1. ' GULZAR AHMED, J.---It is a very old suit of 1967 and I wonder why it has remained pending up till now. The fact that it has happened so is most unfortunate. Indeed, the file is voluminous but that in itself may not be the cause of its pendency for such a long period. Whatever may be the causes, administration of justice requires that the matters brought in Court of law are to be decided and disposed of as early as possible. It so happens in certain cases, that extraordinary delay in the decision of the case takes its tool to the extent that the matter ceases to have either live issue or parties become disinterested for lack of getting appropriate relief within a reasonable period of time. This reflects gravely on the institution of Court of justice and in my respectful view, special attention needs to be given to old pending cases to obviate the miseries of the litigants who have come to the door of Court for seeking justice in accordance with law. Having said so I will not deal with the matter.
2. ' This suit is filed for the grant of licences under the contract or for recovery of Rs,19,38,864.
3. ' Plaintiffs in the suit respectively are (1) Mian Manzoor Hussain through his legal heirs, (2) Mian Muhammad Akhtar and (3) Karachi Road Transport Corporation Limited. The defendants respectively are (1) Government of Pakistan, (2) Province of West Pakistan (subsequently substituted by Province of Sindh) and (3) Commerce Bank Ltd. (subsequently substituted by United Bank Ltd.).
4. ' Brief facts of the suit are that through Ordinance XXI of 1959, the Government of Pakistan, the defendant No,1 has established a Corporation by the name of Karachi Road Transport Corporation (hereinafter referred to as KRTC) with authorized share capital of seven crore of rupees with subscribed capital in the first instance of three crore of rupees divided into thirty lakh shares of ten .Rupees each of which seventeen lakh shares were to be issued immediately,,and remaining from time to time with previous sanction of the Central Government and in the first place offer of forty nine per cent of the issued capital was to be made to public for subscription out of the total paid- up capital of Rs,1,70,00,000. The defendant No,1 held share of Rs,1,35,42, T30 of Rs,10 each while the remaining were held by the public. KRTC was established to operate road transport services in the Federal Capital and it has acquired a fleet of 456 single decker and 24 double decker new buses from 1959 up to 1961 and earned profit of Rs,24,53,065. It is alleged in subsequent year, on account of mismanagement and gross negligence the profit of KRTC was substantially reduced and ultimately defendant No,1 advanced loan of Rs,67 lakh to help it to survive in the year 1962/63 but it incurred loss of Rs,63 lakh. Defendant No,1 therefore decided to disinvest its share-holding and transfer the management of KRTC to private sector. It is alleged that plaintiffs Nos.1 and 2 being one of the biggest and experienced bus operators were approached by the defendant No,1 officials.
5. After negotiations, by letter dated 13-6-1963, the defendant No,1 offered to sell its shares at per value of Rs,1,35,42,130 to the plaintiff No,2. The plaintiff No,2 by letter of the same date i,e, 13-6-1963 accepted the offer of the defendant No,l. These letters were treated to be the contract. The contract was acted upon and on payment of Rs,5 lakh furnishing of Bank Guarantees for payment of balance sale price of the shares and of refund of loan of Rs,67 lakhs, the defendant No,1 shares were transferred to the plaintiff No,2 and on 1-7-1963 the management and control of KRTC was taken over by the new Board of Directors nominated by the plaintiff No,2 and notified by the defendant No,
1. Plaintiffs have alleged that the defendant No,1 failed to comply with clause No,13 of the Contract and has sought specific performance of such clause and in the alternative has claimed damages. The prayer made in the suit is as follows:- "It is therefore, respectfully prayed:
(1) Decree for specific performance for the grant of licences for the replacement of the entire fleet of 480 buses and for the spare parts, tubes, tyres, machines, tools and equipments for the workshop sufficient to repair and maintain the entire fleet of the value of Rs,3,50,00,000 and damages amounting to Rupees 15,88,93864 may be passed against defendants Nos. 1 and 2.
6. Or in the alternative a decree for compensation or damages of Rs,19,38,93,864 with interest at 9% per annum from the date of suit till payment thereof may be passed in favour of plaintiffs against defendants Nos. 1 and 2.
(2) Defendant No,1 may be restrained from making any recovery from defendant No,3 on account of plaintiffs or defendant No,3 may be restrained to make any payment to defendant No,1 on account of plaintiffs.
(3) Costs of the suit may be awarded to the plaintiffs.
(4) Any other, alternative or additional remedy may be granted to the plaintiffs, as may be just and proper in the circumstances of the case".
7. Defendants have filed their separate written statement. On the pleading of the parties following issues were framed:
(1) Whether defendant No,1 committed breach of clause 13 of the Agreement incorporated in its letter dated 13-6-1968? If so, what is the effect?
(2) Whether plaintiff suffered losses in the manner as alleged in the plaint?
(3) To what relief, if any, the plaintiffs are entitled and against which of the defendant or defendants?
(4) General.
8. Plaintiffs have examined (1) Lt.-Col. (Rtd.) S.Z.H. Zaidi employed as an O.S.D. KRTC affairs with the defendant No,3 (Commerce Bank Ltd), (2) Haji Amin, a clerk of Karachi Stock Exchange, (3) Abu Muhammad, Statistical Officer, Federal Bureau of Statistics, (4) Muhammad Ibrahim, Transporter,
(5) Safdar Baig, Bus owner, (6) Mian Muhammad Akhtar, the plaintiff No,2.
9. ' The defendant did not examine any witness and consequently the defendant's side was closed on 3-11-1998. The parties counsel have filed elaborate written note of arguments and oral arguments have also been heard.
10. ' Learned Counsel for the plaintiff in the first place has emphasized that the only question that needs to be addressed in the present case is of the enforcement of clause No,13 of the contract and that the suit having been filed before the winding up order of the plaintiff No,3 was passed, therefore, provision of section 316 of the Company Ordinance, 1984 has no application to the case in hand and that plaintiff has proved its case for the specific performance and alternatively for grant of damages as claimed in the suit. On the other hand, Mr.Abrar Hasan, learned Counsel for the Official Liquidator of the plaintiff No,3 has submitted that all the assets of the plaintiff No,3 have been sold and all the claims that were made against the plaintiff No,3 have been met.
11. ' Learned Counsel has further stated that the file of the said J.M. No,7/1968 may be examined for the appropriate decision of the matter. Mr.Sayed Tariq Ali, learned Standing Counsel for the defendant No,1 has contended that the suit has been filed for the benefit of the plaintiff No,3 company and the company having been wound up the prayer for specific performance has become infructuous. He has further stated that the alternative claim for damages cannot be granted where the case for specific performance is not made out. He has further contended that the plaintiffs Nos. 1 and 2 have received their shares in the company and they have no subsisting claim of whatsoever nature either against the plaintiff No,3 or against the defendant No,l. He has further contended that no permission as required under section 316 of the Company Ordinance is obtained and that the plaintiffs Nos. 1 and 2 have ceased to be the directors. Suit cannot be maintained by them. In support of his submission he has relied upon PLD 1970 Karachi 229. Mr. Himayat Ali Pirzada, learned Counsel for the defendant No,2 has contended that the plaintiffs have no locus standi to maintain the suit and has also relied upon the note of written arguments and PLD 1970 Karachi 229.
12. ' ISSUE NO.1.
13. ' The main dispute between the parties rests on clause No,13 of the defendant No, l's letter dated 13- 6-1963 which has been produced as Exh.11/4 and is admittedly a term of contract. Clause-13 of Exh.11/4 is as follows:
(13) Subject to an upper annual ceiling to be fixed on receipt of your concrete requirements and scrutiny by this Ministry and the Ministry of Commerce, you will be given licences for import of bus chassis and spare parts for the first two years after the transfer to enable you to replace any obsolete buses and to repair such off-road buses out of the existing fleet as can be that bus chassis and spare parts of the required makes and types are not available within the country.
14. ' The contract between the parties was acted upon. Plaintiff No,2 made initial payment of 45 lakhs to the defendants No,
1. Two bank guarantees, one on behalf of the plaintiff No,2 Ex-11/15 for payment of balance sale price of shares amounting to Rs,1,25,42,130 together with 5-1/2% interest per annum and the other by KRTC Ex-11/16 for payment of loan amount of Rs,67 lakhs together with 5% interest per annum were furnished to the defendant No, 1 . On 29-6-1963 defendant No,1 issued notification Ex.11/13 in terms of section 5 of the KRTC Ordinance 1959 by which new Board of Directors of KRTC comprising of plaintiff No,2 and his three nominees was notified. On 30-6-1963 through Exh.11/14, the defendant No,1 transferred its shares of the value of Rs,1,35,41,130 to the plaintiff No,2. On 1-7-1963 the new Board of Directors took over the management and control of the KRTC.
15. Soon thereafter, the KRTC under the signature of its Secretary wrote a letter dated 5-7-1963 Exh.11/16 requesting the defendant No,1 for implementation of the said clause-13 of the contract and asked for providing of licences for import of spare parts for 250 off-road single decker buses, replacement of 200 single decker buses and spare parts etc. Of buses for the period ending in June, 1965 in the total sum of Rs,1,37,70,000. After scrutiny of requirement, the defendant No,1 through its letter dated 7-5-1964 Exh.11/21 made an allocation of Rs,17 lakhs to the KRTC for the import of 50 new bus chassis and spare parts with condition that new as well as the repaired buses be brought on road not later than 31-12-1964 and its report be submitted to the Ministry. In the meanwhile KRTC (Repeal) Ordinance 1964 (Ordinance XXIV of 1964) was promulgated by which the KRTC Ordinance 1959 was repealed. The plaintiff No,3 was incorporated as a limited company, on 5-6-1964 and it took over all the assets, liabilities and operations of KRTC. As it appears, that the plaintiffs were not satisfied with import licences and foreign exchange allocation of Rs,17 lakhs and asked for issuing of further import licences and allocation of foreign exchange. The defendant No,1 through its letter dated 27-1-1965 Ex-11/33 addressed to the General Manager of the Plaintiff No,3, informed that the foreign exchange worth Rs,17 lakh was granted to the KRTC for importing such parts, material as was to repair 350 buses. Another Rs,14.50 lakh was granted for importing 50 new chassis with 20% spare parts and building material and that these grants covered 400 buses fleet and it was taken to have met the stipulation and there is no case for further grant of foreign exchange and asked for providing full details of the foreign exchange already granted. It further noted that there is increased availability of chassis from the local assemblers and other requirements and the plaintiff No,3 may purchase the same from them as is being done by other operators of buses. It was further informed that transportation being the provincial subject, the plaintiff may approach Provincial Government of West Pakistan.
16. ' The evidence shows that the plaintiffs did not honour its commitment with regard to payment of balance sale price of the shares purchased from the defendant No,1 and also did not honour commitment for payment of loan amount to the defendant No, 1 . Consequently, the defendant No,1 encashed the said two bank guarantees and made recovery of its dues. The record further shows that plaintiff No,3 made default in meeting its obligations so much so that winding up petition being JM No,7/68 was filed against it and on 6-5-1969 the Court passed the order of winding up and appointed the Official Assignee as its Official Liquidator. Defendant No,3 so also National Bank of Pakistan have filed recovery suits against the plaintiffs. In the plaint the plaintiff's claim is that in terms of clause-13 of the contract, the defendant No,1 should have provided licences for replacement of more than 200 chassis, spares, tubes, tyres, machine and machine tools for maintenance of 280 buses for the first year and that by the time the allocation of Rs,17 lakhs was made, the entire fleet of buses had become incapable of operation and required replacement and by not providing the licence, as above, the defendant No,1 has committed breach of contract. The plaintiff has claimed granting of licences for replacement of entire fleet of 480 buses spare parts, tubes, tyres, machines and machine tools for maintenance of entire fleet and workshop or in the alternative compensation of the losses incurred. There is no mention in the plaint that besides allocation of Rs,17 lakh an allocation of Rs,17 lacks and Rs,14.50 lakhs was also made for making import of bus chassis spare parts etc. The fact of allocation Rs,14.50 lakh is apparently suppressed by the plaintiffs. The plaintiff No,2 in his cross-examination has admitted that amount of Rs,14.50 lakh was further allocated by the defendant No,
1. It may be noted that although there was an allocation of Rs,14.50 lakhs to the plaintiff but the plaintiff has not produced any document or record to show that these allocations were utilized by them for the benefit and use of the KRTC or the plaintiff No,3. In cross-examination, the plaintiff No,2 has stated that the import licences of Rs,17 lakh and Rs,14.50 lakh were utilized but stated that details of import made by the plaintiffs against these import licences could not be given by him.
17. ' He admitted in his cross-examination that the plaintiffs were not able to obtain release of 50 bus chassis from United Bank Limited as it was not having funds to make payment to UBL and the bank auctioned those 50 chassis. The record therefore, clearly shows that although the defendant No,1 did issue import licences and made allocation of foreign exchange to the plaintiffs for purchase of 50 new bus chassis and spare parts in terms of clause 13 of the contract but the plaintiffs are unable to give any details of the imports made by them. On the record, there is information of import of 50 bus chassis but that too was allowed to be auctioned by the Bank. Thus this import of 50 buses became meaningless. The defendant No,1 apparently made compliance of said clause-13 of the contract by issuing of import licences and making allocation of foreign exchange of Rs,17 lakhs and Rs,14.50 lakhs but as it appears the plaintiff did not utilize such licences for the benefit and use of the KRTC or the plaintiff No,3.
18. ' The plaintiff No,2 in his evidence has asserted that he has agreed to purchase the shares of KRTC at par value for the reasons that the Government undertook and assured the plaintiffs to compensate the possible losses and one of the concession offered to the plaintiff was the condition that the Government would give plaintiffs import licence for importing 480 new buses.
19. Whatever may be the share price being quoted in Stock Exchange, the contract for purchase of the shares was made in the sum of Rs,1,35,42,130 out of which the plaintiff No,2 merely paid an amount of Rs,5 lakh to the defendant No,1 and against it acquired the assets as shown in Exh.11/31 of Rs,2,66,30,525. The liabilities shown in Exh.l1/31 were that of loan of Rs,67 lakhs of the Government while there were also sundry creditors in the sum of Rs,23,74,333. Apparently the reason assigned for purchase of shares at par value does not appear to be correct from the above facts and figures. In his cross-examination the plaintiff No,2 was confronted with clause-13 of the contract Ex- 11/4 and he stated as follows: "It is correct that no specific number of the buses is mentioned in this paragraph. It is also correct that in para-13 of the Agreement (Exh.11/4) it was for the Government to fix annual selling after scrutiny of the requirement submitted which was done by the Government."
20. ' This statement of the plaintiff No,2 altogether demolishes the case of the plaintiffs that by clause- 13 of the Contract Exh.11/4 the defendant No,1 has either undertaken or given assurance for issuance of import licence to the plaintiffs of 480 buses. The plaintiff No,2 in his cross examination has also stated that the Committee constituted by the Government has recommended providing of foreign exchange to KRTC in the sum of Rs,61 lakhs. This report has been produced as Exh.11/19. It is not either alleged in the plaint nor any evidence to that effect has been brought on record to show that the recommendation of the Committee by any means was binding upon the defendant No,1 that the defendant No,1 could not have taken its own decision regarding the requirement of the plaintiff.
21. This witness in respect of the representations that are stated to have been made for granting of further licences and foreign exchange in his cross examination has . Made following statement.
22. "After this sanction the plaintiff had made repeated representation to the Government for further sanction for import of the spare parts and for equipments for repair of the buses but no reply was received from Federal Government. I cannot produce any copy of the letter in this connection at this moment but I have proof for that."
23. ' Therefore, looking at the facts and circumstances and the evidence that has been brought on record, the only conclusion that can be reached on this issue is that the defendant No,1 did not commit breach of clause-13 of the Contract embodied in the letter dated 13-6-1963 Ex-11/4 rather it complied the same as mentioned in Ex.11/33.
24. ' ISSUE NO.2: ' The burden to prove this issue was upon the plaintiff. The suffering of losses is based upon the fact that the defendant No,1 committed breach of clause-13 of the contract embodied in the letter dated 13-6-1963 Exh.11/4. Thus loss is claimed for breach of contract. In issue No,1 it has been found that no breach of clause-13 of the contract embodied in the letter dated 13-6-1963 Exh.11/4 was committed by the defendant No,l. Consequently, the suffering of losses by the plaintiffs in operating KRTC or the plaintiff No,3 could not justifiably be blamed to the defendant No,
1. It may be noted that the plaintiff took over from the defendant No,1 fleet of buses comprising of 456 single decker buses and 24 double decker buses. Besides, there were stores and spares of the value of Rs,31,14,444. The plaintiff No,2 in his evidence has stated that by the time the allocation of Rs,17 lakhs was made, the entire fleet of buses were incapable of operation and required replacement. It is unbelievable that the buses as were handed over to the plaintiffs on 1-7-1963 all of a sudden by 7- 5-1964 the date of letter Exh.11/21 making allocation of Rs,17 lakh came to a pass where it becomes incapable of operation. It was suggested to the plaintiff No,2 that in the first place, plaintiffs have not utilized the import licences and foreign exchange allocation for the benefit of KRTC or the plaintiff No,3 and it was further suggested that the plaintiffs through their own mismanagement and inexperience have suffered losses and also that the spares and other assets of the KRTC were transferred to Gujrat Bus Service. All these suggestions were denied by the witnesses. The plaintiff No,2 in his cross-examination has made the following statements:-- "We were the biggest and experienced bus operators in whole of India before partition and after that we were biggest and experienced bus operators in Karachi till 1967."
25. "In 1966-67 when we had started Gujrat Bus Service in Karachi, we had 10 buses. We had about 100 buses all over India before partition. Before partition our services were confined to Gujrat only."
26. "Our family members Mian Muzzafar Hussain, Mian Manzoor Hussain, Mian Asghar Hussain, myself and several others were partners in Gujrat Bus Service."
27. "I cannot say why the business of Gujrat Bus Service was discontinued when it was running in profit.
28. Actually said business was belonged to my cousins and they can only say why this was discontinued by them."
29. ' The above evidence apparently shows that the plaintiff's own claim that he was an experienced bus operator is negated and that the losses that are stated to have been suffered by the plaintiff had no nexus with the clause-13 of the contract and that either they were on account of plaintiff's own inexperience or there was no will to continue the bus service. It is admitted in the evidence by the plaintiff No,2 that the assets of KRTC/ the plaintiff No,3 were sold by him and no amount was paid to the shareholders. The plaintiff's claim for compensation is based on breach of contract. No breach of contract is found. The provision of section 73 of the Contract Act is not attracted nor the provision of section 19 of the Specific Relief Act comes into operation as the breach of Contract is not proved.
30. ' The plaintiff No,2 in his evidence has admitted that there was no contract between the plaintiffs and defendant No,2. As regards defendant No,3, the plaintiff No,2 in his evidence has admitted that the suit against it has been filed as it has allowed encashment of Bank Guarantee to the defendant No,
1. No illegality in respect of encashment of Bank Guarantee is either established or pointed out.
31. Consequently, there is no evidence or material on record to find that plaintiffs have suffered losses on account of defendants No,2 and 3.
32. ' ISSUES NOS.3 AND 4: ' As the issues No,1 and 2 have been answered against the plaintiffs, therefore, there is nothing to hold that the plaintiff is entitled to any relief. Consequently both the issues are answered against the plaintiffs and the suit is dismissed.