In this suit for recovery of Rs,110,000,000 by the plaintiff Bank against defendants Nos.1 to 4 and for a mortgage decree under order XXXIV C.P.C. in relation to the property bearing plot No,19/2, Jinnah Cooperative Housing Society Limited together with the construction thereon, plaintiff by the aforesaid C.M.A. seeks an order for appointment of Receiver of the property bearing plot No,53, Oil Installation Area, Keamari, by removing defendants Nos.2 to 4 from its management and control and handing over of management and control to the Receiver with all powers.
2. Defendant No,1 is a private limited company with defendants Nos. 2 and 3 as its Directors and share-holders with 75% shareholding in the company. Defendant No,4 is the mortgager and guarantor for repayment of finance facilities advanced by the plaintiff Bank. Defendant No,5 hold& original agreements between the parties in trust.
3. According to the plaint, plaintiff Bank in normal course of banking business extended financial facilities to M/s. Ahmed Chemicals (Pvt.) Ltd., against the security/pledge of goods imported into Pakistan under the relevant letters of credit. Consignments of R.B.D. Palm Oil totaling 9115.964 metric tons were imported by the said customer into Pakistan and stored in the Tank Terminals of defendant No,1 at Plot No,53, Oil Installation Area, Keamari under lien and pledge of the plaintiff.
Defendant No,1 owner of the Tank Terminals, as bailee of the plaintiff, confirmed that the said consignment was stored in its Tank Terminals under the lien of the plaintiff and that the same would not be delivered to any person without instructions and delivery orders issued by the plaintiff. In or about January, 1997, the plaintiff became apprehensive that stocks of Palm Oil held by defendant No,1 were being unlawfully and fraudulently removed from the Tank Terminals in collusion with the defendants and, therefore, requested M.S. lqbal A. Nanji & Co. surveyors to carry out physical inspection and seal one tank containing 8,500 metric tons of R.B.D. Palm Oil.
Defendants, however, avoided, neglected and failed to allow inspection and sealing of the tank.
Accordingly surveyors submitted their report dated 4-2-1997 stating that the defendants did not permit them to carry out inspection and sealing of the tank as directed. It is the case of plaintiff that upon being confronted about their unlawful and fraudulent actions, including removal of goods from the Tank Terminals under the lien and pledge of the plaintiff, defendant No,1 and the customer acknowledged their liability to compensate and reimburse the plaintiff for the total consignment of R.B.D. Palm Oil to the extent of Rs,160 million and Rs,300 million respectively and agreed to make payment of the said amounts to the plaintiff. However, the defendants neglected and failed to fulfil their obligations in terms of the letter of acknowledgement and undertaking dated 4-2-1997. In view of illegal, dishonest and fraudulent actions of the defendants constituting criminal breach of trust, the plaintiff reported the commission of criminal offence to the F.I.A. which commenced investigation and prosecution of defendants Nos.2 & 3 before the Special Court.
Defendant No,3 and a Director of the customer were arrested pursuant to the process and orders issued by the Special Court under the Offences in respect of Banks (Special Court) Ordinance, 1984.
In July, 1997, the defendants once again expressed their desire to arrive at an amicable settlement with the plaintiff and accordingly entered into two agreements of sale relating to the property bearing No,53 Oil Installation Area, Keamari and sale of shares comprising of 75% shareholding of defendants Nos. 2 & 3 as well as Memorandum of Understanding relating to the above agreements. It is averred that the aforesaid three agreements were entered into by the defendants voluntarily and without any pressure, influence or coercion of any kind, which include express acknowledgement and admission of liability on the part of the defendants to pay the plaintiff a sum of Rs,110,000,000 within eleven months from the date of the agreements whereupon the matter would stand amicably concluded failing which the plaintiff would be at liberty to enforce the terms of the agreement.
4. It is further averred that simultaneously with the execution of agreements defendants handed over to the plaintiff physical possession of the Tank Terminals and the latter appointed their guards at the Tank Terminals. The defendants also entered into agreement with the customer reflecting acknowledgement of liability of defendant No,1 to the plaintiff as bailee of the consignment and loss to the extent of Rs,110 million being the value of pledged stock of palm oil. As security for fulfilment of its obligations under the above said agreements defendant No,4, wife of defendant No,3 deposited documents of title of her property with intention to create an equitable mortgage in favour of the plaintiff and also executed her personal guarantee. In view of the agreements/understanding between the defendants and the plaintiff and. the security furnished by Mst. Bilqis Bano defendant No,4, the plaintiff bona fide believed that the matter relating to removal and loss of the pledged goods had been amicably concluded and therefore did not institute legal proceedings. Consequently defendant's advocate moved an application before Special Court stating that the dispute had been settled between the parties in terms of agreements and requested for bail which was granted to defendant No,3. It is the grievance of the plaintiff that defendants neglected to make payment of any amount towards the admitted liability and to their utter surprise on 6-3-1998 took over the possession of the Tank Terminals illegally and by physical force under the cover of interim injunction order dated 5-3-1998 passed in. suit No,210/1998 obtained on misrepresentation of facts. According to the plaintiff since the defendants have instituted suit No,210/1998 seeking. cancellation of agreements entered into with the plaintiff, the plaintiff is not bound to wait for the expiry of eleven months from the date of agreements for payment of Rs,110 million, hence this suit.
5. In the counter affidavit filed by defendant No,2 on behalf of defendants Nos.1 to 4, grant of financial facilities to M/s Ahmed Chemicals Limited, import of palm oil by them and storage thereof in the Tank Terminals of defendant No,1 is admitted but it is disputed that defendant No,1 was the bailee of pledged stocks against storage in their Tank Terminals. Involvement into any fraudulent and dishonest act on the part of the defendants is disputed with a further averment that in spite of smooth sailing a criminal case was registered against the defendants with regard to the agreements and memorandum of understanding purportedly executed by defendants which were admittedly got signed from the defendants while defendant No,3 was in custody of FIA and thus these are without any legal impact. Moreover these documents have been challenged in Suit No,210/1998 before this Court and unless these are declared enforceable and valid these cannot be relied upon. Delivery of physical possession of Tank Terminals to the plaintiff is seriously disputed and with reference to letter of M/s Iqbal A. Nanji and Company dated 4-2-1998 it is urged that the possession remained intact with the defendants who removed existing stocks under valid delivery orders after making payment to plaintiff. With regard to the carrying on business of oil storage, it is stated that the defendants are using their property and there is no improper use of the Terminal and no waste or damage is being caused to the property. Allegation with regard to forcible dispossession of the plaintiff's guards is controverted with the assertion that the plaintiff Bank was never in possession of the Tank Terminals and had no right, title or interest to the property.
6.An affidavit-in-rejoinder has been filed reiterating pleas taken in the plaint and in the affidavit in support of the CMA and controverting various statements made by the defendants.
7.I have had the privilege of hearing learned counsel for the parties and examining the material placed on record.
8. Before proceeding with the grounds justifying the appointment of a Receiver or otherwise at the behest of a party, it may not be out of place to examine the legal argument advanced by learned counsel for the contesting defendants that as no relief relating to appointment of Receiver is solicited in the suit, plaintiff cannot legitimately ask for appointment of a Receiver. Argument is misconceived and untenable on the face of it. Learned counsel seems to labour under the misconception that like a prayer for temporary injunction which can only be granted in aid of prayer for injunction sought in the suit, there ought to be a prayer for appointment of Receiver in the suit.
9. Indeed section 44 of Specific Relief Act empowers a Court to appoint a Receiver pending a suit at the discretion of the Court. Second part of this provision of law postulates that the mode and effect of his appointment, and his rights, powers, duties and liabilities are regulated by the Code of Civil Procedure. It would, thus, follow that appointment of Receiver is a matter exclusively in the discretion of the Court depending on the facts and circumstances of each case. This subject is appropriately dealt with under the provisions of order XL rule 1 C.P.C. which lays down the circumstances in which the Court may appoint a Receiver of any property whether before or after decree. Main consideration for appointment of a Receiver which by its nature is the harshest remedy provided under the Code of Civil Procedure is the satisfaction of the Court when it appears to it to be just and convenient to make such appointment. The object behind appointment of a Receiver is to preserve the status quo during the pendency of the litigation and to prevent the ends of justice from being defeated as stipulated under section 94 C.P.C. It is well settled that a Receiver can only be appointed of property which is the subject matter of the suit. A party asking for appointment of a Receiver must make out a prima facie title to the property as the effect of appointing a Receiver is to dispossess a person in possession. In law upon the appointment of a Receiver, the property comes into custodian legis for the benefit of all those ultimately found to be true owners of the property. No doubt a discretion is vested in a Court under this rule but it is well settled that the discretion should be sparingly exercised and only for safeguarding the interests of all the parties as well as the property. While considering the question of appointing a Receiver, the Court is guided by judicial principles whether there exists in the applicant a prima facie title to the property; whether the property is in danger of being wasted if a Receiver is not appointed and lastly whether it is just and convenient to appoint a Receiver.
10.Considering the facts and circumstances of the case in hand, it would appeal that the plaintiff Bank has not been able to substantiate its title to Tank Terminals owned by the defendant Company and the only ground available to it appears to enforce its claim on the basis of disputed liability of the defendants to pay for and on behalf of M/s Ahmed Chemical (Pvt) Ltd to whom finance facility was extended by the Bank. During the course of arguments, much emphasis was laid on letters purportedly written by defendant No,1 company to the plaintiff assuring that RBD Palm Oil consignment will not be delivered to the borrower without proper instructions/delivery orders of the plaintiff Bank. Letter dated 7th January, 1997 addressed to M/s lqbal A. Nanji and Co. requesting them to take over the Tanks Nos.1.3 & 5 under their custody and supervision as well as reply letter dated 4th February, 1997 reporting that they were not allowed inspection and sealing of the Tanks by defendants are hardly relevant to reflect whether the plaintiff has prima facie strong and valid title to RBD Palm Oil stored in the Tank Terminals belonging to defendant No, 1 . Likewise reference to letter dated 7-1-1997 & 4-2-1997 purportedly written by M/s Ahmed Chemical (Pvt.)
Limited to defendant No,1 and the plaintiff Bank respectively can hardly be considered as satisfactory evidence of the facts stated therein for the reason that M/s Ahmed Chemical (Pvt.)
Limited are not party to the suit.
11.Learned counsel for the plaintiff as well as defendant No,6 heavily relied upon agreements of sale dated July 1997 purportedly executed by defendant No,1 through its Directors defendants Nos.2 & 3 agreeing to transfer property bearing plot No,53, Oil Installation Area together with Tank Terminals to the plaintiff in the event of their inability to make cash payment of Rs,110 million within eleven months of the execution of such agreements with a further stipulation that defendants Nos.1 to 3 shall induct four nominees of MCB on the Board of Directors of defendant No,1 who shall represent 75% shareholding by way of transfer of shareholding of defendants Nos.2 & 3.
12.Learned counsel for the contesting defendants on the other hand assailed these agreements for the reasons that these are undated; that there are blanks as to the amount due and payable by defendant No,1 on page 3 of the agreements and more particularly for the reason that transfer of management, administration and control of the company was allegedly contemplated within a period of eleven months from the date of execution of such agreements but long before the said stage defendants challenged the authenticity and genuineness of such agreements in Suit No,210 of 1998 in which an interim injunction order has been passed in their favour. Essentially defendants' ground of attack as to the validity of such agreements including the agreement purportedly executed by Ahmed Chemical (Pvt) Limited and countersigned by defendant No,1 is that these were got signed while defendant No,3 was in police custody in FIR 42/1997 lodged by the plaintiff Bank. Registration of criminal case against defendant No,1 and its Directors at the behest of the plaintiff is not disputed by plaintiff while agreements as well as Memorandum of Understanding on the part of the defendants are sub judice in Suit No,210/1998, I would therefore advisedly refrain from commenting on the merits of this contention. Suffice however to say that generally the attitude of our police agencies towards the citizens lodged in police custody is not a secret and serious exceptions bakd on day to day experience are expressed by the superior Courts from time to time.
13.Indeed, there is hardly any sufficient and tangible material on record to support the view that the plaintiff was handed over management, control and administration of defendant company or the control and custody over the Tank Terminals in pursuance of the agreements of sale relied upon by plaintiff. This being the position, it is highly difficult to hold that the guards allegedly employed by the plaintiff Bank at the Tank Terminals were forcibly pushed out by the defendants as alleged. Having so stated I am inclined to the view that it is neither just, nor convenient to appoint a Receiver to take over control and management of the Tank Terminals owned and possessed by the defendants. Reliance is placed on Attaur Rehman v. Inamur Rehman (1994 SCMR 54), Salahuddin v. Rahim Bukhsh (PLD 1992 Quetta 59) and Kathiawar Cooperative Housing Society v. Mecca Masjid Trust (PLD 1994 Karachi 375).
14.For the aforesaid facts and reasons, there is no substance in the prayer for appointment of a Receiver pending decision of the suit which is accordingly declined.