I intend to dispose of four interlocutory applications filed in the above two suits, as the questions of law and fact are identical and since the subject---matter of both the suits is also one and the same, i.e. Shares certificates of (late) Yousuf Bhaimia.
2. Suit No.344 of 1994 is filed by the widow of (late) Yousuf Bhaimia, who died on 20th May, 1991, leaving behind the plaintiff and one sister as legal heirs, hereinafter referred to as the "deceased".
The deceased was one of the Directors of Messrs Liza General Contracting Company, established at Abu Dhabi, UAE (hereinafter referred to as the "Company"). That the company entered into some business with UAE Armed Forces, for which the Company obtained running finances from the Bank of Credit and Commerce International, Abu Dhabi, UAE (hereinafter referred to as the "BCCI"). It is not disclosed by the plaintiffs as to how the shares of different companies, as mentioned in Schedule ' A' , annexed with the plaint, came into possession of the defendant No.1 in Suit No.344 of 1994, namely Habib Credit and Exchange Bank Limited, Karachi (hereinafter referred to as the 'HC&EB'). However, it is further averred in the plaint that no lien exist on these shares, which were delivered/handed over by the defendant No.1 to the defendant No.2, namely, Touch & Ross, Official Liquidator of BCCI (Overseas) Limited (hereinafter referred to as the 'Official Liqudator').
3. The grievance of the plaintiff in Suit No.344 of 1994 is that these shares certificates, alongwith blank transfer deeds, have been illegally and without notice to the heirs of deceased Yousuf Bhaimia, were handed over by the defendant No.1 to defendant No.2 without adopting due course of law inasmuch as no judgment or decree of a competent Court of law was obtained by the Official Liquidator to show their right or claim on these shares. In view of these alleged facts the plaintiff has prayed that she be declared to be the sole heir of deceased Yousuf Bhaimia and to have the exclusive ownership and benefits of all these shares and that the act of the defendant No. l (HC&EB) delivering these shares to the defendant No.2 (Official Liquidator) be declared illegal, null and void. Plaintiff has also prayed for permanent injunction restraining the defendants from transferring, alienating or creating any interest on the shares.
4. Suit No.507 of 1994 has been filed by the Bank of Credit and Commerce International (Overseas)
Limited, through its Official Liquidators against the plaintiff in Suit No.344 of 1994 as well as against sister of deceased Yousuf Bhaimia, Messrs Liza General Contracting Company and against Pak Grease Manufacturing Company (Pvt.) Limited. The plaintiff in Suit No.507 of 1994 was a company incorporated in Grand Cayman and was having offices throughout world including Abu Dhabi, Karachi, Lahore and Rawalpindi. That by order dated 14-1-1992, passed by Grand Court of Cayman Island, the plaintiff was ordered to be wound up and Messrs Lan Wight, Robert Azford and Michael Mackey were appointed as its Official Liquidators. That the Company of deceased Yousuf Bhaimia, according to the plaintiff's knowledge, was a partnership firm, having its principal place/office at Abu Dhabi. That the said company, in order to settle the outstandings with BCCI SA, Abu Dhabi, requested from the plaintiff's Bank certain overdraft loan facilities That on certain terms and conditions the required facilities were granted after execution of several loan agreements, performance bonds, letter of guarantee etc. Etc. That deceased Yousuf Bhaimia also handed over/delivered shares of several companies in Pakistan to the plaintiff. From time to time deceased Yousuf Bhaimia obtained extension for the repayment of the said loan, After the death of Yousuf Bhaimia, in the month of May, 1991, the plaintiff-bank approached defendant No. l for settlement of the outstanding liabilities.
5. It is further case of the plaintiff in Suit No.507 of 1994 that deceased Yousuf Bhaimia pledged with the plaintiff's bank in the year 1985, shares of several companies operating in Pakistan. In support of this claim, the plaintiff has filed two documents, one dated 30th July, 1985 (Annexure 'M'), which is a letter written by deceased Yousuf Bhaimia to BCCI (Overseas) and the other letter, dated 13th August, 1985 of BCCI (Overseas), Karachi, addressed to BCCI Grand Cayman (Annexure 'N'). Since the legal heirs of deceased Yousaf Bhaimia failed to repay the outstanding dues to the plaintiff, it started transferring the shares into its name and had transferred shares of several companies in the name of the Official Liquidators, which is apparent from Annexure P/2. The plaintiff has also lodged claim with certain companies as mentioned in Annexure ' Q' and the details of those companies, which have not transferred any shares, have been disclosed in the list filed as Annexure ' R' The dispute in the present suit arose when the defendant No.4, namely, Pak Grease Manufacturing Company, Karachi, refused to transfer the shares in the name of the Official Liquidators. The plaintiff has filed this suit for recovery of US $ 8,638,488.62 against the defendants as well as for mark-up and compensation.
6. I have heard Mr. Yawar Farooqui, for the legal heirs of deceased Yousuf Bhaimia, Mr. S.A. Sarwana, for BCCI/Official Liquidators, Mr. Mehmood Y. Mandviwala, for HC&EB and Mr. Yousuf Qasim, for Messrs Pak Grease Manufacturing Company (Pvt.) Limited. Before proceeding on merits of the applications, I would like to deal with the preliminary objection, raised by Mr. Yawar Farooqui, Advocate. According to the learned counsel this Court has no jurisdiction to entertain Suit No.507 of 1994 as the cause of action accrued at Abu Dhabi, UAE, that the Lisa Company was not maintaining any branch office in Pakistan and that vide several agreements the BCCI and deceased Yousuf Bhaimia have agreed to resort to the Courts of England In this connection it would be advantageous if clause (k) of the Loan Agreement dated 1st July, 1984, executed between Lisa General Contracting Company and the BCCI (Overseas) Limited, is reproduced, which reads as under:--- "K. Law; This Agreement shall be governed by the Laws of England and the Borrower agrees that the English High Courts (but without prejudice to the jurisdiction of the Courts of any other country) shall have non--exclusive jurisdiction to hear and determine any claim arising hereunder. "
7. There are other loan agreements, executed in the year 1985 between the abovementioned parties, which all include, more or less the same clause as quoted hereinabove. No doubt parties have agreed that the terms of agreement shall be governed by the Laws of England but it was the Borrower, namely, "Lisa General Contracting Company", which agreed that the English High Courts but without prejudice to the jurisdiction of the Courts of other countries, shall have "non-exclusive" jurisdiction to hear and determine any claim arisen thereunder. This clause is binding on the plaintiff of Suit No.344 of 1994 as nowhere the plaintiff in Suit No.507 of 1994, which is the "Lender" in the said agreement ever agreed to refer this dispute to the Courts of England. It is not denied that there are only two legal heirs of deceased Yousuf Bhaimia, who are permanent residents of Karachi and that the head offices of all such companies to which the shares in question belong; are also situated within the territorial jurisdiction of this Court. It is an admitted position that deceased Yousuf Bhaimia delivered all these shares to BCCI at Karachi and the same were handed over to HC&EB, who further delivered the same to the Official Liquidators. All these acts formed part of cause of action which have accrued within the jurisdiction of this Court. Therefore, I am of the view that the principle as enunciated in section 20(c) of the Code of Civil Procedure, 1908, is fully attracted in the present suit. For any reference see the cases reported as Messrs Brady & Co.
Pakistan Ltd. v. Messrs Sayed Saigol Industries Ltd. 1981 SCM R 494 wherein the Hon'ble Supreme Court of Pakistan after referring to section 20, C.P.C. Held as follows:--- " ....The conjunction 'or' separates all the three clauses (a), (b) and (c) of section 20. Subject to limitations, pecuniary or otherwise, referred in the earlier provisions of the C.P.C., section 20 contains a general provision embracing all personal actions. The plaintiff has three options thereunder to sue: where the defendant or each of the defendants actually resides, carries on business or personally works for gain (clause 'a'); or, in case there are more than one defendants, any of them besides, carries on business or personally works for gain (clause 'b'); or, at the place where the cause of action, wholly or in part, arises (clause 'c'). If the situation in a particular case is not covered by clauses (a) and (b), the suit tan be instituted by virtue of clause (c), at the place where cause of action, wholly or in part, arises------..
8. In this connection I may also refer to the decision of Full Bench of Hon'ble Supreme Court in the case of State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem 1987 SCM R 393, where it was held that every suit is to be instituted in a Civil Court within the local limits of whose jurisdiction the defendants reside and carry on business or where the cause of action wholly or in part arose. The relevant portion is reproduced as under:--- "We have considered the arguments of the learned counsel for the parties. Under section 9 of the Code of Civil Procedure the Civil Courts have jurisdiction to try all suits of a civil nature excepting the suit of which their cognizance is either expressly or impliedly barred. Under section 20 of the Code of Civil Procedure every suit is to be instituted in a Civil Court within the local limits of whose jurisdiction the defendant resides or carries on business or where the cause of action wholly or in part arose. Under section 28 of the Contract Act every agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals or which limits the time within which he may thus enforce his rights, is void to that extent .. ...
9. The rule laid down in the case of State Life Insurance Corporation of Pakistan (supra) was again reiterated by the Hon'ble Supreme Court in the case of Messrs Kadir Motors (Regd.), Rawalpindi v.
Messrs National Motors Limited, Karachi and 3 others 1992 SCM R 1174. It would be advantageous to quote two paragraphs from the case of M.A. Chowdhury v. Messrs Mitsui O.S.K. Lines Ltd. And 3 others PLD 1970 SC 373, which supports my view which I am inclined to take: "I am also not impressed by the argument that since no suit can be filed against a non-resident foreigner in Pakistan the exclusive jurisdiction clause in a contract entered into with such a foreigner must be treated in a different manner. This has really no bearing on the question of jurisdiction. If the suit can otherwise be defeated or is not maintainable in the Courts in Pakistan, that is an entirely a different matter. That cannot be a valid ground for legalising the exclusion of the jurisdiction of the Courts in Pakistan or taking away the jurisdiction which they would otherwise possess under the law of the land.
If by reason of the provisions of section 20 of the Code of Civil Procedure a particular Court in Pakistan has no jurisdiction to entertain a suit against a particular defendant, the suit can be dismissed as against that defendant but that cannot be a ground for refusing jurisdiction altogether even as against the defendants who are properly before the Court and are amenable to its jurisdiction. "
10. In view of this legal position, I hereby overrule the objection raised to the maintainability of Suit No.507 of 1994 on the ground of territorial jurisdiction. Now I intend to proceed with several interlocutory applications, filed in the above two suits.
11. C.M.A. 2538 of 1994 in Suit No.344 of 1994. This is an application filed by Mst. Irshad Begum (plaintiff) one of the legal heirs of (late) Yousuf Bhaimia, praying that the interim injunction be granted restraining the defendants not to claim or exercise any right in relation to the shares belonging to deceased Yousuf Bhaimia, as disclosed in Schedule ' A' to the plaint and for further injunction that they may be prohibited from transferring, selling, alienating or creating any interest other than that of plaintiff on the shares belonging to deceased Yousuf Bhaimia. In addition, it is further prayed that the defendants be directed to deposit all the transfer deeds and receipts arising out of the said shares with the Nazir of this Court. In support of this application, Mr. Yawar Farooqui, has argued that the act of deceased Yousuf Bhaimia, in obtaining loan from a bank in UAE, against the movable properties pledged in Pakistan was an illegal act and is also violative of the Foreign Exchange Regulation Act, 1947. In this connection reference was made to the case of Satya Ram Ghosal and 2 others v. Province of -East Pakistan 1971 DLC 767 and the case of Manzoor Hussain and others v. Wali Muhammad and another PLD 1965 SC 425. Reference was also made to section 5 of the Act, 1947, which prohibits repatriation of Foreign Exchange from Pakistan in illegal and unauthorised manner. Relevant clauses of section 5 is reproduced as under:--- "5. Restrictions on payments.---(1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this subsection which may be granted conditionally or unconditionally by (the State Bank) no person in or resident in Pakistan shall--- (a)-------------------------------------------------------------------------------
(b) draw, issue or negotiate any bill of exchange or promissory note or acknowledge any debt, so that a right whether actual or contingent to receive a payment is created or transferred in favour of any person resident outside Pakistan;
(c) make any payment to or for the credit of any person by order or on behalf of any person resident outside Pakistan;
(d) place any sum to the credit of any person resident outside Pakistan; (e)-------------------------------------------------------------------------------- (2)--------------------------------------------------------------------------------
(3) Nothing in this section shall restrict the doing by any person of anything within the scope of any authorisation or exemption granted under this Act. "
12. It is argued by Mr. S.A.Sarwana, that an amalgamation policy was approved by the Federal Government, as provided under section 47 of the Banking Companies Ordinance, 1962, whereby the BCCI, its Official Liquidator and HC&EB were allowed to take over all such assets and properties of the borrowers in Pakistan, who have obtained loan from BCCI, now under liquidation, and, therefore, according to the learned counsel an implied permission was accorded for such transaction by the State Bank of Pakistan. In this connection, Mr. S.A. Sarwana, has also referred to a letter dated 4th April, 1994, filed with the written statement of defendant No.4 in Suit No.507 of 1994, which shows that the State Bank of Pakistan has no objection under section 13 of the Foreign Exchange Regulation Act, 1947, for registration of the shares in the name of liquidators if they have legal right to the same and subject to the condition that repatriation of capital dividend would not be claimed from Pakistan at any stage. The transactions involved in both the suits are in full knowledge of the State Bank of Pakistan and all such factors must have been considered while framing policy for amalgamation of BCCI (Overseas) Pakistan with the HC&EB but no objection was ever raised by the State Bank of Pakistan, who are the competent authorities under the Act, 1947. In my view section 5 of the Foreign Exchange Regulation Act, 1947 is not an absolute bar for the repatriation of foreign exchange from Pakistan but it is subject to any general or special exemption, to be granted conditionally or unconditionally by the State Bank of Pakistan. If such exemption is granted by the State Bank then the provisions of section 5 will not be operative. In the instant case it appears that the State Bank has granted such exemption but at the belated stage.
13. In the case of Satya Ram Ghosal, it was held by a learned Division Bench of Erstwhile Dacca High Court that no payment can be made to any non--resident of Pakistan without the permission of State Bank and without complying with the provisions of Foreign Exchange Regulation Act, 1947.
After 1979, the Foreign Exchange Regulation Act, 1947 has undergone extensive changes. After promulgation of the protection of Economic Reforms Act (Act XII of 1992) the dealing with foreign currencies in Pakistan was made permissible to quite large extent. In the case of Manzoor Hussain and others, it was held that the scheme of the Act, 1947 forbid making of a contract, which may contemplate doing a thing which is contrary to the said Act and, therefore, any term of a contract which violates any of the terms of Foreign Exchange Regulation Act, 1947 is neither violation nor comes within the mischief of section 23 of the Contract Act. It was further held that the provisions of section 23 of the Contract Act is to be construed strictly and that the Court should not invent new categories of public policy in order to invalidate a contract.
14. It was further contended by Mr. Yawar Farooqui, that the shares in question were kept in safe custody by deceased Yousuf Bhaimia with the BCCI , (Overseas) Pakistan and that these shares were never pledged or were mortgaged. This plea is not supported by any evidence. This is belied by Annexure 'B', filed by the plaintiff herself with the plaint in Suit No.344 of 1994 which is a letter dated 4th September, 1985, issued by BCCI (Overseas) Limited, Grand Cayman to deceased Yousuf Bhaimia in which an understanding was conveyed that BCCI (Overseas) shall not exercise their rights as to the pledge of the shares until all efforts for affecting recovery of claim against UAE Armed Forces are exhausted. In the end of the letter, it was mentioned that the understanding conveyed vide the said letter does not in any way affect or prejudice the rights of BCCI and remedies against Lisa General Contracting Company and deceased Yousuf Bhaimia. Mrs. Irshad Begum, the plaintiff, as it appears from the contents of the plaint in Suit No.344 of 1994 either wilfully or due to real ignorance of facts did not mention the circumstances which led her husband deceased Yousuf Bhaimia, to hand over/deliver these shares to the BCCI Pakistan. The loan agreement and other Letters of Guarantee, executed by deceased Yousuf Bhaimia, have not been denied by his legal heirs. There are other communications on the case file of these two suits, which prima facie indicate that the shares were delivered to BCCI Pakistan for the loan/running finances obtained by Lisa General Contracting Company at UAE from the BCCI (Overseas) Limited, Grand Cayman. It is settled law that to obtain a prohibitory injunction, a plaintiff is required to prove a prima facie case, balance of convenience and irreparable loss. I am of the tentative view that the plaintiff has failed to prove a prima facie case, therefore, question of irreparable loss and injury to her neither arises nor the balance of convenience is in her favour. However, there is one important legal question which requires determination before transfer/registration of these shares in the name of Official Liquidators i.e. Up to what extent the legal heirs of deceased Yousuf Bhaimia are liable to meet the liabilities of their predecessor. Therefore, while rejecting this application I have laid down certain terms in the end of this order to safeguard the interest of all the parties. C.M.A.
No.2538 of.1994 was disposed of through a short order on 23-5-1995.
15. C.M.A. 3524 of 1994 in Suit No.507 of 1994.--Plaintiff, namely, BCCI, has filed this application under Order XXXIX, Rules l and 2, C.P.C. Read with section 94/151, C.P.C., seeking interim injunction against the defendants restraining them to claim or exercise any right directly or indirectly in connection with the shares of deceased Yousuf Bhaimia, as per Annexures ' Q' & ' R' of the plaint. In Annexure ' Q' the plaintiff has disclosed names of those companies for which the Official Liquidator has lodged the claim but it has not yet been transferred and in list/Annexure ' R' names of those companies are mentioned including name of defendant No.4 for which the plaintiff has not lodged any claim.
The plaintiff has further prayed for a direction against defendants to deposit with the Nazir of this Court all dividends, warrants, payments, bonus shares received by them. Plaintiff has further prayed for rendition of accounts by the defendants. The plaintiff, in paragraph 12 of his plaint, has stated that they have received so far in total 3,48,093 shares of deceased Yousuf Bhaimia from HC&EB and has realised a sum of Rs.3,95,000 approximately. It is further claimed by the plaintiff that they have lodged claim for the transfer of the shares with the companies as disclosed in Annexure ' Q' and for the companies for which no claim has been placed are disclosed in Annexure ' R' to the plaint. Contents of this paragraph was not specifically denied by the defendants. In view of the facts of both cases, I am tentatively of the considered opinion, that BCCI/Official Liquidators have prima facie established a good case for obtaining an interim injunction. The other two ingredients for grant of interim injunction are also in favour of plaintiff-Bank. However, in order to safeguard the interest of all the parties, it would be justand proper if all the parties are restrained from disposing of the shares belonging to deceased Yousuf Bhaimia till further orders. Therefore, C.M.A. 3524 of 1994 was partly granted by a short order dated 23-5-1996, to the extent as mentioned hereinafter.
16. C.M.A. 6474 of 1994 in Suit No 507 of 1994. This is an application under section 10, C.P.C., filed by defendant No .l praying that this suit be stayed as an earlier suit bearing Suit No.344 of 1994 is pending. Learned counsel for the defendants has not pressed this application for the time being in view of the fact that during the course of hearing I have observed that both suits should be consolidated and be proceeded jointly for-complete adjudication of all issues pending between the parties. This application is, therefore, dismissed as not pressed.
17. C.M.A. 2140 of 1996 in Suit No.507 of 1994. This is an application under section 151, C.P.C., filed by the plaintiff praying that the defendants Nos. l and 2 be directed to submit account of all the dividends, warrants, payments, bonus, shares, which they have received after 20th May, 1991 and have further prayed that the companies be directed to retain payments of all dividends,, warrants, bonus,' shares belonging to deceased Yousuf Bhainua till further orders. I am afraid the additional prayer in this application cannot be granted as the said companies are not before this Court.
However, keeping in view my findings in other applications I have partly granted this application through a short order on 23-5-1996 to the extent that all the parties were directed to submit their respective accounts with the Nazir of this Court within thirty (30) days disclosing all dividends, warrants, payments, bonus, shares and other earning so far received by them, in respect of shares belonging to deceased Yousuf Bhaimia and the parties were further directed to continue filing such statement after every three months.
18. On 23-5-1996 through a short order all the abovesaid applications were disposed of in the following manner. Above are the detailed reasons:---
(i) That this Court has jurisdiction to entertain both the suits.
(ii) C.M.A. 2538 of 1994 in Suit No.344 of 1994 is partly granted to the extent that the defendants in Suit No.344 of 1994 (including BCCI and its Liquidators) are restrained till disposal of the suit from disposing of in any manner the shares in the name of deceased Yousuf Bhaimia which are in their possession and from repatriating any amount abroad earned if any, as a result of sale proceeds or profits from disposal of such shares.
(iii) C.M.A. 3524 of 199-1 in Suit No.507 of 1994 is partly granted to the extent that the defendants /legal heirs of deceased Yousuf Bhaimia are restrained till disposal of the suit from disposing of in any manner all such shares belonging to (late) Yousuf Bhaimia which are in their possession or in case if they may come into possession of some other shares, hereafter.
(iv) C.M.A. 6474 of 1994 is dismissed as both the suits have been consolidated. Suit No.507 of 1994 (BCCI (Overseas) Limited through Official Liquidators v. Mrs. Irshad Yousuf Bhaimia and others) is declared to be the leading suit.
(v) C.M.A. 2140 of 1996 in Suit No.507 of 1994 is granted to the extent that all the parties are directed to submit their respective accounts with the Nazir of this Court, within 30 days hereof disclosing all dividends, bonus, profits and other earnings, so far received by them in respect of shares belonging to late Yousuf Bhaimia and should continue t file such statements after every three months.
19. Since the plaintiff in Suit No.507 of 1994 is under liquidation before the foreign Courts where its creditors and debtors are awaiting their fate and since the subject-matter of both these suits are share certificates of different companies which always fluctuate, it would be in the interest of justice as well as in the interest of all the parties that this suit be disposed of at an early date. I, therefore, pass further orders in the following terms:---
(a) That both the suits should be fixed for regular hearing within three months irrespective of the forthcoming summer vacations.
(b) The evidence shall be recorded by a Commissioner, namely, Mr. K.A. Ghani (retired Judge of this Court) who shall receive the evidence through affidavits, subject to the objections. If any, from the other side and subject to cross-examination.
(c) That the learned Commissioner shall return the Commission within three months after receiving intimation. Tentatively, Commissioner's fee is fixed at Rs.30,000 to be borne in proportionate by each party. All the parties are directed to deposit their respective share of Commissioner's fee with the Nazir of this Court within seven days.
(d) Further hearing is adjourned to 3rd June, 1996 for framing of consolidated issues and for further directions.
20. I would like to clarify that in paragraph 19(c) above the Commissioner's fee, as fixed through the short order, was for each suit.