' MUNIB AKHTAR, J.---By means of C.M.A. 902 of 2011, the plaintiff seeks attachment before judgment of certain amounts belonging to the defendant, and lying with the Karachi Port Trust ("KPT"). The second application, C.M.A. 5597 of 2011, is an application seeking amendment in the relief sought in the first application, by the addition thereto of relief by way of interim injunction. These applications arise in the following circumstances. On or about 17-6-2008, a contract was entered into between the plaintiff and the defendant. The defendant is a joint venture of a Korean engineering company, and it is common ground that for purposes of the present applications, it can be treated as a foreign defendant, i,e,, as having its domicile outside of Pakistan. In essence, the agreement was for the plaintiff to provide certain consultancy and other services to the defendant, of which the most important were services by way of assistance in obtaining tax rebates or otherwise helping to reduce the defendant's tax burden in Pakistan on account of its business activities in this country. It was the plaintiff's case that he did provide the contractual services and as a result thereof, the defendant did receive, or became entitled to receive, the benefits referred to in the agreement, and thus he became entitled to certain payments from the defendant in terms as stated therein. The defendant denied this claim, and since the agreement contained an arbitration clause, the matter was eventually referred to arbitration before a sole arbitrator, where the dispute is pending adjudication on the merits. (It may be noted that the suit out of which the two applications under consideration arise was filed by way of an application under section 20 of the Arbifration Act, 1940.)
Obviously, I am not concerned with the merits of the dispute, which shall be adjudicated upon by the learned arbitrator, and any award made by him shall thereafter be dealt with in accordance with law. It appears that the defendant is the contractor in a construction project at Karachi Port and in connection therewith, according to the plaintiff, it has become entitled to certain payments from KPT. It is these monies that the plaintiff seeks to have attached before judgment and/or otherwise injuncted by means of the present applications.
2. Learned counsel for the plaintiff submitted that the point to be noted regarding the agreement was that for the services to be rendered by him, the plaintiff was entitled to receive a certain percentage of the tax benefits that were obtained by the defendant. He submitted that the defendant had received specific and ascertained amounts by, way of tax benefits and thus the amount being claimed by the plaintiff was a determined amount, and not merely a general claim by way of unliquidated damages. A categorical averment had been made in this regard in the plaintiffs affidavit. Learned counsel submitted that section 41 of the Arbitration Act read with the Second Schedule thereto gave the court ample power to make interlocutory orders while the reference was pending in order to safeguard the interests of either one or the other of the disputants and/or to otherwise protect the subject matter of the reference. The plaintiff s case was that KPT had retained certain sums by way of retention money on running bills submitted by the defendant, and payable by KPT. As specifically averred in the plaintiffs affidavit, the defendant had now claimed and become entitled to the retained amounts. Learned counsel further submitted that to these specific and categorical averments, only pro forma and vague denials had been made in the counter-affidavit. Learned counsel put his case for interim orders both in terms of Order XXXVIII and also the inherent jurisdiction of the Court under section 151, C.P.C. Learned counsel also, with reference to the inherent jurisdiction, relied on the power of the court to issue the well known Mareva injunction, as invented and developed by the English courts. In support of his submissions, he referred to Mohiuddin Molla v. Province of East Pakistan and other PLD 1962 SC 119, and also two Division Bench judgments of this Court reported as Nazar Muhammad v. Akbar PLD 1989 Kar. 635 and Balagamwala Oil Mills (Pvt.) Ltd. v. Shakarchi Trading AG and others PLD 1990 Kar. .1. Learned counsel also submitted, with reference to the Mareva injunction, that. Order XXXIX, Rule 1(b), C.P.C. Achieved much the same result and submitted that it was in part for this reason that the second C.M.A. Had been moved for amendment to the first or primary miscellaneous application.
He submitted that the plaintiff had made out a clear case for interim orders by way of either attachment before judgment of the amount to be released by KPT to the defendant, or any suitable restraining order in relation thereto
3. Learned counsel for the defendant strongly opposed both the applications. He submitted that it was an established practice in construction projects, which was duly reflected in the relevant contract between the defendant and KPT, that a certain sum of money was deducted and retained by the project owner (i,e,, KPT) from the running bills submitted from time to time by the contractor (i,e,, the defendant). The retention money was kept by the project owner in order to ensure full and timely completion by the contractor of his obligations under the construction contract. Learned counsel submitted that the retention money could not be regarded as belonging to the contractor and that therefore Order XXXVIII had no application, since it applied only in respect of the defendant's "property". Learned counsel further submitted, with reference to Rule 5 of the aforesaid Order, that it was also a necessary condition that the defendant should be "about" to take any of the actions stated therein. He submitted that this word necessarily implied a certain immediacy or imminence, which was completely lacking in the present case. Elaborating this point, learned counsel submitted that the construction contract was a multiyear project, which was nowhere near completion and therefore it was not conceivable that the release of any funds or amounts to the defendant by KPT was imminent. Thus, learned counsel submitted, Order XXXVIII, C.P.C. Had no application in the circumstances of the present case. Learned counsel further submitted that the plaintiff had made only bald assertions with regard to the retention monies in a pro forma manner, by essentially reproducing the relevant language of Order XXXVIII. Furthermore, nothing had been placed on record which would establish that the defendant had the necessary "intent" to delay, defeat or otherwise frustrate the execution of any decree that may, if at all, be eventually made against it. In this context, learned counsel emphasized that the fact that the defendant was a foreign entity was not sufficient, in and of itself, to make Order XXXVIII applicable or indeed, to entitle the plaintiff to any interim orders in respect of any amount that may be payable to the defendant by a third party. Learned counsel also-relied on certain decisions to which I will presently refer, but drew attention in particular to Uzin Export Import Enterprises for Foreign Trade v.
Asia Steel Industrial Aids Ltd. And others 1986 M LD 1356, a Division Bench judgment of this Court, to contend that the subsequent Division Bench judgment in respect of the Mareva injunction, the Balagamwala case (supra), was in conflict therewith and therefore, and to the extent of the conflict, could not be regarded as good authority. Learned counsel contended that since the plaintiff had failed to make out any case whatsoever, the applications under consideration ought to be dismissed.
4. Exercising his right of reply, learned counsel for the plaintiff placed on record a letter dated 17-3- 2011, written by the defendant to the project engineer appointed for the project, whereby the defendant had specifically sought a sum of Rs, 82,732,603.00 from the retention monies lying with KPT and submitted that this letter clearly established that the release of the retention monies, or at least a part thereof, was imminent. Learned counsel submitted that the retention monies were in law, the property of the contractor, i,e,, the defendant, and that therefore, they could be made the subject of interim orders by the Court.
5. I have heard learned counsel for the parties, perused the record with their assistance and considered the case-law relied on by them. The case put forward by learned counsel for the plaintiff may conveniently be considered firstly, in terms of Order XXXVIII and secondly, in terms of the inherent jurisdiction of the Court under section 151 and/or its powers under Order XXXIX, Rule 1(b). In respect of attachment before judgment under Order XXXVIII, Rule 5 thereof provides, as presently relevant, in its sub-rule (1) as follows:-- " (1) Where at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant with intent to obstruct or delay the execution of any decree that may be passed against him, -
(a) is about to dispose of the whole or any part of his property, or
(b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court, the court may direct the defendant...."
Procedurally of course, the court must first require the defendant to show cause why he ought not to furnish security, and it is only if he fails to properly show cause or does not furnish the security that may be ordered that Rule 6 provides for the attachment of his property (although a conditional order of attachment may be made under Rule 5(3). However, since the substantive question that almost invariably arises, and was raised and argued in the present case, is in relation to Rule 5(1), it is necessary only to consider this provision.
6. As noted above, learned counsel for the defendant submitted firstly, that the retention monies were not the defendant's "property", and secondly, that there was nothing on record 'to show that the defendant was "about" to remove his property from the jurisdiction with "intent" to obstruct or delay any decree that may be made against it. As to the first point, I am of the view that the retention monies are the "property" of the defendant, being a debt owed to the defendant by KPT.
The defendant, in its aforementioned letter dated 17-3-2011, has expressly spoken of the retention money in these terms. However, quite apart from that, even on the plane of principle, it seems that the retention money would (unless there was something to the contrary in the concerned contract) be regarded as belonging to the contractor. When a running bill is submitted to the project owner, he may accept or reject it, either in whole or in part. If he accepts it, then he has to make payment in respect thereof, as stipulated in the contract. The amount of the running bill is thus a debt owed by the project owner to the contractor. The fact that the contract also stipulates that the project owner may retain a portion thereof till fulfilment of certain specified tasks by the contractor does not make it any less a debt owed to the latter. The fact that the payment of the retained portion is conditional, and may never come about if the project owner can lawfully adjust it in terms of the contract, also does not detract from this position. Therefore, in my view, the retention monies lying with KPT are a debt owed by it to the defendant, and hence the latter's property within the meaning of Order 38.
7. For Rule 5(1) to be applicable, the plaintiff must show that the defendant has the necessary "intent", and that it is with this intent that he is "about" to remove his property from the jurisdiction of the court. Learned counsel for the defendant relied on Allied Industries Hub (Pvt.) Ltd. v. China National Metals and Mineral Import and Export Corporation and another 1989 M LD 2027, Balagamwala Oil Mills (Pvt.) Ltd. v. Shakarchi Trading AG and others 1991 CLC 2071 and Arrow Trading Company v. Hyosung Corporation and others 1997 M LD 55, all single Bench decisions of this Court, to submit that the mere fact that the defendant was a foreign corporation and had no permanent assets in the country was no ground to order attachment before judgment, especially if, as was the case at hand, the plaintiff was, and had all along been, aware of this position. (It may be noted that the Division Bench decision in the Balagamwala case (supra) was on appeal from the second mentioned case; however, nothing was said there as would affect the decision of the learned single Judge on the point now under consideration, and the appeal was in any case dismissed on the merits.) The fact that a foreign company may be doing business in Pakistan without having a permanent presence here, e.g., on a single project basis, would almost invariably mean that any payments received by it would be remitted abroad. The effect of such remittances may well be that a plaintiff may be unable to execute in Pakistan any decree made in his favour against such a defendant. However, it is not such an effect simpliciter that is caught by Order XXXVIII. It is only if such effect is brought about with the intent to delay or obstruct the decree that Order XXXVIII may be engaged. The mere fact therefore that in the present case, the defendant is a Korean entity is not of itself sufficient to attract Order XXXVIII, and standing alone, is not a factor that is of prime importance.
8. As noted above, learned counsel for the defendant submitted that the use of the word "about" necessarily meant that the removal of the property must be imminent or immediate. In my view, that sets the bar too high, and could well defeat the very purpose of an attachment before judgment (if a proper case for such an order is made out). This is especially so in present times, when the transfer of funds to a place outside the jurisdiction not merely of the court, but of the country, can be achieved almost instantaneously. Nor can the test as, in effect, proposed by learned counsel for the plaintiff be accepted, since that would bring virtually every removal within the ambit of Rule 5, thus essentially making the word "about" otiose. In my view, an appropriate test would be to determine if, in the given facts and circumstances, it can be reasonably expected that the property would be removed from the jurisdiction in the near future. If so, then the defendant may be regarded as "about" to remove his property from the jurisdiction of the court. As to what would constitute the near future would depend on the facts of each case. In some circumstances, it may mean only an immediate or imminent removal; in others, a longer timeframe may well be more appropriate.
9. Inextricably linked to the issue treated in the last paragraph is of course, the requirement that the defendant must also have the necessary "intent", i,e,, to obstruct or delay execution of any decree against him. No hard and fast rule can be laid down as to what would constitute the necessary "intent" or how it would be determined, nor would it be desirable to do so. Much would depend on the facts and circumstances of the case. In some cases, the very facts constituting the removal (or proposed or attempted removal) may be such as lead irresistibly to such a conclusion-res ipsa loquitur, as it were. In others, something additional may need to be adduced by the plaintiff.
However, one point is clear. An order of attachment before judgment obviously curtails the undoubted right of a person to deal with his property as he deems appropriate. The object of such an order is preventive and not punitive. The plaintiff must therefore make out a clear case that the ingredients of Rule 5 are applicable. If there is a doubt or ambiguity, then the benefit must go to the defendant. Thus, unless the necessary "intent" can be made out with reasonable clarity from the relevant facts objectively considered, an order of, attachment ought ordinarily to be regarded as inappropriate.
10. When the foregoing principles are applied to the facts and circumstances of the present case, I am clear that a case for attachment before judgment has not been made out. It may well be the case that the defendant will remit the retention money, e.g., as demanded by it in its letter of 17-3- 2011, out of the country. But that is only to be expected given that it is a foreign entity. The plaintiff has not, in my view, been able to show that such a remittance, even if made, would be with the necessary "intent", i,e,, in order to defeat or obstruct any decree (on the basis of any award) that the plaintiff may eventually obtain in his favour. The purpose behind Order XXXVIII is not to guarantee to a plaintiff that there will always be an asset available in the jurisdiction to satisfy his claim, should he ultimately succeed in his action. That is not the function or duty of a court of law.
The purpose behind Order XXXVIII is to ensure that a defendant does not abuse the process of the court, in the sense that he is able, pending adjudication of the claim against him, to make himself judgment-proof; That his acts, undertaken in the normal course, may for all practical purposes have such an effect is also not sufficient; it must be shown that he acted with intent to bring about such an effect. The plaintiffs case, on the basis of the H record as presently available, does not reach the required threshold. Learned counsel for the defendant relied on Associated Drillers Ltd. v.
Dirk Verstoop BV PLD 1979 Kar 734 (SB), where it was observed as follows:-- "Even if it is to be conceded that Rule 5 of Order XXXVIII, C.P.C. Is not exhaustive and the Court is competent to order attachment even in a case which does not strictly fall within the purview of the above, provision of law, but the question which remains to be considered is as to whether the basic requirement of the above provision, namely, that the Court should be satisfied that the defendant with intent to obstruct or to delay the execution of any decree which may be passed, has taken or is about to take any of the steps specified in clauses (a) and (b) of the aforesaid rule of the aforesaid order. In my view simpliciter the fact that the plaintiff will not be able to execute their decree if any passed in their favour is not sufficient to invoke the provisions of Order XXXVIII, Rule 5, C.P.C. If the above ground is to be accepted as a sufficient ground to order attachment before judgment, it will cause hardship to the foreign companies/organisations operating in Pakistan, as it will be open to any person to file a suit against a foreign contractor for an alleged claim on the eve of the winding of affairs in Pakistan on completion of the work, which was entrusted to him in Pakistan, and also to invoke the provisions of the. Order XXXVIII, Rule 5, C.P.C. On the ground that there would be no asset of the aforesaid foreign contractor to satisfy the decree if any passed in his favour after several years." (pg. 737, para 8)
' In reply, learned counsel for the plaintiff cited Muhammad Hanif v. Echard and Co. Marine GmbH and others PLD 1977 Kar. 609 (SB) but in that case (which concerned the arrest of a vessel), it was specifically held as follows:-- "Now coming to the averments made in the application it is clear from the affidavits of the plaintiff and the broker that the defendants are trying to dispose of the vessel at a rate less than the market rate and that the defendant No, 1 being a foreigner has no property in Pakistan: Mr. Zahid has contended that the fact that the defendant No. 1 is a foreigner having no property in Pakistan is not sufficient for grant of attachment before judgment. The contention is correct.- But in the present case, this is not the only ground for seeking attachment before judgment. This ground is coupled with the fact that the plaintiff has made out a prima facie case for claiming damages and also that the defendants are trying to dispose of the vessel hurriedly at a price less than the market rate. From these facts it can be presumed that the defendants' intention is to dispose of the vessel so that they may be able to save themselves from the plaintiffs claim. In these circumstances if the defendant is a foreigner and has no other property except the property in suit or one sought to be attached, the Court will consider it as an important factor for exercising its discretion under Order XXXVIII, Rule 5, C.P.C. All such factors taken together if established make out a clear case for attachment before judgment. The defendants in their affidavit have not denied that they are not selling the vessel. It has been denied that they are selling it at a lower rate with intention to delay or defeat the decree. The defendants are admittedly selling the vessel. They have stated that it is in the normal course of their business, but have not produced on record an iota of evidence that they are engaged in the business of selling scrap vessels or that during the past how many vessels they have sold. They have stated that they are selling it but did not disclose with whom they are negotiating to sell the vessel. It is correct that if a party sells or disposes of any of its property in its normal course of business, then unless it is clearly established that the sale is with the intention to delay or defeat the decree, the Court will not make an order for attachment before judgment. But where the sale is admitted without establishing that it is in the normal course of business together with the facts that the defendants have no other property within the jurisdiction of this Court and sufficient evidence has been brought on record prima facie establishing incriminating intention of the defendants, mere statement that it is being sold in the normal course of business will not be sufficient to save the property from attachment." (pp. 612-13)
' The facts of this case were clearly different, and markedly so, from those at hand. Although the decision nicely illustrates some of the principles referred to in the paras supra, it does not, as such, further the plaintiffs case. Learned counsel for the plaintiff also laid emphasis on the point that the latter's claim was for an ascertained and specific sum, and not merely a general claim for unliquidated damages, which is the rock on which many an application for interim relief (and especially for a Mareva injunction) has foundered. While relevant, this fact cannot be regarded as decisive in and of itself. In my view, the plaintiff has been unable to make out a case under Order XXXVIII.
11. I turn therefore to consider the other limb of the plaintiff's case, namely, that quite apart from Order XXXVIII, it would be proper for the Court to exercise its inherent jurisdiction to make an appropriate order in the present case. In this context, learned counsel for the plaintiff relied in particular on the Mareva injunction, as invented by the English courts. The Mareva injunction does not seem to have found much favor with Pakistani courts, as attested by the fact that the only decision cited before me in this regard was the Division Bench judgment in the Balagamwala case (supra). In that case, the learned Division Bench was referred to the relevant English authorities in relation to the Mareva injunction. Two points decided by the learned Bench are relevant for present purposes. I will consider later what the learned Bench had to say regarding the Mareva injunction itself. First, it is necessary to consider the following observation (made while citing with approval an earlier single Bench decision of the Court reported as Mst. Salma Jawaid and others v. S.M Arshad and others PLD 1983 Kar. 303):-- "We are inclined to agree with Mr. Mansoor Ahmed Khan that in a fit case the Court may grant interim injunction even if the case does not fall within the four corners of the well-settled principles under Order XXXIX, Rules 1 and 2, C.P.C., if the facts of the case so demand, in order to foster the cause of justice." (PLD 1990 Kar. At p.6)
' Learned counsel for the defendant submitted that this observation was contrary to an earlier (1986) Division Bench judgment in the Uzin Export Import case (supra), and it is therefore necessary to first consider this point.
12. The Uzin Export Import case was also one in which attachment before judgment was sought.
Learned counsel for the defendant relied on the following passage:-- "The question of security cannot be divested from attachment at the object of Order XXXVIII, Rule 5, is attachment before judgment is to prevent an attempt on the part of the defendant to obstruct of delay the execution of any decree that may be passed against him. When there is a specific provision for dealing with such matter then the inherent power cannot be used. The facts and circumstances of the case do not justify for demand of security and unless security is demanded the attachment cannot be made." (1986 MLD at p. 1360)
' While the passage itself is clear enough, there is, if I may sty so with respect, a certain ambiguity inasmuch as it is to be found in that portion of the judgment where the Court was noting the rival submissions of learned counsel appearing before it. It is therefore not entirely clear whether the passage is part of what the Court decided, or simply one of the contentions put forward by learned counsel. Towards the end of the judgment, the learned Division Bench observed as follows:- "The aforesaid facts would show that it ASIACON has not made out a case either under Order XXXVIII, Rule 5 or Order XL, Rule 10, Order XXXIX, Rules 1 and 2, therefore, the question that if a case is not covered by any of the aforesaid provisions section 151, C.P.C. Would apply requires no consideration as the injunction cannot be granted ex delicto justified." (pg. 1368)
Learned counsel for the plaintiff on the other hand, relied on another Division Bench decision reported as Nazar Muhammad v. All Akbar PLD 1989 Kar. 635, pointing out that the learned Judge who authored this decision (Haider Ali Pirzada, J.) was also party to the. Uzin Export Import decision.
He relied in particular on the following passage: "There is nothing in Order XXXVIII, Rule 5 of the Code, which expressly or by necessary implication precludes the exercise of the inherent power of the Court under section 151 of the Code. We are, therefore, of the opinion that in the instant case the defendant has no assets of his own or is not likely to acquire till the date of decree, the Court can make a suitable order under section 151 of the Code as may be necessary for the ends of justice or to prevent abuse of the process of the Court."
(pg 644)
In my view, when the three Division Bench judgments are considered, there is, really speaking, no conflict in what has been held therein. It may be noted that the Uzin Export Import case was cited before the Bench in the Nazar Muhammad case The passage that perhaps best reflects the views expressed by the. Court in all three decisions is to be found in the Nazar Muhammad case, where after reviewing earlier authorities, the learned Bench held as follows:-- "The following principles are deduced from the above decisions:--
(1) The inherent power of a Court is in addition to and complementary to the powers expressly conferred under the Code.
(2) But that power will not be exercised if its exercise is inconsistent with, or comes into conflict with, any of the powers expressly or by necessary implication conferred by the other provisions of the Code.
(3) If there are express provisions exhaustively covering a particular topic, they give rise .To a necessary implication that no power shall be exercised in respect of the said topic otherwise than in the manner prescribed by the said provision.
(4) Whatever limitations are imposed by construction on the provisions of section 151 of the Code, they do not control the undoubted power of the Court conferred under section 151 of the Code to make a suitable order to prevent the abuse of the process of the Court." (p. 644)
' As noted above, in the Balagamwala case, the learned Division Bench had cited with approval an earlier single Bench decision of the Court. In the passage from the decision that was cited, it was observed, inter alia, is follows: "..[I]n some judgments the Superior Courts have exercised powers under section 94 or 151 of the Code of Civil Procedure to grant relief to a claimant or applicant although the case did not fall within the four corners of specific provisions of the Code. In other cases the Courts declined to exercise their inherent powers under section 151, C.P.C. Where they reached the conclusion that the case made out by the claimant or applicant was not covered by a provision of the Code.... I may with refer to the observations made by the Supreme Court of Pakistan in PLD 1962 SC 119 to the effect that generally speaking the Code of Civil Procedure does not create new powers but regulates the exercise of powers already possessed by the Court and even before the Civil Procedure Code was enacted, the Civil Court possessed powers of the kind mentioned in the Code and that the Civil Court possessed the powers because it has jurisdiction to determine and protect civil rights and for the protection of those rights the exercise of such powers is essential. Supreme Court of Pakistan, elucidating the principle further, observed in H.M.Saya and Co. v. Wazir Ali Industries Ltd. PLD 1969 SC 65 that the Court ought not to act on the principle that every procedure is to be taken as prohibited unless it is expressly provided for and to give such a meaning to the omission would result in grave injustice. It was further observed that the Court should proceed on the principle that every procedure which furthers administration of justice is permissible even if there is no express provision permitting the same." (PLD 1983 Kar. 303, 312; cited at PLD 1990 Kar at P.
7)
' In my view, when all of the foregoing passages are considered together, and read in light of the respective judgments as a whole, there is no conflict in the views that have been expressed.
Therefore, the submission by learned counsel for the defendant that the Balagamwala case is inconsistent with earlier binding authority cannot be accepted.
13. Quite obviously, what the learned Division Bench has said in the Balagamwala case regarding the Mareva injunction is binding on me, and it will be necessary in the first instance, to set out the relevant passage from the judgment. After considering the English authorities cited before it, the learned Bench observed as follows:-- "We may point out that in the English cases, in which Mareva Injunction was granted and relied upon by Mr. Mansoor Ahmed Khan, the plaintiff obtained in most of the cases Mareva Injunction in respect of the money or major portion of the money which belonged to him or in respect of which there was no doubt about the admissibility of the amount of his claim. In the instant case at this stage, it cannot be said that how much amount of damages the appellant would be entitled in case they succeed to prove breach on the part of respondent No, 1 . Secondly, the injunction is sought in respect of the money received by respondent. No,3 under a letter of credit of some different transaction, the letter of credit being negotiable, we cannot make respondent No,3 to commit the breach of the terms of the letter of credit." (pg 8; para. 6)
' In order to place this passage in its proper context, it will be necessary to consider in some detail the genesis and juridical nature of the Mareva injunction, and it is therefore to this exercise that I now turn.
14. Surprising though it may seem to Pakistani lawyers, brought up (professionally speaking) on the C.P.C., the general common law rule, of long standing, is (or at any rate, was) that a plaintiff is not entitled to restrain a defendant from dealing with or disposing of his property on the ground that the plaintiff may be able to obtain judgment against the defendant. This was so on the authority of decisions such as Lister and Co. v. Stubbs (1890) 45 Ch D 1, where it was observed as follows:-- "...I know of no case where, because it was highly probable that if the action were brought to a hearing the plaintiff could establish that a debt was due to him from the defendant, the defendant has been ordered to give security until that has been established by the judgment or decree." (p. 13, per Cotton, U.)
' This rule worked hardship and in many instances enabled the defendant, when sued, to take steps while the action was pending to either dispose of his assets or to so arrange his affairs that he became judgment-proof. This was a serious defect in English procedural law, which was long recognized. However, the remedy was equally long in coming, and did not arrive till 1975, when in two ex parte decisions given in quick succession, Nippon Yusen Kaisha v. Karageorgis and another [1975] 3 All ER 282 and Mareva Compania Naviera SA v. International Bulkcarriers SA [1975] 2 Lloyd's Rep 137; [1980] 1 All ER 213 (Note), the Court of Appeal (headed in both instances by Lord Denning MR) issued the injunction whose name thereafter became associated with the second of the two cases. Although the Mareva injunction was received enthusiastically throughout much of the common law world, developed rapidly, and has gone from strength to strength, it is important to keep in mind that, as a judicially evolved doctrine, it is, strictly speaking. An exception to the general rule noted above. Thus, the High Court of Australia has observed in Jackson v. Sterling Industries Ltd. [1987] HCA 23; (1987) 162 CLR 612 as follows:-- "[T]he Mareva injunction represents a limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it. He cannot beforehand prevent the defendant from disposing of his assets merely because he fears that there will be nothing against which to enforce his judgment nor can he be given a secured position against other creditors." (pg. 618)
15. In England, the Mareva injunction has been placed on a statutory footing, and in the civil procedure rules (CPR) currently in force there, is known as a "freezing injunction". However, from its inception, the courts were concerned with establishing its nature and the juridical basis for the injunction, given that it ran against long standing decisions of the highest authority, .And the Court of Appeal had invoked the inherent powers or jurisdiction of the court while granting the injunction.
For present purposes, two points are of importance. Firstly, it is to be noted that as originally invented, the Mareva injunction was issued against a defendant outside the jurisdiction of the court, but with assets within the jurisdiction, the danger being that those assets would be removed from the jurisdiction or otherwise dissipated while the action was pending, rendering the defendant effectively judgment-proof. This was expressly recognized by Lord Denning himself in Rasu Maritima SA v. Perusahaan Perlambangan Minyak Das Bumi Negara [1977] 3 All ER 324 at 332-333.
Of course, the injunction was subsequently extended to resident defendants as well. The rationale behind the injunction, and the jurisdiction of the court to issue it, was directed against the defendant abusing the process of the court in the foregoing manner. This was so put in the High Court in Iraqi Ministry of Defence and others v. Arcepey Shipping Co. SA (The Angel Bell) [1980] 1 All ER 480, and subsequently approved by the Court of Appeal in such decisions as Rahman (Prince Abdul) bin Turki al-Sudairy v. Abu Taha [1980] 3 All ER 409, A.J. Bekhor and Co. Ltd. .v. Bilton [1981] 2 All ER 565 and Z. Ltd. v. A. [1982] 1 All ER 556 Thus, in the last mentioned case, Kerr. LI. Summarized the position of the Mareva injunction as follows:-- "[I]n my view Mareva injunctions should be granted, but granted only, when it appears to the court that there is a combination of two circumstances. First, when it appears likely that the plaintiff will recover judgment against the defendant for a certain or approximate sum. Secondly, when there are also reasons to believe that the defendant has assets within the jurisdiction to meet the judgment, in whole or in part, but may well take steps designed to ensure that these are no longer available or traceable when judgment is given against him." (pg. 572)
' In A.J. Bekhor and Co. Ltd. (supra), Ackner, LJ emphasized that the Mareva injunction was a "limited exception" to the general rule, and observed: "The plaintiff, like other creditors of the defendant, must obtain his judgment and then enforce it. He cannot prevent the defendant from disposing of his assets pendente lite merely because he fears that by the time he obtains judgment in his favour the defendant will have no assets against which the judgment can be enforced. Were the law otherwise, the way would lie open to any claimant to paralyse the activities of any person or firm against whom he makes his claims, by obtaining an injunction freezing their assets (per Sir Robert Megarry V.-C. In Barclay-Johnson v. Yuill [1980] 3 All E.R. 190 at 193)....The purpose of the Mareva jurisdiction was not to improve the position of claimants in an insolvency but simply to prevent the injustice of a defendant removing his assets from the jurisdiction which might otherwise have been available to satisfy a judgment. It is not a form of pre-trial attachment but a relief in personam which prohibits certain acts in relation to the assets in question (per Robert Goff J.. In Iraqi Ministry of Defence v. Arcepey Shipping Co. S.A. [19801 1 All E.R.
480).... The courts must be vigilant to ensure that the Mareva defendant is not treated like a judgment debtor." (pg. 577)
16. The second aspect of the Mareva injunction, namely its juridical basis, was touched upon by the Privy Council in Mercedes-Benz AG v. Leiduck [1995] 3 All ER 929, which was an appeal from Hong Kong. Speaking for the Board (Lord Nicholls dissenting), Lord Mustill observed:- "..[T]he first step would be to ascertain not only what a Mareva injunction does, but also how, juristically speaking; it does it. This should be straightforward but is not.. After only a few years the development of a settled rationale was truncated by the enactment of section 37(3) of the Supreme Court Act, 1981. This did not, as is sometimes said, turn the common law Mareva injunction into a statutory remedy, but it assumed that the remedy existed, and tacitly endorsed its validity.
The possibility that an all-out challenge to the entire concept... Seems a rather unlikely event, at least in the courts of England and Hong Kong. The remedy is now 20 years old and the problems, of which there is no lack, are of a practical kind; how to frame an order which, on the one hand, protects the claimant against the manipulations of the defendant who may prove to be unscrupulous, without strangling the working capital of the defendant at the instance of a claimant who may prove to be unscrupulous;... How to choose ancillary orders which are effective without being oppressive. These problems did not arise in the early days of the injunction, where the remedy was given only in the clearest of cases, but they have been increasing ever since. Amidst all the burdensome practicalities theory has been left behind. The only rationalisations which can be found in the cases are as follows. First, that although Mareva relief takes the shape of an injunction it is really kind of attachment. ...[I]it is now quite clear that Mareva relief takes effect in personam only; it is not an attachment; it gives the claimant no proprietary rights in assets seized and no advantage over other creditors of the defendant...." (pg 938-9; emphasis supplied)
' Lord Mustill then considered the next rationalization for the injunction, namely that it could be issued on the basis of the inherent jurisdiction of the court. However, after considering the relevant cases and the applicable statutory provision (at pp. 939-40), Lord Mustill observed that it was not possible to draw that conclusion as well, and concluded as follows:-- "The most that can be said is that whatever its precise status the Mareva injunction is quite a different kind of injunction from any other. The inquiry must begin by recognizing that it is sui (pg 940)
17. The upshot of the foregoing discussion is that, as presently relevant, the Mareva injunction was designed to remedy a long standing defect in English procedural law, namely, the earlier inability (or disinclination) of the court to grant interim relief to the plaintiff against a defendant who, pending the outcome of the litigation, was dissipating. Or disposing of his assets so as to render himself judgment-proof. This was an abuse of the process of the court, and therefore the remedy of the Mareva injunction was invented. But as is at once apparent, this is precisely what is achieved by an order of attachment before judgment in terms of Order XXXVIII. Thus, the relief that the Mareva injunction was intended to provide is in any case already available in the C.P.C. Put differently, the defect in English law that the injunction sought to rectify simply does not exist in our procedural law. Of course, the Mareva injunction has, as Kerr, II, noted with approval in Z Ltd. v. A (supra), "pervaded the whole of [English] law and that it is an extremely useful addition to [English] judicial armoury" (pg. 571). I will have something to say on this shortly, but at present it is important to keep in mind that in this case, the Court is concerned only with a specific and particular kind of interim relief, and the question is whether the inherent jurisdiction. Of the Court can be, or needs to be, invoked to grant that relief, given that the C.P.C. Itself makes specific provision for granting such relief.
18. Before proceeding to answer the question just posed, it is necessary to dilate on one more aspect of the matter. As held by the Privy Council, it is the nature of the Mareva injunction that it operates in personam. One consequence of this is illustrated by the Court of Appeal decision in Cretanor Maritime Co. Ltd. v. Irish Marine Management Ltd. [1978] 3 All ER 164. There, a third party had a floating charge on the relevant asset (a bank deposit). The plaintiff obtained a Mareva injunction in respect of the deposit, and thereafter, the charge crystallized. It was held that the charge holder was entitled to priority over the right of the plaintiff since the Mareva only operated in personam against the defendant, whereas the charge holder had a proprietary interest in the deposit on account of the charge having crystallized. Since the Mareva injunction confers no title to or other interest in the relevant assets, in the present case, if such an injunction is issued, it would be without prejudice to the right of KPT to adjust the retention monies as permissible under the construction contract. An attachment before judgment under Order XXXVIII has precisely the same effect. Thus, Rule 10 expressly provides that an order of attachment "shall not affect the rights, existing prior to the attachment, of persons not parties to the suit".
19. The question posed at the end of para.17 can now be addressed. In my view, the answer to the question must be in the negative. The principles for exercising the inherent jurisdiction have been stated, inter alia, by the learned Division Bench in the Nazar Muhammad case (supra), and are set forth in para 12 herein above. In my view, the issuance of a Mareva (or Mareva-type) injunction in the exercise of inherent jurisdiction in the facts and circumstances of the present case would be in conflict with those principles, in particular, principles (2) and (3). The reason is that, such an injunction would substantially be in the nature of an order of attachment before judgment, and its effect would, for all practical purposes, be indistinguishable from such an order. As made clear by the learned Division Bench, the exercise of inherent jurisdiction: (a) is complementary to the express powers conferred by the Code; (b) cannot be exercised in a manner that is inconsistent or in conflict with the express powers; and (c) cannot in any case be exercised if the matter is covered by an express power. The Mareva injunction as originally invented (which one might call the "classic" Mareva) would, to any sensible degree, be indistinguishable from an order of attachment before judgment, which is a power expressly conferred on the court by the Code.
Therefore, in my view, not merely would a Mareva injunction not be warranted in the facts and circumstances of the present case, it could perhaps even be regarded as impermissible.
20. The foregoing discussion can be summarized in the following manner:-
(a) The decision of the learned Division Bench in the Balagamwala case establishes that a Mareva injunction may issue, if otherwise appropriate, in circumstances envisaged in para.6 of the judgment (reproduced in para.13 herein above), i,e,, where the money sought to be injuncted belongs to the plaintiff, or there is no doubt about the admissibility of his claim.
(b) In a case such as the present, where the Mareva injunction would be substantially or practically equivalent to an attachment before judgment under Order XXXVIII, a Mareva, injunction cannot (or at the very least ought not to) issue.
(c) The question whether in other situations, to which English law and/or other common law jurisdictions have extended the Mareva injunction, Pakistani courts (or to be more precise, the courts of the Province of Sindh) can or may issue such an injunction in the exercise of inherent jurisdiction, can only be decided on a case to case basis in light of the principles enunciated in the case law. It would be inappropriate to make any sweeping generalization simply on the basis or for the reason, e.g., that the Mareva injunction 'now pervades the whole of English law'.
21. The last point that needs attention is the submission by learned counsel for the plaintiff that the situation at hand is covered by Order XXXIX, Rule 1(b) C.P.C. This provision empowers the court to grant an injunction if "the defendant threatens or intends to remove or dispose of his property with a view to defraud his creditors". While in one sense, the language of this provision is broader than that used in Order XXXVIII, Rule 5 (inasmuch as a mere "threat" is sufficient), in its applicability, the provision is narrower, and indeed, directed towards another purpose altogether. The objective is to prevent a defendant from "defrauding" his "creditors", and not to defeat or frustrate any decree that may be made against him. The material on which the court can come to one or the other of these conclusions is not the same, and what may be sufficient for one purpose may be insufficient or irrelevant for the other. The threat or intention must be established by definite information, and a case of fraud clearly spelt out. No such material is available on the record, and therefore, in my view, no case is made out for an injunction in terms of Order XXXIX, Rule 1(b).
22. In light of the foregoing, the two applications under consideration must, in the end, fail and are therefore hereby dismissed.