' SALMAN HAMID, J.---This order will dispose of CMA No,6463 of 2010. Through this CMA restraining order has been sought by the plaintiffs against the defendant from creating third party interest in the following properties:--
(i) SE 16 R. 32, situated at 15-B, Davis Road, Lahore;
(ii) St-8/1, Main Drig Road, Shahrah-e-Faisal, Karachi.
(iii) Plot No,7, Survey Sheet No,35-P/1, Banglore Cooperative Housing, Society Limited, Block 7 and 8, Karachi.
(iv) Plot No,A-1, through A-25, A-28, through A-48, A-26, A-49 and A-50, Sector A, HITS, Lasbella, Balochistan. (hereinafter referred to as; "the Properties")
2. The case of the plaintiffs is that in order to move forward in settling and regularizing their liabilities towards the defendant on 4th December, 2008 a Memorandum of Understanding (MoU) was executed. In terms of the MoU above Properties were agreed to be parted with conditionally in favour of the defendant within the time stipulated therein.
3. The MoU also stipulated that the pledged sugar worth Rs,250,000,000 shall be sold and 30% of the value thereof, being Rs,75,000,000 shall be paid by the plaintiffs against which the defendant would release 100% sugar and would convert the balance liability into long term finance, to be secured by a charge over all of fixed and other assets of Dewan Sugar Mills Ltd.
4. The MoU further stipulated that the pledge vehicles would be sold and the proceeds thereof were to be deposited by Dewan Farooq Motors Ltd. Towards the reduction of their liability.
5. It was further agreed in the MoU that yarn of Dewan Textile Mills and Dewan Farooq Spinning Mills Ltd. Would be adjusted which will create room in the L/C limit against which the defendant was to open L/Cs for further purchase of cotton.
6. The MoU also stipulated that the defendant would restructure the liabilities of the plaintiffs whenever other banks agree for the same.
7. The MoU also stipulated that the total outstanding of the plaintiffs would be rolled over by the defendant by 15th January, 2009.
8. Dr. Farogh Nasim, learned counsel for the plaintiffs argued that the MoU required the plaintiffs and the defendant to perform reciprocal and collateral acts. According to Dr. Nasim though the plaintiffs fully performed their part of the contract, the defendant miserably failed to perform their part of the contract The plaintiffs were thus defrauded by the defendant in getting the title of the Properties transferred in their favour, without first parting with the consideration thereof, i.e the roll over and restructuring of their (plaintiffs') liabilities.
9. It was also argued that the MoU is a document which stands on its own and is to be read independently, as an independent contract. Non-compliance of any of the covenants of the MoD by any of the party to it attracts specific performance thereof through the court of law. Hence it was argued by Dr. Nasim that execution of Agreements and Sale-Deeds in respect of the Properties was an act from the side of the plaintiffs in compliance of the terms of the MoU which were to be reciprocated by the defendant by allowing rolling over and restructuring the plaintiffs' liabilities.
10. It was further argued that now that the plaintiffs have performed their part of the contract in terms of the MoU and third party conditional interest in respect of the Properties has been created by them (plaintiffs) in favour of the defendant, the defendant are bound, both ethically and legally to perform their part of the contract and give roll over and 'restructure plaintiffs' existing liabilities.
11. Mr. Arshad Tayyabally, erudite counsel for the defendant, forcefully opposed the CMA and prayed for its dismissal. The reasons were that the plaintiffs were not party to the MoU and could have not, keeping in view the provisions of section 23(a) of the Specific Relief Act, 1872, preferred the present suit. It was also, argued that MoD is not a valid agreement and riot enforceable. It was, according to Mr. Tayyabally, superseded firstly by agreements and then by Sale Deeds in respect of the properties. Reliance was placed on Mehran Sugar Mills v. Sindh Sugar Corporation Ltd. And 2 others (1995 CLC 707).
12. It was thus argued that the MoU was superseded by the agreements and the Sale-Deeds of the Properties and the plaintiffs deemed to have given up the condition of roll over and restructuring of their liabilities as was stipulated in the MoU. The two subsequent sets of instruments were free from any reservations on the part of the plaintiffs. In this behalf Tahir Hussain Malik v. Mst. Najma Rafi (1995 SCMR 1407) was cited. As an alternative argument it was also stated by Mr. Tayyabally that at best the condition of roll over could be attributed to Clause 4 of the MoU only, which too extinguished since the plaintiffs failed to make the payment of the amount mentioned therein.
13. As to the argument of restructuring, as raised by the plaintiffs, it was mentioned by the learned counsel for the defendant that such was conditional inasmuch as that it was to be made effective provided other banks also agree to restructure plaintiffs' liabilities.
14. It was further argued that the question of roll over does not arise as the plaintiffs had not obtained any financial assistance from the defendant. As an alternative argument it was stated that the plaintiffs were mortgagors of the third party in respect of the Properties. Now that the Properties have been transferred into the name of the defendant, the plaintiffs are not even mortgagoRs, The plaintiffs, it was argued, are not even owners of the Properties and they have no right therein. Reliance was placed on S.M. Majeda Khatun Chowdhurani v. Rabindra Chandra DE and others (1952 Dacca 112).
15. Mr. Tayyabally also argued that since the plaintiffs have also raised claim of damages, they are not entitled to interim injunction. It was also argued that since necessary and proper parties have not been impleaded the suit is liable to be dismissed along with the CMA. In support of this contention, reliance was placed on Muhammad Amin v. Khamisa and another (PLD 1956 Lahore 22). Receipt of Letters dated 20-1-2009 and 18-2-2009 was denied. According to Mr. Tayyabally these were forged and contained forged stamps of the defendant on them.
16. In the end it was argued that the plaintiffs, at best, could have preferred a suit under the banking jurisdiction as according to the learned counsel, looking at the contents of the plaint, the case of banker and customer relationship was attempted to be made out.
17. With regard to the objection that the suit is hit by section 23(a) of the Specific Relief Act, 1877, the learned counsel for the plaintiffs, in the first instance, in rebuttal stated that such objection was not raised specifically either in the written statement or in the counter affidavit and therefore, the same was inconsistent and at variance to the pleadings of the defendant. In such regard Muhammad Hussain (deceased) through his legal heirs v. Noor Muhammad (1992 CLC 1459) was relied upon.
The argument of section 23(a) of Specific Relief Act 1877 was further combated by stating that by virtue of clause (b) of section 23 of the Specific Relief Act 1877, a suit could be filed by a representative. In such regard reliance was placed on Muhammad Farouk Dossa v, MRs, Qudsia Dossa and 2 others (1990 MLD 2016). To meet the objection of section 23(a) of Specific Relief Act, 1877 it was further stated in rebuttal that CMA No,12901 of 2010 has been filed for impleading the other companies of Dewan Group with which Group MoU was entered into.
18. Meeting the argument that the MoU was superseded and/or it is incapable of standing on its own, it was argued and reiterated that since reciprocal promises are contemplated in the MoU and that the plaintiffs have fulfilled their part of the contract and the defendant yet to perform its part, the MoU is a document very much in existence and is not superseded in any manner whatsoever.
Specific performance of MoU is still possible. In support of these arguments, the learned counsel for the plaintiffs relied upon Major (R) Ahmed Khan Bhatti v. Mst. Masooda Fatima (PLD 1981 Karachi 398).
19. Combating the argument that the subsequent agreements and Sale-Deeds in respect of the Properties superseded the MoU, it was argued in rebuttal that since the subsequent, document do not mention even by passing the supersession of MoU, the same cannot be treated as such. It was reiterated that the MoU is still capable of specific performance. Reliance was placed on Qamaruzaaman Khan v. Industrial Development Bank of Pakistan (2009 CLD 460) and it was argued that all the documents i.e. MoU, the Sale Agreements, and the Sale Deeds in respect of the Properties are to be read together. In this regard reliance was placed on Sandoz Limited and another v. Federation of Pakistan and others (1995 SCMR 1431), Hoshang and others v. Dr. Eddie P.
Bharucha and others (PLD 1968 Karachi 723), Civil Aviation Authority v. Messrs AER Rianta (2002 CLC 1430), Shahab Shahzad Mirza v. Nadeem Ahmed (2009 YLR 1601) and Eidoo Khan v. Abdul Majeed and 3 others (2001 YLR 2634).
20. The argument that at best the agreement of roll over was only to the extent of clause (4) of MoU was also refuted it was argued that the document has to be read as a whole and not in isolation. It was further argued that such a plea was raised only at the time of argument of CMA and was not raised in the pleadings of the defendant.
21. With regard to the argument that restructuring was subject to other banks also restructuring, it was argued in rebuttal that it is the defendant who first mala fidely initiated recovery proceedings against the plaintiffs. Because of such mala fide recovery proceedings, it was argued, the question of restructuring of plaintiffs' liabilities by other banks was made impossible by the defendant.
22. With regard to the argument that the plaintiffs were not the customer of the defendant, it was argued that since the plaintiffs belong to Dewan Group and that the MoU was also executed between the Dewan Group and the defendant; the suit was maintainable. Even otherwise, it was argued that appropriate application for impleading other companies of Dewan Group is already pending in the suit.
23. Facing the argument that since the plaintiffs have claimed damages, suit for injunction was not maintainable, it was argued that in the first instance only a right has been reserved in the plaint for claiming, damages and not otherwise. In the second instance it was argued that even if compensation and/or damages would have been claimed, such would be of no consequence and the suit for injunction was still maintainable. Reliance was placed on MRs, Mussarat Shaukat All v.
MRs, Safia Khatoon and others (1994 SCMR 2189).
24. Meeting the objections that the letters dated 20-1-2009 and 18-2-2009 were never received and that the stamps on it of the defendant were forged, it was argued that even if these letters are taken out from the pleadings, the terms of MoU would still be capable of specific performance. It was also argued that even otherwise the veracity of the letters and stamps thereon cannot be decided at an interlocutory stage.
25. The argument that the suit ought to have been filed under the banking jurisdiction, it was simply argued that since the defendant themselves have disputed the relationship of banker and customer, the suit was not filed under the banking jurisdiction. As an alternative argument, it was stated that it is a settled law that the suit on original side can be converted into suit on banking side and vice versa. Reliance was placed on Muhammad Hussain v. State Bank of Pakistan and others (2001 YLR 2259), National Bank of Pakistan v. S.G. Fibre Ltd. And others (2004 CLD 689) and Nadeem Ghani v. UBL and others (2001 CLC 1904).
26. Heard arguments and perused the record and also the plethora of case-law cited by the learned counsel for the parties.
27. At the time of presentation of this suit, Additional Registrar (OS) raised as many as four objections. First one was with regard to cause of action. Second objection was raised in terms of section 2(e) of the Financial Institutions (Recovery of Finances), Ordinance 2001. Third objection related to the prayer clause (b) of the plaint and it was mentioned that it was barred by section 56 of the Specific Relief Act. Fourth objection was with regard to prayers (a) and (b) of the plaint.
According to the Additional Registrar (OS) these prayers were beyond the scope of the Financial Institutions (Recovery of Finances) Ordinance 2001 and that it was the function of the financial institutions to renew and roll over the liability of customer. On 16-8-2010 this suit was put up for orders on office objections and for hearing of the CMA. The learned counsel for the defendant made appearance and following order was passed: "Case is kept for office objection at Flag 'A'. Counsel for defendant has given no objection to the office objections which have been replied by the counsel for the plaintiff. Office is directed to issue number to the suit. Counsel for defendant seeks time to file counter affidavit. Adjourned."
28. Looking at the above Order it becomes abundantly clear that the objections which were raised by the Additional Registrar (OS) had been given up by the defendant and appropriate Order in such regard was passed by this court. Despite giving up of these objections, again objection with regard to the filing of the suit on the original side was raised together with an objection to the maintainability of the suit on the ground of mis-joinder and non-joinder of parties.
29. The provisions of Rule. 10 of Order I, C.P.C. Would show that the same are liberal and the court is empowered to substitute or add as, plaintiff upon such terms as it thinks just at any stage of the suit. Rule 10 of Order I, C.P.C. Empowers a court to remedy' such defect. It is well established by now that misjoinder by itself is not fatal nor is non-joinder per se fatal. Parties can be added by the court either on application, oral request or suo motu. However, in the present case since objections with regard to mis-joinder and non-joinder of parties was raised, CMA No,12901 of 2010 was filed and notice whereof was waived by the defendant and time was allowed to file counter affidavit to the same. This application is still pending adjudication.
30. Be that as it may, it would be clear that basically the present suit is based on MoU executed by Dewan Muhammad Yousuf Farooqi, the Chairman of Dewan Mushtaq Group, plaintiffs being part of such Group. Even the MoU at various places say that the MoU is between Dewan Mushtaq Group and the defendant. The only inference which can be drawn is that it was the Dewan Mushtaq Group who had entered into MoU to salvage its various companies after getting benefit of roll over and restructuring of liabilities by the defendant. The three companies which are also the plaintiffs herein and part of Dewan Mushtaq Group agreed to part with the Properties mentioned in paragraph 1 of the MoU in consideration of roll over and restructuring. Such being the position, in my opinion all the necessary parties and/or the three necessary companies of Dewan Mushtaq Group are before this court.
31. Nevertheless since the application bearing CMA 12901 of 2010 under Order I, Rule 10, C.P.C. Is pending adjudication and the suit is still at an interlocutory stage, the plaintiffs be not non-suited because of non-joinder and misjoinder of parties; a defect, if any, easily curable.
32. The MoU would show that certain reciprocal acts had been visualised to be performed on either side. The record of the file would show that as far as the acts, those were mentioned in the MoU to be performed by the plaintiffs, the same were duly performed by them. However the acts which were, to be performed by the defendant still remain to be performed for which present suit for specific performance within the period of limitation prescribed for it was filed.
33. It has come on record that in terms of MoU, which in my opinion, looking at its construction is an independent document qualify to stand on its own and is also capable of specific performance as it is a subsisting and valid document not superseded by subsequent Agreements and Sale Deeds in respect of the properties as argued by the learned counsel for the defendant. The reason is simpler The MoU envisaged reciprocal and/or collateral acts. Conditional transfer of the Properties by the plaintiffs in favour of the defendant was one of such acts, to be reciprocated by the defendant by rolling over and restructuring of plaintiffs' liabilities. Therefore, it would not be wise or fair to argue that since the Agreements and Sale Deeds in respect of the properties were made, such superseded the MoU. The acts of the plaintiffs would only show that they performed their part of the contract and are still waiting that the defendant perform, its part of the contract, more particularly because the defendant have also received-consideration thereof.
34. It is beyond comprehension that any 'commercial enterprise would enter into an agreement, in the present case, MoU without any consideration. The MoU was reached, after much deliberations, "to move forward with settling/regularizing Dewan Mushtaq Group (hereinafter Dewan) 's liabilities towards Mybank Ltd." It was with this intention of the parties that MoU came into being. To achieve the purpose of settling/regularizing Dewan's liabilities, Dewan agreed to conditionally part with the Properties and other assets as mentioned in MoU. The consideration on the part of the plaintiffs was roll over and regularisation of their, liabilities enable them to do business, make profits and repurchase the Properties, within a period of two years, conditionally parted with. However since the defendant failed to honour and/or perform its part of the contract, as envisaged and agreed upon in terms of the MoU, the entire road map chalked out washed away.
35. The argument that the MoU was superseded by the Sale Agreements and Sale Deeds in respect of the Properties under the facts and circumstances of the case does not hold the field. To my understanding, the Sale Agreements and Sale Deeds were outcome of the MoU and/or the performance of terms and conditions thereof. Execution of these documents only demonstrate full compliance of the terms of the MoU by the plaintiffs and complete non-compliance of the terms of MoU by the defendant. Not supersession and/or novation of MoU, as argued by the learned counsel for the defendant.
36. The Sale Agreements and the Lease Deeds in respect of the Properties would show that the plaintiffs are still liable to pay taxes and charges in respect thereof. Therefore in my opinion the transactions constituted mortgage with conditional sale, if such being the case, it would be just and proper that the properties are protected till such time that the entire fate of this case is decided.
37. The objections regarding the jurisdiction, non-joinder and mis-joinder of parties, supersesion of MoU by subsequent agreements having been dealt with, I am tentatively of the view that the defendant is yet to perform its part of the contract by restructuring and rolling over the liabilities of the plaintiffs. Before this is done, the interest of the plaintiffs in the Properties needs to be safeguarded.
38, The record of the file would show that despite availing benefit of the MoU the defendant did not adhere to the covenants thereof whereby the interest of the plaintiffs was to be safeguarded. It was specifically mentioned by the plaintiffs that the defendant were the first to file recovery proceedings against the plaintiffs despite execution of MoU which was mala fide inasmuch as that because of filing of such recovery suits, the restructuring by other banks was made impossible and by such act the defendants also defeated the scope of restructuring thereby nullified the term of MoU regarding the restructuring of their liabilities. It was also pointed out that charge which was required to be created in terms of MoU was also created. As far as the allegation that full amount of pledged sugar was not made it was explained that the liabilities were reduced and adjusted and whatever amount against such reduction was calculated was fully paid off. It was thus, argued that all that was required by the MoU on the part of the plaintiffs was fully complied. However the defendant did not perform its part of the contract. Thus present suit within the period of limitation.
39. Having discussed the case as much and also coming to the conclusion that the terms of MoU are yet to be complied with by the defendant, I am inclined to allow the CMA No,6463 of 2010 as prayed, therefore, the defendant is restrained from creating third party interest in the properties I till the disposal of the suit.