' KHALID ALI Z. QAZI, J.---Through this judgment, we intend to dispose of High Court Appeals Nos. 163 and 186 of 2008 filed against the judgment dated 21-4-2008 and decree dated 15-5-2008 passed in suit No,312/1996 by learned Single Judge of this Court whereby the appellants Karachi Electric Supply Company Limited and Federation of Pakistan have filed the separate appeals under section 3 of the Law Reforms Ordinance 1972 against the decree signed on 14-5-2008 and judgment dated 21-4-2008.
' Brief facts of the case requisite for disposal of both appeals are that the respondent No,1 has filed a Civil Suit No,312/1996 for permanent injunction against the appellants i,e, Federation of Pakistan through Private Power and Infrastructure Board and K.E.S.C. Initially, the suit was only for permanent injunction, however application filed by the respondent No,1 for amendment in the plaint was allowed on 7-4-2008 and the respondent No,1 converted the suit into the suit for declaration, mandatory and permanent injunction. It appears that respondent No,1 Messrs. Tri-Star Energy Ltd.
On 11-6-1994 applied for the permission of setting up a power project in Karachi. The appellant Private Power and Infrastructure Board Government of Pakistan vide letter dated 24-6-1994 gave confirmation of its interest for setting up of 110 MW power project to be situated at Karachi and issued a letter of interest. In terms of the letter of interest the respondent No,1 was required to submit a performance Guarantee from a scheduled bank licensed to operate in Pakistan. In the amount stated in the letter of interest (LOD in term of the LOI and on submission of performance Guarantee a letter of support (LOS) was to be issued to the respondent No,1 confirming its right to develop the project of the site as per terms of the LOS. The respondent No,1 submitted a performance guarantee on 2-8-1994 in favour of the appellant Government of Pakistan in sum of Rs,11,000,000 in view of performance guarantee, the Government of Pakistan / Private Power and Infrastructure Board issued a letter of support on 18-9-1994 to the respondent No,1 for the establishment of a Thermal Power Plant of 110 MW at Karachi. The appellant Government of Pakistan on behalf of the President of Pakistan gave a permission to design finance, insure, build, own, operate and maintain a power generating plant at Karachi. The electricity was to be sold, to the appellant K.E.S.C. Power Purchase Agreement was signed on 12-6-1995 with K.E.S.C. Appellant and the Fuel Supply Agreement with P.S.O. Was signed on 27-7-1995.
3. It was the case of private respondent that despite achievement of financial close by the respondent No,1, the appellant Government of Pakistan threatened encashment of the respondent's No,1 performance guarantee and asked the Bank to comply with its encashment demand. However, the action for encashment was held in abeyance by Government of Pakistan the respondent No,1 was asked to establish a letter of credit (L/C) in favour of appellant/K.E.S.0 as per the requirements under the power purchase agreement (PPA). It was further stated that the Government of Pakistan vide a letter dated 1-11-1995 finally accepted the financial close but with retrospective effect from 17-9-1995. The respondent No,1 finally succeeded in establishing the letters of credit, however the same was not found acceptable to the K.E.S.C./appellant. The Government of Pakistan Private Power and Infrastructure Board finally withdrew its demand for encashment of the performance guarantee vide letter dated 26-12-1996. The Government of Pakistan by a letter dated 10-1-1996 delivered a new threat to issue notice of intent to terminate implementation agreement to the respondent No,1 on the allegation of not achieving construction start' and not submitting information which evidence the satisfaction of all conditions precedent to the initial availability of funds under the financing documents each within 90 days after financial close.
4. It is further urged by the private respondent in plaint of suit that the appellant gave a notice of intent to terminate the Power Purchase agreement on 30-1-1996 to the respondent No,l. The respondent No,1 through its advocate vide letter dated 14-2-1996 refuted the allegations regarding the failure to achieve the commencement of construction. The respondent No,1 requested the Government of Pakistan that as construction contract had already been sent and the same may be perused for acceptance and the notice may be withdrawn but the Government of Pakistan had decided to terminate the agreement. It was further alleged that there was no reason to terminate the agreement. The termination of the contract shall be unlawful and shall perpetuate a clear injustice against the plaintiff. The above suit was filed for restraining the appellants K.E.S.C. And Government of Pakistan from terminating the agreement, however after recall of the interim orders on 20-10-1997, the Government of Pakistan sent a termination notice of implementation agreement with immediate effect in terms of section 19.2 of the implementation agreement and on account of the vacation of interim restraining order. The appellant in its written statement clearly stated that from the conduct of the respondent No,
1. It was clear that it was not in a position to complete the project and/or supply electricity. The LOl dated 22-6-1994 was issued by respondent No,1 and not by the appellant. The respondent No,1 was asked to establish a letter of credit in compliance with the terms of the Power Purchase agreement which was a part of conditions required to achieve financial close. The establishment of letter of credit on the date of financial close was mandatory condition under section 9.4(f) of the PPA. The letter of credit did not meet the terms of PPA in favour of K.E.S.C. To cover the liquidated Damages payable in case of delays in commissioning the project.
Moreover the amount of L/C was payable in US dollars. The Government of Pakistan had asked the respondent No,1 to establish L/C accordingly, as required by the terms of PPA. Since the L/C did not meet the format, it could not be accepted without the approval and concurrence of Government of Pakistan. The appellant issued notice of intent to terminate the power purchase agreement.
5. The Government of Pakistan in its written statement took the pleas that in view of the respondent No,1 failure to discharge its obligations it was established beyond doubt that the respondent No,1 could not design, finance, build, own operate and maintain a power generating plant and / or supply and electricity to the appellant. The Government of Pakistan was only obligated to support the project by way of facilitation and assurance in terms of the LOS and subsequently the implementation agreement. The delay was caused by respondent No,
1. The financing documents submitted by the respondent No,1, were found to be highly suspected, inadequate and insufficient.
The first and second Tri-Star Modarabas being associated companies of the plaint and under the control of its sponsors, it was obvious that the respondent No,1 could not enforce its rights under the underwriting agreements against the said two Modarabas. It was further urged that two applications filed by the respondent No,1 under Order VI, rule 17 were pending. In these applications, the respondent No,1 sought amendment in the plaint with the prayer of declaration that termination of implementation agreement vide letter dated 20-10-1998 and power purchase agreement dated 5-1-1999 was unlawful/mala fide and a further, prayer of mandatory injunction was made that the appellants K.E.S.C. And Government of Pakistan be directed to perform the above agreements. Though the amendments sought in the above application amount to change the entire complexion of suit and instead seeking amendments, fresh suit should have been filed. It is contended that after termination of both agreements, the whole suit had become infructuous.
The applications filed under Order VI, rule 17 were allowed vide order dated 7-4-2008.
6. Mr. Muhammad Ali Mazher Advocate for appellant has forcefully contended that no issues were framed in the suit by learned Single Bench of Honourable High Court and the matter was being fixed for hearing of applications. When the matter was got fixed in the Court with misrepresentation on 21-4-2008, neither it was placed for framing of issues, nor for evidence nor for final disposal. The office note is clear that it was only for further orders keeping in view the filing of amended plaint. In the order dated 21-4-2008 the contention of Mr. Hussain Tabassum Advocate for plaintiff was recorded that nobody appeared from the defendant's side since long and matter is proceeding ex parte while in the judgment, the name of Mr. A.R. Akhtar Advocate is mentioned. According to the information received, Mr. A.R. Akhtar is seriously ill and not attending the Court for last many months. He never appears in the case on 21-4-2008 so his presence marked in the judgment is unjustified. It is pertinent to mention that no time or opportunity for filing amended written statement was allowed to the defendants and matter was finally, decided without framing the issues, without recording the evidence of the parties and even without hearing the arguments of the learned counsel for the parties. Therefore, neither the learned Single Judge in chamber was justified in passing the impugned judgment and decree in such a hurry nor the judgment is in accordance with law. He submits that after allowing amendment in the plaint, no opportunity was afforded to the appellants/defendants to file amended written statements. He further submits that no urgent application was filed by the respondent/plaintiff for fixation of matter in the Court on 21- 4-2008, therefore the impugned judgment and decree passed on the basis of application under section 151, C.P.C. Without notice to the defendants was not justified and caused serious miscarriage of justice to the appellants. Mr. Muhammad Ali Mazhar further submits that learned Judge failed to consider that serious controversies were raised by the parties in the pleadings and unless, the issues are framed and evidence is led, the controversy could not be resolved. He further submits that the learned Judge failed to consider that both the agreements were terminated much earlier in the year- 1998 and 1999 respectively, therefore, at this belated stage, the termination notices/letters could not be set aside. He further submits that impugned judgment and decree are against the provisions of section 21,42, 54 of Specific Relief Act as both the agreements by their nature were revocable and could not be specifically enforced. He submits that impugned judgment and decree are also against the law of natural justice. He further submits that learned advocate appeared on behalf of private respondent misrepresented and misguided the Honourable Court on saying that in the pleadings almost all point are admitted as such there was no need to record evidence. This statement of learned counsel was totally incorrect, contemptuous, misconceived and against the pleadings. He has relied upon the following reported judgments:-
(t) PLD 1967 SC 271, (2) PLD 1960 (W.P) Karachi 562, (3) PLD 2006 SC 214, (4) PLD 2005 SC 842, (5)
2005 SCM R 720, (6) PLD 2003 SC 379 and (7) PLD 2005 SC 270 relevant page 284.
7. Mr. Yawar Farooqi Advocate for ministry of Water and Power Government of Pakistan / appellant in H.C.A No, 186/2008 supported the arguments advanced by Mr. Muhammad Ali Mazher Advocate for K.E.S.C. In H.C.A No, 163/2008.
8. Mr. Asim Mansoor Khan learned counsel for the private respondent controverted the arguments advanced by the learned counsel for the appellant and supported the impugned judgment and decree passed by the learned Single Judge of this Court. He submits that both the appeals are barred by the period of limitation as prescribed by law. He submits that after filing of amended plaint there was no need for providing the opportunity to file the amended written statement. He further submits that where there are no new disputed facts and amendment made due to changed situations the written statement could only be filed after leave of the Court. In the instant case after amendment of the plaint the facts, nature of the suit and prayer clauses were drastically changed therefore, filing of the amended written statement is mandatory requirement of law. Mr. Asim Mansoor further submits that the Court in law can proceed to determine the dispute in issue without recording evidence if it is based on documents which are admitted. He submits that in the instant case the impugned judgment is on admitted documents. In suit there were no factual controversies nor there existing any documents that were denied by either of the parties. He further submits that all the parties have filed documents along with their pleadings each one of which have been admitted by either side. Genuineness of a document has to be only ascertained if the same is denied in the written statement.
9. On 6-6-2008 Mr. Anwar Mansoor Khan learned counsel for the respondent No,1 appeared and filed Vakalatnama on behalf of the respondent No,1 and sought time to file counter affidavit.
10. Counter affidavit of Asad Ahmed the Chief Executive of the respondent No,1 was filed on 23-6- 2008 wherein it was stated that appeal filed by the appellants is barred by limitation and based on malice and mala tide, in that, the K.E.S.C. Having been privatized, now refuses to .Supply electricity in the blistering heat to the citizens of Karachi, the services, the industry and the business, when the private power and infrastructure Board (PPIB), Ministry of Water and Power, Government of Pakistan agrees to go ahead with the implementation agreement dated 14-2-1995, the agreement that was sought to be cancelled earlier for political reasons. It is further urged by the respondent that the K.E.S.C. On being privatized was required to put up or set up power generation units serve to generate sufficient power to distribute the same in its area, predominantly, the city of Karachi, and such area where the K.E.S.C. Extends to. In additions, they are required under the law to supply electricity which is generated by private generation units for which the Government of Pakistan through the PPIB, has given permission by virtue of the implementation agreement. It is submitted that all agreements are pursuant to the implementation agreement. The facts of this case, are that when the agreement of 14-2-1995 was entered into between the Government of Pakistan through the PPIB, it was agreed, on the basis of the power policy of 1994, that there would be other agreement consequent upon the implementation agreement. The implementation agreement spelt out the security package, which amongst others included the power purchase agreement, which agreement was the agreement with the K.E.S.C. Dated 12-6-1995. The power generation complex was to be setup at near Hawks bay Karachi, in the Province of Sindh. The Government of Pakistan guaranteed by a Guarantee of 27-11-1995 that, in consideration to the respondent No,1 having entered into the power purchase agreement with the Government of Pakistan would guarantee irrevocably and unconditionally to require the signatory of the power purchase agreement to fulfil its obligations. That the said implementation agreement, per se was the Master Agreement to guide and require all the electricity supply corporation/companies to take up/purchase the said electricity being generated in power units for the supply of the same to Karachi and it is a joining area for the public, industry, services etc.
11. It is further contended that no doubt, a dispute had arisen for which a suit bearing No,312/1996 was filed by the respondent No,1 against the PPIB and K.E.S.C. Seeking a permanent injunction against the said respondent restraining Them from committing any breach of the agreement or terminating the "Implementation agreement" and the "Power Purchase Agreement" pursuant to the notices of intent to terminate dated 17-1-1996 and 30-1-1996. The written statement of both the parties were filed. Principally, the said appellant and the respondent No,2 took the major issue that, after the 'Financial Close' the construction of the project had not commenced, wherefore, the respondent No,1 was in default and thus, the intention to terminate the said agreement. The notice of 30-1-1996 by the appellant sought to terminate the agreement on the ground, that under the provisions of section 4.2(b) of the agreement, the company was required to achieve construction start and satisfy all conditions precedents to the initial availability of funds under the financing documents each within 90 days after the financial closing. It has been stated that the respondent No,1 achieved financial closing on 17-9-1995 whereas the respondent No,1 did not achieve construction start. It is further stated that in the written statement, that, under the provisions of section 4.2(b) of the power purchase agreement that the notice was given. It is stated that notice given by the K.E.S.C. Was consequent to the similar notice of the respondent No,2 dated 17-1-1996. It is stated that as the power purchase agreement was to be acted upon, the implementation agreement was to be first acted upon. Thus, if the implementation agreement was to fail the power purchase agreement would have become ineffective.
12. The power purchase agreement was thus consequent to the implementation agreement. The Government of Pakistan has now chosen, in the wake of the severe power crises, not to file an appeal against the judgment and decree passed by the learned. Single Judge of this Honourable Court. The Government of Pakistan Ministry of Water and Power, through the PPIB has by a letter No, C(CO2) PPIB-08/TsrLJL dated 19-6-2008 signed by its Managing Director stated, on the representation by the respondent No,1 that consequent upon the order of High Court of Sindh they are pursuing the policy of bringing additional power generation capacity in the country to bridge the widening demand and supply deficit, more so for K.E.S.C' s service area, where the power generation execute and an adversely affecting households, commercial activities and industrial growth. The PPIB has committed itself to provide guidance and operations, as when required by the company and in order to implement the project, the Security Package documents need to be amended with the consent of the parties. Accordingly the company was required to chalk out the implementation strategy of the project.
13. It is further contended that in view of the policy of the Government of Pakistan, the present appeal is liable to fail on amongst other, on this ground and on the ground of it being barred by limitation. The K.E.S.C, notwithstanding it being a party, was only a Pro forma party, as it acts, under the policy, the implementation agreement and the guarantee of the Government of Pakistan. The appeal is mala fide. It is further stated that apparently the learned Single Judge was also aware of the difficulty that the city of Karachi was facing and apparently chose to fast track the present case. Learned counsel further contended that where all the documents were admitted evidence was not required to be led and further that the implementation and power purchase agreements have not been denied in any form whatsoever.
14. Instant appeals were heard and reserved on 25-7-2008 and Mr. Anwar Mansoor Khan learned, counsel for the respondent No,1 has filed the written submission after reserving the judgment of the appeals on 28-7-2008 replying the questions, which were put by this Court.
(i) Whether after the filing of the amended plaint was there a requirement of allowing time to file the amended written statement?
(ii) Whether it was necessary to frame issues after notice to the other parties?
(iii) Whether there is any inherent power of the Court to proceed in the matter, as they did?
15. Learned counsel for the respondent No,1 has replied the same and reliance was made on (i)
1996 CLC 79 (ii) 2007 CLC 1089 (iii) PLD 2001 Kar. 383 (iv) 2003 M LD 1430 (v) PLD 1963 Dhaka 175 (vi)
1983 SCM R 1265 (vii) unreported judgment in Suit No, 1448 of 1998 (viii) Letter issued by PPIB to the respondent No,1 (ix) statement filed by the respondent No,2 in HCA No,163/2008 (x) 2003 CLD 1822 and (xi) 2000 M LD 466.
16. We have heard the arguments of the learned counsel for the parties, perused the record minutely and law and relevant case law.
17. As far the contention of the learned counsel for the private respondent that the documents annexed with the memo. Of plaint which were not objected to by the learned counsel for the appellants/ defendants are concerned, it is settled proposition of law that any document placed on record or exhibited, which has not been duly proved, cannot be considered as admissible piece of evidence so the contention raised by learned counsel for the respondent is repelled.
18. The reported and unreported judgments cited at bar by learned counsel for the respondent are quite different from the facts and circumstances of case in hand. Therefore, the supra cases are not relevant and rendered no assistance and support to the respondents' case. It will be advantageous to reproduce the order sheet dated 21-7-2008 which is as under:-- "For further orders as amended plaint filed as per order dated 7-4-2008.
' 21-4-2008 ' Mr. Umar Lakhani, Advocate holding brief for Mr. Abid S. Zuberi, Advocate for the plaintiff.
' Mr. Hussain Tabassum, Advocate.
' Mr. Hussain Tabassum, Advocate for the plaintiff has filed an application under section 151 C.P.C.
For taking up the matter today. The application is granted. Mr. Abid S. Zuberi has also filed an application under rule 50 of the Sindh Chief Court Rules (O.S.) for discharge of the Vakalatnama on behalf of the plaintiff. Mr. Hussain Tabassum, Advocate has already filed his vakalatnama on behalf of the plaintiff. The application is allowed and vakalatnama of Mr. Abid S. Zuberi is discharged.
Office is directed to delete the name of Mr. Abid S. Zuberi from the file cover and put C.M.A.
Numbers of the applications filed today in Court by Mr. Abid S. Zuberi and Mr. Hussain Tabassum, Advocates, which have been disposed of.
' Mr. Hussain Tabassum states that nobody has appeared from the defendant's side since long and matter is proceeding ex parte. He has argued the matter at length. Orders during the course of the day.
(Sd.) Judge
19. The mandate of Order XIV, rule 1, C.P.C, reveals that it is incumbent upon the Court to frame issues, in the light of controversies raised in the pleading of the parties. Issues of law and facts are to be illustrated clearly, to enable the parties to understand the point at issue to support their respective claims by relevant evidence on material points. In the instant case, we find that no opportunity was afforded to the defendants for filing amended written statements and the single issue framed by the learned Single Judge does not reflect the pleadings of the parties causing prejudice to the appellants/ defendants. The Honourable Supreme Court of Pakistan and this Court time and again, has laid stress on the fact that the cases in between the parties should be decided on merits and the rules and procedures are framed to foster the cause of justice and should sparingly come into the way of dispensation of the same on merits, reference may be made to Syed Tahira Begum and another v. Syed Akram Ali and another (2003 SCM R 29) and Libra Enterprises v. Messers Macter Pharmaceutical (Pvt) Ltd. (2006 CLC 316), a division bench judgment authored by one of us (Mr. Justice Azizullah M. Memon ACJ).
20. On perusal of record we find that on 21-4-2008 matter was fixed for further order. Learned Advocate for plaintiff has filed an application under section 151, C.P.C. For taking up the matter on same day which was granted by learned Judge even without issuing any notice to the defendants.
On the same day Advocate for plaintiff stated that nobody has appeared from the defendant's side since long and matter is proceeding ex ,parte. He has argued the matter and impugned judgment has been passed on same day and decreed was later on signed on 15-5-2008. The entire matter has been decided in one day without compliance of the various proceedings of the suit the stages i,e, settlement of issues, filing of list of witnesses and documents, recording of evidence and final arguments.
21. We, therefore, do find that neither the learned Single Judge was justified in deciding the entire case in such a hurry nor the judgment is in accordance with the evidence on record. Admittedly, the learned Judge in Chamber erred in law, committed material irregularity and as such we have no other option except to set aside the impugned judgment and decree passed by the learned Judge.
22. In the circumstances, we are of the opinion that the defendants/appellants have made out a case to allow them to defend themselves in the above said suit in order that it may be heard and decided on merits. Since decree has been signed by learned Judge on 15-5-2008 and appeals have been filed on 4-6-2008 and 6-6-2008 therefore, same be treated within the period of limitation prescribed by law. Consequently both High Court appeals are hereby allowed. The impugned judgment and decree passed in Suit No, 312/1996 are hereby recalled and the defendants/appellants are afforded with an opportunity to file their amended written statements in the suit within thirty days from the date of announcement of this judgment.