IRFAN SAADAT KHAN, J.-- The instant High Court Appeal (H.C.A.) has been filed impugning the judgment passed on 8.8.2007 in Suit No.367 of 1995 by a learned Single Judge of this Court. It is pertinent to mention that two more High Court Appeals, in respect of the same parties bearing H.C.As. Nos.89 and 128, both of 1993, are pending but all the counsel appearing in the present appeal and in the appeals mentioned above have stated that for a proper adjudication in the instant matter between the parties it would be fitness of things if H.C.A. No.198 of 2007 is heard and disposed of first.
2. Briefly stated, the facts of the case are that a company under the name and style of Faruqi House Building Corporation (Pvt.) Limited (hereinafter referred to as the company) was formed in the year 1962 by the deceased Mr. Shakeel Ahmed Khan Faruqi (hereinafter referred to as late Mr. Faruqi) and the shareholding and management of the company remained with him till the year 1982, when it was claimed that the shareholding of the company and the management stood transferred to the. Appellant No.2 and his family members. The controversy between the parties arose when it was found that both the Faruqi Family and the Appellant No.2 claimed management and shareholding over the said company and, therefore, it is in this background that the Appellant No.2, claiming himself to be the Managing Director of the company, filed a suit for declaration and permanent injunction by arraying the family members of Mr. Faruqi and the Registrar Joint Stock Companies (now SECP) as the defendants. The matter proceeded before the learned Single Judge in the above referred suit who, vide the impugned judgment, found the claim of the appellants to be highly doubtful and thereafter dismissed the suit.
3. The record reveals that the learned Single Judge, after hearing the parties, vide order dated 23.2.1999 framed the following issues:- "1 Whether defendants Nos.1 to 5 are share holders of Messrs Farooqui House Building Corporation Ltd. (the said company)?
2. Whether any of the defendants Nos.1 to 5 have the right to hold office of Chairman, Managing Director and Director of the said company?
3. Whether Muhammad Saleem Khan is the Managing Director of the said company?
4. Whether defendants Nos.1 to 5 have any right of claim over the property or assets of the said company?
5. What should the decree be?"
Thereafter vide order dated 2.6.1999, on an application bearing C.M.A. No.5050 of 1999, the following additional issues were framed:- "6. Whether suit as framed and filed is maintainable?
7. Whether the suit is hit by the provisions of Sections 12 and 42 of Specific Relief Act, 1877?
8. Whether the suit is time barred?"
4. The learned Single Judge through his detailed judgment except the Issue No.8 decided the other issues in favour of the defendants (present respondents) and observed that the suit, firstly, was not maintainable on legal grounds and, secondly, dismissed the same on merits as well. The learned Single Judge, however, found the suit to be instituted within the limitation period and not barred.
5. Chaudhry Atif Rafiq, Advocate has appeared on behalf of the appellants and submitted that the judgment passed by the learned Single Judge is not in accordance with law. He, at the very outset, stated that the claim of the appellants was only with regard to the shareholding and management in the company and not with regard to the land owned by the company. He stated that since Mr. Faruqi was suffering with financial difficulties hence in the year 1982 he contacted the Appellant No.2 M. Saleem Khan (hereinafter referred to as Mr. Khan) and gave a power of attorney through a proper Board Meeting and sold out the shares to Mr. Khan. He stated that all the legal formalities in this regard, which include obtaining of power of attorney from the minors of the Faruqi Family, were fulfilled and thereafter the shares of the company were transferred to Mr. Khan and his family members through proper agreements and in accordance with law. He invited our attention to those agreements and staled that the transfer of the shares took place in a legal and lawful manner and it was only after fulfilling the legal and codal formalities that Mr. Khan was appointed as the CEO of the company.
6. The learned counsel also invited our attention to various transfer letters, minutes of the Board of Meeting of various dates to show that the transfer was made in a legal and lawful manner. He stated that after the death of Mr. Faruqi the respondents illegally created a parallel Board of Directors and started filing returns with the Registrar of Companies, which, as per him, they legally cannot do since the management and the shareholding of the company stood transferred to Mr. Khan and his family members, therefore, the said returns about holding of meetings and carrying on other activities by the Respondents Nos.1 to 5 with regard to management of the company were illegal. He stated that the appellant received a letter dated 25.6.1984 from the Deputy Registrar of Joint Stock Companies (now SECP) objecting to his filing of the returns of the company. It was then Mr. Khan filed a suit for permanent injunction against the respondents, which, as per the learned counsel, was , incorrectly dismissed by the learned Single Judge without going through the various aspects, documents and other points raised before him. He stated that the company owned 384-00 acres of land, out of which Mr. Khan had already purchased 139-02 acres land of the company, and it was clarified before the learned Single Judge that Mr. Khan and his family members were not interested in the land of the company, rather, in its shareholding and management only.
7. The learned counsel next stated that the learned Single Judge while passing the judgment has not considered various provisions of the Companies Ordinance, 1984, which talks about a proper procedure with regard to the purchase and sale of the shares of a company. He stated that the returns filed by the appellants before the Registrar of Companies duly establishes the legal character of Mr. Khan and his family members. He further stated that the observation of the learned Single Judge that suit was not maintainable is an incorrect finding, which needs to be set aside. He stated that parameters of Order XX, Rule 5, C.P.C. have not been fulfilled by the learned Single Judge and has also not considered the fact that a declaration with regard to shareholding of the company of Mr. Khan and his family members was imperative in the matter but the same was declined without giving plausible reasons for the same. He stated that seeking negative declaration in the matter was in accordance with the Specific Relief Act, 1877. He further stated that proper power of attorney was given by Mr. Faruqi to Mr. Khan to sell out the shares in the year 1981, which he and his family members purchased and the transfer of the shares was done in accordance with law. He also stated that provisions of Sale of Goods Act were also ignored by the learned Single Judge. As per the learned counsel, while passing the impugned judgment the deposition of the parties and the cross-examinations were also ignored by the learned Single Judge. In support of his above contentions, the learned counsel has placed reliance on the following judgments:-
1. Muhammad Hassan v. Shamsuddin (2013 MLD 1392).
2. Muhammad Yousaf v. Irfan (2009 YLR 1688).
3. Sarshar Ali v. Roberts Cotton Association Ltd. and another (PLD 1963 SC 244).
4. Mobeen Raza and another v. Messrs Alloo and Minocher Dinshaw (2016 PLC (N) 10).
5. Jan Ara v. Muhammad Zubair (2012 CLC 1630).
7. (sic) Muhammad Nawaz v. Member Judicial Board of Revenue (2014 SCMR 914).
8. Binyameen v. Hakim (1996 SCMR 336).
9. Messrs Oriental Shipping Co. Ltd. v. Panaghia Odigitria (1991 MLD 148).
10. Abdullah Khan v. Government of Sindh (1986 MLD 1500).
11. Muhammad Ijaz Ahmed Chaudhry v. Mumtaz Ahmad Tarar and another (2016 SCMR 1).
12. Adam Limited v. Mitsui & Company (2009 CLD 144).
8. Mr. Badar Alam, Advocate has appeared on behalf of Respondents Nos.1 to 5 and has supported the judgment of the learned Single Judge. He, however, stated that the learned Single Judge was not correct, so far as, the decision on Issue No.8 is concerned i.e. with regard to the limitation involved in the suit. He stated that the learned Single Judge ought to have dismissed the suit on the ground of limitation in limine. He stated that, though, no appeal has been filed by the Respondents Nos.1 to 5 in this regard but the provisions of Rule 2 Order 14 and Rule 3 of Order 15, C.P.C. support his submission. He further stated that no application under Section 5 of the Limitation Act was also filed by the plaintiff in the suit, hence according to him, the matter since was time barred, therefore the same should not have been entertained. In support of his above contention he has placed reliance on the following decisions:- "1. Sherin and others v Fazal Muhammad and others (1995 SCMR 584).
2. Ahsan Ali and others v. District Judge and others (PLD 1969 SC 167).
3. Province of Punjab, through Member Board of Revenue v. Muhammad Hussain through Legal Heirs and others (PLD 1993 SC 147)
4. Hajji Muhammad Shah v. Sher Khan and others (PLD 1994 SC 294)
5. Dilmir v. Ghulam Muhammad and others (PLD 2002 SC 403)
9. Mr. Badar Alam next contended that in the cross-examination Mr. Khan has duly admitted that he has shown himself to be a plaintiff whereas according to him the plaintiff could only be the company, if aggrieved. He stated that, though, Mr. Khan claimed ownership of the company on the basis of sale agreement dated 21.3.1982 but he has failed to prove his major shareholding in the company. He submitted that all the documents prepared in this behalf with regard to meetings, resolutions, returns, etc. and so far as acquisition of shares by him and his family members are concerned were void being fake and forged. He further stated that if for argument's sake it is assumed that Mr. Khan had acquired shares in a legal and lawful manner, however, it is a matter of record that Mr. Khan has not paid full amount of the sale consideration of the shares, hence, according to him, the acquisition of shares was defective. He stated that previously Mr. Khan filed a suit bearing No.1145 of 1984 before the Civil Judge, which was returned; however, Mr. Khan kept mum for almost eleven (11) years and thereafter filed the present suit. He stated that a sale agreement does not create ownership and invited our attention to Section 73 of the Contract Act and stated that Mr. Khan on the basis of agreement has claimed ownership and management of the company. He further stated that the transfer deed and the share certificates produced, which were stated to be executed in favour of Mr. Khan, are forged documents and a nullity in the eyes of law. He also invited our attention to the cross-examination of Mr. Khan.
10. The learned counsel further stated that even the Registrar of Companies has termed the share transfer documents to be unregistered. He stated that in view of these facts the claim of Mr. Khan to be the M.D./Chairman or CEO of the Company is misconceived. He stated that Mr. Khan has sought negative declaration from the Court, which is not permissible Under the law. According to the learned counsel the contention raised by Mr. Chaudhry that Mr. Khan was only interested in holding the shares and management of the company is not correct rather Mr. Khan was interested in the land measuring 384.00 acres of the company, which is worth millions of rupees. He further stated that it is a settled principle of law that a person filing a suit has to succeed on the strength of his case rather than the weaknesses of the other side. He stated that while transferring the shares to Mr. Khan and his family members since the provisions of Section 76 of the Companies Ordinance were also ignored, therefore, the learned Single Judge quite rightly observed that the said transfer of shares was not in accordance with law. In support of his contention the learned counsel has placed reliance on the following decisions:-
1. Central Cotton Mills Ltd. v. Naveed Textile Mills Ltd. and others (1993 MLD 42)
2. Akbar Ali Sharif and others v. Syed Jamal uddin and others (1991 MLD 203)
3. Bashir Ahmed v. Abdul Wahid (PLD 1995 Lahore 98)
4. Muhammad Saeed Akhtar Butt v. The Election Tribunal and others (1999 MLD 2793).
11. Mr. Badar Alam further stated that Mr. Khan and his family members were neither the shareholders nor the directors of the company, hence they were not competent to hold meetings, pass resolutions and to file statutory returns, therefore, all the actions taken by them in this behalf were null and void. He in support of this contention has placed reliance on the decision given in the case of Province of Punjab through Chief Secretary and others v. Malik Ibrahim and Sons and another (2000 SCMR 1172). He stated that a number of documents were not produced, while the matter proceeded before the learned Single Judge, hence, firstly, cannot be presented now and, secondly, the Court can presume the same to be not genuine. He in this regard placed reliance on the decision given in the case of Dconath Singh v. Debendranath Rai (AIR 1930 Patna 78). He next contended that the assertion taken by Mr. Khan that since their grievance was a continuous cause of action, hence the suit was filed in a timely manner, is also incorrect as according to Mr. Badar Alam not a single share was transferred to Mr. Khan or to his nominee(s) and he was never elected as M.D. of the Company, as the documents relied upon by Mr. Khan were either unregistered or unrecorded documents. In support of his contention, the learned counsel has placed reliance on the following decisions:-
1. Karachi Shipyard and Engineering Works Ltd. and others v. Muhammad Shakir Shaikh (1993 MLD 42)
2. S.M. Shafiq Ahmed Zaidi through Legal Heirs v. Malik Hassan Ali Khan Moin through Legal-Heirs (2002 SCMR 338).
12. Mr. Badar Alam further submitted that since Mr. Khan could not legally be said to have acquired the shares and the management of the company, hence his claim to be the M.D. or C.E.O. or Chairman of the Company is misconceived and the learned Single Judge was quite justified in dismissing the suit filed by him by categorically observing that it was, in fact, the Defendants Nos.1 to 5, who are Respondents Nos.1 to 5 in the present HCA, were the proper shareholders of the company and have the right to hold the office of Chairman/M.D. and to control the management of the company and Mr. Khan has no right to either claim shareholding or a post in the management or any claim whatsoever over the shares or the assets of the company. He finally stated that this HCA, being bereft of any merit may, therefore, be dismissed.
13. Chaudhry Atif Rafiq Advocate while giving his rebuttal to the arguments advanced by Mr. Badar Alam, learned counsel for Respondents Nos.1 to 5, submitted that the suit was not time barred as the cause of action arose from the letter/order addressed by the Deputy Registrar Joint Stock Companies dated 25.6.1984 and the same was challenged within the limitation period. He stated that the said issue came-up for hearing vide Issue No.8 and the learned Single Judge has rejected the claim of the respondents about the limitation, hence the said argument, according to him, is not available to the counsel for the respondents. He reiterated his earlier arguments that late Mr. Faruqi duly granted permission, through sale agreement, to Mr. Khan to sell out the shares of the company and, therefore, Mr. Khan was fully authorized to transfer or purchase the shares on the basis of the registered sub-power-of-attorney given to him or to his nominees/family members. He in the end submitted that since the judgment of the learned Single Judge suffers with a number of illegalities and irregularities and is a result of misreading and non-reading of the evidences, hence the same may be set aside.
14. We have heard both the learned counsel for the parties at considerable length, perused the record and have gone through the decisions relied upon by them.
15. We will first of all take-up the issue agitated by Mr. Badar Alam Advocate with regard to the limitation. He was categorically asked a question that if the Respondents Nos.1 to 5 were so aggrieved with the decision of the learned Single Judge on the Issue No.8 why have they not filed any appeal against such finding of the learned Single Judge. To this Mr. Alam explained that the respondents can agitate the same even if they have not filed the appeal and referred to Rule 2 of Order XIV and Rule 3 of Order XV, C.P.C. It is noted that the learned Single Judge so far as the issue of limitation is concerned framed the said issue, as an additional issue being Issue No.8, and categorically observed that forum remained changing with regard to the matter between the parties, which clearly means that the appellant was continuously pursuing the matter at different fora. It is also an admitted fact that a suit bearing No.1145 of 1984 was filed before the Civil Judge, Karachi-West, who returned the same for want of jurisdiction. The legal proceedings between the parties were continuously going on, which clearly shows that the appellant never slept over his alleged claim to be the CEO of the Company.
Whether the said claim was correct or not is a different issue, but it is an admitted position that the parties are daggers drawn with each other as multiple litigations were between them. Hence, we are of the view that the findings of the learned Single Judge, in this behalf do not require any interference and the suit filed by the appellant could not be said to be either barred by time or beyond the scope of limitation. Since we have found the suit to be within the limitation time, hence there does not arise any question of filing an application under Section 5 of the Limitation Act, 1908, therefore, the decisions relied upon in this behalf by Mr. Alam are found to be quite distinguishable on the facts obtaining in the instant matter.
16. It may further be noted that the appellant duly challenged the holding of the shares by the Respondents Nos.1 to 5 in J.M. No.04 of 1987, which was allowed in the year 1992 and the Respondents Nos.1 to 5 were directed to be removed from the company against which HCA bearing No.44 of 1992 was filed, which matter was remanded to the learned Company Judge in 1994. However, the matter went upto the Hon'ble Supreme Court of Pakistan and the Hon'ble Apex Court observed that since complicated questions of law are involved hence the proper remedy would be to file a civil suit and it was in this backdrop that the appellant filed a suit bearing No.367 of 1995, which shows that the appellant and in some cases the Respondents Nos.1 to 5 were agitating and litigating with each other with regard to the ownership and management of the company. Hence, keeping in view these aspects, we are of the view, that the learned Single Judge was quite justified in observing that the matter was not barred by time and was rightly adjudicated upon by him, hence, we do not agree with the submission of Mr. Badar Alam that Suit No.367 of 1995 should have been dismissed by the learned Single Judge as barred by time. So far as applicability of Rule 2 of Order XIV and Rule 3 of Order XV, C.P.C. is concerned they also do not seem to have any bearing on the issue in hand. Hence, the argument of Mr. Alam on this aspect also is repelled.
17. We will now dilate upon the main issue involved in the instant HCA that whether Mr. Khan could hold the office of Chairman/CEO/MD of the Company and has the legal authority to appoint his family members/nominees as shareholders of the company. It was averred that due to an understanding between Mr. Khan and Mr. Faruqui. Mr. Khan acquired/ purchased 4208 shares of the company along with all its assets and liabilities and for which he had paid a major portion of the amount, however, it is an admitted fact that full amount with, regard to purchase of shares was not paid by Mr. Khan. Record reveals that certain meetings were convened, resolutions were passed and statutory returns were filed with the Registrar of Companies by Mr. Khan but those documents, as apparent from the record, have been alleged to be quite dubious in nature. It is claimed by Mr. Khan that he acquired the shares of the company through a sale agreement. It is a settled proposition of law that sale agreement does not confer ownership rights as according to the Contract Act, Transfer of Property Act and Sale of Goods Act until and unless a sale agreement is transformed into a sale deed, ownership cannot be deemed to be legally transferred to a purchaser. Therefore, the sale agreement dated 21.3.1982 could not be relied upon for the obvious reasons that the said agreement, as stated earlier, is not having legal backing so as to confer ownership as enshrined under the relevant laws. The decisions relied upon in this regard are hardly of any help to the learned counsel for the appellant and quite distinguishable from the facts obtaining in the instant matter.
18. Moreover, the terms of the agreement appears to be quite eyebrows raising. As per the clauses of the agreement the entire shares were to be sold at Rs.1,00,00,000/- out of which only a sum of Rs.1,60,000/- was paid and the balance amount was required to be paid at the rate of Rs.5,000/- per month for the first five years and then at the rate of Rs.10,000/- per month till the time the entire payment is made, which period comes to more than eighty five (85) years for completion of the entire sale proceeds or satisfaction of the entire sale consideration, which is hardly believable. It may further be noted that no, clause of the alleged agreement states that the shares of the company would be transferred to Mr. Khan or to his nominees prior to the payment of entire sale consideration, which means that it would be only after the end of the 85 years; from first, payment that Mr. Khan or his family members or nominees would become the owners of the shares of the company and not prior to that period.
19. A question would arise that whether filing of returns, holding of meetings and passing of resolutions by a person who, otherwise, is found to be, legally speaking, not a shareholder of the company could confer ownership upon such person. We are sanguine that the answer to this question would be in negative. In the instant case if the Court in the appeal comes to the conclusion that Mr. Khan could not be considered to be a shareholder of the company his holding of the meetings, passing resolutions and filing statutory returns would become redundant and non-est in the eyes of law, being an alien to the company. We agree with the submissions of both the learned counsel that a parallel Board of Directors could not run but if the Court in the instant matter comes to the conclusion as to who are the proper persons to run the affairs of the company and manage the company, the question of parallel management either by Mr. Khan and his family members or that of Respondents Nos.1 to 5 would automatically come to a logical conclusion.
20. Though, Mr. Khan produced a number of transfer deeds and share certificates, regarding transfer of shares to his family members and nominees, but here again a question would arise as to what authority Mr. Khan possessed in signing those documents and transferring the shares to his nominees and family members, if he is found to have no concern with the company, then obviously his signing of the transfer deeds, shares certificates, etc., would become meaningless, null and void.
21. Though, it is claimed that the shares of the minors of the Faruqui family were transferred by Mr. Faruqui himself, when he was alive, to Mr. Khan through a power of attorney but the record reveals that the power of attorney from all the legal heirs of Mr. Faruqui was not obtained, hence it could not be claimed by the learned counsel for the appellant that the entire shares of the Faruqui family were transferred to Mr. Khan in a legal manner. Even otherwise the record further reveals that the power of attorney given by some of the shareholders to Mr. Faruqui was cancelled prior to the execution of the sale agreement which aspect also, in our view, goes against the appellant.
22. Moreover, it is also an admitted position that the power of attorney given to Mr. Khan contains the power given to him for collection of money only and where are the powers with regard to transfer of shares to him or of his family? The said authority appears to be lacking and on this aspect no light was thrown by the counsel representing the appellant. Needless to state that when the transfer of shares to Mr. Khan is not in accordance with law how could the transfer of the shares by Mr. Khan to his nominees or family members be considered to be a valid transfer. Here again, we are of the view that the said transfer by Mr. Khan to his nominees or family members could not be considered to be a valid transfer or a transfer in accordance with law.
23. It may also be noted that in the comments filed by the Registrar of Companies it has categorically been pointed out that the documents furnished by Mr. Khan to the Registrar of Companies were "neither registered documents nor properly documented". This point also in our view goes against the, appellant that when the regulatory authority categorically stated that the documents furnished in his support by Mr. Khan with regard to the shareholding of the company were not in accordance with law his appointment as Chairman/ MD/CEO of the Company could not be considered to be a valid appointment. Interestingly it is seen that Mr. Khan did not even hold a single share in the company but all the shares have been transferred by him to his nominees or family members and in case of not having any share could a person claim himself to be either Chairman/MD/CEO of the Company? In our view, he cannot, as the provisions of Companies Ordinance in this regard are quite clear.
24. It is also to be noted that claim of holding of majority shares by Mr. Khan had become dubious specially if viewed on the fact that some 1150 original shares of the company were lying with the II-Senior Civil Judge, Karachi-Central, in G.W. Suit No.1394 of 1980 as surety. Moreover, at no point of time Mr. Khan has ever produced original share certificates, as evident from the record. Whereas, on the other hand, the Respondents Nos.1 to 5 have produced original share certificates of '1000 shares before the learned Single Judge. Here again it may be seen and noted that if Mr. Khan claims himself to be the owner of the shares of the company, why had he not produced the original share certificates before the Court and why the Respondents Nos.1 to 5 have produced the original shares, which caused heavy doubt about the shareholding by Mr. Khan as had he been given/sold out the shares or the authority to retain the shares he must have possessed the original shares, which were never produced by Mr. Khan and, thus, Mr. Khan's claim of ownership of the shares by him or by his nominees or family members could hardly be considered to be a valid ground about the ownership of the shares.
25. Therefore, in view of the above facts and in view of the various documents furnished by the parties and examined by us, we are of the view that the impugned judgment passed by the learned Single Judge does not require any interference as the learned Single Judge through his exhaustive judgment has threshed out the issues in a proper manner. Moreover, before us also the learned counsel for the appellant has failed to adduce any convincing argument or furnish such documents to prove the ownership of the shares of the company by Mr. Khan. We, therefore, hold that since Mr. Khan, his nominees and family members have failed to prove or to show that they are the shareholders of the company hence they do not have the right to hold the office and the management of the company and, therefore, dismiss the present HCA by observing that the claim of Muhammad Saleem Khan to act as a CEO/Managing Director/Chairman of the Company has neither been established nor proved. So far as the issue of seeking negative declaration, as raised by the learned counsel for the Respondents Nos.1 to 5 is concerned, since we have dismissed the appeal hence, we do not deem it appropriate to dilate upon the said issue.
26. This H.C.A., therefore, stands dismissed along with all the listed and pending applications filed in this H.C.A. and the order of the learned Single Judge is hereby maintained.