' MUNIB AKHTAR, J.---This application for interim injunctive relief arises in the following circumstances.
2. Syed Muhammad Asim (hereinafter referred to as "the deceased") passed away on or about 5- 12-1990. He was a Sunni Muslim, who was unmarried and whose parents had predeceased him. The deceased left a substantial estate comprising various assets and properties. For present purposes, it is sufficient to refer to only one of those assets, being the majority shareholding held by the deceased in a company by the name of Universal Textile Mills Limited (hereinafter referred as "the Company"). The plaintiffs claim to be the sole legal heirs of the deceased, being his sisters and/or their successors-in- interest, and the nephews of the deceased, being the sons of a predeceased brother. Their grievance, as further elaborated herein below, is that the defendants have unlawfully deprived them from their legal entitlement to, and in the estate of the deceased including in particular, the shareholding of the deceased in the Company.
3. It appears that all the plaintiffs are Indian nationals, and the present suit has been filed through two attorneys, one of whom is Mr. Qazi Syed Qaiser Noor. According to learned counsel for the plaintiffs, in order to enable the estate of the deceased, which comprised of assets wholly within Pakistan, to be managed properly, the plaintiffs and/or their predecessors-in-interest executed a power of attorney on or about 24-10-1991 in favour of three persons, being the defendant No,1, the defendant No,6 and defendant No,11. The power thereby granted was of a general nature, and included the power of sale of the properties comprising the estate of the deceased. The properties were listed in a schedule to the power of attorney, and included the shares held by the deceased in the company. The instrument authorized the attorneys to act jointly and severally so that each one of them was enabled to act in terms of the power conferred thereby. It may be noted that two of the attorneys, being the defendants Nos.6 and 11, have passed away and are now represented in the present proceedings by their successors-in-interest.
4. The Company had an issued and paid-up capital of 425,000 shares of which around 265,746 shares were held by the deceased. The Company was originally listed on the stock exchange. After the passing away of the deceased, who had been its Chairman, there was apparently a change in management and the plaintiffs' attorneys and/or their nominees took over management and control of the company. The grievance of the plaintiffs, as submitted by learned counsel appearing on their behalf, is that over a period of several years, the attorneys and their nominees first had the Company de-listed by buying out the other shares, and then converted it from a public company into a private company, which is its status today. According to the learned counsel, the attorneys had filed a petition in this Court, being SMA No,161 of 1991, under the Succession Act, 1925, with regard to the estate of the deceased. This petition was ultimately disposed of by means of an order dated 24-12-1995, whereby the Nazir of this Court was directed to take charge of the securities and other assets listed in the order, which included the shares held by the deceased in the Company.
Thus, it was the Nazir who was empowered to take charge of the shares and to receive the profits, dividends and benefits accrued, and accruing, thereon. Learned counsel submitted that in clear defiance of this order, the attorneys and their nominees, being in control of the Company, have purported to transfer the shares held by the deceased in the Company to themselves and/or their nominees on or about 18-7-2005. He submitted that this was a gross violation of the authority conferred on the attorneys by means of the power of attorney referred to herein above. He referred to Muhammad Taj v. Arshad Mehmood 2009 SCM R 114 and Jamil Akhtar and others v. Las Baba and others PLD 2003 SC 494 to contend that it was a settled principle of law that if an agent acting under a power of attorney sought to transfer any property of the donor of the authority to himself or his fiduciaries, then a specific permission had to be obtained from the donor. No such permission had been taken in the present case by the attorneys, and thus, according to learned counsel, the purported transfer of the shares of the deceased in the Company was entirely unlawful. It was the plaintiffs who were, and remained, the sole and true owners of the shares, being the only legal heirs of the deceased.
5. It is averred in para 3 of the plaint that the Company owns a property as described therein, being a plot of land and building thereon in Block No,22, F.B. Area Karachi (hereinafter referred to as the "said property"). Although the Company was, as its name suggests, originally a textile unit, it is common ground between the parties that now the only income generating asset of the Company is the said property, a portion of which has been leased to defendant Nos.17 to 18, and a portion of which is with the defendant No,16. The latter operates a C.N.G. Station on the same by way of a joint venture with the Company. Thus, the tenants pay rent, and the defendant No,16 makes regular monthly payments under the joint venture. The present application is concerned solely with these payments, and the only relief sought in this application is as follows:-- "For the reasons disclosed in the accompanying affidavit, the plaint and its Annexures, it is, prayed on behalf of the plaintiffs above named that this honourable Court may be pleased to grant temporary injunctions restraining the defendants Nos.1 to 14, their servants, agents, attorneys, and any other person acting through or under them from receiving and the defendants Nos.16 to 18 their servants, agents, attorneys, and any other person acting on their behalf from paying to the defendants Nos.1 to 14 the rent, use/occupation charges of Plot No,L-16/A, measuring 5484 sq. Yds, Block-22 with building thereon, known as Universal Textile Mills Ltd., situated in Federal 'B" Industrial Area, Karachi till the final disposal of the suit."
6. It is to be noted that in the suit as originally instituted, the Company was not made a party. An application was moved by the defendants Nos.1 to 15, being C.M.A. 7103 of 2010, praying that the Company may be impleaded as a defendant. This application was allowed by means of an order dated 29-6-2010, and the Company was made party to the suit as defendant No,19.
7. Learned counsel appearing for the defendants Nos.1 to 15 strongly contested the claim put forward on behalf of the plaintiffs. He submitted firstly, that the property in question belonged to the Company, which was a separate legal entity in its own right and hence the said property did not form part of the estate of the deceased. Thus, since it was the Company that was entitled to receive the rent from the tenants and the payments from the defendant No,16 under the joint venture, the plaintiffs had no right to block or prevent the said defendants from making payments to the Company. Insofar as the shares held by the deceased in the Company were concerned, learned counsel submitted that in fact the plaintiffs had disposed of 205,000 shares to the defendants for a total sale consideration of Rs,17,42,000, i,e, for approximately Rs,8.50 per share and it was this transaction that was duly noted in the Company's records on 18-7-2005. Learned counsel emphasized that prior thereto, the Company's record had shown the shares as belonging to the estate of the deceased, and it was only on the aforesaid date that the shares were transferred to the names of the defendants. Learned counsel submitted further that of the sale consideration, a sum of Rs,12,60,000 was paid in cash to the plaintiffs, and the balance was paid over in foreign currency equivalent to US$ 8000. He further submitted that the remaining 60,746 shares of the deceased in the Company were transferred to one of the present attorneys of the plaintiffs, namely, the aforesaid Mr. Qazi Noor, at the request of the plaintiffs themselves. He further submitted that the aforesaid Mr. Qazi Noor served for a time as a Director as well as the Secretary of the Company and participated in its affairs. In fact, according to learned counsel for the defendants, the agreement entered into between the Company and the defendant No,17, annexed to the plaint itself, was executed on behalf of the Company by three Directors, including the aforesaid Mr. Qazi Noor. Thus, according to learned counsel for the defendants, the present claim being made by the plaintiffs was entirely concocted and without any basis whatsoever. The plaintiffs did not have any interest in or concern with the shares of the deceased in the Company (having transferred the same), and the very acts regarding which the present grievance was being aired (namely the leasing out of portions of the said property) had been done with the knowledge and participation of the plaintiffs' own attorney, the aforesaid Mr. Qazi Noor.
8. In reply, learned counsel for the plaintiffs stated that the aforesaid sums in question, i,e,, the Rs,12,60,000 paid in cash and the remaining portion paid in US dollars had in fact been returned to the defendants for which proper receipts had been obtained and which were annexed to the affidavit-in-rejoinder of the plaintiffs. It may be noted here that during his submissions, learned counsel for the defendants had also referred to these documents. His case was that the purported receipts were forgeries, and the plaintiffs had not returned the amounts paid to them for the shares. Learned counsel further submitted in the alternative that even if the receipts be accepted as true and proper, that nonetheless clearly showed that the shares had been transferred under a proper and valid transaction by the plaintiffs to the defendants, and therefore the only grievance, if any, of the former was for a claim for damages or other monetary compensation for the sale consideration.
9. Learned counsel for the defendant No,16 stated that insofar as the said defendant was concerned, it had to make regular monthly payments to the Company and therefore it needed clarity as to how such payments could be made in order to enable the said defendant to discharge its legal obligations. It would seem that the position of the defendants Nos.17 and 18, the tenants of the Company, is also the same as that of the defendant No,16.
10. Before considering the matter on its merits, two preliminary points need to be stated and kept in mind. Firstly, as is clear from the relief sought by the plaintiffs in terms of the application under consideration, the present matter moves within a very narrow compass namely, whether or not the defendants Nos.16 to 18 are to continue making payments due from them in respect of their use or occupancy of the said property. The application itself seeks to restrain the defendants Nos.1 to 14 from receiving such payments and, as noted above, the Company was not impleaded in the suit as originally instituted. However, it is common ground that the said property belongs to the Company, and the latter is, in law, a separate legal entity. Payments therefore, have to be (and apparently are being) made to it, and not to the defendants Nos.1 to 14. Thus, since the Company is now impleaded as a defendant, the relief really being sought by the plaintiffs in the present application is that the defendants Nos.16 to 18 should not make payments to the Company. The point being made here however, still remains, namely that the present application is very narrowly focused on the sole question of whether or not the Company should continue to receive payments from the defendants Nos.16 to 18. It is for this reason that although the submissions of learned counsel for the plaintiffs and the defendants Nos.1 to 15 referred to various other aspects of the suit as well. I have kept attention focused on the actual controversy that requires determination in the present application. Since the other submissions did not relate to a resolution of the question raised in the application at hand, I have not burdened this order by recording the same. Secondly, it is accepted by the defendants that the entire Board of Directors of the Company comprises of the defendants, and that the Chief Executive of the Company is also one of the defendants. Thus, there is no question but that the Company is entirely in the hands, and under the control, of the defendants. In my view, it was not therefore necessary in the present circumstances to formally issue notice to the Company before hearing this application after it had been made a party to the suit.
11. In my view, the starting point for the resolution of the question raised in the present application must be the fact that the said property belongs to the Company. It is a fundamental principle of law that a company is a separate legal entity. The assets and properties of the company belong to it and not to its shareholders. Thus, what the deceased held and owned in the Company was the shareholding that stood in his name. That did not however mean that he owned any of the assets of the Company, including the said property. It follows that all that the plaintiffs can lay claim to is the shareholding of the deceased in the Company. They do not, as such, have any right, title, or interest in any of the assets of the Company, including the said property. Their grievance is of course, that they have been unlawfully deprived of the deceased's shareholding in the Company by the defendants. But that does not mean that they have therefore also been somehow "deprived" of the said property or any income being generated by any use of the latter. The two matters are in law separate and distinct, and the plaintiffs' attempt to conflate the same is not legally correct.
12. It is of course true that if a company is in the control of majority shareholders who are abusing their position by (e.g.) defrauding the company, the minority shareholders can institute legal proceedings to bring such a situation to an end. However, the important point to note is that such an action is a derivative or representative action. The minority shareholders do not act in their right or on their own behalf. The suit is brought on behalf of the company (which is unable to take action because of its control by the majority shareholders). The company is, and indeed must be, impleaded in such proceedings.
13. In the present case, the right asserted by the plaintiffs is a right which they claim inheres in them. They do not claim to act in any representative capacity on behalf of the Company; indeed, they did not implead the Company at all. In other words, they seek an injunction in respect of the payments being made by the defendants Nos.16 to 18 on the basis of a right claimed by them for themselves. But that right, if any, can only be a right to, or in, the said property, since the defendants Nos.16 to 18 make payments only for their use and occupancy of the said property.
However, for the reasons already stated, no such right in, or to, the said property inheres in the plaintiffs. The said property belongs to the Company, and only to the Company. The plaintiffs' claim to the shareholding of the deceased in the Company does not confer any right on them in, or to, the said property.
14. Even as regards the plaintiffs' claim to the deceased's shareholding in the Company, the prima facie position that emerges from the record is that certain payments were made to the plaintiffs by the defendants, i,e,, the cash payments of Rs,12,60,000 and US$ 8,000. In their affidavit in rejoinder, the plaintiffs have contended that these sums were taken back from them by the defendants "with ulterior motives and in preplanned manner" for which receipts were obtained from the latter.
Learned counsel for the defendants submitted that these receipts were forgeries. That is of course a matter that will have to be determined at trial. However, for present purposes, I find much force in his alternative submission that even if the receipts be regarded as true and proper, that shows that some transaction did take place in respect of the shares for which payment was made by the defendants. Even if the defendants succeeded in tricking the plaintiffs into returning the money (as is being claimed by the letter) then, prima facie, it would seem that their claim sounds only in damages or other monetary compensation for a return or payment of the consideration due to them. In any case, as it clear from the foregoing, this dispute does not, prima fade, having anything to do with the question raised in the present application, namely, the payments being made by the defendants Nos.16 to 18 in respect of their use or occupancy of the said property.
15. It is of course well-established that for a plaintiff to successfully maintain an application for interim injunctive relief, all the three ingredients necessary for such relief must be found to exist in the plaintiffs favour. The plaintiff must firstly establish a prima fade case. In my view, the question of whether or not the plaintiff has succeeded in establishing a prima facie case must always be examined in the context of the application under consideration. In other words, the plaintiff must show that he has a prima facie case for the grant of the relief that he is seeking. In the present case, for the reasons stated herein above, in my view the plaintiffs have failed to make out a prima facie case in the context of the present application and the relief that they are seeking in terms thereof. It was necessary for them to show that they had some prima fade right, or interest in, the said property for the use or occupancy of which the payments which the plaintiffs seek to block are being made. They have however failed 'to make out any such case since the said property belongs to the Company alone. Secondly, the plaintiff has to show that the balance of convenience lies in his favour and against the defendant. In my view, the plaintiffs have not succeeded on this score as well. The question of balance of convenience in the present case has to be examined not between the plaintiffs and the defendants Nos.1 to 15, but rather between the plaintiffs and the Company (now impleaded as the defendant No,19). In my view, the balance of convenience in respect of the payments lies with the owner of the said property, i,e, the Company and not the plaintiffs. Finally, the plaintiff has to show that he will suffer irreparable loss and injury if the interim relief is not granted to him. In the present suit, the principal question is as to whether the plaintiffs have been wrongfully deprived of their claimed right to the estate of the deceased, including his shareholding in the Company. The question of payments made to the Company in respect of the said property owned by it is essentially an ancillary question and does not have any direct or material bearing on the principal question. As noted above, it is common ground that the said property is now the only income generating asset of the Company. In such a situation, it seems that it is not the plaintiffs, but rather the Company which may suffer irreparable loss and injury if the present application is allowed since that would, in effect, deprive the Company of its sole source of income.
16. In view of the foregoing, the plaintiffs are not entitled to the interim injunctive relief that they are seeking by means of the present application. Accordingly, the application is hereby dismissed and the ad interim order made on 2-6-2010 is hereby recalled. The defendants Nos.16 to 18 shall make payments of the amounts due from them to the Company. The Company shall by the 10th day of the next succeeding month, submitted a statement duly certified by its auditor showing the receipts and expenditures for each month. It is however, clarified that the observations made hereinabove are only of a tentative nature and made for purposes of the present application alone.