' JAWWAD S. KHAWAJA, J.---The appellant Iftikhar Ahmed Shaffi who is a member of the Lahore Stock Exchange filed a suit against the said Stock Exchange and 32 others including defendants Nos.2 to 29 (respondent Nos.2 to 29 in this appeal) who are Members of the Lahore Stock Exchange.
The said suit, inter alia, prayed for a declaration that two agreements, dated 3-6-2000 and 5-6- 2000 entered between the appellant and the Lahore Stock Exchange, are void and liable to be cancelled. A further declaration was sought to the effect that Cheque No,00851832 for Rs,50.0 million drawn on Allied Bank Ltd., defendant No,30 and Cheque No,25732217 for Rs,50.0 million drawn on Muslim Commercial Bank defendant No,31, were void and liable to be cancelled. A permanent injunction was also sought to restrain the Lahore Stock Exchange from presenting the aforesaid cheques for encashment. Other reliefs were also prayed for but for the purpose of the present judgment it is not necessary to refer to the same.
2. Alongwith his plaint Iftikhar Ahmed Shaffi filed an application seeking interim relief under Order XXXIX, rules 1 and 2, C.P.C. The said application prayed that the Lahore Stock "Exchange be restrained from taking coercive action against Iftikhar Ahmad Sheikh including but not limited to declaring him a defaulter and from encashing the aforesaid cheques.
3. The Lahore Stock Exchange submitted its written statement in response to the plaint and also filed a reply to the application seeking interim relief: A reply to the application was also filed by some of the other defendants who are represented before us. The said application was fixed for hearing on 20-7-2000. The parties were heard and the application was dismissed on that date.
While dismissing the said application, the learned trial Court also proceeded to reject the appellant's plaint under Order VII, rule 11, C.P.C. On the ground that it did not disclose a cause of action.
4. The appellant, being aggrieved of the aforesaid order of the learned trial Court, dated 20-7-2000, has filed the present appeal. He challenges both the rejection of his plaint as well as the dismissal of the application for interim relief moved by him under Order XXXIX, rules 1 and 2, C.P.C.
5. We first propose to deal with the dismissal of the plaint by the learned trial Court. We have heard learned counsel for the appellant as also learned counsel for the Lahore Stock Exchange. It was contended by learned counsel for the appellant/plaintiff that the plaint did disclose a cause of action and, as such, could not have been rejected by the trial Court in exercise of powers under Order 7, rule 11, C.P.C. It was argued by him that in order for a plaint to be rejected under the aforesaid rule the contents of the plaint along would be relevant and would have to be presumed as being correct. The plaint could only be rejected if it failed to disclose a cause of action despite the presumption of correctness. This being a well-settled legal proposition, was not disputed by learned counsel for the Lahore Stock Exchange. He, however, argued that even if the contents of the appellant's plaint were taken to be correct, no cause of action was made out therefrom.
6. In order to resolve the afore-noted controversy we have examined the plaint with the assistance of both learned counsel. It sets out an elaborate factual narration leading up to the two agreements, dated 3-6-2000 and 5-6-2000 referred to above. The gist of the appellant's grievance is that the agreement, dated 3-6-2000 was a sequel to earlier meetings between the appellant and the members of the Lahore Stock Exchange. These meetings were necessitated because of a serious crisis in the stock markets of Karachi and Lahore which had resulted in the suspension of trading on the Lahore Stock Exchange, firstly, on 26-5-2000 and then again on 2-6-2000.
7. The agreement of 3-6-2000 was negotiated by the appellant's brother Waqar Ahmed Shaffi. The salient terms of the said agreement included a clause that the appellant's trading rights, which had been suspended, would be restored. It was also agreed that open positions held by the appellant, would be liquidated on the next working day i,e, 5-6-2000 at the best available prices but the shares of Adamjee Insurance Company would be sold at the rate of Rs,75 per share even if the Market price was less than Rs,75 per share.
8. According to the plaint, the agreement of 3-6-2000 was entered into in good faith in order to stave of the serious crisis in the stock market. The two cheques mentioned above were handed over to the Stock Exchange based on the expectation of the appellant that the terms of the agreement of 3-6-2000 would be strictly complied with by the Stock Exchange.
9. In paragraph 27 of the plaint, it is alleged that the Lahore ' Stock Exchange resiled from the terms of the agreement of 3-6-2000. The open positions were not liquidated as agreed on 3-6-2000. It is specifically alleged in the plaint that on 5-6-2000 the appellant was peremptorily informed by the Lahore Stock Exchange that it did not intend honouring the agreement arrived at on 3-6-2000.
Instead the agreement, dated 5-6-2000 was placed before the appellant which he was forced to sign in a coercive environment. It is alleged in the plaint that threats were extended to the appellant/plaintiff that in the event of his refusal to sign the fresh agreement his shares would be allowed to fall further in price with calamitous results.
10. Learned counsel' for the appellant argued that from the above-noted contents of the plaint it was clear that the signature of the appellant on the agreement of 5-6-2000 was obtained through coercion. According to him the above-noted threat extended to the appellant constituted criminal intimidation as defined in section 503 of the Pakistan Penal Code. Since the appellant signed the agreement on 5-6-2000 with the object of avoiding the execution of such threat the agreement was voidable and therefore liable to be cancelled under section 39 of the Specific Relief Act.
11. Learned counsel for the Lahore Stock Exchange however, argued that the Stock Exchange provided a market for trading of securities where prices could rise or fall depending on market forces. According to him the Lahore Stock Exchange had no role to play in the fixation of stock prices or in their rise or fall. He, therefore, contended the mere fact that prices of shares held by the appellant were falling would not by itself give a cause of action to the appellant. On this basis learned counsel argued the consent of the appellant to the agreement of 5-6-2000, was not result of coercion as defined in section .15 of the Contract. Act.
12. In order to appreciate the submissions of learned counsel for the Lahore Stock Exchange in the context of the arguments advanced by learned counsel for the appellant, it will be useful to examine section 15 of the Contract Act and section 503 of the Pakistan Penal Code which read as under: "S.15. 'Coercion' defined.---Voercion' is the committing or threatening to commit, any act forbidden by the Pakistan Penal Coed or the unlawful detaining, or threatening to detain, any property, the prejudice of any person whatever, with the intention of causing any person to enter into an agreement."
"S.503. `Criminal, intimidation'.---Whoever threatens another with an injury to his person, reputation or property, or to the person or reputation of anyone in whom that person is interested, with intent to cause alarm to that person or to cause that person to do any act which he is not legally bound to do or to omit to do any act which that person is legally entitled to do as the means of avoiding the execution of such threat, commits criminal intimidation."
13. Taking the contents of the appellant's plaint as being correct we cannot help noting the allegation that the stock exchange was in control of and had the ability either to allow the prices of securities listed on the said exchange to fall to the detriment of the appellant or to arrest such fall.
The second material fact, alleged in the plaint, as noted above, was that the said ability was threatened to be exercised to cause diminution in the value of the appellant's securities in the event of his refusal to sign the agreement of 5-6-2000. The third averment in the plaint, relevant for this order is that the threatened diminution of prices of securities to the disadvantage of the appellant/plaintiff, was illegal. The appellant, according to the plaint, put his signature on the agreement of 5-6-2000 to avoid the illegal threat. These averments in the plaint are sufficient to show that the requirements of section 503 of the Penal Code were fulfilled thereby disclosing a cause of action in favour of the appellant. It is not necessary for us, at this stage, to determine if the appellant was justified in making the abovementioned allegations in the plaint, because this will be a matter of evidence and proof.
14. As for the agreement of 3-6-2000 there are clear allegations that the Stock Exchange committed material breach of the said agreement and as a result the appellant was entitled to the cancellation of the two cheques referred to in the first paragraph of this judgment. The plaint avers the said cheques had been issued in good faith in reliance on the commitments contained in the aforesaid agreement on the part of the Lahore Stock Exchange.
15. Learned counsel for the Lahore Stock Exchange on the other hand argued that the two cheques were independent negotiable instruments, which by the appellant's own showing, had been issued with his free consent and with free consent of his brother Waqar Ahmed Shaffi. According to him the cheques, therefore, could not be cancelled on account of any failure on the part of the Lahore Stock Exchange to comply with the terms of the agreement dated 3-6-2000. He also argued that the cheques could only be cancelled if the same were either void or voidable. In support of this contention he referred to the provisions of section 39 of the Specific Relief Act.
16. We have considered the arguments of both learned counsel and have also examined the provisions of section 39 of the Specific Relief Act. Illustration (d) to the aforesaid provision is as under:-- "A agrees to sell and deliver a ship to B, to be paid for by B's acceptance of four bills of exchange, for sums amounting to Rs,30,000 to be drawn by A on B the bills are drawn and accepted, but the ship is not delivered according to the agreement, A sues B on one of the bills. B may obtain the cancellation of all the bills."
17. It is clear from the aforesaid illustration that even though a bill of exchange or cheque is meant to be a self-contained instrument creating rights and obligations between drawer and payee, it can be cancelled, where such instrument is issued in consideration of an agreement between drawer and payee and the payee has been in material breach of such agreement. The void ability of the bill or cheque can thus, result from a breach of agreement even though the instrument was issued by the drawer through exercise of his free-will.
18. In the present case the plaint clearly alleges that the two cheques were issued relying on the agreement of 3-6-2000. Since the Stock Exchange has allegedly failed to adhere to the terms' of the said agreement the cheques, according to plaint are liable to be cancelled. If the alleged failure of the Lahore Stock Exchange is proved at the trial, the plaintiff/ appellant in our opinion will be entitled to avoid the cheques and have the same cancelled. In present case as in the aforesaid illustration the cheques were issued as a mode of assuring payment of a sum of money by the drawer to payee pursuant to an agreement. Since the agreement was not duly performed as averred in the plaint in the present case the appellant would be entitled to claim cancellation of the cheques as prayed. This appears to be as the clear intent of section 39 of the Specific Relief Act as elucidated by illustration (d) thereof.
19. From the averments in the plaint and for the B reasons discussed above we are not left in any doubt that the plaint does disclose a cause of action and could not therefore have been rejected by the learned trial Court under Order VII, rule 11, C.P.C. We therefore, set aside the impugned order dated 20-7-2000 to the extent it purports to reject the plaint. In the circumstances, the suit of the appellant/plaintiff shall be decided by the learned Civil Court after proper trial.
20. Mian Qamar-uz-Zaman, Advocate, learned counsel for Muslim Commercial Bank (respondent No,31) argued that the said Bank was merely a drawee of one of the cheques mentioned in the plaint and as such, was neither a necessary nor a proper party in the case. Mr. Ali Zafar, Advocate, who represents respondents Nos.2 to 15, 7 to 29 and 32 in addition to the Lahore Stock Exchange also contended that the said respondents were not necessary of proper parties in the case as no specific allegations had been made in the plaint against them. In the present proceedings we do not consider it necessary to decide as to whether the said respondents are or are not necessary or proper parties. They may, if so advised, move the learned trial Court in this behalf.
21. Let the matter now come up on 6-3-2002 for consideration of the impugned order to the extent it deals with the plaintiff's application for interim relief and the dismissal of the said application.