1. KHILJI ARIF HUSSAIN, J.---M/s. Airsys ATM Limited and Joannou and Paraskevaides (Overseas)
2. Limited as a consortium filed the suit on 31-1-2004 against the defendant for declaration, damages and costs. Plaint was verified by one, Antoniou Manoras, as Country Manager (Pakistan) of Joannou and Paraskevaides (Overseas) Limited and as Consortium Project Manager of the plaintiff consortium. After service of the notice parties filed their respective written statements. The defendant No.2 filed an application under Order VII, rule 11, C.P.C. With a prayer to reject the plaint as the suit has not been instituted by a competent person having the power and authority to do so and barred under section 456 read with sections 451 and 452 of the Companies Ordinance.
3. Heard Mr. Salman Talibuddin learned Advocate for the defendant No.2, and Mr. Bilal A. Khawaja, learned Advocate for the plaintiff. Mr. Salman Talibuddin, learned counsel for the defendant No.2 argued that the suit was instituted by a consortium of two companies and plaint is verified by .One Anthoullis Antoniou Manoras and without passing the Resolution by the Board of Directors of the said two companies respectively deciding to file the suit and authorize someone to file the same, the suit is not a properly instituted by a competent person having power and authority to do so is liable to be dismissed. Learned Advocate for the defendant argued that resolution passed by the "consortium" between two limited companies cannot be termed as resolution passed by the two limited companies. In support of his contention, learned counsel relied upon Article 1.1 and Article 4 of the Consortium Agreement (Annexure P/9) filed along with the statement by the defendant No.2 and relied upon The case of Abdul Rahim and 2 others v. Messrs United Bank Limited of Pakistan, PLD 1997 Kar.
62. Mr. Salman Talibuddin, the learned counsel for the defendant No.2 further argued that consortium by itself is not a single legal entity and cannot institute a suit in its own name and relied upon the definition of "Consortium" given in the Webster Comprehensive Dictionary Encyclopedic Edition, Volume One, and black's Law Dictionary seventh edition. Mr. Salman Talibuddin, learned counsel for the defendant, while dealing with his objection about the maintainability of the suit under section 459 of the Companies Ordinance, 1984 argued that 'Consortium' consists of two foreign based companies in Pakistan required to deliver the Registrar of the companies within 30 days on the establishment of place of business in Pakistan all information required under section 451 of the Companies Ordinance, 1984. It was argued by the learned counsel for the defendant No.2 that section 452 of the Companies Ordinance required to inform the Registrar for registration any alteration made or occurs in director or chief executive of the company etc. Within 30 days of alteration. It was contended by the learned counsel that plaintiffs who are foreign based companies failed to comply the requirement of sections 451 and 452 of the Companies Ordinance therefore cannot institute the suit. Learned counsel for the defendnt No.2 in support of his contention that any change in the constitution of the company ought to have been notified to Registrar of the companies but required information about the change in the constitution of the one member of consortium has not been notified to the Registrar of the companies and accordingly suit filed by Messrs Airsys ATM Limited and Joan nou and Paraskevaldes (Overseas)
4. Limited (hereinafter referred as "J&P") the plaintiff companies is barred under section 459 of the Companies Ordinance, relied upon Annexure D1 filed along with the application a photocopy of Cyprus Mail: News Articles dated 5-9-1999. From the said news article it appears that Mr. Stelious Joannou co-founder of J&P has died on 9-5-1999. It was contended by the learned Advocate that the information about the death of one of the directors not forwarded to the Registrar of the companies as required under section 452 of the companies Ordinance and accordingly suit is barred under section 459 of the Ordinance. In support of his contention learned counsel relied upon the case of China Annang Construction Corporation v. K.A. Construction Co., 2001 SCM R 1877.
5. Mr. Bilal A. Khawaja, learned counsel for the plaintiff argued that the suit has been filed by a consortium of two limited companies who decide to do the business together and accordingly entered into a Consortium Agreement dated 2-12-1994. It was argued by the learned counsel that the consortium between the two companies being was constituted for the purpose of preparing the tender for the project known Terminal No.1, Jinnah International Airport, Karachi and in terms of Article 1.3 of the Consortium Agreement "each participant have a scope of work setting out the extent and nature of his share of the project." Learned Advocate for the plaintiff relied upon Article 4 of the Consortium Agreement and argued that both companies being members of the Consortium consciously conferred of their own powers to "Management Committee" constituted in terms of the said article for overall management and control of he affairs of the Consortium, and each company appointed two representatives as member of the management committee and said committee decided by a resolution to institute a suit and authorize one of its members to sign all documents, plaint, written statement, affidavit, etc., in the proceedings to be filed against the defendants and accordingly there was no need of passing of resolution by the Board of Directors of each company for the purpose of instituting the suit. In reply to the objection Mr. Salman Talibuddin learned counsel for defendant No.2, said that suit is barred under section 456 of the Ordinance, 1984 due to non-compliance of sections 451 and 452, the learned Advocate argued that both the companies are submitting their returns right from 1989 till dated to the Registrar of the companies and faithfully disclosing all the information required under sections 451 and 452 of the Companies Ordinance. In reply to the contention of the learned counsel for the plaintiff that the death of one of the directors as appeared in Daily Mail 1999, not notified to registration he relied upon Para 10 of his counter affidavit in which defendant on oath stated that all relevant information as required by section 451 of the Companies Ordinance has been provided to Registrar of the companies and denied the allegation that the Form 40 Annexure C40 did not contain all the relevant information as required under section 451(1) and (2) of the Companies Ordinance and that there has been any undisclosed change in the directorship of one of the members of consortium. I have taken into consideration respective arguments advanced by the learned Advocates for the parties, perused the record. Normally for the purpose of deciding the application under Order VII, rule 11, C.P.C. Court has to confine itself to the contents of memo. Of plaint deeming the same as correct to see whether plaint can be rejected or not however in appropriate cases defence taken by the defendant can also be looked into. Here I would like to mention, though not relevant for the purpose of deciding the issue in the matter, that initially defendant entered into an agreement with a consortium in which Messrs Siemens Plesy Electronic System Limited (SPESL) and Messrs Airsys ATM Limited were members and on 30-3-1998 with defendant. No doubt ordinary dictionary meaning of "Consortium" is companionship, love, affection, and a benefit that spouse is entitled to receive from the other but the phrase "Consortium" when used, in business, and in commercial dealing normally, means that when two or more companies decided to do particular venture together. Whether such an association of the company can be termed as a partnership business between two companies and required registration with the Registrar of the Firm under Partnership Act and non-registration may bar the suit to enforce and agreement by such an association tinder section 69 the Partnership Act is a question which can be answered after recording evidence. However, I would like to observe here that one of the object of registration of the firm is to put on notice all the persons dealing with the partnership firm to know who are the partners of the firm answerable to his liability whereas a company by itself is a legal person and is under discipline so far as his acts deeds are concerned under Companies Laws and Rules framed under it. I have some reservation that a "Consortium" constituted by two or more companies can sue in its own name as legal entity, however since in the title of the plaint, name of all members of consortium has been given, suit cannot be dismissed due to any ambiguity in the description of the parties, if any, and in interest of justice if required parties can be called to remove the same to decide the case on merits. The suit was filed by plaintiff described plaintiff as Messrs Airsys ATM Limited and Joannou and Paraskevaides (Overseas) Limited a "Consortium". The plaint verified and signed by Mr. Antoniou Manoras, as Country Manager (Pakistan) of Joannou and Paraskevaides (Overseas) Limited plaintiff No.2, as Consortium Project Manager of the plaintiff consortium. In the memo. Of plaint also plaintiff stated that plaintiff consortium was qualified for construction of Lahore Airport Terminal Blocks and related facilities at Lahore International Airport. Agreement and correspondence exchanged between the parties in respect of the contract between the parties also addressed to Project Manger Consortium of Messrs Airsys ATM Limited/Joannou and Paraskevaides (Overseas) Limited.
6. The averment that suit has been filed by a consortium has not been denied by the defendant in his written statement. The question now required consideration is whether a suit filed by a consortium, required passing of Resolution by the Board of Directors of its respective members companies or not. There is no cavil to the proposition that a limited company administer its function through its Board of Directors, who can exercise the authority conferred upon them by the articles of association. The Board of Directors can confer any power upon one of his directors and/or to any other person of their own choice to act on behalf of the company and once. Such a power is delegated then all acts and deed of such person within the parameters of power conferred is binding upon the company. Keeping in view what I have stated, it appears that the two limited companies entered into a Consortium Agreement dated 2-12-1994. It is not the case of the defendant that the consortium agreement between two companies was executed by an incompetent person who has not been authorized by the company to enter into an agreement. Consortium agreement duly executed between the members of the consortium provided that overall management and control of the affairs of the consortium shall be vested in the Management Committee consisting of four persons and each participant shall be entitled to appoint two representatives to the Management Committee.
7. Agreement further provided that all the decisions of the Management Committee must be unanimity and if unanimity cannot be reached the matter in question shall be referred to the managing director. The members of the consortium confer overall management control of consortium in favour of four persons two nominees by each being Members of the Management Committee. The said four persons to whom all the power of management and control of the affairs of the consortium has been conferred, by resolution decided to file the suit against defendant. The defendant has not questioned that persons who passed the resolution were not nominated by the members of the consortium nor question authenticity of the resolution passed by the Management Committee deciding to file suit to authorize. The terms "affairs" has been defined in the Black's Law Dictionary 16th Edition as "inclusive term bringing in its scope and meaning anything that person may do". The members of the management committee were nominated by the said two companies knowingly that all the "affairs of the consortium" has to be administered by them. The phrase "affairs" in this context cannot be given limited meaning particularly when delegated authority did not call in question the authority exercised by their nominees while dealing with the affairs of the consortium, taking step for the recovery of the consortium dues and in this regard filing the suit. The question whether two members of the consortium nominated their two respective representatives as members of the Management Committee while nominating them consciously confer all powers or authority to deal with the Management and affairs of the consortium including authority to institute suit can be answered after recording of evidence. In my tentative view filing of suit by the Management of Consortium cannot be termed other than an act dealing with the affairs of the consortium and in this view of the matter plaint cannot be rejected summarily. Mr. Talibuddin learned Advocate for the defendant in support of his contention argued that in suit without passing the Resolution of Board of Directors of the Company is not maintainable relied upon the case of Abdul Rahim and others v. Messrs United Bank Limited, PLD 1997 Kar. 62 and National Bank of Pakistan and others v. KDA, PLD 1999 Kar. 260 As I have held hereinabove that only a person, duly authorized by company, either by articles of the company or by a resolution of the Board of Directors can institute a suit. In the case of National Bank of Pakistan (supra) after recording of evidence whereas in the case of Abdul Rahim (supra) matter was remanded to Banking Court to decide the question in the light Of observation made in the judgment the question whether person who instituted the suit was authorized by company to institute the suit can be answered after recording the evidence and examination of Article of the company. Now I will deal with the objection of the learned Advocate for the defendant that due to non-compliance of sections 451 and 452 of the Companies Ordinance the companies are not entitled to bring suit. It is not disputed by the defendant that information as required under section 451 of the Companies Ordinance has been provided by the two members of the consortium to Registrar of the companies. The grievance of the defendant is that change of directors of the one members' of the committee has not been notified as required under section 452 of the Companies Ordinance.
8. The plaintiff in reply to the said grievance specifically stated that Form 40 (Annexure C4) did contain all the relevant information as required by section 451(1) (2) of the Ordinance and/or that there has been any undisclosed change in the directorship of the 'J & P.
9. Mr. Bilal Khawaja, learned counsel for the plaintiff, during course of his argument expressed his reservations about the news item appeared in Cyprus News Article dated 8-3-2004. In view of the specific denial of the plaintiff that there is no undisclosed change in the directorship of any members of the consortium and that all the information required under section 451 sub-rules (1) and (2) has been duly provided to register of companies plaint cannot be rejected at this stage and same can be decided only after evidence has been recorded. For the foregoing reasons listed application CMA No.2394 of 2004 is dismissed however at the time of filing of issues defendant if so advised can propose the issue about the maintainability of the suit.