1. ' The order sheet does not mention the applications which are fixed for hearing today but the learned counsel for the parties state that CMA No. 1022/92, CMA No. 1023/92, CMA No. 867/92 and CMA No. 3779/92 are pending and have to be heard.
2. CMA No. 1022 of 92.---This is an application under Order 7, Rule 11, C.P.C. by the defendant, to reject the plaint. The affidavit in support of the application contains numerous allegations pertaining to the merits of the controversy between the parties but the allegations relevant to the present application are (i) that "on the basis of the plaintiffs' own admission contained in para. 7 of the plaint, the suit as framed is not maintainable; (ii) that the plaint merits rejection due to corporate violations, fraud and misrepresentations and the Specific Relief Act"; and (iii) that "the agreement is unlawful and opposed to public policy. Hence the complaint is liable to be rejected."
3. ' The facts as alleged in the plaint, are as follows. By an agreement (Annexure 'A' to the plaint), the administration of the hospital of the plaintiff No. 1 was handed over to the defendant who is a director of the plaintiff No.1. Under that agreement, the defendant was to be responsible for the. running expenses of the hospital; all the income of the hospital was to go to the defendant; and, in lieu of such income, the defendant was to pay the plaintiff Rs, 270,000 for the .first quarter commencing on the Ist June, 1991, and thereafter Rs, 180,000 per quarter as rent. The agreement was to be for a period of four years subject to termination by the defendant. It was to "stand nullified with immediate effect" if the defendant failed to make quarterly payments, and, in that event, the defendant was to hand over the charge of the hospital to the Management. It is alleged in para. 7 of the plaint that the plaintiffs are now advised that the appointment under the agreement is of a managing agent and bad in law. It is further alleged that the agreement stands nullified as the defendant has not made payments in terms of the agreement and committed other breaches thereof.
4. ' Upon the above allegations, the plaintiffs have prayed for (a) direction to the defendant. to make over and place the administration of the medical complex of the plaintiff No. 1 under its Board of Directors, (b) Rs,990,000 as payments due under the agreement, (c) accounts, and (d)
5. Rs,5,000,000 as compensation and damages.
6. ' Mr. Nasim Farooqui, the learned counsel for the defendant, submits that the agreement is not enforceable because (i) it is an agreement of managing agency whin is prohibited by section 206 of the Companies Ordinance, 1984, (ii) it is compulsorily registrable under section 17 of the Registration Act and, not having been so registered, does not create any right in the plaintiffs and
(iii) it is contrary to the provisions of the Sindh Rented Premises Ordinance, 1979. He, however, has not advanced any further argument with regard to the consequences (in the context of the present application) of the alleged invalidity of the agreement on account of the provisions of the Registration Act and the Sindh Rented Premises Ordinance; but contends that since the agreement is admittedly void under the provisions of the Companies Ordinance, the suit for its enforcement is barred. He further contends that the plaintiffs ought to have filed a suit for cancellation of the agreement which is alleged to be void, under section 39 of the Specific Relief Act, 1877, and that, therefore, the present suit is barred.
7. ' Mr. J.H. Rahimtoola the learned counsel for the plaintiffs, submits, on the other hand, that the reliefs, claimed by the plaintiffs fall under section 65 of the Contract Act, 1872, which provides that when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is found to restore it, or to make compensation for it, to the person from whom he received it. He further contends that, in any case, the plaintiffs have pleaded, in para. 9 of the plaint, that the agreement stands nullified and that the suit for reliefs consequent upon the nullification of the agreement is not barred. This latter argument is premised on the assertion by Mr. Rahimtoola that the plea in para. 9 of the plaint, though not stated to be so, is in fact, in the alternative to the plea in para.
7. of the plaint that the agreement is "bad in law".
8. ' The question that arises is whether the suit is one for enforcement of an agreement which is void or unenforceable or one for relief under section 65 of the Contract Act; and whether, in either case, it is barred by any law. Prayer (a) in the suit for direction to the defendant to hand over the management of the hospital of the plaintiff No.1 to its Board of Directors would seem to fall under either of the categories mentioned above because the relief could be by way of restoration under section 65 of the Contract Act or by way of enforcement of the agreement which provides for handing over of the management of the hospital if and when the agreement stands nullified.
9. Prayer (b), for payment of money due under the agreement, prayer (c), for accounts, and prayer (d), for compensation and damages, would appear to be based upon the plea in para. 9 of the plaint that the agreement stands nullified. However, whether or not the plaintiffs are entitled to claim the reliefs, or any of them, on the basis of averments in para. 7 of the plaint or in para. 9 thereof will have to be determined at the trial of the suit. Mr. Farooqui contends that the plea in para. 9 of the plaint is inconsistent with the plea in para. 7 and is not stated to be in the alternative, but remedy in that case does not lie under Order 7, Rule 11, C.P.C.
10. Since, prima facie, it appears that the suit is not exclusively for enforcement of a void agreement, the plaint cannot be rejected. Mr. Farooqui submits that the plaintiffs ought to have filed a suit for cancellation of the agreement under section 39 of the Specific Relief Act but there is nothing in that section to make it obligatory for the plaintiffs to file a suit for cancellation or barring a suit of the nature filed by the plaintiffs. The provisions of Order 7, Rule 11 (d) on which Mr. Farooqui relies are, therefore, not attracted.
11. ' The application is, in the circumstances, dismissed.
12. CMA No. 1023/92.---This is an application under Order 19, Rule 2, C.P.C. by the defendant to summon MA. Hafeez, the plaintiff No. 2, for cross-examination in relation to the affidavit filed by him in support of his application for interlocutory relief. Mr. Farooqui says that the affidavit in question is the one filed in support of CMA 867/92. The ground on which the deponent is sought to be cross- examined is that the allegations in the affidavit are vague, baseless and false. Mr. Farooqui submits that in order to make out a case for interlocutory relief, the plaintiffs are required to establish, facts showing a prima facie case and that they have failed to do so in the affidavit in question. That may be so but whether or not the plaintiffs have made out a case for grant of interim relief will have to be decided on the basis of the allegations contained in the affidavit. In this view of the matter, Mr. Farooqui does not press this application but reserves the defendant's right to make a similar application should the circumstances so require. The application is, therefore, dismissed as not pressed.
13. C.M.As. 867/92 and 3779/92.---The learned counsel for the parties agree that the hearing of these applications be adjourned to 12th August, 1992 and that, in the meantime, without prejudice to the respective contentions of the parties, the management of the plaintiffs' Medical Complex by the defendant shall be supervised and monitored by the Official Assignee. .