MUSHIR ALAM, J.- Through this revision the applicant has challenged the judgment and decree dated 7.3.1997 and 14.3.1997 respectively passed by the learned VII 1th Additional District Judge, Karachi South, in Civil Appeal No. 85/1993 whereby judgment and decree dated 2.3.1993 and 6.3.1993 respectively passed in suit No. 137/1985, were set aside, suit filed by the applicant as against respondent and Slobe Tanker Services Inc under liquidation was dismissed.
2. It is claimed by the applicant that the applicant being subrogate of M/s. Sultan Feroze of Karachi, lodged claim in the sum of Rs.70,462/- arising out of short landing of cargo carried on board M.T.
Globe Overseas' from the part of New York to Karachi. On refusal to settle the claim applicant filed a suit No. 137/1987 for the recovery against M/s. Globe Tankers Service Inc. The owner/charter/carrier of the said vessel and against the present respondent, acting as local agent for them, who were liable to make good, the loss in terms of undertaking executed under Section 55 of the Customs Act. Suit was decreed jointly and severally against the defendant therein, vide judgment and' decree dated 2.3.1993 and 6.3.1993 respectively. Respondent (defendant No. 1) herein and M/s. Globe Tanker Services Inc. (since wound-up) defendant No. 2 filed Civil Appeal No. 85/1993. During pendency of the appeal, respondent moved an application under Section 316 of the Companies Ordinance, 1984 for the stay of the proceedings in appeal, in consideration of the fact that, the defendant No. 2 in suit and co-appellant therein namely M/s. Globe Tankers Services Inc. Was ordered to be wound-up' by an order dated 15.3.1993. The application was dismissed by the learned VIIIth Additional District Judge, Karachi South, vide order dated 25.3.1996 against which revision being No. 150/1996 was preferred before this Court. Revision was disposed of with the observation that: "if the appellants considers that in consequence of winding-up order and having regard to Section 55 of the Customs Act, it is no longer liable under the decree. This plea may be taken-up at the hearing of appeal."
3. After remand, the appeal was allowed vide judgment and decree impugned herein, whereby, the judgment and decree passed by the Trial Court were set aside, for the reason that since winding- up proceedings were pending in the High Court, suit ought to have been transferred to the Company Judge under Section 316(3) of the Companies Ordinance, 1984.
It was contended by the learned counsel for the applicant that, learned Additional District Judge failed to appreciate that, the judgment and decree were passed by the learned Trial Court on 2.3.1993 and 6.3.1993 respectively, whereas, order for winding-up of M/s. Globe Tankers Services Inc.
Was passed on 15.3.1993 in J.M. No. 10/1992 filed by the respondent herein, i.e. Mackinnon Mackenzie themselves, It was contended that the provisions of Section 316 of the Companies Ordinance, 1984 apply only when the winding-up order has been made or provisional manager has been appointed and not merely on filing of petition for winding-up.
4. Mr. Mansoor Shaikh, learned counsel for the respondent, in rebuttal, contended that by virtue of subsection (3) to Section 316 of the Companies Ordinance, 1984 any suit or proceeding by or against the company which is pending in any Court other than the Court before which the proceeding for winding-up of the company is pending. Such suit and others proceeding are to be transferred and disposed of by the Company Court alone, In support of his contention he has relied upon unreported judgment dated 27.9.2000 and 28.10.1998 respectively in Civil Revision Application No. 85/1998 M/s. Mackinnons Mackenzie and Co. v. Mrs. Musarrat Jawed and other and Civil Revision Application No. 109/1997, M/s. Mackinnons Mackenzie and Co. v. M/s. The Eastern Federal Union, insurance Company Limited and others.
5. I have heard the arguments and perused the record.
6. It is an admitted position that the suit was filed by the applicant/plaintiff in July, 1985 against respondent and M/s. Globe Tankers Services Inc. U.S.A, (since ordered to be wound up) which suit was defended by the respondent herein for self and as agent for said company. Suit was decreed on merit in the sum of Rs.70,462/- against both the defendants jointly and severally on 2.3.1993. It is also admitted position that winding-up of M/s. Globe Tankers Services Inc. Was initiated at the behest of respondent herein, under Sections 305 and 451 of the Companions Ordinance, 1984.
Winding-up petition was allowed on 15.3.1 993, i.e. After the suit was decreed.
7. To a query by the Court, Mr. Mansoor A. Shaikh, learned counsel for the respondent candidly admitted that though the winding-up proceeding were initiated at their motion, they did not intimate the learned Trial Court regarding pendency of winding-up petition.
8. In order to appreciate the contentions of the learned. Counsel for the parties it will be advantageous to reproduce Section 316 of the Companies Ordinance, 1984:
316. Suits stayed on winding-up orders: (1) When a winding-up order has been made or a provisional manager has been appointed, no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose.
(2) The Court which is winding-up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of, any suit or proceeding by or against the company.
(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding-up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by the Court.
9. From the bare perusal of sub-section (1) of Section 316 above, it is abundantly clear that mere pendency of the winding-up petition ipso facto does not operate as a bar to any suit or proceeding by or against the company. Bar, only operate on actual winding-up order or the order appointing provisional manager. Object of Section 316 of the Ordinance, 1984, is to regulates the pending suit or proceeding pending in any other Court so that none of the creditor may be prejudiced, their rights and interest are not adversely effected while distributing the assets of Company, amongst them, in accordance with their entitlement and priority if any.
10. Mr. Mansoor Shaikh, learned counsel for the respondent laid much stress on sub-section (3) to Section 316 reproduced above to argue that even filing of winding- up petition will operate as bar.
In Ulbricht's WWE, Ges M.B.H.A. Schwanestadt/Chaufing, Austria v. Ulbricht's (Pakistan) (Pvt.) Ltd.
(1990 CLC 1329) repelling similar contention it was held at page 1333: As I can see sub-section (a) of Section 316 of the Companies Ordinance, 1984 is an overriding provision and controls sub-sections (2) and (3) thereof which cannot be read in isolation as maintained by the learned counsel for the petitioner. No doubt sub-sections (2) and (3) of Section 316 of the Companies Ordinance, 1984 confer special jurisdiction to a Company Judge to try and transfer suits and other proceedings by and against the company but this jurisdiction comes into play when there is already an order under sub-section (1) thereof.
The Company Court assumes Special Jurisdiction over pending suit and proceedings only after the winding-up order is passed or when provisional manager is appointed, to try itself all pending suits or proceedings by or against the company either by itself or grant permission to continue such suit or proceedings pending in any other Court. Such view also find supports from the fact that power to stay any suit or proceeding against the Company are exercisable by the Company Court under Section 313 of the Ordinance, 1984 at the motion of company or any of its creditor or contributors any time after presentation of the winding-up petition and before the winding-up order is made.
11. Another aspect of the case is that the respondent themselves initiated winding-up proceeding against their principle could have very well applied for the stay or transfer of the proceeding from the Trial Court to that of the Company Court, if at all they were to take any advantage. Once such a party allow the suit or legal proceeding, to continue and in fact participate in such proceeding it amounts to acquiescence in the proceeding, at a latter stage would be stopped from challenging the proceeding on such score (see Bashir Ahmed v. Nippon Badin (Pvt.) Ltd. (1997 CLC 1295 (1309)).
Even otherwise, winding-up order was made after the suit was decreed jointly and severally.
Occasions to seek permission of the Company Judge would only arise when any appeal or execution proceedings are filed against the wound-up company.
12. As far as reliance of learned counsel on unreported judgment in Civil Revision No. 109/1997 (supra), It also related to a similar claim against the applicant M/s. Mackinnouns Mackenzie & Co., who were the agents for the same wound-up company, which was ordered to be woundup vide order dated 15.3.1993. With utmost respect to the observation made by the learned Bench therein. I find myself unable to subscribe to the view expressed therein, it appears that proper facts were not laid before the learned Bench, In the R.A. 109/1997 material dates i.e. Date of judgment and decree passed by the learned Trial Court is missing. As far as judgment in Civil Revision No. 85/1998 is concerned, facts were identical, and judgment and decree were passed in a suit against the present application and wound up company oh 15.4.1992. In said case application under Section 316 of the Companies Ordinance, filed before the Appellate Court was dismissed, judgment was announced on 20.12.1995. In revision it was ruled that liability though coextensive is not the personal liability and proceedings against the Principal in absence of permission under Section 316 cannot be maintained.
13. With utmost respect to the observation of the learned Bench, I most humbly disagree, In the instant case, main ground for holding that, the applicant is liable for the claim in suit rest on a declaration given under Section 55(e) of the Custom Act, whereby the applicant undertook to discharge all the liabilities of the vessel by virtue of such a declaration. Applicant being an agent held himself answerable for the discharge of all the claims for damages or short delivery which may be the liability of the owner of the cargo, which position is not disputed.
14. Effect of the declaration referred to above, is detailed in Section 55(2) of the Act, whereby, the agent is held liable to pay all the penalties and is also liable to satisfy the claim relating to short delivery or damages that is caused to the cargo in terms of the declaration. Such liability has been interpreted in Banerjee Cowasjee and Co. v. Habib insurance & Co. (PLD 1975 Kar. 195) where Insurance Co. (subrogate) sued the agent without suing carrier, it was held unless liability against carrier is admitted or is established agent is not liable under the Customs Act. In said case Insurance Company did not made carrier a party to the claim. Claim was not established against the claim. Claim was not established against the carrier therefore, the action failed. The impact of a declaration under Section 55(d) and (e) of the Custom Act, also came into consideration in PLD 1968 Kar. 89 M/s. Pakistan Industrial Chains Company v. American Oriental Lines Inc. New York and others, in said case, Ship's Agent was held, liable on customs declaration given by them under Section 64(d) of Sea Custom Act; in said case, carrier sued, admitted the" liability. Ship Agent was~held (table for the admitted claim on the declaration given u/S. 64(d) of the Sea Customs Act.
In suit in hand, the claim in suit was established, against the carrier after full dress trial, therefore, Ship Agent was held personally liable on his declaration given u/S. 15(d) of Customs-Act.
15. From the discussion made above it appears that the liability of the agent only crystalized and become coextensive with that Principal once such liability is established through Court of law or admitted by the carrier themselves. There is no cavil to the proposition that once such liabilities is established and proved in Court of law, it become enforceable as against the agent as well.
Admittedly in this case the liability stood established as against the Principal. Consequently the agent also became jointly and severally liable pursuant to judgment and decree passed by the learned Trial Court dated 2.3.1993 and 6.3.1993. It is only after the judgment and decree, winding-up order dated 15.3.1993 was passed. Concept of co-extensive liability as enshrined in Section 128 of the Contract Act would be attracted, which reads as follows: Surety's liability. The liability of surety is coextensive with that all of a principal debtor, unless it is otherwise provided by the contract.
16. In the instant case liability as against the agent in terms of Section 55 of the Customs Act, was determined by the Court of law. Co-extensive liability in legal parlance means the extend equally and to exist same time, side by side, together. Purport and intent of a judgment and decree against more than one person also bind such judgment- debtor co-extensively. It means that either of the party/judgment-debtors could be followed by the decree- holder for the satisfaction of the decree, In a case reported as N.B.P, v. Allied Paper Industries Ltd. (1997 CLC 737)
Execution of decree against Co. And others J.Ds. In which (wound-up) Co. Was impleaded as J.D.
Was held to maintainable, notwithstanding, the fact that 'leave of Court1 as contemplated by Section 316(1) of Co. Ordinance had not been obtained, It was held, execution of decree would be applicable against individual J.D's as decree made them responsible jointly and severally, In a case cited as Arumugahm Chattiar v. Sedasivam Pillai (AIR 1971 Mad. 321) it was held, surety because liable to pay entire amount immediately after passing of decree and it is not deferred until creditor exhaust his remedies against principal debtor. Co extensive liability of the surety as referred to above has been set at rest in number of cases one may refer to Messrs Platinum Insurance Company Limited, Karachi through Managing Director v. Daewoo Corporation, Shaikhupura through/Director, Administration and Finance (PLD 1999 SC 1) City Bank v. Tariq Mohsin Siddiq/' and others (PLD 1999 Kar. 196) The Central Exchange Bank Ltd. v. (1) Mst. Zaitoon Begum, (2) Mst. Yasmin and (3) Mst. Shamim Akhtar.
17. In view of the foregoing discussion, in my humble view the bar under Section 316 will not be attracted in cases where a judgment and decree was passed against a company prior to its winding-up order and where company in the distress is very much interested in defending its position to, avoid the judgment and decree against it. Such bar is only attracted where any suit or proceedings are to proceed, commenced against the company in terms of Section 316(1) of the Company Ordinance, In the instant matter, admittedly, the appeal was filed by the company which was very much interested to protect itself against the rigorous of the judgment passed against it for reference one may see AIR 1959 MP 95.
18. Preponderance of case-law on the subject including Eastern Automobile Syndicate Ltd. v.
Rejinder Kumar Singh (AIR 1959 MP 95) National Bank of Pakistan v. Allied Paper Industries Ltd. (1997 CLC 737). Where suit or other proceedings were commenced against the Company and Winding:up order was made or Provisional Liquidator was appointed, the suit was decreed against the Company. Than it could be the Company, which may be interested to take a protective proceedings by challenging the same before a higher forum and seek exoneration from the consequence of decree or action against it. As has been done in the instant case. Under circumstances applicant herein (respondent in appeal) were not obliged to obtain any leave from the Company Court. Conclusion of the learned first Appellate Court conclusion of the learned first Appellate Court that the jurisdiction of the Trial Court was barred during pendency of the winding- up proceeding before the High Court in view of foregoing discussion is erroneous and cannot be sustained.
19. There is nothing in Section 316 of the Companies Ordinance, 1984 that bar action against co- defendant whose liability is joint arid several with that of company under liquidation, It is prerogative of the decree-holder to seek execution of a judgment and decree either jointly or severally against any of the person against whom the decree has been so made. The respondent No. 1 cannot be allowed to wriggle out of such legal obligation.
20. For the foregoing reasons this revision is allowed and impugned judgment and decree passed by the learned with Additional District Judge, Karachi (South) is set aside. Appeal is remanded to the learned with Additional District Judge, Karachi (South) to hear the ..Same and decided on merits. Let notice be also issued to the Official Assignee/Liquidator to appear before the learned Appellate Court. Parties to appear before the Court on 16.5.2002, on which date Court may fix date for hearing as may be convenient to it. Appeal may be heard and decided expeditiously.