1. ' On an objection raised as to the maintainability of this suit, vide order, dated Dear Sirs With reference to my discussion with Mr. Shaukat A. Fancy and Mr. Anwar Rammal, I hereby tender my resignation with effect from 31st July, 1972 office closing hours, subject to the following terms and conditions which had been agreed to between Mr. Shaukat A. Fancy, Mr. Anwar Rammal and myself.
(1) I shall be paid six months' salary in lieu of notice period. Three months' salary shall be paid to me immediately and
(2) I shall be paid 40 days' salary in lieu to my total unallied privilege leave.
(3) I shall be paid a sum of Rs, being the credit balance lying in my account after adjustment of expenses.
2. ' From the aforesaid amount a sum of Rs,10,000 should be paid to me immediately and the balance by the 15th September, 1972.
(4) In respect of my 240 shares in the company of the face value of Rs,24,000 Mr. Anwar Ramal and/or Mr. Shaukat A. Fancy have agreed to purchase the same from me. It has been further agreed between Mr. Anwar Rammal. Mr. Shaukat A. Fancy and myself that Mr. Shaukat A. Fancy is hereby appointed the arbitrator to fix price of these shares. The sale shall be completed within the period of six months from the date hereof.
3. ' The decision of the Arbitrator in this matter shall be final and binding on Mr. Anwar Rammal and myself Mr. Shaukat A. Fancy as President of the Company has agreed to guarantee the fulfillment of the above conditions.
4. (Sd.)
5. (SULTAN GULAMANI)
6. ' In pursuance to the above letter the 'said shares' were transferred on 31-8-1974 but the decision as to the amount of sale consideration has not been taken, therefore, Plaintiff instituted the present suit alleging that the cause of action accrued on 12-2-2000 as stated in paragraph 16-A of the plaint and is reproduced hereunder:-- "CAUSE OF ACTION 16-A. That the initial cause of action to the plaintiff accrued in the month of January, 2000 when the plaintiff came to know that the defendant company is being disposed off/third party interest is being created. The cause of action renewed on 12th February, 2000 when the plaintiff was provided the report (Annexure "C"), through which the plaintiff came to know that his shares stand transferred long ago. The cause of action got renewed against when after the report supra, the plaintiff conducted detailed enquiries through which other wrongs committed by the defendant got exposed. The cause of action is in continuum."
7. ' Defendant filed written statement raising amongst other, objection as to the maintainability of this suit by way of preliminary objection. Defendant also moved an application under Order 7, rule 11, C.P.C. These objections led to the framing of the above preliminary issue. Learned counsel for the parties agreed before the Court that the above issue can be decided on the basis of aforesaid pleadings and documents together with the certified copies of proceedings in an earlier Suit No,1330 of 1974 originally filed in the Court of in 14th Senior Civil Judge Karachi and followed by subsequent proceedings on transfer of the said suit before the Court of 7th Senior Civil Judge, Karachi, South.
8. ' Mr. Abid T. Japanwala, Advocate for defendant has referred to the record of proceedings of Suit No,1330 of 1974 filed by the plaintiff against the defendant and others. It was a suit for declaration and injunction challenging the sale and transfer of the aforesaid 240 shares held by plaintiff in of the defendant-Company in favour of Mr. Anwar H. Rammal with the following prayers:- "(i) A declaration that the Annual General Meetings dated 30-9-1972 and 4-9-1973 were illegal, void and of no consequence whatsoever being in clear contravention of provisions contained in Articles 8, 9 and 10 of the Companies (Managing Agency and Election of Directors) Order, 1972 and also the Companies Act, 1913 and the Article of Association of the defendant No,1.
(ii) A declaration that the plaintiff is still a Director of the Defendants No,1 and continue to have 16% shares holding of the defendant No, 1 .
(iii) An injunction restraining the defendants Nos.1, 3 to 5 from taking steps enforcing the transfer of 240 shares held by the plaintiff under Article 26 of Article of Association of otherwise.
(iv) Cost of the suit.
(v) Such further and/or additional relief which may deem fit land proper to this Honourable Court."
9. ' Application under Order 39, rules 1 and 2 of C.P.C. Filed by plaintiff for restraining transfer of the said shares in Suit No,1330 of 1974 was dismissed by the learned 1st Senior Civil Judge and Assistant Sessions Judge, Karachi vide his order, dated 3-7-1974. On 4-7-1974 a letter was forwarded under registered post A/D., acknowledged by the plaintiff which is Annexure B to the written statement and is reproduced hereinunder:-- "Mr. Sultan A. Gulamani, 14-Al-Filpana, 4th July, 1974 C-2, Bath Island, Karachi.
10. Dear Sir, ' In continuation of our Letter No,24298, dated 18th June, 74, we wish to inform you that action has been taken in accordance with the Article 26 of the Articles of Association of the Company, and you are hereby advised that the 240 shares held by you have been sold to Mr. Anwar H. Rammal for a consideration of Rs,6,480 for which a Cheque No,F-124517, dated 4-71974 on Commerce Bank Ltd., from Mr. Anwar H. Ramal is enclosed. Please note that the Certificate Nos.1, 5 and 11 for 240 shares bearing distinctive Nos.1 to 120, 501 to 540 and 1341 to 1420 have been treated as cancelled as you have failed to surrender the same. Your faithfully, FOR ASIATIC ADVERTISING LIMITED.
11. (Sd.)
12. ' DIRECTOR ' Encl: One Cheque."
13. ' Subsequent proceedings of Suit No,1330 of 1974 as recorded on the relevant dates and relied upon by defendants arc as under:-- "22-3-1977 plaintiff and his counsel were called absent as costs was not paid, the suit was dismissed default of costs, the diary sheets for subsequent date are relied upon by the learned counsel is reproduced as under:-- 26-4-1977 ' Advocate for plaintiff moved application under Order, 9, rule 4, C.P.C. Order passed thereon. Notice Cost hearing 11-7-1977 (Sd.)
14. C.J. XXVI 11-7-1977 ' None present at call. Process not issued as cost not paid. Put off to 4-8-1977 for order.
15. (Sd.)
16. C.J. XXVI 4-8-1977 ' None present at call, no. Any intimation nor cost has been paid as per office report. Fixed the stand dismiss accordingly.
17. (Sd.
18. C.J. XXVI ' Learned Advocate for defendants after referring to section 3 of the Limitation Act, 1908 has argued that after dismissal of Suit No,1330 of 1994 on 4-8-1977, the remedies available to plaintiff were (i) either to move the Court under Order 9, rule 9, C.P.C. Or (ii) to prefer an appeal against the said order. The period of limitation provided under law to seek these remedies is 30 days and 60 days respectively, from the date of orders. The time available thus, expired sometime in the year 1977. In support of arguments reliance has placed on the reported case of Sabzal and others v. Bingo and others PLD 1989 Karachi 1, Dr.Izhar Fatima M.B.B.S. v. Haji Muhammad PLD 1996 Karachi 164, Sikandar Ali v. Abdul Raheem alias Leemon 1996 CLC 1273 and Messrs Shakil Waqas & Co. v. General Manager/Marketing, Pakistan Railways 1999 CLC 1236.
19. ' It is further argued that the present suit is filed by plaintiff without disclosing the fact of the dismissal of earlier suit after 23 years of the order, and it is not maintainable. Reliance is placed upon the reports Muhammad Riaz v. Karachi Metropolitan Corporation 2000 CLC 1107, Maj. (Recd)
20. Hamid Ali Khan v. Mian Muhammad Anwar, (2000 CLC 1633) and Mir Afzal v. Qalandar (PLD 1976 Azad J&K 26).
21. ' Mr. Kazi Abdul Hameed Siddiqui learned advocate for plaintiff in his reply has also relied upon the letter of defendant dated 31-7-1972 Anncxure D.5 to the written statement already reproduced above and stated that the value of the shares remain to be fixed by Mr. Shoukat. A. Fancy. He was appointed as Arbitrator to fix the price of the said shares but he failed to do so. Since July 1972 the said Arbitrator neither entered into arbitration nor gave his award. Lie further argued that this is a case of continuous cause of action in favour of plaintiff. That in substance the two suits are different and on different set of facts, the plaintiff was awaiting for commencement of the arbitration proceedings and award to be made by Arbitrator. He further argued that parties to the two suits are different. Suit No,1330 of 1974 was filed by the plaintiff against defendant and four other defendants while in the present suit only the plaintiff and defendant are parties, and that the defendants Nos.2 to 5 in the earlier suit have not been made parties to the present suit. In support of his argument, the learned counsel placed reliance upon the reports Suraj Rattan Thirani and others v Azamabad Tea Co. Ltd., and others AIR 1965 Supreme Court 295, Jumma Khan and others v. Mahmud Khan and others 1973 SCMR 289.
22. ' In Suraj Rattan's case while considering the words "in respect of the same cause of action" the Hon'ble Supreme Court of India has referred to the test adopted by the Judicial Committee for determining the identity of the causes of action in two suits which can be reproduced with advantage:
30. We consider that the test adopted by the Judicial Committee for determining the identity of the causes of action in two suits in Muhammad Khalil Khan v. Mahbub Ali Mian, 75 Ind App. 121: AIR 1949 PC 78 is sound and expresses correctly the proper interpretation of the provisions. In that case Sir Madhavan Nair, after an exhaustive discussion of the meaning of the expression "same cause of action" which occurs in a similar context in para. (1) of Order II, rule 21 of the Civil Procedure Code observed: "In considering whether the cause of action in the subsequent suit is the same or not, as the cause of action in the previous suit, the test to be applied is are the cause of action in the two suits in substance not technically identical?"
(31) the learned Judge thereafter referred to an earlier decision of the Privy Council in Soorjomonee Dayee v. Suddannund, 12 Beng LR 304 at p.315 and extracted the following passage as laying down the approach to the question: ' Their Lordships are of opinion that the term 'cause of action' is to be construed with reference rather to the substance than to the form of action ' The principle that it is the substance that it is to be examined and not the form as the guide line in arriving at a finding the Hon'ble Supreme Court in the case of Abdul Hakim and 2 others v.
23. Saadullah Khan and 2 others, PLD 1970 SC 63 has observed as under:-- "The expression 'cause of action' in Order 11, nile 2, C.P.C. Means the cause of action for which a suit is brought. In order that the cause of action for the two suits may be the same, it is necessary not only that the facts which would entitle the plaintiff to the right claimed must be the same but also that the infringement of his right, at the hands of the defendants complained against in the two suits, must have arisen in substance out of the same transaction. In considering the application of this bar, regard is to be had to the allegations in the two suits without reference to the defence that may be set up by the defendants. As laid down by their Lordships of the Privy Council in Muhammad Khalil Khan and others v. Mahbub Ali Mian and others PLD 1948 PC 131 "the bar under Order 11, rule 2 refers entirely to the grounds set out in the plaint as the cause of action or, in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour'. A raugh test, although not a conclusive one is to see whether the same evidence will sustain both suits which would be the case if both the suits are founded on continuous and inseparable incidents in the same transaction. The question, however, is to be examined in substance and not merely on form as the cause of action in the two suits may be found to be the same, in spite of the facts alleged not being exactly identical in the two cases. It is not open to the plaintiff to split up the parts really constituting the same cause of action and file different suits in respect of them. In other words, a plaintiff must ask for all his reliefs which flow from the grievances caused to him by the infringement of his rights by the defendants in the course of the same transaction, but he cannot and is under no obligation not add to his grievances which did not occur in that transaction."
24. ' In the case of Hakim Muhammad Buta and another v. Habib Ahmed and others (PLD 1985 SC 153).
25. The Hon'ble Supreme Court has been pleased to examine the question of Limitation in detailed and was pleased to observe that:-- "The words of section 3 of the Limitation Act are mandatory in nature in that every suit instituted after the period of limitation shall, subject to the provision of sections 4 to 25 of that Act, be dismissed although limitation has not been set up as a defence. If from the statement in the plaint the suit' appears to be barred by limitation, the plaint shall have to be rejected also under Order VII, rule 11, C.P.C. The law, therefore, does not leave the matter of limitation to the pleadings of the parties. It imposes a duty in this regard upon the Court itself. There is a chain of authorities, and a detailed discussion of the same is not necessary, to lay down that limitation being a matter of statute and the provisions being mandatory, it cannot be waived and even if waived can be taken up by the party waiving it and by the Courts themselves. In Sitharama v. Krishnsawami ILR 38 Mad.
26. 374, where the defendants had pleaded the bar of limitation but the trial Court had held that they having admitted their liability for the amount in resisting the plaintiff's application in the previous suits, were estopped on general principles of law and equity from pleading that the suit was barred by limitation. It was ruled that the defendants were not estopped and it was observed that ' the bar of limitation cannot be waived, and suits and other proceedings must be dismissed if brought after the prescribed period of limitation' and that the Judge cannot, on equitable grounds, enlarge the time allowed by the law, postpone its operation, or introduce exceptions not recognised by it". The same Court in a subsequent case, Ramaurthy v. Gopayya ILR 40 Mad. 701, reiterated that the parties cannot stop themselves form pleadings the provisions of the statute of limitation, the Lahore High Court also took a similar view in Kundo Mal v. Firm Daulat Ram AIR 1940 Lah.75, and held that 'there is abundant authority in support of the proposition that objections regarding limitation cannot be waived and that even if they are waived they can been taken up again by the parties waiving them or by the Courts themselves'.
27. ' The plaints filed in both the suits by the plaintiff are based on the same facts of the transfer of share and require the same evidence to prove the fact of transfer of the said shares and are thus, same in substance. The shares in question were sold by the plaintiff and it was with his consent that they were transferred in the books of the defendant-Company in favour of Anwar H, Rammal.
28. The only matter that remained for determination was the amount of sale consideration that was paid in part by the transferee to the transferor and the plaintiff in his letter, dated 31-7-1972 has admitted: "In respect of my 240 shares in the company of the face value of Rs,24,000, Mr. Anwar Rammal and/or Mr. Shaukat A. Fancy have agreed to purchase the same from me. It has been further agreed, between Mr. Anwar Rammal, Mr. Shaukat A. Fancy and myself that Mr. Shaukat A. Fancy is hereby appointed the Arbitrator to fix price of these shares. The sale shall be completed within the period of six months from the date hereof."
29. ' ' The record does not reveal any step taken by the plaintiff for commencement of Arbitration proceedings and or the determination of value of the said shares and allowed the same to become time-barred.
30. ' The transfer effected in pursuance to the letter of the plaintiff dated 31-7-1972 was completed on the expiry of the period of six months from that date as stated therein. The only grievance that the plaintiff was left with, if any, was thus, question of determination of the price and the recovery of such amount after determination thereof by Mr. Shaukat A. Fancy who was appointed as Arbitrator to fix the price the plaintiff did not pursue this remedy since the past even twenty five years and there is no substance in the statement made in Paragraph No,16-A of the plaint to show that cause of action accrued in the month of January. The defendant-Company is a legal entity and no fact or grievance, actionable under law is made out by the plaintiff. The defendant is not a party to the sale or transfer of share except to the extent of the entries in the register of shareholders and these were effected on the basis of the sale and transfer of shares between the transferor and transferee of the said shares. It is only after transfer is agreed to that the entries to this effect are made in the register of share-holders required to be maintained by the Company. It is not the defendant but the plaintiff and the transferee of the shares who are the parties to the transaction of the sale of the aforesaid shares. The case of Vasudew Tamchandra Shelat v. Pranlal Jayanad Thakar, (1975)
31. 45 Company Cases 43, decided by the Supreme Court of India can be cited with advantaged where the Court has clearly laid down that where, as between the transferor and the transferee, all formalities have been gone through such as the execution of a document of transfer and the physical handing over the shares by the transfer to the transferee, the shares should be taken to have been transferred to the transferee, though until the transfer of shares is registered in the company's books in accordance with the company law, the transfer could not enable the transferee to exercise rights of a shareholders vis-a-vis the company.
32. ' In the case of 0. Champpa Reddy, E.S. Vankatrevmiab v. Buluk Rishria Evadi, R.B. Mesva AIR 1986 SC 1370 the Court while examining the interest of a shareholder has observed that:-- "Shares is movable property, with all the attributes of such property. The right of share-holders are
(i) to elect Directors and thus to participate in the management through them; (ii) to vote on resolutions at meetings of the Company, (iii) to enjoy the profits of the company in the shape of dividends, (iv) to apply to the Court for relief in the case of oppression; (v) to apply to the Court for relief in the case of mismanagement; (vi) to apply to the Court for winding-t,;., of the Company:
(vii) to share in the surplus on winding-up. A share is transferable but while a transfer may be effective between the transferor and transferee from the date of transfer the transfer is truly complete and the transferee becomes a shareholder in the true and full sense of the terms, with all the rights of a shareholder, only when the transfer is registered in the company register."
33. ' Palmer's Company Law, 19th Ed. Page 113 explain the practice relating . To sale or mortgage of shares in blank as follows:-- "Upon a sale or mortgages of shares, the transferor very commonly signs and hands over with is called blank transfer (i,e, a transfer signed by transferor, but with a blank for the name of the transferee), the intention being that the purchaser or mortgagee shall be at liberty later on to fill up the blank and perfect his security by getting himself registered. If, however, the regulations require the transfer to be by deed, the transferee cannot effectively, fill up the blank and deliver the deed unless authorized so to do by power of attorney under seal; whereas if the transfer may be under hand merely, the authority to fill up the blank may be oral and may be implied from the nature of the transaction."
34. ' The English case, law relating to transfer of shares in blank was fully discussed by Lord William, J. In the matter of Bengal Silk Mills Company Ltd. (AIR 1942 Cal. 461). In that case, one Mst. Fatima Begum was the registered holder of 6 shares in the Bengal Silk Mills Company Ltd. In 1928 she executed a transfer deed of the shares in blank in favour of one Suhrawardhy for Rs,2,100. After the death of Mst. Fatima in 1935. Suharwardhy transferred the shares in blank to the petitioner on 10th December, 1940 for Rs,2,400. The petitioner thereupon completed and filled in the blanks and inserted the date of the transfer as 10-12-1940 and presented the transfer deed for registration to the Company, but the company declined to register the same on the ground that the same it was filled in after the death of Mst. Fatima Begum. It was held that whether it be a matter of agency or authority or contract, the transferee in cases of transfers in blank has the right to fill in the necessary particulars including his own name as transferee and the date of the transfer, after the death of the original transferor. If it were otherwise the vast amount of business done by means of blank transfers would have to cease because it would be quite impossible in many cases to ascertain without much trouble and inconvenience whether the original transferor was alive or not.
35. In the instant case the transfer was registered in the books of the defendant in 1974 with the consent of the plaintiff and plaintiff instituted this suit with the prayer of declaration that the modus operandi adopted by defendant Company in 1974 is illegal and void ab initio in addition to injunction against defendant for transferring the said shares as the main prayer cannot be maintained. The plaintiff by his own actions has allowed the property to pass in favour of Anwar H.
36. Rammal with respect to the said shares and the defendant only acted as required by law to register the transfer. The said Anwar H. Rammal has not been made a party to the present suit which in substance is the same as the earlier suit. After transfer of the shares the only remedy available to the plaintiff was with regard to the recovery of the sale Consideration after determination by the Arbitrator which has not been done since the last over 25 years. In view of the above the issue is answered with affirmative. C.M.A. No,3353 of 2000 is allowed and the plaint filed in the above suit is rejected but with no order as to costs.
37. Plaint rejected.