and every document placed on record and with reference to the contents of the application under section 12(2), C.P.C. rightly concluded that respondent No,2 is the absolute owner of the plots and its existing construction/building thereon.
Further with reference to the status of appellant-Company the learned Single Judge in his order has clearly noted that the learned counsel for the appellant has conceded before him that no investment was made by Ch. Shahid Mehmood, Ch. Khalid Mehmood and Ch. Asim Mehmood, Directors of the appellant-Company either in the partnership business or the company. This admission on behalf of the appellant's three Directors clearly affirms the fact that the conclusion recorded by the learned Single Judge in the words "if the veil of incorporation is lifted then the appellant is simply proprietorship concern owned by respondent No,2" is correct.
17. The submission of Mr. Munirur Rehman that even the terms of compromise recorded in the suit demonstrated the status and role of the appellant-Company being the lessee of the machinery from respondent No,4 and Orix Leasing Company, thus, legally the respondent No,2 could not take any unilateral decision about the disposal of such machinery of the company, has no force for the reason that admittedly the leased machinery available in the factory partly belonged to respondent No,4, who is signatory to the compromise dated 17-1-2005 and partly to Orix Leasing Company, with whom also a deed of settlement has been entered into by respondent No,2 on 21- 12-2005. Admittedly, all the Directors of appellant-Company are real sons of respondent No,2, who, as per the record of the company, is also the Chief Executive of the company holding 70% share of the company assets. Thus, looking to the above controversy with reference to the interest of the three Directors of the appellant-Company who are instrumental in filing of application under section 12(2), C.P.C., the order of the learned Single Judge dismissing the application under section 12(2), C.P.C. is unexceptionable.
18. The submission of Mr. Munirur Rehman as regards the actual value of the assets of the appellant-Company has also no force as it is unconceivable that a person holding 70% share in the company will dispose of its assets at a lesser price, thereby causing major loss to his own interest in the company.
19. Looking the above discussed facts from yet another angle it will be seen that admittedly as per record the plot of land and building structure of the factory was exclusively owned by respondent No,2, while the machinery available therein was owned by leasing companies. In this manner the appellant-Company was only lessee of such machinery supplied to it by respondent No,4 and Orix Leasing Company, therefore, sale of such machinery, which was owned by the leasing companies, with their consent, to the respondent No,1, on mutually agreed terms and conditions, as evident from the compromise decree and the deed of settlement dated 21-12-2005 produced before the Nazir of the Court, which has been submitted before us along with report of the Nazir, is unexceptionable.
20. Besides, another son of respondent No,2 who is also on record Director and share-holder of appellant-Company, namely Kashif Mehmood has also fully supported the claim of respondent No,2 and the compromise decree. He has conceded to the position that under the veil of Messrs Gama Silk Mills (Pvt.) Ltd. Company for all practical purposes it was a sole proprietorship concern owned by respondent No,2 as in this company not only respondent No,2 owns 70% share but while allocating 7.5% share each to the remaining four Directors not a single penny contribution was made by any one of them in the company.
21. We are also not impressed with the proposal of Mr. Munirur Rehman extended in his reply arguments. In our view this proposal further exposes the conduct of Ch. Asim Mehmood, who has been instrumental in filing of this appeal on behalf of Messrs Gama Silk Mills (Pvt.) Ltd. that he has been following a revengeful attitude towards respondent No,2, his real father, and is adamant to keep him busy in litigation, by hook or crook. As a matter of fact the proposal now extended by learned counsel for appellant cuts the very root of appellant's case 4nd has made this appeal virtually infructuous, inasmuch as if the judgment and decree impugned through application under section 12(2), C.P.C. are to be maintained and payments are to be released accordingly then the only dispute remaining before the Court would be about the disbursement of remaining sale consideration amount between the respondent No,2 and his sons/alleged Directors of appellant- Company. Obviously such internal family dispute would fall beyond the limited scope of application under section 12(2), C.P.C. which could only be agitated before the proper forum, but could not form basis for setting aside the compromise decree.
22. Kazi Faez Isa learned counsel for respondent No,2 has made statement before us that it is now only Ch. Asim Mehmood one Director of the appellant-Company, who is vigorously pursuing this litigation to knock out some monetary gains while the other two Directors, who are signatories to the Board Resolution of respondent-Company dated 22-3-2005, are no more active in the matter.
However, we would refrain from commenting upon such statement as nothing is before us to confirm its veracity.
23. The upshot of the above discussion is that we are not inclined to disturb the impugned order passed by learned Single Judge, merely for some technical reasons as by this order substantial justice has been done to the parties. However, we are satisfied that imposition of cost of Rs,25,000 on the three Directors namely Ch. Shahid Mehmood, Ch. Khalid Mehmood and Ch. Asim Mehmood, looking to the nature of controversy, is unjust and harsh. Accordingly to that extent the impugned