1990 PLP 631 (CLC)

2. The plaint proceeds on the premises that it was at the behest of the defendant that the printing works, venture of the plaintiff‑private Limited Company was commenced with its registration on 10‑8‑1982, all finance having been provided by the referred office‑bearers and other shareholders, the defendant being obliged only to contribute labour and expertise. Even so, the defendant was given two shares of Rs.1,00,000. each with a corresponding undertaking by him that he would have the amount paid back/adjusted through his share of profits. Rooms 1 to 5, including Shops 7 and 8, in Siddiq Manzil on Plot No.III‑B‑2, Commercial Area, Nazimabad, Karachi, were, allegedly, contrived by the defendant to be let out by himself and his two brothers and one sister, jointly as landlords, to the plaintiff‑private Limited Company, on a monthly rent of Rs.1,500 the oral agreement of tenancy being dated 31‑8‑1982 The defendant had been made Managing Director of the Company on 10‑8‑1982, and was, allegedly, from time to time, entrusted with sums of money totalling Rs.34,49,

288. Thus, having become Incharge of all the finances, the defendant operated bank accounts of the Company in the SITE Branch of Habib Bank. Gole‑Market, Nazimabad Branch of Habib Bank and Idgah Branch of United Bank, Karachi. The defendant, allegedly, admitted receipts of Rs.34,49,288 between 1982 to 1984, through a writing in his own hand. Such payments were made per bank drafts, through one Suleman Gill, a shareholder of the Company and the same are said to have been duly received and encashed by the defendant. Photostat copies of relevant documents are attached with the plaint. The defendant is stated also to be having a personal account at the SITE Branch of Habib Bank. It is maintained that the defendant, from such funds, for and on behalf of the Company, purchased an IBM Composer, Heidal Burg (25/1‑4'x 30'), Roland Favorit Double Colour (20' x 30'), Rota Single Colour, Burg Plate Making (20' x 30'), together with Grinder, Arch Lamp Plate Exposer and a Cutting Machine (7"). The defendant also, allegedly, purchased Datsun 1980 Model (1300 CC) Car bearing No.113‑452, in 1984, for Rs.82,000 in the name of the Company. Soon the defendant arrogated the assets of the Company to himself. Rent Case No. 225/87, was fraudulently got instituted by him in his own name and those of his two brothers and one sister, as landlords, where he himself appeared for the Plaintiff‑Company. Such case having been filed on 2‑3‑1987, a collusive written statement was, allegedly submitted by him, admitting default but pleading financial hardship. The defendant, in consequence, suffered an ejectment order on 10‑5‑1987, and later, on 29‑7‑1987, surrendered possession to himself and to his brothers and sister in execution of the ejectment order. Plaintiff‑Company, on coming to know, filed FRA No.819/87, which is said to be pending in this Court, after having been admitted.

3. Earlier on, a General Body Meeting of the Share‑holders of the Plaintiff Company, was held on 6‑2‑1987, at Riyadh, where majority of the share‑holders are said to be working and living and in such Meeting the Defendant, through a Resolution, was removed from the Office of the Managing Directorship of the Company and besides, it is said, that in view of Article 29 of the Articles of Association, the defendant has ceased to hold that office on expiry of a three years' term as contemplated in such Article. A copy of the Memorandum and Articles is also appended with the plaint.

4. On the foregoing pleas, the plaintiff Company seeks a Declaration that the above‑said machinery and motor car belong to it and that alleged proceedings of the plaintiff‑Company, dated February, 1984, April, 1986 and June, 1987 are unlawful and fraudulent. Possession of the above assets, and permanent, Injunction, restraining the use, disposal or sale thereof together with Rendition of Accounts, are also sought.

5. This suit having been filed on 18‑11‑1987 the defendant submitted his (2 page) written statement on 24‑3‑1988. All that is said in the written statement is that the suit is barred by the Companies Ordinance, 1984, the defendant is the lawful Managing Director of the plaintiff‑Company, Jalaluddin Ansari is not such Managing Director, and that plaintiffs have concealed that Suits Nos. 177/87 and 397/87 are pending in the Court of Xth Senior Civil Judge, Karachi (West). As to the facts, there is a bare denial of all the paras in the plaint (running into 11 pages), without giving any specifics, on which score all that is said is that the Company was got registered by the defendant and that proper court‑fees has not been paid. On such basis the suit is said to be non‑maintainable. With the written statement is attached a copy of an order in Suit No.177/87, title of which shows that the defendant herein is plaintiff in that case and Chaudhry Ghulam Nabi, Mohammad Sharif Ansari and Jalaluddin Ansari, the suing parties in this case, are cited as defendants therein, in their capacities of the first two being Directors and the third as a Share‑holder of Al‑Riadh Packages (Private) Limited. The referred order is on an application dated 26‑2‑1987 in the said suit, wherein extension of status quo is sought till the next date of hearing which, per terms of the order of even date, is however, shown to have been extended till further orders.

6. Alongwith the suit an application under Order 40, Rule 1, C.P.C. (C.M.A. 5270/87) for appointment of Receiver of the referred assets, an application for Injunction under Order 39 Rules 1 and 2, C.P.C. (C.M.A. No. 5269/87) seeking restraint from use, disposal or sale by the defendant of the above assets, and an application under Order 38 Rule 5, C.P.C. (C.M.A. 5271/87) for attachment of property bearing No.3, E‑2, Commercial Area, Nazimabad Karachi, were moved. Subsequently, on 9‑12‑1987 the defendant moved an application under Order 7, Rules 10 and 11, C.P.C. (C.MA. 5564/87). In such application, the plaint is sought to be rejected/returned on the ground that the plaintiff is a registered private limited company, its affairs are governed by the Companies Ordinance 1984, Jalaluddin Ansari is not its Managing Director, pendency of Suits Nos.177/87 and 397/87 has been concealed and the suit, therefore, is not maintainable. At about the same time Irfan Hussain, Iqbal Hussain and Mst. Murtuzai Begum, all brothers and sister of the defendant, submitted an application under Order 1 Rule 10, C.P.C. for joinder as defendants in this suit (C.M.A. 5565/87) on the ground that the plaintiffs were only tenants of the referred commercial area plot sought to be attached and that they stand, lawfully, evicted from the same. Sometime later the defendant moved an application of his own under Order 39, Rules 1 and 2, C.P.C. (C.M.A. 6546/88) on 21‑9‑1988 seeking restraint against the above Jalaluddin Ansari and all those acting for him from taking over possession of the above commercial property. Around the same time the defendant moved another application (CMA.6447/88) for contempt against Jalaluddin Ansari on the ground that the latter, posing and acting as Managing Director of the plaintiff company, had lodged a complaint to the S.S.P. Central, making similar false and baseless allegations as in this suit, allegedly, implying that he did not have faith in the proceedings pending in this Court. Out of these applications, CMA.5565/87, for joinder, was by consent allowed for the limited purpose of contesting the application under order 38,Rule 5, C.P.C. (C.M.A. 5271/87). On 25‑9‑1985 ad interim order, in the context of C.M.A. 6546/88, moved for Injunction by the defendant, was passed, but subject to notice, to the effect that the plaintiff shall not act otherwise than in due course of law. Apart from C.M.A. 5565/87 the other applications are, therefore, to be disposed of through this order.

7. In the three separate counter‑affidavits submitted by the defendant in respect of applications for Injunction, appointment of Receiver and attachment before judgment, the defendant, in addition to the pleas raised in the written statement, maintains that in so far as the assets in question are concerned the same belong to Al‑Riadh Packages (Private) Limited and are in its possession but as regards the commercial area property, which is sought to be attached, it is said that the same cannot be attached because the defendant is only a part owner and the plaintiff‑Company, as tenant, stands evicted from the same. In the three separate Affidavits in Rejoinder Jalaluddin Ansari, plaintiff‑deponent, maintains that under Article 29 of the Memorandum and Articles of Association of the Company the defendant had ceased to hold office of Managing Director and that it is necessary to protect the assets of the company in terms as prayed. Pursuant to orders dated 20‑3‑1988, a copy of plaint in suit No.177/87, afore referred, has been brought on record, which shows that Ikhlaq Hussain, plaintiff in that suit and defendant herein, has questioned the meeting of the plaintiff Company dated 6‑2‑1987 held at Riadh, Saudi Arabia, as fraudulent and illegal and election of Managing Director and Directors therein to be likewise so. The application for Injunction, on which orders of status quo were passed in the above‑referred suit, copy whereof has also been placed on record, shows that what was sought therein was that the defendants be restrained from interfering with the Office of Managing Director, purported to be held by the plaintiff in that suit (the defendant here). The plaint in referred Suit No.397 of 1987, filed by Ikhlaq Hussain, defendant here, and his two brothers and one sister, against the same parties proceeds on the ground that the plaintiffs therein are lawful owners of the Nazimabad commercial area property. It is maintained that shops Nos.7 and 8, situated on the said plot, were converted by the referred plaintiffs, at their own expenses, into two offices which are exclusively used by plaintiff No.1, Ikhlaq Hussain, Managing Director of International Islamic Publishers (Private) Limited, carrying on the business of publication of Books on Islamic topics. It is said that the defendants had become furious and desperate following upon the institution of Suit No.177/87, to restrain whom from entering or taking‑over possession, the prayer for Permanent Injunction in the suit is based. 7‑A. A cursory examination of the above facts would reveal that there are serious differences between the share‑holders of the plaintiff‑private limited Company on the one hand and the defendant, on the other, the latter of whom claims to be the Managing Director of the plaintiff‑private limited Company. As far as the Nazimabad commercial area property is concerned, though the defendant is evasive and has indulged in equivocations, the admitted position is, as reflected in the application under Order 1, Rule 10, C.P.C. by his co‑owners, that the plaintiff‑Company was a one‑time tenant thereof. There does not, also, appear to be adequate rebuttal of the fact that the defendant in this suit did not at all duly defend the eviction proceedings in which he, demonstrably, figured as a party on either side. Sweeping denials, without any due details, do not satisfy the requirements of law. The rule of pleadings, as incorporated in Order 8, Rule 5, C.P.C. which the defendant does not appear to have observed is that each fact in the plaint, is to be separately, adequately and specifically denied in the written statement and unless that is done, not only the repudiation is not effective but may even constitute an admission. It would, accordingly, seem that the plaintiffs did have an interest in the said property and such interest is pending adjudication in an FRA bearing No.819 of 1987. That the defendant is disposed to counteract that interest is only allegedly demonstrated in the Ejectment proceedings, which await determination in the said F.R.A. but it is manifestly clear in Suit No.397 of 1987 where the defendant has sought protection of his own possession in the very property from which the plaintiff‑company stands dispossessed and like incidents are involved in defendant's application under Order 39, Rules 1 and 2 (CMA.6546/88) in this very suit.

8. As regards the question of grant of Injunction, appointment of Receiver and Attachment before judgment it may bear recalling that, following upon the institution of this suit,. an order was passed, on 6‑12‑1987, whereunder the defendant was restrained from selling the machinery and car till further orders. Such order has remained in force throughout but, according to the plaintiff -Company, serves little purpose as the assets of the plaintiff‑Company remain in wrong hands, occasioning benefits to those disentitled, on their own acts, and waste, in so far as rightful claimants are concerned. The fundamental point for consideration is that the rights and deviations there from between parties to this litigation who, admittedly, are shareholders in the plaintiff‑private limited Company, are akin to and in the nature of disputes between partners in a firm as declared by the Supreme Court in the case of Ladli Prasad v. Karnal Distillery Co. PLD 1965 SC 221 and re‑affirmed in this Court in the case of Lilawati v. Anwarul Islam PLD 1971 Kar. 25 and have to be dealt with as such. The protective measures to be set into motion where one partner is shown to be A acting adversely to the interest of the other or others are too well known to bear repetition. In such cases the other partner or partners has/have a present right to dispossess the transgressor and waste, a necessary ingredient to be established for grant of the equitable remedy of appointment of an Interim Receiver, is to be assumed to subsist. The ru9e on principle, on analogy and on authority should be and is the same involving disputes between share‑holders in a private limited Company.

9. The case of the plaintiff‑Company that the defendant is misappropriating and misdirecting the assets of the company seems to have been substantially vindicated in Suit No. 397/87, pending in the Court of the Xth Civil Judge, Karachi, where he is shown to be running another concern of a competing nature in the same premises, from which, the plaintiff‑Company stands uprooted. Besides, the defendant is, singularly, so reticent on the question as to where the plaintiff‑Company is operative after its eviction and at what location its assets are currently situated. What is more, he says next to nothing on the matter of accounts. It also, prima facie, appears that the defendant may be directly responsible for various acts of commission and omission which resulted in the referred orders of eviction of the plaintiff‑Company. CMA‑6540/88 for Injunction to protect the possession of the defendant from the self‑same premises may be a chain in that process. I would refrain from saying more on the subject as the matter of possession of that premises is still under adjudication in this Court, though in a different jurisdiction. All these facts, however, prima facie, show that there are elements of malversation and misappropriation in the defendant's conduct of the affairs of the plaintiff‑Company which have to be safeguarded in these proceedings. Plaintiff‑Company has been able to show that all its assets, irretrievably, lie with the defendant. The latter seems to be defying the will of the majority, which is shown to be, helplessly, kept at bay. In spite of efflux of his tenure, as Managing Director, he shows no signs of giving up. The Managing Director and other office‑bearers elected and inducted by the majority share holders are unable to perform their duties because of the overbearing conduct of I the defendant. The plaintiff‑Company, therefore, have a strong arguable case. They have established a present right to dispossess the defendant.

10. Waste of the assets of the Company in the hands of the defendant is self‑evident in the circumstances of this case as patently only a minority share‑holder is in possession and that too questionably and to the exclusion of the. majority. He [ has failed to project let alone show any adequate or profitable management. It, as rarely happens, figures out to be a case of oppression of the majority at the hands of minority share‑holders of a private limited Concern.

11. In the circumstances, till such time as the controversies in the suit are decided, appointment of Interim Receiver appears, pre‑eminently to be in order and should meet the ends of justice. Nazir of this Court is, therefore, appointed as Receiver to take over all the assets of the Company from the defendant and/or any person claiming from or under the defendant. The appointed Receiver shall have and exercise all powers available to Interim Receivers under the Code of Civil Procedure including those of running the business of the Company.

12. In order that the realisation of funds in the hands of the defendant is ensured and as some elements of diversion of those funds are visible which may be calculated to delay or defeat the execution of a decree for Accounts, which may be passed in this suit, the requirements of Order 38 Rule 5, C.P.C., prima facie, also appear to be satisfied and as 'such attachment before judgment in respect of the share of the defendant in the Nazimabad commercial area property is ordered with an order of restraint superadded prohibiting the defendant and the other co‑owners, parties to CMA 5271/87, from parting with possession or letting out the erstwhile leased property of the plaintiff‑Company during the pendency of the suit.

13. By appointment of Receiver and through attachment, as aforesaid, CMAs 5269, 5270 and 5271, all of 1987, filed by the plaintiff stand disposed of. As regards the defendant's application under Order 39, Rules 1 and 2 (CMA 6546/88) the same is disposed of in such manner that stay earlier granted thereon stands confirmed.

14. Next may be disposed of defendant's application under Order 7 Rules 10 s and 11 C.P.C. (CMA 5564/87). No bar under the Companies Ordinance, 1984, as claimed, is established in relation to this suit nor is a case for return of the plaint made out. CMA. 5564/87 is, therefore, dismissed.

15. As to defendant's application (CMA 6447/88) wherein action by way of contempt is sought, on the ground that, on pleas similar to those in the suit, the persons, through whom the plaintiff sues, also sought to secure defendant's punishment for Criminal offences, all that may be said is that the same facts can give rise to civil and criminal proceedings and the two can be pursued C simultaneously for, speaking generally, the object of either is different. However, it is obvious that in lodging Criminal proceedings no disrespect to the Civil Court should be evinced which, surely, would expose the detractor to pains under the law of contempt. Of this last, no element is shown to be present. CMA 6447/88, therefore, merits no action and is dismissed. A.A./A‑637/K Order accordingly.