P L D 1975 Karachi 21 (PLP)

3. On receiving the dividend for the year ending 31‑12‑1953 the Karachi Branch applied to the State Bank of Pakistan for permission to effect the remittance to the Bombay Company, but it was refused. On making enquiries, the Bombay Company learned that the defendant had unauthorisedly altered its Share Register by deleting the words "Fort, Bombay", "Bombay" or "of Bombay" from the address of the Bombay Company and substituting "Karachi" therefor and that the defendant had also not included the name of the Bombay Company as a non‑resident shareholder fin the list of non‑resident shareholders submitted by it to the Exchange Control Department of the State Bank (except in respect of 427 other shares which are not in dispute). In the litigation which will presently be noted, it was found as a fact, that the defendant had done so in the year 1950 behind the bank of the Bombay Company in order to save its (the defendant's) concern from being taken over by the Custodian of Evacuee Property, as otherwise more than 50% of its shares would have been held by evacuee shareholders. The Bombay Company protested to the defendant against the alteration of the Share Register in respect of the change of its address, by its letter dated 17‑11‑1954 (Exh. 5/28), but on receiving no response, it filed a suit against the defendant o 3‑2‑1956 (which was ultimately transferred for trial to the Court of the 3rd Sub. Judge, First Class, Karachi (Suit No. 400/ 1956). Therein the Bombay Company prayed for rectification of the Share Register and for a mandatory injunction directing the defendant to classify the said shares as belonging to a non‑resident shareholder. That suit was dismissed, but a first appeal was preferred by the Bombay Company to the Additional District Judge. It was allowed and the suit was decreed on 14‑7‑1962 as prayed. A second appeal preferred by the defendant was dismissed by the High court of West Pakistan, Karachi on 12‑10‑1965 and the defendant's petition for leave to file a Letters Patent Appeal, was also dismissed. The defendant then filed a Civil Petition for Special Leave to Appeal to the Supreme Court, but it was withdrawn by the defendant and stood dismissed on 3‑9‑1968 as by this time, the very shares in controversy had become vested in the Custodian of Enemy Property.

4. During the pendency of the legal proceedings, the defendant continued to draw the dividend warrants in the name of "The Bank of India Ltd., Karachi" instead of "The Bank of India Ltd., Bombay" in respect of the said shares for each of the years 1954 to 1960 inclusive (Fxhs. 6 to 6/6). But each of them was returned to the defendant by the Karachi Branch unrealised from year to year for correction. But they were neither corrected nor returned in spite of demands. Nor was the Share Register rectified despite the appellate decree which was maintained in second appeal.

5. By a Notification dated 8‑2‑1966, the said 20,835 shares (together with some other 548 shares not in dispute) held by the Bank of India Ltd. were vested by the Central Government in the Custodian of Enemy Property for Pakistan as enemy property under rule 182 of the Defence of Pakistan Rules. Thereupon, the Deputy Custodian of Enemy Property by letter dated 10‑3‑1966 (Exh. 5/81) requested the defendant to issue the outstanding dividend warrants in respect of the said shares in his favour and forward them to him for credit to the account of the Custodian. But the defendant declined to comply. However, the defendant, in response to enquiries as to what dividends remained outstanding on the shares held by the Bombay Company, supplied information in statements dated 5‑11‑1965 (Exh. 6/45) and 4‑5‑1968 (Exh. 5/82) showing that dividends for the years 1954 to 1960 remained outstanding. Finally, the plaintiff demanded payment of the outstanding dividends for the year 1954 onwards, to which the defendant replied that the dividends for the years 1954 to 1960 were time‑barred and that, as such, no claim for this period lies. Accordingly, the plaintiff filed the present suit on 14‑10‑1969 claiming judgment and decree in the sum of Rs. 9,70,602.50 being the aggregate amount of the unpaid dividends on the said shares for the years 1954 to 1960, with interest at 9 %.

6. The defendant submitted a written statement denying the plaintiff's claim and pleaded that the claim was time‑barred.

7. Only one issue has been framed by the Court and it reads s (1) Whether the claim for dividends for the years 1954‑60 is time‑barred? If not, what is the effect ?

7. Counsel agreed that no oral evidence was necessary, as the issue in suit being one of limitation could be resolved on the documentary evidence.

8. I have considered the documentary evidence and submissions of counsel for the parties. My finding on the issue is that the suit is not time barred for the following reasons.

9. Mr. Aziz learned counsel for the defendant submitted that the suit is barred under Article 120 of the First Schedule to the Limitation Act 1908. It is not disputed that that Article applies to a suit to recover an unpaid dividend and that the period commences from the date of declaration of the dividend by the company. Each of the unpaid dividend in suit for the years 1954 to 1960 was declared more than six years before the present suit, as will appear from Exhs. 6 to 6/6. It, is the submission of Mr. A. Aziz that it made no legal difference that the dividends warrants Exhs. 6 to 6/6 were drawn in the name of the Karachi Branch because the Branch itself was owned by the Bombay Company and is one legal entity. Therefore, if the plea of )imitation raised by Mr. A. Aziz applies, it is clear that the suit would be barred and the acknowledgement by the defendant relied on by Mr. Afzal Nabi in letter dated 4‑5 1968 Exh. 5/32 cannot save limitation as it was made after the expiration of the period of limitation in respect of the unpaid dividends the last for the year 1960 expired on 30‑12‑1967). However, it would al‑pear that, at any rate, the defendant's earlier acknowledgement dated _5‑11‑1965 Fxh. 5/45 would save limitation in respect of the unpaid dividends for the years 1958, 1959 and 1960 (the period of which expired on 30‑12‑1965, 30‑11‑1966 and 30‑11‑1967 respectively).

10. The submission of Mr. Afzal Nabi is that no period of limitation applies under section 10 of the Limitation Act because in the circumstances of this case, the defendant was holding the unpaid dividends in trust for a specific purpose. Each of the dividend warrants Exhs. 6 to 6/6 was returned to the defendant unrealised for correction each year but the defendant retained them despite a demand for their return by the Bombay Company in its letter dated 10‑8‑1962 Exh. 5/84, after it had obtained the appellate decree in its favour. Again, after the shares had vested as enemy property, the plaintiff by its letter dated 10‑3‑1966 Exh. 5/81 demanded payment of the unpaid dividends, but the defendant again declined and put forward an excuse in its reply dated 26‑4‑66 Exh. 5/65 "since legal implications are involved in the issue the matter has been referred to our legal adviser for their advice. We shall, however, revert to the subject on hearing from them". Later on, the payment of unpaid dividends was declined on the ground that they were time‑barred. It is, therefore, clear that in the circumstances, the defendant was holding the unpaid dividends which were returned and entrusted for a specific purpose namely, for correction. The defendant was thereby constituted an express trustee of the unpaid dividends which it held in trust for a specific purpose. In this connection, reference may be made to Kishtappa Chetty v. Lakshmi Ammal (A I R 1923 Mad. 578) and Mahomed Habeeb Alum v. Anjuman Ara Begum (I L R 62 Cal. 393). These cases explained the meaning of section 10 of the Limita tion Act. In the former case it was observed that the word "vested" under section 10 means nothing more than having "control of the property", while the words "specific purpose" have been explained in the latter case, as meaning an obligation from the evidence to apply the money for B the benefit of another person. I am, therefore, inclined to accept the submission of Mr. Afzal Nabi that the suit is not barred by limitation under section 10 of the Limitation Act.

11. As Mr. Afzal Nabi rightly submitted, there is an acknowledgement .of the unpaid dividends in the balance‑sheet of the defendant issued to the shareholders every year in which the item "dividends unclaimed" under "Sundry creditors" appears in each of the balance‑sheets, which Mr. A. Aziz candidly admitted, included the unpaid dividends in suit. Reference may be made to Jones v. Bellgrove Properties Ltd. ((1949) 1 All E R 498) in which tile entry "sundry creditors .7,638 8 s. 10 d." was held to be an admission of liability to anyone who could, on the evidence, show that the general figure included a specific amount due to a creditor. This case was followed in Raiah of vizianagiram v. The Official Liquidator (A I R 1952 Mad. 136) para. 33 and in Lahore Enamelling & Stamping Co. Ltd. v. A. K. Bhalla and others (A I R 1959 Punj. 341).

12. The suit is accordingly decreed with costs, as prayed. K. B. A. Suit decreed.