1. ' MUHAMMAD SHAFI SIDDIOUI, J.---Plaintiffs Nos. 2, 3 and 4 claim to be shareholders of Ahmed Fine Textile Mills Limited holding 99.9% shares of Fa.Zal-ur Rahman Fabric Limited. Plaintiffs Nos.2, 3, 4 and plaintiff No,2's son collectively control approximately 32.0005 % of Ahmed Fine Textile Mills Limited.
2. ' It is the case of the plaintiff that Fazalur Rahman Fabric Limited (hereinafter referred to as "FRFL") is a company incorporated under Companies Ordinance, 1984 having its registered office in the province of Punjab. All the plaintiffs and defendants are stated to be the residents of Multan. The plaintiffs have prayed in this suit as under:--
(i) Declare that the contract/ agreements for purchase of the machinery as mentioned in para 18 of the plaint or any letters of credit opened in respect of the same to be without any valid approval or resolution of the board of directors of FRFL and hence illegal, void ab initio and without any legal effect.
(ii) Declare that the defendants Nos. 1 to 5 are not fit to act as directors of FRFL as they have breached their fiduciary duties owed to FRFL and direct the removal of the said defendants from the position of directors of FRFL.
(iii) Permanent injunction restraining the defendants Nos.1 to 6 from acting as the directors of FRFL or participating in any board meeting of FRFL.
(iv) Direct the removal of the defendant No,7 from the post of company secretary of FRFL.
(v) Permanent injunction restraining FRFL from making any payment under any letter of credit or any other agreement or contract in respect of the machinery mentioned in paragraph 18 of the plaint.
(vi) Direct the defendants Nos.1 to 7 to compensate FRFL for any amount that has already been paid on account of purchase of machinery mentioned in paragraph 18 of the plaint to any bank or any other persons
(vii) Declare the meeting held on 8-11-2013 and minutes thereof to be void ab initio, illegal unlawful and without any legal effect.
(viii) Permanent injunction restraining the defendants Nos.1 to 7 from holding any general meeting of FRFL or board meeting for removing plaintiff No,2 as CEO or director of FRFL or from taking any coercive action against the plaintiffs in any manner whatsoever.
3. ' In para-47 of the plaint it is contended that the defendants Nos.1 to 6 instituted a case before the Lahore High Court at Multan Bench wherein the said Hon'ble Court was pleased to pass order dated 22-11-2013 to the effect that the Board of Directors of defendant No,8 FRFL are to run affairs of defendant No,8. It is further stated that as mentioned in para-47 of the plaint that in terms of said order plaintiffs Nos.2 and 3 were required to participate in running affairs of defendant No,8, however they were not allowed to participate. Learned Counsel on query stated that the cause of action is mentioned in para 49 and the jurisdiction in para-50 of the plaint. It is necessary for the purpose of dealing with the objection raised by this Court to reproduce paras 49 and 50 of the plaint which are as under:- "49. That the cause of action first arose in favour of the plaintiffs and against the defendants Nos.1 to 7 when the said defendants contracted to purchase the machinery mentioned in paragraph 18 hereof without any valid authority or board resolution/approval, when they concealed information and details of FRFL business from plaintiffs, on 8-11-2013 when they tried to threatened, intimidate and harass the plaintiff No,2, when they attempted to confirm minutes of a meeting dated 8-10- 2012 when no such meeting was ever held, when the meeting dated 8-11-2013 was held in an illegal and mala fide manner and against the law and code of corporate governance, when the illegal notice dated 21-11-2013 was issued calling EOGM on 17-11-2013 for removal of plaintiff No,2 as CEO of FRFL; on each date they committed the acts of illegality and misfeasance detailed in the foregoing paragraphs hereof, when the defendant No,7 concealed information from the plaintiffs forged and fabricated minutes of meeting, aided and abetted the defendants Nos.1 to 6 in their acts of illegality, misfeasance breach of fiduciary duty and siphoning of funds and concealed the same, when the defendant No,7 acted against the interest of FRFL, when defendant No,6 illegally acted as director of FRFL, and the cause of action continues to accrue each day the defendants Nos.1 to 7 continue with their illegal acts.
50. That this Hon'ble has jurisdiction to adjudicate the present suit as the machinery will land at the port of Karachi and therefore, the cause of action has also arisen in Karachi."
4. ' On 12-12-2013 this Court on contention of the learned Counsel for the plaintiff that by a resolution in extra ordinary general meeting dated 17-12-2013 the defendants will remove the plaintiff No,2 from the post of Chief Executive Officer of defendant, was pleased to pass orders that they shall not pass any resolution for the removal of plaintiff No,2, however, the plaintiff was put on notice to satisfy the Court as to how the suit is maintainable as admittedly the registered office of the plaintiff company is at Punjab and impugned notice of EOGM was issued in Multan and EOGM was also scheduled in Multan. The plaintiff sought few adjournments however the matter was ultimately heard on 17-1-2014.
5. ' It is the case of the plaintiff that in terms of the provisions of section 20(c), C.P.C., the accrual of even a fraction of cause of action within the jurisdiction of this Court would render this suit within the jurisdiction and this Court can proceed and adjudicate with the matter. It is contended by the learned Counsel that in para-18 of the plaint the plaintiff has stated that the contract for purchase of such machinery and opening of the letter of credit in lieu thereof is without approval of Board of Directors of FRFL and hence any consignment arriving via Karachi Port under the contract/agreement referred above executed between the defendant No,8 and the shipper would provide them a cause of action within the jurisdiction of this Court. Learned Counsel has relied upon para-50 of the plaint wherein it is stated that the machinery would land at Port of Karachi and since the machineries are going to land at Karachi Port for its onward destination, therefore, it would provide them cause of action to file the instant suit.
6. ' Learned Counsel for the plaintiff has relied upon the case of D. Muniranciappa u. Amiduala Venkatappa and another reported as AIR 1965 Mysore 316 which provides that even fraction of cause of action is part of cause of action and its percentage to whole cause of action is immaterial. Learned Counsel for the plaintiff has further relied upon the case of Dessee Veerabhadrauua Venkata Subbauua Firm u. Biswanath Jauadish Parsad (AIR 1962 Andhra Pradesh 338) which provides that in terms of section 20(c), C.P.C., contract of sale of goods, suit for damages and breach of contract, the place where the goods were delivered or payment is to be made, Court at that place has jurisdiction to entertain suit. He next relied upon the case of Messrs Brady & Co. (Pakistan) Ltd. v. Messrs Sayed Saigol Industries Ltd. (1981 SCMR 494) which also deals with section 20(c) regarding part of cause of action. Learned Counsel next relied upon the case of National Investment Trust Ltd. v. Lawerencepur Woollen and Textile Mills Ltd. (2002 CLD 527) which deals with the sale of the share of company and the dispute was in relation to the performance of contract of sale of shares of incorporated company. He next relied upon the case of Hail Riaz Ahmed Mir v. Briq. (Retd.) Ch. Muhammad Sharif (PLD 2003 Karachi 45) which also deals with the cause of action partly accrued. Substantially learned Counsel for the plaintiff concludes that it is immaterial whether office is registered at Punjab and the directors such as plaintiffs and defendants are residents of Multan, it is the consignment which is arriving via Karachi, which is sufficient to provide jurisdiction to this Court.
7. ' On the other hand learned Counsel for the defendant, though has not filed any counter affidavit, reply or application submitted that the suit on the face of it is not maintainable and the plaint is liable to be rejected. Learned Counsel has relied upon the provision of section 7 of the Companies Ordinance, 1984 and submitted that the relief as claimed for is within the parameters and frame of Companies Ordinance, 1984 and even para-49 which relates to the cause of action provides no jurisdiction to this Court. Learned Counsel has relied upon the case of Brother Steel Mills Ltd. And others v. Mian Iluas Miraj and others (PLD 1996 SC 543). He next relied upon the case of Muzaffar All Awan v. Messrs Pioneer Alliance (Pvt.) Ltd. And others (PLD 1989 Lahore 106). He further relied upon the case of Siddique Muhammad Malik and others v. Immad Iftikhar Malik and others (2000 CLC 477) and lastly learned Counsel has relied upon the case of Iftikhar Hussain and others v. Dadex Eternit and others (2002 CLD 575). Learned Counsel for the defendant submitted that the consignment which is going to arrive at their factory situated at Punjab via Port of Karachi would not provide them a cause of action. Even otherwise whether the case is covered by section 7 of the Ordinance, 1984 or not, no right of plaintiff is infringed or violated within the jurisdiction of this Court to provide them even a fraction of cause of action.
8. ' Heard the learned Counsel and perused the record.
9. ' The arguments of the learned counsel for the defendants revolves around two points i.e, the reliefs sought by the plaintiffs are such which are covered under Companies Ordinance, 1984 and the other point is that, whether or not the reliefs sought are covered by the Companies Ordinance, no cause of action has accrued to the plaintiffs to file this suit within the jurisdiction of this Court.
10. ' In order to understand as to whether the reliefs sought are covered within the parameters of Companies Ordinance, 1984, prayer clause from (i) to (x) are reproduced as under:-- "(i) Declare that the contract/ agreements for purchase of the machinery as mentioned in paragraph 10 of the plaint or any letters of credit opened in respect of the same to be without any valid approval or resolution of the board of directors of FRFL and hence illegal, void ab initio and without any legal effect.
(ii) Declare that the defendants Nos. 1 to 5 are not fit to act as director of FRFL as they have breached their fiduciary duties owed to FRFL and direct the removal of the said defendants from the position of directors of FRFL.
(iii) Permanent injunction restraining the defendants Nos. 1 to 6 from acting as the Directors of FRFL or participating in any board meeting of FRFL.
(iv) Direct the removal of the defendant No,7 from the post of company secretary of FRFL.
(v) Permanent injunction restraining FRFL from making any payment under any letter of credit or any other agreement or contract in respect of the machinery mentioned in paragraph 12 of the plaint.
(vi) Direct the defendants Nos.1 to 7 to compensate FRFL for any amount that has already been paid on account of purchase machinery mentioned in paragraph 18 of the plaint to any bank or any other person
(vii) Declare the meeting held on 8-11-2013 and minutes thereof to be void, ab initio, illegal, unlawful and without any legal effect.
(ix) Cost of the suit.
(x) Grant any further relief to which the plaintiffs are found entitled to in the circumstances, in the interest of justice, equity and fairness."
11. ' Apparently except the prayer clause (i) all reliefs claimed are covered by one or the other provisions of Companies Ordinance, 1984. As far as prayer clause (i) i.e, declaration to the effect that the contract/agreement of purchase of machinery or any letter of credit in pursuance thereof opened in respect of the same are without any valid approval or resolution of the Board of Directors, it appears that such declaration in view of facts and circumstances are not getable within the parameters of Companies Ordinance, 1984; however it is a matter of fact that such declaration is dependent upon the other reliefs claimed in the suit.
12. ' Section 7 of the Companies Ordinance 1984 provides jurisdiction to a High Court at a place where the registered office of the company is situated. Admittedly and in pursuance of the memorandum of association the registered office of Fazal Rehman Fabrics Limited is in province of Punjab. It does not need any lengthy discussion that all issues arising . Out of the Companies Ordinance, 1984 are to be dealt with by company Judge of a Court having jurisdiction at a place where the registered office of the B company is situated which in the present case is Lahore High Court, where admittedly registered office of defendant No,2 is situated. The distinction in section 7 of the Companies Ordinance was made only in respect of the winding up petition. In terms of subsection
(2) of section 7 for the purpose of winding up the registered office is one which has longest been the registered office of the company during last six month's immediately preceding the presentation of the petition for winding up, however this is not the case here.
13. ' In order to examine as to whether apart from the relief covered under the Companies Ordinance, 1984 any cause has accrued to the plaintiffs within the jurisdiction of this Court, plaint needs to be examined. The cause of action is mentioned in Para 49 of the plaint which talks about series of causes of action accrued within the jurisdiction of Lahore High Court such as the defendant contracted to purchase the machinery, allegedly without valid authority or board resolution, and when they concealed information and details of a FRFL business from the plaintiffs and again when they tried to threaten, intimidate and harass the plaintiffs and again when they confirmed the minutes of the meeting dated 8-10-2012 though it is alleged not to have held and again when legal notice dated 21-11-2013 was issued calling Extraordinary General Body Meeting (EOGM) on 17-11-2013 for removal of plaintiff and again for breach of fiduciary duty and siphoning of funds. In the entire para 49 which relates to the cause of action no instance with regard to accrual of cause of action within the jurisdiction of this Court is mentioned. Neither it could have been in terms of section 7 of the Companies Ordinance, 1984.
14. ' In para 50 it is stated that the machinery allegedly purchased by FRFL for its onward journey will be going to land at the Port of Karachi and hence it is stated that the cause of action has arisen within the jurisdiction of this Court. Section 20(c), C.P.C. Deals with the cause of action which prescribes that the Court will only have the jurisdiction over matter if the cause of action arises within the local limits of its jurisdiction. Term cause of action as used in section 20 with reference to the jurisdiction of the Court relates to the facts or allegations giving rise to a claim leading to infringement of some right of a party and not to a notional or imaginary assertion in that context.
15. ' In the case of Chalna Fibre Company Ltd. v. Abdul Jabbar and 9 others reported in PLD 1968 SC 381 the ratio on the basis of which civil suit under section 9, C.P.C. Under the circumstances was held to be competent and not hit by any provisions of Companies Act, 1913 as there was no provisions in the Companies Act under which a party could seek the relief he claimed in the suit. The ratio of the judgment is also based on the fact that such declaration could only be made by seeking relief through a declaratory suit. However, the questions like that one in this suit that landing of such machinery at Karachi for its onward destination is not the determining factor in the said judgment.
16. Thus, what was held by the Hon'ble Supreme Court was that since the relief sought was not hit by any provisions of Companies Act and that the cause of action accrued within its jurisdiction, therefore, the suit was held to be competent; unless that jurisdiction has either been expressly or impliedly taken away by some other law it will continue to vest in the Civil Court. Following the principle laid down in the said judgment in the instant case it appears that apart from prayer clause (i) all other reliefs are available to the plaintiff under Companies Ordinance, 1984. However for the purposes of prayer clause (i) it is necessary that at least some fraction of the cause of action should have accrued within the jurisdiction of this Court in terms of section 20(c), C.P.C.
17. ' In the instant case the entire paragraph that deals with the cause of action i.e, para 49 provides alleged cause of action to the plaintiffs within the local limits of Lahore High Court. The landing of the machinery at the port of Karachi, as alleged in Para 50, will not going to infringe any right of the plaintiff within the jurisdiction of this Court. If at all their rights are infringed in terms of entering into such contract for the purchase of the machinery such rights were allegedly infringed at a place where the contract was entered into i.e, within the jurisdiction of Lahore High Court. The plaintiffs cannot create a cause of action solely by their own effort. It must be created for them by some act of the defendants which must be part of action.
18. ' In the plaint it is the case of the plaintiffs that the FRFL has entered into an agreement for purchase of machinery at Punjab where the registered office of the company is situated and the machinery is being imported which will arrive there via Port of Karachi. This ground alone that the machinery will going to land at Karachi before it reach its ultimate destination i.e, Punjab provides not even an imaginary cause of action to the plaintiffs as for its ultimate benefit the machinery for all intent and purposes is to be installed and used at Multan (Punjab) i.e, within the jurisdiction of Lahore High Court. The plaintiffs have not placed any other document apart from this statement that the machinery is going to be landed at Karachi Port although it is admitted by the learned counsel for the plaintiffs during arguments that one way or the other either through private carrier or some other contracted arrangement the machinery is going to arrive from Port of Karachi to Multan for its installation. There may or may not be an involvement of private transporter to its ultimate destination. Defendants have not done anything that has breached or infringed rights of the plaintiffs within the jurisdiction of this Court and just landing of consignment at Karachi Port and that too for its onward journey is not breach of any right.
19. ' The case-law relied upon by learned counsel for the plaintiffs are not applicable to the facts and circumstances of the present case. PLD 2003 Karachi 45 is in respect of part cause of action arising out within the jurisdiction of one Court that has jurisdiction to entertain the suit. Similarly the case of National Investment Trust Limited v. Lawrencepur Woollen and Textile Mills Ltd. Reported in PLD 2002 CLD 527 also talks about the part of the cause of action which in the instant case cannot be held only in view of landing of the machinery at Karachi Port for its onward destination at Punjab.
20. ' The plaintiff has to make out a case that certain rights that he was enjoying in the jurisdiction were declined, refused and that the alleged landing of the consignment at Karachi for its onward destination would constitute infringement of right which he was enjoying.
21. ' I am afraid that the plaintiffs have not expressed any such right that they were enjoying within the territorial limits of this Court and that by landing of such consignment at Karachi such right will be infringed which could provide them cause of action in terms of section 20(c), C.P.C. Hence in view of such facts and circumstances, I have no option but to return the plaint under Order VII, Rule, 10, C.P.C.
22. Plaint returned.