1. KHILJI ARIF HUSSAIN, J.--- The plaintiff filed suit for declaration that the plaintiffs are the lawful and legal owners of shares in defendants Nos.10 and 11 as specified in Annexure 'X' annexed to the plaint and to direct the defendant No.1 to hand over and deliver possession of the said shares to the plaintiffs and in alternate for a decree and order against defendant No.1 for cancellation of the shares alleged to be in possession of defendant No.1 and damages against defendants Nos.2 to 8 in the sum of Rs,10,00,00,000.00 (Rupees ten crore).
2. Brief facts for the purpose of deciding listed suits are that plaintiff entered into an agreement on 23-4-1987 agreed to purchase shareholdings of defendants Nos.2 to 8 in defendants Nos.10 and 11 comprising of 13,06,310 shares in the defendant No.10, 17,500 in defendant No.11 and 3 shares in another company, namely, Saif Nadeem Industries (Pvt.) Ltd. For a total sale consideration of Rs,13,063,100.00. Pursuant to said agreement plaintiff established inland Letter of Credit in the sum of Rs,13,063,100.00. However, on the request of defendant No.2 that he would be delivered only 715,910 shares instead of 1,306,310 shares at price higher than the price agreed per share, the plaintiff reluctantly agreed to this and an amended Letter of Credit was opened. The defendant No.2 on negotiation of Letter of Credit handed over 715,910 shares of defendant No.10 to National Bank of Pakistan, Lahore in the presence of officers of American Express Banking Corporation, Lahore, B.C.C.I., Lahore, Allied Bank of Pakistan, Lahore and the said shares were thus received by the plaintiff through National Bank of Pakistan. The defendant No.2 also handed over share certificates and transfer deeds of 17,500 shares of defendant No.11 and 3 shares M/s. Nadeem Industries (Pvt.) Ltd. And same were transferred in the name of the plaintiffs. The plaintiffs also purchased 6,93,690 shares of defendant No.10 from other sources and took over possession, management and control of defendants Nos.10, 11 and Saif Nadeem Industries (Pvt.) Ltd. As majority share-holdeRs, The agreement between the parties by which defendants Nos.2 to 8 agreed to sell their shares specifically provided that the shares in question were encumbered and free from any lien/charge or encumbrance and that the defendants Nos.2 to 8 are the lawful owners of the said shares with full power and authority to sell and transfer and dispose of the same and that there was no liability of defendants Nos.10, 11 and Saif Nadeem Industry (Pvt.) Ltd. And other than those disclosed in the agreement and the schedules. The defendants Nos.2 to 8 further undertook to indemnify the plaintiffs against any liability of defendants Nos.10, 11 and Saif Nadeem Industries (Pvt.) Ltd. Not disclosed in the agreement after purchase of the aforesaid shares from defendants Nos.2 to 8. The shares purchased by the plaintiffs from defendants Nos.2 to 8 were pledged with defendant No.9 as security for repayment of certain liabilities and upon the plaintiffs letter of credit being negotiated defendant No.9 (American Express International Banking Corporation, Lahore) and other banks dues were duly paid and the relevant shares sold and purchased under the said agreement were released from pledge/charges of the Banks and handed over to the plaintiff.
3. On 26-11-1987 plaintiff No.1 received a letter from the defendant No.1 (National Development Finance Corporation) informing him that the defendants Nos.2 to 8 as sponsors of Saif Nadeem Bicycles Ltd., has pledged shares of the value of Rs,42,500,000 of Saif Nadeem Engineering Ltd.
4. (defendant No.11) and' shares of the value of Rs,8,000,000.00 of Saif Nadeem Kawasaki Motors Ltd.
5. (defendant No.10) to secure the financial assistance to Messrs Saif Nadeem Bicycles Ltd. And that the shares were still held by N.D.F.C. The plaintiff replied said letter and requested the defendant No.1 not to grant any credit facilities against the security of the shares allegedly to be in possession of defendant No. 1. The plaintiff also addressed letter dated 29-11-1987 to defendants Nos.2 to 8 calling upon his clarification about the claim of the defendant No.1. The plaintiff also requested defendant No.1 to deliver said share, certificates in his possession to the plaintiffs and/or defendants Nos.10 and 11. However, the defendant No.1 declined to do so and stated that the subject shares would be handed over to the sponsors of Messrs Saif Nadeem Bicycles Ltd., who deposited same with defendant No-.1. It was stated that due to fraudulent misrepresentation and false, incorrect warranties, covenants of the defendants Nos.2 to 8 the plaintiff has suffered and are likely to suffer along with defendants Nos.10 and 11 losses and damages and plaintiffs claim a sum of Rs,10,00,00,000.00 (Rupees ten crores) as damages.
6. On 19-3-1989 defendant No.1 was directed to surrender all share certificates in his possession with the Nazir of this Court. The defendant No.1 filed written statement and stated that they are willing to hand over shares in their possession to the person(s) may be designated by the Court. The defendants Nos.2 to 8 filed written statement and stated that all the shares agreed to sell by them were duly transferred in the name of the plaintiff and suit against defendants is misconceived and based on false allegation made by the defendant No.l. The defendants denied that they have taken any financial facilities from defendant No.1. The defendant No.9 also filed written statement and denied the allegations made in the memo. Of plaint. On the basis of the pleadings following issues are framed:--- "(1) What were the terms and conditions of sale of shares by defendants Nos.2 to 8 in favour of plaintiffs?
(2) Whether defendants Nos.2 to 8 fulfilled their obligations under the said Agreement?
(3) Whether defendants Nos.2 to 8 had pledged with defendant No.1, shares of the value of Rs,42,500,000 of defendant No.11, and shares of the value of Rs,8,000,000 of defendant No.10, out of the shares sold by defendants Nos.2 to 8 to the plaintiffs? If so, what is its effect?
(4) Whether defendants Nos.2 to 8 had made misrepresentations and fraudulently and dishonestly suppressed the liabilities of defendants Nos.10 and 11 at the time of execution of the Agreement? If so, what is its effect?
(5) Whether the plaintiffs have suffered loss and damages in the sum of Rs,10 Crores? If so, whether the defendants Nos.2 to 8 are liable for the same?
(6) Relief?"
7. On behalf of the plaintiff, plaintiff filed his affidavit in evidence and repeated the allegations as stated in the memo. Of plaint. The defendants failed to cross-examine the plaintiffs witness or lead any evidence in rebuttal. Heard Mr. A.H. Mirza, Advocate, of the plaintiff. None for the defendants, perused the record and my findings on issues are as under:--- Issues Nos.1 and 2.
8. As regards Issues Nos.1 and 2, the defendants Nos.2 to 8 in their written statement did not deny execution of the agreement to sell the share certificates as well as its terms. The agreement of sale though has not been produced along with affidavit in evidence however same has been filed as Annexure "A" to memo. Of plaint and since defendants have not denied the execution of the agreement and its terms and condition and the share certificates which defendants agreed to sell and plaintiff purchased were duly transferred in the name of the plaintiff.
9. The issues are answered in affirmative.
10. Issues No.3.
11. The share certificates as mentioned in the agreement of sale were duly transferred in terms of the agreement between the parties in the name of the plaintiff, and plaintiffs took over management of defendants Nos.10 and 11 being major shareholders in the company pursuant to sale agreement.
12. The defendant No.1 deposited share certificates in this Court on the first date of hearing which certificates apparently may be duplicate of the shares certified which plaintiff purchased from defendants Nos.2 to 8 and is not claiming any liability against defendants Nos.10 and 11 and/or on the said shares which plaintiff had purchased from the defendants Nos.2 to 8 and deposited the same with the Nazir in terms of the order dated 19-3-1989. No document has been produced by defendant No.1 or by the plaintiff that the share certificates were pledged by the defendants Nos.2 to 8 with defendant No. 1 .
13. The issues are answered in negative.
14. Issues Nos.4 and 5.
15. Heavy burden lies upon the plaintiff to prove that defendants Nos.2 to 8 made misrepresentation and fraudulently and dishonestly suppressed liability of defendants Nos.10 and 11 at the time of execution of the agreement and accordingly plaintiff has suffered loss and damages in the sum of Rs,10 Crores. The plaintiff in his own affidavit in evidence stated that the certificates held by defendant No.1 are not genuine/authentic shares of defendant No.10 and as such defendants Nos.2 to 8 cannot be held liable for the alleged claim of the defendant No.1 that the shares certificates in question were pledged with them. It was alleged in the affidavit in evidence that the plaintiff has suffered loss of Rs,185,000,000 by way of customs duties evasion, liquidation petition filed by American Express Bank for the recovery of Rs,4.3 million value of the shares purchased, Rs,13,063,100 increase in liability from 80,000,000 to Rs,23,000,000 of the amount of Rs,150,000,000 for damages and loss of profit sustained by plaintiff of Rs,154,000,000 but unfortunately the plaintiffs failed to bring evidence on record how plaintiffs are entitled for the alleged damages/ compensation. No documentary evidence has been produced that there was any evasion of customs duties or that on account of any acts and deeds of the defendants the plaintiff has suffered alleged loss claimed by them. In the absence of any documentary evidence on record that the plaintiff has suffered damages further that the defendant committed breach of the agreement, the plaintiff is not entitled for alleged claim of damages.
16. Issues are answered in negative.
17. For the foregoing reasons, the plaintiffs suit is decreed to the extent that the plaintiffs are lawful, rightful and legal owners of the shares of defendants Nos.10 and 11 which they have purchased from the defendants Nos.2 to 8 by an agreement to purchase and shares certificates deposited by the defendant No.1 with the Nazir of Court, may be returned to the plaintiffs after cancelling the said share certificates as they are either duplicate or forged share certificates.