MUHAMMAD AMEER BHATTI, J. --- This application under Section 12(2), CPC has been directed against the judgment of this Court dated 10.12.1999 on the ground of misrepresentation and fraud committed by the respondent with this Court as well as the applicant.
2. The brief facts of the case necessary for the disposal of this petition are that upon the disagreement between the parties, an application under Section 20 of the Arbitration Act was filed by the respondent against the present petitioner on the basis of an arbitration clause provided in the agreement executed by the parties. This application was contested by the present applicant, however, on the acceptance of application with the consent of both the parties, Ch. Ejaz Ahmed, S.E. Building Faisalabad was appointed as a sole arbitrator. The arbitrator filed his award in the Court on 07.03.1985. Objections were raised, however, the learned Trial Court overruled the objections and the award was made the "rule of the Court" vide judgment and decree dated 08.07.1985. An appeal FAO No. 221/1994 filed before this Court was also dismissed vide judgment dated 10.12.1999 which was in the Hon'ble Supreme Court but could not succeed. Execution petition was filed by the present respondent on 18.02.2001. The petitioner filed the objection petition before the Executing Court, who vide order dated 19.09.2003 dismissed the objection petition and also directed the judgment-debtor/petitioner to deposit the decretal amount in the Court, otherwise the property mentioned in "Fard Taleeqa" shall be attached.
3. Thereafter, the petitioner tiled this application under Section 12(2), CPC on the ground that the proceedings had been conducted throughout by the general-attorney on the instrument executed on 25.02.1981. The firm already stood dissolved on 25.05.1982 and thereafter the general attorney had no authority to participate in the proceedings, hence the entire proceedings conducted by all the Courts on the basis of incompetent person were/are illegal and the award, orders of the Civil Court as well as this Court and the Hon'ble Supreme Court have been obtained by misrepresentation and fraud. Hence liable to be set aside.
4. Learned counsel for the petitioner contends that it is not disputed that the firm stood dissolved on 25.05.1982 and power-of-attorney was executed in favour of Rana Muhammad Sadiq on 25.02.1981. The moment firm had been dissolved the power-of-attorney cost its validity, hence the general attorney had no authority to participate in the arbitration proceedings. As such, whatever has been done on behalf of the respondent by the general attorney is not sustainable in the eye of law. Further contends that although this fact was in the notice of the respondents. Yet they have intentionally not disclosed it at the proper stage/time and concealed this tact not only from the learned Trial Court but also from this Court as well as the Hon'ble Supreme Court which act amounts to contempt and misrepresentation. In this way. Whatever has been obtained by the irrelevant person cannot be considered legal. Further contends that since the firm did not exist at the time of decree passed by the Civil Court as the case was prosecuted by a legally void person not validly authorized or appointed in accordance with law. Learned counsel while-referring to Section 69 of the Partnership Act contends that the other proceedings specifically mentioned in the sub-section (3) of the said Section includes the arbitration proceedings. It is appropriate to reproduce the relevant provisions for ready reference:--- SECTION 69.
(1) (2) (3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect---
(a) The enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realize the property of a dissolved firm, or
(b) The powers of an official assignee, receiver or Court under the Insolvency (Karachi Division x x x x6) Act. 1909, or the Provincial Insolvency Act. 1920. To realize the property of an insolvent partner.
The said Section empowers the partner to file a suit if the firm is registered under the law of Partnership Act, 1932. He has referred Lakhatti Textile International through Partner v. Messrs Southern Agencies (Pvt). Lid (2008 CLC 444), Messrs Sainjee Cargo Services v. Messrs Cargo Movers and others (1989 CLC 2229), Abdul Rehman v. Parvez Ahmed Butt and 2 others (1983 CLC 1740), Messrs Marvi International through Partners v.
Muhammad Aslam and 2 others (PLD 2007 Karachi 78), A.I Muhammad v. Mirza Muhammad Hussain Beg (PLD 1968 Lahore 712), Goverdhandoss Takersev v. M. Abdul Rahman and another (AIR
(29) 1942 Madras 634), Sasadhar Chakravarty and another v. Union of India and others (AIR 1997 S.C 336), Tagdish Chandret Gupta v. Kajaria Traders ( India) Ltd. (AIR 1964 S.C. 1882):--- "Partnership Act (1932), S. 69 (3) --- Construction of---Rule of ejusdem generis when applies--- Word 'other' proceedings in S. 69(3)-- Not controlled by preceding expression---Bar under S. 69(3) applies to all proceedings including one under S. 8(2). Arbitration Act---AIR 1961 Born. 65 Reversed.
(S) AIR 1957 Punj. 159 and AIR 1951 Pat. 196, over-ruled.
Loonkaran Sethia, etc. v. Mr. Ivan E. John and others etc. (AIR 1977 SC 336):- "(A) Partnership Act (1932), S. 69---Bar under--- Section 69 is mandatory in character and its effect is to render a suit by a plaintiff in respect of a right vested in him or acquired by him under a contract which he entered into as a partner of an unregistered firm. Whether existing Or dissolved, void. In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69".
Learned counsel while arguing about the scope of Section 12(2), CPC contends that if any unauthorized person initiated any type of proceedings, power given under Section 12(2), CPC can be exercised against those proceedings. He referred Messrs Sainjee Cargo Services v. Messrs Cargo Movers and others (1989 CLC 2229), Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd. (AIR 1964 SC 1882). Further contends that unregistered firm vif obtains a decree that is nullity and not executable. Reliance is placed on Sundarlal and Sons v. Yagendra Nath Singh and another (AIR 1976 Calcutta 471): "(B) Partnership Act (1932), Section 69---Decree obtained by unregistered firm in contravention of Section 69 is nullity and cannot be executed---Objection can be raised at stage of execution".
While referring word fraud as mentioned in Section 12(2), CPC, contends that if any decree has been obtained by committing fraud, it is in-executable decree and in-executable decree cannot be passed as the decree should be specific and lawfully enforceable. Learned counsel for the petitioner further contends that since the incompetent person has obtained the decree by playing fraud with the Civil Court. This Court as well as the Hon'ble Supreme Court, hence the same is liable to be set aside under Section 12(2), CPC. Reliance is placed on Salahuddin v. Mst. Zohra Begum and 6 others (2008 CLC 75): "S. 12(2), CPC setting aside of judgment on ground of fraud---Scope--Concealment of facts was fraud, which by itself Would be sufficient for setting aside judgment---Party having concealed facts from Court could not be given premium therefor."
Mumtaz Begum and another v. Hafiz Abdul Muqtadir and 4 others (PLD 1982 Karachi 783):--- "(c) Civil Procedure Code (V of 1908) O.VII, R. 11 read with Arbitration Act (X of 1940), S. 32---Decree- -Challenge on ground of fraud---A decree passed as a result of proceedings under Arbitration Act, X of 1940, held, not immune from being challenged in Civil Court on ground of fraud and such claim not hit by S. 32 of Arbitration Act, 1940".
Muhammad Yasin v. Sheikh Hanif Ahmed and 4 others (1993 SCMR .437), Qasim International Containers Terminal Ltd. v. Qasim Fright Station Pvt. Ltd. And another (2002 MLD 171), Ch. Fazal Muhammad through LRs v. Pakistan through Secretary Ministry of Defence and others (2007 CLC 148), (2006 SCMR 71), Khawaja Muhammad Yousaf v. Federal Government through Secretary Ministry of Kashmir Affairs and Northern Areas and others (1999 SCMR 1516), Government of Sindh through the Chief Secretary and others v. Khalil Ahmed and others (1994 SCMR 782): "---S. 12(2), CPC---Decree obtained by fraud---Fraud vitiates even the most solemn proceedings and Courts of general jurisdiction are competent to suo mom recall decrees obtained from it by fraud.
5. On the other hand, learned counsel for the respondents contends that technicalities should not be a hurdle for grant of the rights which a person is found otherwise entitled to. Further contends that against the objection petition, the order of the Executing Court was challenged through Civil Revision before this Court, which was dismissed thereafter this application has been moved. He while relying on Mst. Sabiran Bibi and others v. Ahmed Khan and others (2008 SCMR 226) contends that the present application is not maintainable and liable to be dismissed being without substance. Further contends that according to Sections 45, 46 & 47 of the Partnership Act, the powers remain with the partners even after termination of a partnership, meaning thereby the dissolution of partnership does not come to an end for practical purposes i.e. Continues for the purpose of winding up of business and partners can sue or may be sued in names of the same firm for dedication of unfinished affairs. He has relied on Shuja-ul-Mulk v. Firm Abdul Ghafoor-Abdul Qadim (PLD 1964 Peshawar 110). Messrs Chaudhry Allah Bux Moula Bux v. Aijaz Messrs Moula Bux and another (PLD 1973 Karachi 468), Messrs Memon Trading Co. v. Messers Hajee Ghaffar. Haji Habib Janoo (PLD 1966 Dhaka 612), Messrs Pioneer Housing Society Ltd., through Managing Director Bank Square Lahore v. Messers Babar and Company through Shakir A.I Khan and 2 others (PLD 1999 Lahore 193). Further contends that the general power-of attorney once given in favour of any person remains in field till its revocation. As provided under Section 202 of the Contract Act. To elaborate his point further contends that since Section 46 of the Partnership Act empowers the partners to perform their duties even after dissolution of partnership (even in the name of the partnership), hence the power-of-attorney does not automatically comes to an end after the dissolution of the partnership, hence the power-of-attorney issued in favour of the attorney remains valid till it is revoked under Section 202 of the Contract Act with a specific exercise of power by the principal, hence the application under Section 12(2) is not maintainable, rather the same has been filed to delay the process of the execution of the decree.
6. In rebuttal, the learned counsel for the petitioner contends that under . Sections, 4 & 17 of the Partnership Act (which impose the penalty for providing the wrong information): "4. Definition of "partnership" "partner,' "firm" and "firm name ." "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all."
Persons who have entered into partnership with one another are called individually "Partners" and collectively "a firm" and the name under which their business is carried on is called the "firm name."
"17. Rights and duties of partners after a change in the firm, after the expiry of the term of the firm and where additional undertakings are carried out.---Subject to contract between the partners--
(a) Where a change occurs in the constitution of a firm, the mutual rights and duties of the partners in the reconstituted firm remain the same as they were immediately before the change.
As far as may be;
(b) Where a firm constituted for a fixed term continues to carry on business after the expiry of that term, the mutual rights and duties of the partners remain the same as they were before the expiry.
So far as they may be consistent with the incidents of partnership-at-will; and
(c) Where a firm constituted to carry out one or more adventures or undertakings carries out other adventures of undertakings, the mutual rights and duties of the partners in respect of the other adventures of undertakings are the same as those in respect of the original adventures or undertakings."
Hence the provisions are mandatory and after dissolution of the partnership. It was the duty of the partners to provide the correct information, which they failed to perform, hence the decree obtained by the incompetent and unauthorized person (general attorney) is untenable in the eye of law and would be deemed to be obtained by misrepresentation and committing fraud on the Courts as well as the petitioner. Therefore while accepting this petition, the decrees be set aside and matter be relegated to its initial stage so that further proceedings shall be conducted in accordance with law.
7. I have considered the arguments advanced by the eminent learned counsels of the parties and benefited from the relevant provisions of law as well as the reference made by the learned counsels.
8. So far as the contention of the learned counsel for the petitioner that no partnership existed at the time of passing of the award, hence any act done in favour of the firm which was not registered (non-existent) at that time, had no legal value according to Section 69 of the Partnership Act, 1932.
As such, the firm cannot carry out its function unless it is registered and on this point all the judgments referred to by the learned counsel have been correctly construed and there is no dispute about this proposition. There is no cavil to hold that the firm cannot function unless it is registered in accordance with law as provided under the Partnership Act and whatever, the law laid down leads to one conclusion i.e. Section 69 of the Partnership Act puts the embargo on the firm that it shall not start its business in its name unless it is registered. However, the case in hand does not entail the question of registration of a firm inasmuch as the learned counsel has misread and misapplied this provision of law. Here the question is altogether different for the firm was formerly registered and later dissolved. So instead of Section 69, Sections 45, 46, 47 and 49 of the Partnership Act, 1932 are the relevant Sections to help resolve the issue in hand.
"45. Liability for acts of partners done after dissolution. (1)
Notwithstanding the dissolution of a firm the partners, continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution, until public notice is given of the dissolution: Provided that the estate of a partner who dies, or who if adjudicated an insolvent, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable under this Section for acts done after the date on which he ceases to be a partner."
(2) Notices under sub-section (1) may be given by any partner .
"46 Right of partners to have business wound up after dissolution. On the dissolution of a firm every partner or his representative is entitled, as against all the other partners or their representatives, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or their representatives according to their rights".
"47 Continuing authority of partners for purpose of winding up. After the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun unfinished at the time of the dissolution, but not otherwise: Provided that the firm, is in no case bound by the acts of a partner who has been adjudicated insolvent but this proviso. Does not affect the liability of any person who has after the adjudication represented himself or knowing permitted himself to be represented as a partner of the insolvent."
48. Mode of settlement of accounts between partners. In setting the accounts of, a firm after dissolution the following rules shall subject to agreement by the partners, be observed:---
(a) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and, lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits.
(b) The assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:-
(i) In paying the debts of the firm, to third;' parties;
(ii) In paying to each partner ratably what is due to him from the firm for advances as distinguished from capital;
(iii) In paying to each partner rateably what is due to him on account of capital; and
(iv) The residue, if any, shall be divided among the partners in the proportions in which they were entitled to share profits.
According to those Sections. The partners of the firm can, to all intents and purposes, continue to perform their duties till the winding up all the matters of the firm. From the bare reading of the said Sections it appears that merely on dissolution of a firm the partnership does not come to a complete end but it continues for the purpose of winding up the business. Every partner has authority to take recourse to steps for that purpose and to complete transaction begun but unfinished at the time of the dissolution and from the above authorities cited it appears that after the dissolution of partnership, a partner may sue or be sued in the name of the firm provided the cause of action arose before the dissolution of the firm and the adjudication on the same remain unfinished Messrs Memon Trading Co. v. Messrs Hajee Gaffar Hajee Habib Janoo (PLD 1966 Dacca 612). There is no dispute as to the fact that the firm was registered at one stage and subsequently it was dissolved, thus making no practical difference for performance of functions in firm's pre- dissolution and post-dissolution period.
9. Even now, there is no cavil to the proposition that whatever function was performed by the general attorney on behalf of the partners was with their consent. Since this general power of attorney had been given by all the partners of the firm and they did not revoke it, hence it remained in the field and no adverse inference can be drawn as the learned counsel for the petitioner has tried'to establish through his arguments. Even if it is presumed that the firm had dissolved and in its wake the general attorney continued to perform his duties, it will be presumed that he was discharging his functions in the name of the firm with the tacit approval of the partners because the authorized persons (partners of the firm) did not make any effort to revoke this general attorney. Since Sections 45, 46 & 48 empower the performance' of duties by the partners as they were before the dissolution of firm, so they performed their duties by not revoking the power-of-attorney from the attorney, hence their act is valid and whatever had been done by the general attorney on behalf of all the partners of the firm, shall be considered a valid performance of duty on behalf of the firm hence the judgment referred, by the learned counsel for the' petitioner Muhammad All Razi Khan v. Muhammad All Zaki Khan and others (2007 MLD 54), Sardar Muhammad Mushtaq Khan and 6 others v. Sardar Muhammad Parvez Khan and 14 others (2001 MLD 1725), Muhammad Yasin Khan v. Nazir Begum and another (2008 PLR 1556) have no relevancy.
Even otherwise, this . Objection could have been raised by the partners if some fraud had been committed by the general attorney with the firm or its partners but this is not the circumstance of this case. Moreover, now the partners are before this Court and they are pleading that whatever the general attorney has performed on their behalf, it was with their consent. So, according to Section 196 of the Contract Act which is reproduced below for facility of reference: "196. Right of person as to acts done for him without his authority.--- Effect of ratification.---Where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. If he ratifies them, the same effects will follow as if they had been performed by his authority".
It can be presumed to be ratification which has been validly protected under the provision of law. If any principal accepts any act done by his agent even an unauthorized one. If the principal owns his act it amounts to validation and ratification, hence the principle of ratification is applicable squarely in this case and the statement of the present respondents/partners of the firm have been represented by the learned counsel for the respondents, have lent legitimacy to acts done by the general attorney on their behalf. Reliance is placed on Haji Shafi Muhammad Jamote v. Fishermen Cooperative Society Limited and 6 others (1999 MLD 1668), Imperial Bank of Canada v. Mary Victoria Begley (AIR 1936 PC 193), Muhammad Zakria and 3 others v. Bashir Ahmad (2001 CLC 595):--- "S. 196---Ratification, principle of---Act done by one person on behalf of another---Provision of S. 196, Contract Act, 1872---Applicability--- Pre-requisites---Act should have been performed by a person acting for the other but without the knowledge of the other---Before ratifying unauthorized act of agent, the principal must be proved to have the knowledge of the action he is approving so that the principal can exercise the option of ratifying or disowning---Person ratifying the contract must know fully all the material circumstances, under which the act is so done---Act cited to be ratified must not be a void act."
10. Even otherwise, the petitioner is not an aggrieved person in the precise sense of Section 12(2), CPC which is reproduced below for facility of reference:--- "Sec. 12, CPC-
(1) (2) Where a person challenges the validity of a judgment, decree or order on the plea of fraud, mis-representation or want of jurisdiction, he shall seek his remedy by making an application to the Court which passed the final judgment, decree or order and not by a separate suit."
The decree challenged by the petitioner has been found in accordance with law and facts of the case and he had been found liable to pay certain amount to the respondent unto Hon'ble Supreme Court of Pakistan. To this extent there is no illegality in the judgment. Now on the basis of this fact that the man who was representing respondents was not a legal person could not be considered a ground for setting aside a decree unless in whose favour the decree has been passed, raised objection that too if his claim would have been found more instead of the declared one. However, the situation is diametrically opposed as the respondents/ decree-holders are accepting, whatever has. Been decreed as correct and they have made the statement even before this Court through their counsel to the effect that they accepted whatever has been done on their behalf by their agent: This state of affairs reinforces the impression that the Judgments/Decrees passed in favour of the respondents were, by no means, the outcome of fraud or misrepresentation.
11. I have explored the matter from all possible angles and find that no prejudice (fraud or misrepresentation) has been caused to the applicant/petitioner. Even he had no locus-standi to file these petitions which on the face of it, seem to be filed with mala fide intention to deprive the respondents of the eventual fruition of the Judgments/Decrees upheld by the Hon'ble Supreme Court of Pakistan and the petitioners some have what (sic) the same (at least for eight years) to the respondents by way of this petition.
12. ' In the light of afore-mentioned exhaustive discussion, I am inclined to dismiss this petition with costs.
Petition under Section 12(2), CPC dismissed.