' This common judgment will dispose of these two suits, namely, Suit No,185 of 1966 (Messrs Muhammad Amin Muhammad Bashir Ltd., and others v. Pakistan and others) and Suit No,324 of 1966 (Ahmed Dawood and others v. Pakistan and others) as the evidence and the questions of law are common.
2. The plaintiffs of Suit No,185 of 1966 were the shareholders of the Karachi Road Transport Corporation Ltd., (for brevity sake, hereinafter referred to as the Corporation) which was established by the Ordinance XXI of 1959 PLD 1959 CS 174 namely, the Karachi Road Transport Corporation Ordinance, 1959. The plaintiffs as claimed in the plaint had shares in the Corporation of the value of Rs,7,50,000. It is further claimed in the plaint that on 14-6-1963 the defendant No,1, namely, Federation of Pakistan decided to transfer their shares to defendant No,5 who was required to form a company by the name of Karachi Road Transport Corporation Ltd. (For brevity sake, hereinafter referred to as the Company). At the relevant time an impression was given to the plaintiffs that the shareholders of the Corporation shall become the shareholders of defendant No,3, namely, Karachi Road Transport Corporation Ltd. To the same value and extent as shown in the share certificate of the Corporation; that the said impression was confirmed by the defendant No,1 allegedly through different promises. Meanwhile, the Ordinance XXI of 1959 was repealed through the Ordinance XXIV of 1964, namely, Karachi Road Transport Corporation Ltd. (Repealed)
Ordinance, 1964. PLD 1965 West Pakistan Statutes 5 /. It was admitted by all the parties that the fate of this Ordinance, 1964 was that the earlier company stood dissolved on 17-12-1964 by virtue of a Notification, dated 14-12-1964.
3. It is further the case of the plaintiffs of Suit No,185 of 1966 that no provision was made either in the Memorandum or in the Articles of the Association of defendant No,3 to the effect of the rights, assests and liabilities of the shareholders of the Corporation. According to the averments of the pliant, the plaintiffs, within one month after coming into force of the Ordinance, 1964, made offer to the defendants Nos.4 and 5 to purchase their shares at par with the market value, which was denied by the said defendants by their letter, dated 22-2-1965. In a nutshell, the case of the plaintiffs is that the defendants Nos.3 to 6 are liable to pay the plaintiffs the value of their rights, properties and interest in the Corporation which may be equal to the value of their share as held by them in the Corporation. In the alternate and without prejudice the plaintiffs had also challenged vires of the Ordinance XXIV of 1964 through which Messrs Karachi Road Transport Corporation Ltd. Was taken over by the defendants Nos.3 to 6. They are asserting their fundamental rights as granted to them vide Article 14 of the deceased Constitution, 1962. In the aforesaid background they have prayed for the following reliefs:--
(a) For Rs,7,50,000 being the value of plaintiff's right, properties and interests ' in the Corporation' or,
(b) Rs,7,50,000 being the value of the shares owned and held by them in 'the Corporation' by way of specific performance of the contract, or,
(c) for declaration that Ordinance No,24 of 1964 is ultra vires of the Constitution to the extent it does not provide compensation for the shares held and owned by the plaintiffs and/or their rights, property and interest in the Corporation being consistent with Fundamental Right No,14 and that defendants are liable to pay compensations to the plaintiffs for their shares in the sum of Rs,7,50,000 and/or,
(d) for declaration that defendants Nos.1 and/or 2 without lawful authority transferred the properties of the 'Corporation' to defendants Nos.3 to 6 and have deprived the plaintiffs of their rights and interests in 'the Corporation' and/or defendants are liable to account for the same and pay compensation and/or damages to the plaintiffs to the extent of par value of the shares of 'the Corporation' held and owned by the plaintiffs and to render accounts thereof, and
(e) for Rs,7,50,000 on account of compensation for the shares and/or damages suffered by the plaintiffs.
(f) Costs of the suit.
(g) such other and further relief or reliefs as may arise out of the above stated facts or under the circumstances of the case or may seem just and proper to this Honourable Court
4. All the defendants of Suit No,185 of 1966 have filed their separate written statements denying the claim of the plaintiffs as well as their liabilities. The case of the defendant No,1 is that by virtue of resolution of the shareholders, dated 31-10-1963, the shares of the Corporation stood transferred, ipso facto the newly formed Company, namely, defendant No,3 and that the plaintiffs are not entitled for the valuation equal to their shares. It is also denied that any understanding, promise or agreement was made by the defendant No,1 to purchase the shares of the plaintiffs. It is asserted by the defendant No,1 that the assets of the Corporation were handed over to the newly formed company by the abovementioned resolution and that the said action was justified, legal and valid.
It is denied that the plaintiffs are entitled for any amount or for compensation. The defendant No,2, newly, Province of West Pakistan has also filed its written statement denying averments of the plaint. They have also stated that there was no violation of the fundamental rights of the plaintiffs and have prayed for dismissal of this suit. According to defendant No,3, namely the Company, the shareholders of the Corporation became the shareholders of the Company and that the said defendant never agreed for the purchase of the shares of the plaintiffs at market value. It was stated that Ordinance XXIV of 1964 was intra vires and that its vires cannot be questioned by the plaintiff through the instant suit. They have also relied upon the resolution of the extraordinary general meeting, dated 31-10-1963. The written statements of defendant No,4, namely, Messrs Mansoor & Brothers, defendant No,5 Mian Muhammad Akhtar and defendant No,6, namely, Mian Mansoor Hussain are similar in contents and on the same line as of the earlier referred written statements. All of them have prayed for dismissal of the suit with special cost against the plaintiffs.
5. In the plaint of Suit No,324 of 1966 it is claimed that the plaintiffs were shareholders of the Corporation. It has further been alleged that in accordance with the provisions of the Ordinance XXI of 1959 the said Corporation had authorized capital of Rs,7 crores and subscribed capital of Rs,3,50,00,000 that the subscription of the Central Government was Rs,1,35,42,130. It has further been stated in the plaint that on or about 14-6-1963 the Central Government (Now Federal Government) decided to transfer its shares to defendant No,3, namely, Mian Muhammad Akhtar; that the transfer had to take effect from 1-7-1963. The letters of the Central Government have been produced as Exhs.11/15 and 16 respectively. It is further the case of the plaintiffs in Suit No,324 of 1966 that by virtue of promulgation of an Ordinance No,XXIV of 1964, it repealed the earlier Ordinance No,XXI of 1959. It was contemplated in the said Ordinance that upon dissolution of the Corporation, all properties belonging to the Corporation would stand transferred and devolved upon the new company i,e, Karachi Road Transport Corporation Ltd. (defendant No,5 in Suit No,324 of 1966). It is further alleged in the plaint that after the promulgation of the repealing Ordinance, the plaintiffs wrote a letter, dated 1-1-1965 and another letter, dated 20-2-1965 calling upon the defendants Nos.1 and 3 to take over their respective shares at par. But the said defendants refused to accept the plaintiff's offer. Thereafter, it is alleged that on several occasions the plaintiffs offered their shares but no reply was given by defendants. It is further stated in the plaint that the latter law i,e, Ordinance No,XXIV of 1964 being a Provincial Statute could not have repealed the earlier law i,e, Ordinance XXI of 1959, the same being Central Statute. It is further averred in the plaint that due to the refusal on the part of the defendant No,3 to accept share of the plaintiff, they have suffered loss of Rs,7,13,000. It is further claimed that the dissolution of the Corporation of which the plaintiffs were the shareholders was illegal. Plaintiffs have prayed for the following reliefs in Suit No,324 of 1966:--
(a) a sum of Rs,7,13,000 as value of shares mentioned in the para. (1) above and/or damages and/or compensation from the defendants or such of them as this Hounouable Court may hold liable with further interest 9% from the date of suit till realization.
(b) In the alternative--
(i) a declaration that the dissolution of the Corporation is illegal, and ultra vires and the Corporation despite the Repealing Ordinance still exists in terms of The Ordinance of 1959.
(ii) A mandatory injunction restraining the defendants Nos.3 to 6 from managing, appropriating or otherwise using emplying the assets,
(iii) A mandatory injunction directing defendants Nos.1 and 2 or any of them, to revive and operate the Karachi Road Transport Corporation in terms of the Ordinance, XXI of 1959 and to reinstate and/or appoint the Directors and other statutory office-bearers in terms thereof, after taking over all its assets of every description from defendants Nos.3 to 6 (both inclusive) and a further mandatory injunction against defendants Nos.3 to 6 (both inclusive)- to surrender all the assets, properties and effects of the Karachi Road Transport Corporation to the defendants Nos.1 and 2 for the purpose of being handed over to the Karachi Road Transport Corporation as and when it is to commence business.
(iv) The plaintiffs also claim:-- That a Receiver be appointed to take over and manage the assets of the Corporation till such time the claims of the plaintiffs are not satisfied in terms prayed in clause (a) above.
(v) Any other relief to which the plaintiffs in the circumstances of the case be deemed entitled.
(vi) Costs of the suit...."
6. The defendant No,1 in Suit No,324 of 1966 is Pakistan through Secretary, Ministry of Commerce, Islamabad, who have filed their written statementS and have denied claim made in the plaint. They have stated that shortly after transfer of the shares of Central Government in July, 1963 a meeting was held on 31st October, 1963 in which the shareholders of the Corporation unanimously decided to transfer all their shares ipso facto to the Company i,e, defendant No,5 in this suit. It has further been stated that after the transfer of shares to .The then management, nothing could be done by them except to make attempt to persuade the defendant No,5 to accept the request of the plaintiffs. It is further stated in the written statement that the Legislatures were competent to repeal the Ordinance XXI of 1959 and to dissolve the Corporation by Ordinance No,XXIV of 1964. The other defendants have also filed their separate written statements and have stated the same facts. It is their case that on 31-10-1963, the extraordinary general meeting of the Karachi Road Transport Corporation was called and notices were issued to all the shareholders, including the plaintiffs, and that in the said meeting, it was unanimously resolved that the proposed public limited company (defendant No,5) should take over the business and undertaking of the Karachi Road Transport Corporation. That on the repeal of the Karachi Road Transport Ordinance XXI of 1959 the shareholders became ipso facto the shareholders of the defendant No,5. It is further alleged that after incorporation of the defendant No,5 as public limited company all the shareholders of the said Corporation, including the plaintiffs, have become the shareholders of the defendant No,5 on the same terms, conditions, rights and obligations, as were enjoyed by them in that corporation.
7. As a result of above pleadings of the parties, several legal and factual issues were framed separately in both suits. On 24-9-1987, by consent of the parties in Suit No,185 of 1966, following order was passed by this Court:- "24-9-1987.
Mr. Abdul Rauf, Advocate Mr. Sharaf Faridi, Advocate Mr. Kazi Mehfooz Ahmed, Advocate Mr. Haider Raza Naqvi, Advocate ' By consent it is ordered that the entire evidence recorded in Suit No,324 of 1966 be read and treated as evidence of the parties in this suit. By consent six documents produced by Mr. A. Rauf, Advocate are admitted and accepted as Exhs.A-1 to A-6.
' The matter is adjourned for arguments to 12-10-1987.
(Sd.) Judge."
8. It was jointly stated by the parties that the questions of facts and law are common in both these suits but despite that no efforts were made to get these suits consolidated. In the above circumstances, on 19-5-1999 consolidated issues were framed by this Court with the following observations: - "10-5-1999.
Mr. Abdul Rauf, Advocate for plaintiff. Mr. Abrar Hassan, Advocate for defendant. Mr. Bashir Memon, Official Liquidator for K.R.T.C.
' This matter was heard in past on several occasions. In view of the order,. Dated 24-9-1987 whereby it was ordered that the evidence recorded in Suit No,324 of 1966 be read as evidence in Suit No,185 of 1966, therefore, a need arose as to hearing both the suits together and to pass a consolidated judgment. Parties were directed to file consolidated issues, in view of the aforesaid circumstances, as well as in view of the fact that after recording of evidence, several of the issues have become redundant. Mr. Abdul Rauf and Mr. Abrar Hassan have filed their respective drafts issues and have made their submissions on this point. Following issues are framed by the Court:-
(1) What is the effect of non-recording of evidence in Suit No,185 of 1966?
(2) Whether the plaintiffs in both the suits i,e, Suit No,185 of 1966 and Suit No,324 of 1966 became shareholders of the newly established Corporation which was established in pursuance of Ordinance 24 of 1964?
(3) Whether any meeting of the shareholders of K.R.T.C. Was held on 31-10-1963? If so, what were the decisions/resolutions?
(4) Was Provincial Government empowered to repeal the Karachi Road Transport Corporation Ordinance, 1959 and to deliver the assets of the said Corporation to the Karachi Road Transport Corporation Ltd.?
(5) What is the effect of winding up/liquidation of the Karachi Road Transport Corporation Ltd. On its shareholders/plaintiffs in both the Suits.
(6) Whether the reliefs claimed in the suit can be granted under the changed circumstances when the Company which is the sole beneficiary has gone into liquidation?
(7) Whether the plaintiffs are entitled to any relief?
(8) What should the decree be?
9. The plaintiffs examined P.Ws. Muhammad Aslam, Wali Dad, Shaukat Hussain, Section Officer, Ministry of Communication, and Siddiq Dawood. The defendants did not examine any witness. Now, I will proceed to examine the case, issue wise. First, I will deal with the legal issues.
Issue No,1
10. This issue was framed at the insistence of Mr. Abrar Hassan, learned counsel for the company/K.R.T.C. Under liquidation. According to him, since the plaintiff, in Suit No,185 of 1966, has failed to produce any evidence in support of his case and since he himself has failed to appear in the witness-box such act being fatal, Suit No,185 of 1966 is liable to be dismissed for no evidence.
Mr. Abrar Hassan has also referred to the provision of Order VI, Rule 15, C.P.C. And contended that since the plaint was filed in the year 1966, it was not verified on oath or solemn affirmation (as subsequently provided after introduction of Ordinance XI 1972) the same has no evidentiary value.
He has placed reliance on the following cases:--
(i) Mst. Khair-ul-Nisa and 6 others v. Malik Muhammad Ishaque and 2 others PLD 1972 SC 25,
(ii) Nazir Ahmad Khan and 2 others v. Muhammad Ashraf Khan and 2 others PLD 1975 Karachi 598,
(iii) Muhammad Noor Alam v. Zair Hussain and 3 others 1988 M LD 1122, and
(iv) Riaz Muhammad and another v. Sarwar Shahid and 2 others 1991 CLC 2462.
11. In the case of Mst. Khair-ul-Nisa (cited at serial No,I, above) it was contended on behalf of the appellants that the factum of the service of the notice since denied in the written statement should be considered as evidence as provided under section 32 of the Evidence Act (now repealed). It was held by a Full Bench of Honourable Supreme Court that "Written Statements cannot be the exhibits in the case without the person who filed the same being examined in the Court." It was further observed that the statements made in the written statements were simply verified and were not on oath and therefore, cannot be treated as evidence in that case. Reference was made to the cases J.B. Ross & Co. V.C.R. Seriven and others AIR 1917 Cal. 269 and Muhammad Siddique v. Bhupendra Narayan Roy PLD.1962 Dacca 643. The rule laid down by the Honourable Supreme Court in the case of Khair-ulNisa (ibid) was followed by this Court in K.A.H. Ghori v. Khan Zafar Masood and another PLD 1988 Kar. 460 at 463. In the case of Nazir (cited at serial No,II above) it was held by a Division Bench of this Court that "As a rule pleadings are not evidence by themselves; the statements made by defendant in the written statements, could be used as evidence in cases where they amount to admission of the plaintiff's pleas. These admissions could be direct or even by implication, and in both cases are proof in themselves." This rule could be equally applied in the matter of plaintiffs. In the cases where the defendant has failed to specifically deny any allegations of the plaint or where it was admitted even by implication, such fact being an admitted fact could be considered as part of admitted facts. In the case of Muhammad Noor Alam (cited at serial No,III above), following rule was laid down by a Division Bench of this Court.
"A written statement contains averments of a party which are to be proved through cogent evidence. If a party does not produce any evidence in support of the contents of its written statement, in the absence of any admission on the part of a plaintiff the averments contained in the written statement cannot be treated as evidence."
12. Case of Riaz Muhammad (cited at serial No,IV above) is of no help to the legal proposition as canvassed by Mr. Abrar Hassan. While considering his objections one cannot ignore the order of this Court, dated 24th September, 1987 as reproduced in para. 7 of this judgment. No objection was raised at that time by the present defendant. I am conscious of a decision of learned Single Judge of this Court Abdul Razaq A. Thahim, J. (as he then was) in the case of Shabbir and 2 others v. Mst.
Ghulam Fatima 1987 CLC 1407 where the mode of recording of evidence of one party in one rent case and the same copied out in other cases was not upheld. In that case 5 rent cases were filed before the Rent Controller who disposed of the same with single order and copied the evidence of one case in the other. No separate evidence was recorded. But in the instant case it was agreed by consent of all parties that the evidence recorded in Suit No,185 of 1966 be treated as evidence in other suit as well and at the same time some 6 documents produced by Mr. A. Rauf, Advocate for the plaintiff in Suit No,185 of 1966 were admitted and accepted as exhibited A-1 to A-6 respectively.
Since no objection was raised by any of the defendants in Suit No,185 of 1966 at the relevant time it cannot be considered at this belated stage. Plaintiff's failure to appear in witness box in support of his case is fatal when the burden to prove any particular issue lies upon him and where the facts are within his knowledge but in case where a witness other than plaintiff is fully aware of the facts and has brought all relevant facts successfully before the Court, the defendant cannot compel the plaintiff to appear in the witnesss box and to depose. In such circumstances, a Court may be justified to draw presumption adverse to the plaintiff for not appearing in witness box but it cannot be said that there was no evidence in the plaintiff's case. Be that as it may, both the above suits should have been consolidated in view of this Court order, dated 24th September, 1987 which was not done. However, on 10th May, 1999 it was ordered by this Court that both the suits should be consolidated and that consolidated issue be framed as facts and questions of law were common in both these suits. The grounds of the plaintiff on which they have based their prayer as well as the evidence of the defendants are also common in both the suits. Once two suits are consolidated there remains no need for recording separate evidence.
13. The practice of consolidating two suits fqr the purpose of avoiding conflicting judgments has become an established practice of the Courts. I am fortified in my view by a decision of K.A. Ghani, J. (as he then was) in the case of Shahzada Sultan Humayun v. Nasiruddin 1984 CLC Kar. 3090 where reference was made to Masood Bari v. Abdul Aziz PLD 1967 Kar. 55 and Terath Ram v.
Harbhog Singh AIR 1933 Lah.
1033. For further reference see Muhammad Siddique and another v. Mst. Zahida Begum and another 1986 CLC 2963 (Azad J&K) Mst. Hafizan v. Muhammad Yasin and 2 others 1985 CLC 1448 Pakistan v. Messrs Agro Marketing Corporation Ltd. And 2 others 1981 CLC Lah.
443. Rule laid down in the last cited case was upheld by the Supreme Court of Azad Jammu and Kashmir in the case of Sain Muhammad and 4 others v. Muhammad Younis 1993 CLC 723.
14. As a result of the above discussion, I am inclined to hold that nonappearance of plaintiff in the witness-box and not producing any evidence in Suit No,185 of 1966 was not fatal and that the evidence recorded in suit No,324 of 1966 is the evidence recorded in Suit No,185 of 1966. issue No,4.
15. This issue comprises of two parts. First portion deals with the competence of the Provincial Legislature to repeal the Karachi Road Transport Corporation Ordinance (Ordinance No,21) of 1959 (hereinafter referred to as the Ordinance, 1959) and the second whether the Provincial Government was competent to deliver the assets of the said corporation to the then newly incorporated company. It was argued by Mr. A. Rauf that the Ordinance, 1959 could not be repealed by the West Pakistan Governor through Ordinance (XXIV of 1964) namely Karachi Road Transport Corporation (Repeal) Ordinance, 1964 (hereinafter referred to as the Ordinance, 1964). He has placed reliance on Article 132 of the Constitution, 1962. Mr. Hyder Raza Naqvi has disputed this legal position and has referred to a decision of a Division Bench of this Court in the case of Syed Azizuddin v. Abdul Ghafoor Arain and three others PLD 1964 (W.P.) Kar. 88 where following observations were made:-- "(2) In the next place, it was contended that the Basic Democracies Order, 1959 has been amended by the Governor of West Pakistan. It is urged in this connection that the Basic Democracies Order was passed by the President and, therefore, it was a Central law. On this basis it is urged that the Governor could not amend the same. There is not much force in this contention . Under Article 225 of the Constitution the existing laws were to continue subject to any amendment that may be made by the appropriate Legislature. Basic Democracies is now admittedly a Provincial subject. In that view of the matter the Governor was competent to legislate under Article 79 of the Constitution."
16. The Ordinance, 1959 was enacted by the President pursuant to the proclamation of the seventh day of October, 1958 for the purpose of, establishing a corporation for operating road transport services in the Federal capital which at that relevant time was the city of Karachi. By virtue of section 3, the Corporation established was a body corporate having perpetual succession and common seal with power to hold and dispose of properties subject to the provisions of the said Ordinance. The Chairman of the Board of Directors and some other directors were to be appointed by the them Central Government and other directors not exceeding four were to be elected by the shareholders. Duties of Chairman and Board were also provided in the said Ordinance. By virtue of section 31, all acts and proceedings of the Corporation were subject to the control of the Central Government and by virtue of section 32, it was the Central Government which was competent to revoke the power of the Board. The authority of its liquidation was provided in section 35. All provisions of law relating to winding up of companies or corporations was excluded from application on the K.R.T.C. And its winding up was to be ordered only by the Central Government.
Through Ordinance XXIV of 1964, the earlier Ordinance, 1959 was repealed. The second Ordinance was promulgated by the Governor of West Pakistan. Since the question of assets and liabilities of the dissolved corporation is involved in both the suits, it would be relevant to reproduce section 4 of the Ordinance, 1964 which reads as follows:-
(4) Devolution of the assets and liabilities, etc., of the Corporation.--- Notwithstanding anything contained in any other law or instrument, on the appointed day, the Corporation shall stand dissolved and all property belonging to the Corporation, subject to any encumbrance or charges, and all assets, liabilities, rights and obligations of the Corporation as existing immediately before that day, shall stand transferred to and devolve upon, the Company which shall for all purposes be the legal successors of the Corporation."
17. It is to be seen that in the year 1959, when Ordinance XXI was enacted, Karachi was Federal Capital but subsequently after promulgation of President's Order No,20 of 1960 (PLD 1960 Central Statutes 322), the city of Rawalpindi was proposed to be the principal city of Government of Pakistan while city of Karachi was changed from Federal capital to federal territory of Karachi.
Through President's Order No,9 of 1961, the Federal territory was declared to be ceased from the appointed day and Karachi was made Karachi division of West Pakistan and was to be administered accordingly. According to Article 4, any reference in any Act or Ordinance, Rule, Regulation, Bye-laws or Notification referred to Karachi was to be construed as a reference to the Province of West Pakistan or as the context may indicate to the Karachi Division. The point of continuance of laws relating to Karachi was kept in tact till it was altered repealed or amended by competent Authority. It would be advantageous to quote Article 5 of the President's Order 9 of 1961 which reads as follows:-- "(5) Except as otherwise provided in this Order, all laws, including Acts, Ordinances, Orders, bye- laws, rules, regulations and notification, in force in the Specified Territory or any part thereof immediately before the appointed day, shall, so far as applicable, and with the necessary adaptations, continue in force, until altered, repealed or amended, by competent Authority."
2. None of the parties have argued on the effects of abovementioned two Presidential orders. Once the status of the city of Karachi was reduced from the federal capital to a division of West Pakistan, it was to be treated as subject-matter of the erstwhile Province of West Pakistan. Legislation on the point of transport confined to one division was not the subject-matter of Illrd Schedule to the Constitution of Pakistan, 1962 which may fall within the exclusive domain of the central legislature.
According to Article 131 of the late Constitution, 1962, the central legislature had exclusive powers to make laws for the whole or any part of Pakistan with respect to any matter enumerated in the Illrd Schedule. It was further empowered to legislate even in respect of any matter not enumerated in the Illrd Schedule. It was provided in clause (3) of Article 131 that "The Central Legislature shall have power to make laws having effect in the province with respect to that matter, but any law made in pursuance of this power may be amended or repealed by an Act of the provincial legislature." This being the legal position, I am of the considered view that the Provincial Legislature was legally competent to repeal the Ordinance XXI of 1959.
19. In so far as the question of delivery of the assets and properties of the Corporation to the newly established company is concerned, it was for the Central Government (now Federal) to object on the matter of transfer of their assets and shares to the new company. Plaintiffs, being stranger to such transaction, are not competent to challenge the same. Both the governments are party to the present two suits and they never objected on such transaction. No doubt the manner in "which K.R.T.C. Was dissolved and its assets and properties were transferred/handed over to one family by the then Martial Law Government, was highly deplorable and objectionable. This country has suffered a lot during three Martial Law regimes and the incident of K.R.T.C. Is one of the worst examples of maladministration by the army dictators. The present proceedings being confined to the effect of the change on the rights and shares of the present plaintiffs, I would refrain from passing further comments. In this backdrop, Issue No,4 is answered in affirmative.
Issues Nos.2 and 3.
20. Since both these issues are inter connected, I propose to deal with the same together. It is denied by the plaintiffs that there was any extraordinary general meeting of the shareholders/members of the K.R.T.C. On 31-10-1963 and that no decision was reached for transfer of shares of the private members to the proposed new company. It is also denied by the plaintiffs that the shares of the plaintiffs do not stand transferred to the newly established company. The case of the defendants is that by virtue of Ordinance XXIV of 1964, the shares and interest of the plaintiffs ipso facto stood transferred to the newly established company. Defendants have relied upon section 4 of the said Ordinance which has already been reproduced in para. 16 above.
21. Mr. Abdul Rauf has referred to section 34 of the repealed Companies Act, 1913 and contended that the shares of the plaintiffs could not be transferred to the private corporation without compliance of section 34. He has strenuously referred to subsection (3) of section 34 which prohibits a company to register transfer of shares in or debentures of the company unless the proper instrument of transfer duly stamped and executed by the transferer and the transferee has been delivered to the company alongwith the script. Learned counsel for the plaintiffs has placed reliance on the case Karachi Electric Supply Corporation Ltd. v. Bank of India Ltd. PLD 1967 Kar. 144 at 149) where a learned single Judge of this Court after reference to section 34 of the repealed Companies Act, 1913 and the case of Madhawas v. Canara Banking Corporation AIR 1941 Mad. 354 held that the transfer of shares without complying with the provisions of section 34 was ultra vires.
Mr. Abdul Rauf has also referred to the case Haji Sharif Khan and another v. Raja Abdur Rahman and 6 others PLD 1977 Kar. 814 where this view was reiterated by another Judge Zafar Hussain Mirza, J. (as his Lordship then was). Section 34 provides for transfer of shares by two individuals but where a company is incorporated by operation of law and where its dissolution or transfer is again effected by subsequent piece of legislation, section 34 will not come into play. It will be seen that by virtue of section 35 of the Ordinance XXI of 1959 some of the provisions of Companies Act, 1913 were made applicable impliedly in respect of the dissolved corporation. Winding-up of the Corporation was left at the discretion of the Central Government. It would be relevant if section 35 of the Ordinance, 1959 is reproduced herewith which reads as follows:-- "35. Liquidation of Corporation.-- No provision of law relating to the winding up of companies or corporations shall apply to the Corporation and the Corporation shall not be wound up save by order of the Central Government and in such manner as the Central Government may direct."
22. P.W.3 Siddique Dawood who was one of the Directors of the dissolved K.R.T.C. Was examined as Exh.12. He was found by this Court not consistent on the point whether he attended the extraordinary general meeting on 31-10-1963 or not. He was confronted with the public notice published in the newspaper calling the extraordinary general meeting to be held on 31-10-1963 for which he was not able to say whether he received that notice or not. Then late Mr. Sharaf Faridi who was appearing for the liquidators put him a specific question whether he attended the extraordinary general meeting of the Corporation on 31-10-1963 to which he replied that he did not remember. There were several other members/shareholders- of the dissolved K.R.T.C. But with exception of these two plaintiffs, none have challenged transfer of the K.R.T.C. Into a company.
Minutes Book containing minutes of the meeting held on 31-10-1963 was also produced.
Attendance sheet duly signed by the members attending was also exhibited. Non-attendance of the extraordinary general meeting of K.R.T.C. By one of the plaintiffs will not make the meeting illegal or ineffective. No reliable or convincing evidence was produced by the plaintiffs to show that no such meeting was held. This fact finds place in several communications thereafter exchanged between the plaintiff, defendants and the Central Government. The minutes of the extraordinary general meeting of the K.R.T.C. Held on 31-10-1963 at 16-00 hours in the Head Office of the Corporation were brought on record as Exh.10/9 by the witness from the office of the Official Assignee. His name could not be .Ascertained as the page No,1 of his deposition sheet is torn. It reflects presence of P.W.3 Siddique Dawood in the meeting. Following decisions were taken in that meeting:- "Addressing the Shareholders, Mr. Siddiq Dawood, Director, stated that in the capacity of his being the Director of the K.R.T.C. On behalf of the Private Shareholders, he felt it duty-bound to represent their views. Congratulating the Government of their decision to transfer the control of the K.R.T.C. To Private Investor, he observed that the Private Investor, should always be encouraged to establish the commercial and industrial concerns and thereby promote the national economy. He further congratulated the new management over the praise-worthy progress made by them during the short period of 3 months and prayed for the success of the organization to-the best advantage of the public under the new management.
' Commenting upon the proposal as put up by the Chairman, he informed the shareholders that the Chairman has agreed to the purchase of shares at par from such private shareholders who wish to sell their shares on instalment basis and requested that the condition of payment on the instalment be revised and instead, immediate payment be made to all such shareholders who wish. To sell their shares. The said suggestion of Mr. Siddiq Dawood was then discussed at length by the shareholders who decided that their shares should be transferred in the new Company as proposed.
' Messrs Miskeen Khan, Khawaj Bakhsh, Hakim Syed Ahmed Shah, A. Razak and Saeed Mirza paid glowing tributes to the new management on the meritorious services rendered by them to the common man and for timely saving the infant by promising and flourishing enterprise from the verge of collapse. Commenting upon the factors responsible for the speedy deterioration in the past they strongly condemned the persons at the helm of affairs and appreciated the sincere and ceaseless efforts of the new management who came to their rescue and saved the organization from devastation.
' After the aforesaid discussions, the following decisions were taken--
(1) It was unanimously decided that the proposed Public Company by the name of Karachi Road Transport Corporation Limited should take over the undertaking of the K.R.T.C. On the repeal of the K.R.T.C. Ordinance.
(2) The suggestions of Mr. Dawood regarding the purchase of shares at par on immediate cash payment did not meet their approval who unanimously decided that their shares should ipso facto be transferred to the new Company.
(3) The shareholders further unanimously decided to appoint Messrs Manzoor & Brothers (Agents)
Ltd. As Managing Agents of the new Company and authorised Mian Muhammad Akhtar to carry out all legal formalities including the execution of an agreement between the Karachi Road Transport Corporation Ltd. And the Managing Agents Messrs Manzoor & Brothers (Agents) Ltd.
' Mian Muhammad Akhtar then expressed his heartfelt gratitude to the shareholders for the confidence reposed in him and promised to leave no stone unturned to provide a model service hitherto denied to the travelling public in Karachi."
23. From the aforesaid facts, it is proved that the majority of the shareholders/members of the dissolved K.R.T.C. Decided for transfer of their shares to the newly proposed company. It is observed that the minority members cannot challenge the act of majority in a suit unless it is shown that some fraud, misrepresentation, coercion or duress was committed upon the minority in order to deprive them of their rights. There is no evidence in this suit to come to such conclusion. There is sufficient material on record to show that by operation of law, the plaintiffs became shareholders of another company and that the extraordinary general meeting of the shareholders/ members was duly held on 31-10-1963 where proposals of the defendants in Suit No,324 of 1966 were defeated and by majority it was agreed that the private shareholders will become members of the then proposed committee. Reliance placed by Mr. A. Rauf on the two decisions of this Court will not improve the case of plaintiff as in those cases the transfer of shares was amongst the private individuals. In the instant case, the transfer was by operation of law. In such circumstances, Issues Nos.2 and 3 are answered in affirmative.
Issue No,5.
24. It was argued by Mr. A. Rauf that the plaintiffs' rights as shareholders are not affected by the process of liquidation as the Federal Government had agreed that the new company will purchase the shares of the private shareholders in the dissolved K.R.T.C. He has placed reliance on Ex.11/5 to Exh.11/7, Exh.11/13, Exh.11/14, Exh.11/16, Exh.11/18, Exh.12/3 and Exh.A/1 to Exh.A/6.
25. Exh.11/5 is a letter, dated 20th September, 1963 written by one of the plaintiffs in Suit No,155 of 1966 and addressed to the Secretary, Government of Pakistan, Ministry of Communications pointing out the Resolutions Nos.7, 8 and 9-B passed in the 95th meeting of Board of Directors of dissolved K.R.T.C., dated 12-11-1962. From the contents of this letter, it appears that in the said meeting a proposal was adopted which was to be forwarded to the Central Government for incorporating a clause in the proposed Ordinance providing for the protection of financial interest of the private shareholders and that by purchase of shares at par by the ultimate buyers. In furtherance of Exh.11/5 the opinion of one of the defendant namely Mian Muhammad Akhtar was invited by Government of Pakistan in respect of the purchase of the private shares. Finally vide Exh.11/14, the Government of Pakistan declined to accede to the request of the plaintiffs. It would be pertinent to observe that nothing was proposed in the Ordinance XXIV of 1964 about the mode of purchase of shares of the private persons. It will be seen that in none of these exhibits/documents it was ever agreed by any of the defendants to purchase the shares of private parties. From letters produced by the plaintiffs, it is only proved that there was exchange of such proposal between the plaintiffs on the one hand and the Government of Pakistan and the matter did not go beyond such negotiations. There was a proposal from the Government of Pakistan for incorporation of terms for purchase of private shares in Memorandum and Articles of Association as appears from the evidence, but this never materialised,. Copy of Memorandum and Articles of Association of the new company was produced and exhibited. From the certificate of incorporation, it appears that the new company was registered on 5th September, 1964 and the parties have subscribed their hands to the Memorandum and Articles of Association on 1-8-1964. In this connection, it would be relevant to quote two letters, Exh.11/9 and Exh.11/11 which show that the defendants never agreed in principle for purchase of share the plaintiffs. They read as follows:-- Exh.11/9 "To ' Mian Muhammad Akhtar, Director, Karachi Road Transport Corporation, S.I.T.E., Manghopir Road, Karachi.
' Sub: Repeal of the Karachi Road Transport Corporation Ordinance, 1959.
Dear Sir, ' I am directed to state that in connection with the repeal of the Karachi Road Transport Corporation Ordinance, 1959, it has been suggested on behalf of the private shareholders that adequate provision should be made in the repealing Ordinance to the effect that their shareholdings in the Corporation would be safeguarded in the following manner:-
(i) the shareholders of the Corporation shall be deemed to be holding the shares in the successor company to the same value and extent as is shown in their present share certificates; and
(ii) if any of the shareholders want to dispose of his or her shares in the Corporation at the time of repeal of the Ordinance, you will purchase such shares at par.
(2) I am to request that your comments on the above suggestions may kindly be communicated to this Ministry immediately. Yours truly, (Sd.) S.0.(T)
' Exh.11/11 ' Mr. S.M. Bashir, ' Section Officer, Government of Pakistan, ' Ministry of Communications, (Communication Division) Rawalpindi.
' Dear Sir, ' Sub: Transfer of Karachi Road Transport Corporation to Private Sector.
' In accordance with your Letter No,RT-3(6)/63 of the 14th July, 1964 I and my family members had offered for selling the shares of Karachi Road Transport Corporation at par value to Managing Agents of the Karachi Road Transport Corporation Limited as per copies enclosed. The Managing Agents have sent us their replies stating that our offer for sale of the shares to the Managing Agents is not acceptable to them because according to them they are not under contractual obligation for purchasing the shares at par value. The copies tc, their replies are sent herewith for your perusal, which are self-explanatory.
' I shall now thank you if you kindly instruct the Managing Agents of Karachi Road Transport Corporation Limited to accept our offer of sale of shares and to take delivery of the same against payment.
' Thanking you.
' Yours faithfully, ' (Sd.) (Ahmed Dawood, H.K.)"
26. All these communications as referred by Mr. A. Rauf, in no manner constitute acceptance on the part of the Central Government or any of the other defendants, Exh.11/11 which is a letter written by one of the plaintiffs and addressed to the Ministry of Communications, Government of Pakistan, clearly shows that the then Managing Agents of the new company denied purchases of the share of the plaintiffs by categorically stating, "they were under no contractual obligations for purchase of the shares of the plaintiffs at par value." Mr. A. Rauf, learned counsel for the plaintiff has rightly pointed out that there was no specific provision in the Ordinance XXIV of 1964 provides for transfer of the shares of the K.R.T.C. Established in the year 1959 had specifically dealt with the question of share capital, Board of Directors; their terms of office and other duties of the Directors. But what Mr. A. Rauf has suggested may be correct in so far a private limited company is concerned. In the instant case, the situation is quite different. Here the K.R.T.C. Was incorporated by a piece of legislation giving absolute authority of control and management to the Central Government vide section 27 of the Ordinance, 1959. The Central Government was entrusted with the powers to give direction to the Board as to the broad principle of policy which the Board was required to carry out.
Then vide section 29, the Central Government was empowered to hold survey and to examine any work undertaken by the Board. Section 31 gives vast power to control the corporation's acts and proceedings. Likewise, section 32 of the Ordinance, 1959, authorised the Central Government, upon its satisfaction, to withdraw or revoke the powers of the Board. I have already referred in the above paras. Section 35 which pertains to the liquidation of Corporation. The Ordinance XXIV of 1964 may be a poorly drafted piece of legislation, but for all legal and practical purposes, it dissolved the K.R.T.C. By repealing Ordinance, 1959 and transferred all the assets, liabilities, rights, charges, encumbrances and obligation of K.R.T.C. To the new Company. All these provisions of Ordinance, 1964, do indicate that the shares of the private shareholders also stood transferred to the new company.
27. As a result of the above discussion and the evidence referred to hereinabove, it could be safely held that as a result of winding up of the K.R.T.C. By virtue of Ordinance, 1964, the shares of the plaintiffs in both these suits stand, ipso facto, transferred to the new company and that they are to be dealt with at par with the other shareholders.
Issues Nos.6 and 7 '28. Since both these issues pertain to the nature of reliefs the plaintiffs are claiming seen under the changed circumstances are inter connected, I, therefore, propose to discuss both these issues jointly.
29. In Suit No,185 of 1966 the plaintiff is claiming Rs,7,50,000 being he value of plaintiffs rights, properties and interest in the K.R.T.C. As well is an amount of Rs,.7,50,000 being the value of the shares owned by the plaintiff. In addition, two declarations are also sought to the extent that the Ordinance. XXIV of 1964 be declared ultra vires of the Constitution and violative of the fundamental rights and that the transfer of the properties of the K.R.T.C. Be declared to be without lawful authority. Plaintiffs have also prayed for damages/monetary compensation to the tune of Rs,7,50,000. In Suit No,324 of 1966, the values of shares claimed is at Rs,7,13,000. A declaration is also sought to the extent that the dissolution of K.R.T.C. Be declared illegal and ultra vires; damages/compensation is also claimed but with no specific amount. A prayer of mandatory injunction for reinstatement of the plaintiffs as Director of the New Company with further relief of appointing Receiver to take over and manage the assets of Corporation are also sought. How this reliefs could be granted or could not be granted in view of the changed and altered circumstances, none of the parties have addressed on this point. It is settled law that now Courts are competent to mould relief according to altered circumstances but this discretion is to be judicially exercised in the larger interest of justice with a view to avoid multiplicity of proceedings, to shorten litigation and to do complete justice between the parties. If any reference is needed, see Mst. Amina Begum and others v. Mehar Ghulam Dastgir PLD 1978 Supreme Court 220 at 226. The rule laid down in Amina Begum's case (ibid)) was reiterated by a Full Bench of Honourable Supreme Court in Muhammad Aslam v. Wazir Muhammad PLD 1985 SC 46 rel. At 51.
30. Pending disposal of the above two suits, one person Muhammad Ahmed Proprietor Langford Industry Badami Bagh Lahore claiming himself to be one of the creditors of new K.R.T.C. Filed a winding up petition under section 162 of the Companies Act, 1913 (now repealed). This petition was filed on 3-2-1968 before this Court and was numbered as J.M. No,7 of 1968. It was widely publicised and after hot contest on 6th May, 1969, the said petition was accepted and the Official Assignee was appointed Official Liquidator. Appeal filed against the said order L.P.A. No,123 of 1969 was also dismissed by a Division Bench of this Court on 19th December, 1976. It would not be out of place to quote two paragraphs from the judgment, dated 6th May, 1969 in J.M. No,7 of 1968 authored by Qadeeruddin Ahmed, J. Which reads as follows:-- "(22) In addition to facts that the company is incapable to the Central Government in the amount of Rs,67,00,000 and that the Commerce Bank Ltd., has filed a suit against it for the recovery of a crore of rupees, Mr. Sharaf Faridi has further admitted at the bar that the company owes about Rs,22,00,000 to Burmashell and Caltex. He has also admitted that 10 suits are pending against the company involving claims for more than Rs,10,00,000 and that there are decrees against the company, the total amount of which comes to about Rs,4,00,000. After the advertisement of the petition, only one creditor has appeared in these proceedings and he has supported this petition.
No creditor has opposed it. Additionally, the insistence of the company is that it was floated in adverse circumstances and that it has continuously suffered losses and was also mismanaged. It appears that the initial misfortune of the company is regarded by the company as a good excuse for continuing to exist without any prospects of recovery merely because the Industrial Managements Limited has allegedly mismanaged the affairs and relinquished its charge in January 1969. Since then admittedly, the company has done no business..."
"(24) No other argument was advanced by Mr. Sharaf Faridi. To my mind this is an eminently suitable case for making an order to wind up the company. I, accordingly accept this petition, order the company to be wound up and appoint the Official Assignee to be the Official Liquidator. He is ordered to take over the possession of the assets of the company and to manage the affairs of the company for purposes of winding it up in accordance with the best interest of all concerned. He is authorised to exercise all the necessary powers available to an Official Liquidator under the law for discharging his duties."
31. After the aforesaid order appointing Official Liquidator in the year 1969, several creditors have come forward and have taken settled their claims including part payments towards Government dues including payment of Income Tax. According to recent reference of the Official Liquidator/Official Assignee, dated 13th July, 1999 in J.M. No,7 of 1968, a sum of Rs,1,81,59,636 (Rupees one crore eighty one lac fifty-nine thousand Six hundred and thirty six only) is available with the Official Liquidator.
32. Reverting to the question of relief, I am of the considered view that by lapse of time some of reliefs have become infructuous. It is to be seen that in the month of September, 1987, the process for recording evidence in both suits was concluded and since then, the matter has been coming up for hearing the final arguments. It has taken nearly 12 years for the final hearing of arguments. It will not be just and proper to blame any one side for such delay, but whatever the reasons may have been for the delay, it has adversely affected the rights of the plaintiffs to get reliefs as prayed.
In so far as the plaintiffs claim for the amount of their shares at par value is concerned, it cannot be granted, in view of the fact that their shares stand transferred ipso facto by operation of law to the new K.R.T.C. And that now they are entitled to be treated at par with the other shareholders. In so far as relief of payment of damages/monetary compensation is concerned, there is no evidence on this point except that the Central Government acted beyond its scope while enacting Ordinance XXIV of 1964. There was no justification in law or on moral plain to transfer the shares of the private parties. This act of the then Central Government was highly objectionable. These observations answer the issues Nos.6 and 7 accordingly.
Issue No,8.
33. In view of the above discussion and in the backdrop of the peculiar facts of this case, both the suits are partly dismissed and partly decreed in the following terms:-
(i) That the plaintiffs shall be entitled for the refund of their shares amount at pro rata basis as per decision of the learned Company Judge in J.M. No,7 of 1968.
(ii) A token amount of Rs,5,000 as damages in each suit, is granted in favour of plaintiffs and against Central Government (now Federal Government) which shall be deposited with the Nazir of this Court after expiry of 60 days hereof.
(iii) Parties to bear their own costs.