1992 PLP 631 (MLD)

(2) That the fine of Rs.6 lakhs imposed by the Martial Law Authorities shall be payable by the Company and debited to the account of the plaintiff. (3) That the agency charges of the defendant No.l for running the factory shall be determined by the Commissioner and shall be paid to the defendant No. 1. (4) That the parties do admit the claim of Habib Bank Limited."

18. It appears that the accounts contemplated by the preliminary decree had not yet been taken when, on the 2nd December, 1971, the parties moved an application (Exh.8/30) under Order 23,-Rule 3, C.P.C. The terms upon which the parties had agreed by that application were as follows: -- "It is prayed on behalf of the parties in the above matter that this 1-lon'ble Court be pleased to record the compromise and pass the final decree in the terms as set out below: -- (1) That the possession of the factory `Central Wire Netting & Metal Products Co.' situate at University Road, Karachi, with its Head Office and godown at 427/3, Princess Street, Karachi be handed over to the plaintiff and that the plaintiff will be the sole proprietor of the factory, its business, head office and godown. (2) That the defendant claims no right, interest, title in the said factory and its business including the Head office, godown and the said plot. (3) That the plaintiff shall be liable to pay all the out standings and liabilities of the Company. (4) That the plaintiff as the proprietor of the factory shall be entitled to recover all dues, debts, outstanding against any third party. (5) That the plot of the factory (Plot No.NJ/15 on which the factory is situate) shall be the property of the Company and that the fine of Rs.6,00,000 imposed by Martial Law Authorities on the defendant shall be payable by the Company as has already been agreed in the compromise application dated 17-5-1971, and the orders passed thereon by the Court on 17-5-1971. (6) That the machine (5 crates of Welded Wire Mesh Plant) of M,/s. Concrete Reinforcement & Engg. Co. Ltd. stored at the factory premises shall be returned to them by the plaintiff through the defendant. (7) That the plaintiff shall hand over three Wire Drawing Machines belonging to Alburhan Steels Ltd. to them through the defendant. The Wire Drawing Machines are not planted but stored at the factory premises. (8) That all the outstanding amounts against M/s. Al-Burhan Steels Ltd be considered paid up and that the plaintiff shall not claim any amount against M/s. Al-Burhan Steels Ltd. (9) That the plaintiff shall hand over one Butt Welding Machine to the defendant. (10) That the Channels stored at the factory premises and belonging to M/s. Sh. Fazal be returned to them. (11) That all dues of M/s. Dawood Bhai, Ahmed Bhai, Tayyab Bhai and Muhammadi shall be paid by the company. Their cases will be dealt with as employer and employee. (12) That all outstanding bills referred to and annexed with the Receiver's reference-in-reply, dated November, 1971 and marked as Annexures E and E-1 shall be paid by the plaintiff company to the creditors. (13) That the plaintiff shall hand over to the defendant one Toyota Car No.KAF-7766 in running condition to the defendant. (14) That the parties shall bear their own costs in the suit. (15) That there shall be no accounting between the parties and accounts between them shall be taken as settled. (16) That the either party shall have no claim on each other whatsoever. (17) That receiver be discharged according to law."

19. That application, apparently, was not granted in view of the doubts on the question whether or not the plaintiff was `enemy' under the Defence of Pakistan Ordinance and Rules; and was subsequently withdrawn, apparently, for the same reason.

20. While Suit No.36 of 1971 was pending Suit No.16 of 1973 was filed against Saifuddin by Concrete Reinforcement and Engineering Co., Ltd. in which Zainuddin was apparently interested. In that suit claim was made that certain machinery lying in the premises of the factory belonged to the plaintiff therein. On the 15th August, 1973, another application (Exh.5/7) under Order 23, Rule 3, C.P.C. was presented, duly signed by Jamil Ahmed as attorney of Saifuddin and by Unuddin as well as by their respective Advocates. The terms of that application were as follows: ‑‑ "Saifuddin the plaintiff acting through his legally constituted attorney Jamil Ahmed and Zainuddin the defendant have agreed to the following terms and conditions and have finally resolved all their disputes. The parties Saifuddin, Jamil Ahmed and Zainuddin‑jointly and severally hold and agree to hold Messrs Habib Bank harmless and indemnified from all cost, claims, demands and liabilities whatsoever arising or pertaining or relating to the property factory and business in suit‑‑ (1) Saifuddin and Zainuddin shall perform the terms covenants and conditions of agreement of compromise between them, dated 2‑12‑1971 except clauses (9) and (13) thereof which Saifuddin will not be required to perform and from which he is released and acquitted. A copy of the said agreement is annexed herewith. (2) Saifuddin through Jamil Ahmed and Zainuddin pray that the Honourable Court authorise Messrs Habib Bank Limited the Receiver to deliver possession of 5 crates of welded wire mesh plant to Zainuddin and possession of the factory called Central Wire Netting and Metal Products Company and all its properties including plot, plant, machinery, equipment, stocks, goods, offices etc. to Jamil Ahmed on behalf of Saifuddin. (3) Zainuddin on behalf of himself and the Concrete Reinforcement and Engineering Company Limited agrees to withdraw Suit No.16 of 1973 filed in the High Court of Sindh and Balochistan, against Messrs Habib Bank Limited and Saifuddin with no orders as to costs. (4) The parties accept the account submitted by Habib Bank Limited and agree that the amount in credit in the account instead of being deposited in Court be paid by Messrs Habib Bank Limited to Jamil Ahmed on behalf of Saifuddin and pray to the Hon'ble Court for orders accordingly. The parties release and acquit Messrs Habib Bank Limited. from rendering any more or further account whatsoever. (5) Parties agree that Messrs Habib Bank Limited resign from office of Receiver and pray that accounts submitted by them be accepted and they be discharged from office of Receiver. (6) Saifuddin through Jamil Ahmed and Zainuddin release and acquit each other and one another from accounts and agree that proceedings between them before the Commissioner for taking accounts be dropped and discontinued and are withdrawn. They agree that balance of fees, if any, payable to the Commissioner for taking accounts shall be paid half by Jamil Ahmed on behalf of Saifuddin and half by Zainuddin. (7) Saifuddin through Jamil Ahmed and Zainuddin agree and undertake to take all measures and proceedings, file applications, affidavits and to do, execute and perform all acts, deeds, matters and things as may be necessary and/or proper in matters herein. (8) Saifuddin through Jamil Ahmed, Jamil Ahmed and Zainuddin jointly and severally agree to hold Messrs Habib Bank Limited harmless and indemnified from and against all claims, demands, liabilities and obligations whatsoever arising or pertaining or relating to property, facto 'ry and business including claims of labour and or taxes or making or giving deliveries or handing over possession or making payments provided herein or their acting as Receivers or otherwise howsoever in the premises or in relation thereto. (9) Messrs Habib Bank Limited acknowledges that their own claim in suit is satisfied. Saifuddin through Jamil Ahmed and Zainuddin agree that Habib Bank Limited deliver the documents of title pertaining to the Central Wire Netting and Metal Products Co., pledged and mortgaged with them by Zainuddin to Saifuddin through Jamil Ahmad. The parties pray that the Hon'ble Court will be pleased to' record the settlement and pass decree and orders in terms therewith."

22. As the status of the plaintiff was not settled, the question of his status was referred to Government of Pakistan and the consideration of the above application was deferred pending receipt of clarification from the Government. While the application was thus pending, Saifuddin purported to cancel the power of attorney (Exh.5/1) by a deed of revocation (Exh.5/2), dated the 3rd January, 1974. Notice of purported revocation was published in `Morning News' (Exh.5/4) and an application (Exh.5/3) was moved to restrain Jamil Ahmed from acting as attorney. Saifuddin also wrote a letter, dated the 9th September, 1974 (Exh.5/6) to the Chief Justice of this Court intimating that he had cancelled. the power of attorney, dated the 8th October, 1970 and that, therefore, the Vakalatnama in favour of Mr. BA. Siddiqui, Advocate, signed by Jamil Ahmad, had been automatically revoked. He had also made an application in that suit to keep the original deed of revocation and a copy thereof on the record of the suit and that application was dismissed.

23. Subsequently, statement was made in Court, on behalf of Attorney‑General for Pakistan, that the plaintiff was not an "enemy; and thereafter the application (Exh.5/7) dated the 15th August, 1973, was taken up on the 14th October, 1975, in the presence of Jamil Ahmed, as attorney of Saifuddin, and his counsel Mr. Fatal Bhai as well as Mr. Rustam J.E. Kaikobad on behalf of the plaintiff; and Zainuddin and his counsel; and an order accepting the compromise was passed. The order is reproduced below in extenso‑‑‑ "This is a suit for declaration, permanent injunction, possession and accounts filed on behalf of plaintiff Saifuddin by the then attorney of the plaintiff one Jamil Ahmed against defendant Zainuddin under the following circumstances: The plaintiff Saifuddin had is the year 1947, in Karachi, bought the factory known as Bharat Wire Netting and Metal Products Company from its original Hindu owner Harbans Lal Mangaram Marwah. This factory was renamed as Central Wire Netting and Metal Products Company and the management was handed over by the plaintiff to defendant Zainuddin. Thereafter the plaintiff absented himself from Pakistan and went back to Bombay while the factory was being managed by the defendant. Taking advantage of the absence of the plaintiff the defendant assumed proprietary rights and entire control over the factory. The defendant tried to get the property of the plaintiff in respect of the factory transferred in his personal name. This led to a dispute between the plaintiff who was at Bombay and the defendant who was managing the concern in Karachi. The plaintiff then filed this suit through one Jamil Ahmed by a duly constituted power of attorney. On or about 2‑12‑1971 the plaintiff through his attorney Jamil Ahmed and the defendant Zainuddin presented a compromise document in Court for passing of the final decree. A. question, however, arose whether after the war between India and Pakistan the property of the plaintiff who was then residing in Bombay became enemy property? On this account the matter was left pending and a reference was made. to the Central Government to clarify the position with regard to the subject‑matter of the suit whether it was to be considered as enemy property. The counsel for the Attorney‑General, Mr. Naimuddin, appeared personally and made a statement that the Custodian of Enemy Property had not taken over the Central Wire Netting & Metal Products Company, Karachi as enemy property and that the Custodian of Enemy Property has no interest in the subject‑matter of this suit. The matter was then fixed for the question whether the compromise application presented earlier could be accepted. Meanwhile 'a dispute arose between the plaintiff and his attorney Jamil Ahmed and it is said that while passing through Karachi on a boat the plaintiff met someone on board and handed over a chit to him revoking the said power of his attorney in favour of Jamil Ahmed. This led to the institution of a separate suit for declaration whether this revocation of power of attorney was valid and whether Jamil Ahmed still continued or not as the attorney of the plaintiff? However, for the purpose of the consideration of this compromise application the question of subsequent revocation of the power, if any, has hardly any effect. When this compromise application was, presented in Court for orders there was no dispute regarding the power of attorney executed in favour of Jamil Ahmed. Mr. Fazal Bhai on behalf of the plaintiff has argued that the compromise being entirely for the benefit of the plaintiff, any dispute with regard to the subsequent revocation of the authority of the attorney could have no adverse effect so far as the interests of the plaintiff are concerned. Under this compromise the entire factory with its head office, godown etc. is declared as the sole property of the plaintiff and the plaintiff is to be handed over the possession of the entire property including the factory, business, head office, godowns etc. The question of any reservation of power for the attorney in respect of this factory does not appear in the body of the compromise. Therefore, the decision, if any, in the subsequent‑suit with regard to the attorney, can have no affect on this compromise and has no connection with the present suit. In view of the position as discussed above, this compromise, which is admitted, by the Advocates and all concerned in presence of the parties, Jamil Ahmed and Zainuddin, who are present here, recorded and made rule of the Court. A decree be passed in terms of this compromise. . It might, however, be added that in view of the fact that the present, authority of the said attorney being in dispute on account of the so called subsequent revocation, the possession of the subject‑matter of this suit shall continue to remain with the receiver Mr. Hamid Hussain and the income from the said property shall be deposited in Court on behalf of the plaintiff Saifuddin until such time as the subsequent suit in respect of the revocation of power of Jamil Ahmed is finally decided. The receiver is permitted to withdraw his charges at the rate of 5% of the net monthly income from this factory or Rs.500 per month which ever is more advantageous to the receiver from the date of his first appointment. , Sd/‑ Musthaq Ali Kazi, J"

24. During the pendency of the suit, the factory was run by several persons, successively, as licensees appointed by the Court from time to time.

25. It is in the circumstances outlined above that the plaintiff seeks to have the impugned order and decree set aside on the ground that they were obtained by fraud. The specific allegations of fraud are contained in paras. 23 anal 34(g) & (j) of the plaint. In para.23 it is alleged, inter alia, that on 14th October, 1975, "the plaintiff opposed the compromise application the same being unauthorised as well as collusive and against the plaintiffs interest." and, further, that it was explained to the learned Judge that the plaintiff "had been burdened in the compromise application with, inter alia, heavy liabilities incurred by the licensees from time to time, which liabilities did not in taw and in principle devolve upon the present plaintiff." Para. 34 (j) is to similar effect while in clause (a) of para. 34 the contention is that the alleged fraud was proved by the fact that the defendant No.2 pressed for acceptance of compromise. Thus, according to the pleas in the plaint, the very questions in issue in this suit were brought to the notice of the learned Judge before he passed the impugned order. He cannot, therefore, be said to have been deceived by any fraud or collusion. Similarly, the plaintiff had, avowedly, the opportunity to bring the alleged fraud to the notice of the Court before it passed the impugned order; and he did avail of the, opportunity. That being so, it does not appear to be open to the plaintiff to assail the impugned order in the present suit on the same grounds as were urged before the learned Judge on the 14th October, 1975. As for the allegation that the proof of the alleged fraud was furnished by the defendant No.2 pressing for the acceptance of the compromise, it ignores the fact that the defendant No.l as a party to the compromise was entitled to insist upon its acceptance by the Court and, in fact, did so. Even if the defendant No.2 had not pressed for acceptance of the compromise, the Court, in the circumstances, was bound to accept the same upon the parties admitting that they had signed it and upon deciding that it was a lawful compromise.

26. On the question of fraud all that the plaintiff has said in his examination‑in‑chief is that the defendant No.2, in collusion with the defendant' No.l, attempted to compromise various suits against his interest and he, therefore, revoked the power of attorney given by him to defendant No,2; and further that the compromise was adverse to his interest. He has said nothing to show how the compromise was against his interest. In cross‑examination he has admitted that he came to know of the compromise, dated the 17th May. 1971, in 1972 and of the compromise, dated the 2nd December, 1971, m 1973. He has also admitted that he did not write any letter or make any application to challenge the compromises after he came to know of them. He has further admitted that after 3rd January 1974, Mohammed Ahmed, Advocate, represented him in all cases. Finally he has admitted that he had not examined the accounts and records, filed in Suit No.36 of 1971, regarding the factory.

27. Zainuddin, the defendant No.l, has, in his evidence, denied that he committed any fraud and has also denied, in his cross‑examination, the suggestions that he purchased the shares in Al‑Burhan Steels Ltd., from the funds of the factory or that he transferred some machinery of the factory to that company.

28. Jamil Ahmed, the defendant No.2, in his affidavit by way of evidence has narrated some facts for the purpose of showing that the power of attorney granted to him by the plaintiff was irrevocable. He has further stated that the plaintiff was aware of the compromises and he, the defendant No.2, had during the period of his management of the factory as a licensee, succeeded in repaying debts created by previous management and had invested substantial funds of his own. He has admitted that he ran the factory as a licensee from February, 1972 to 15th May, 1974, and that he did so in the name of the firm (the factory) although by the terms of the licence granted to him he was required to do so in his own name or any other name except that of the factory. He has further admitted that he was not authorised by the Court to invest his own money in the factory. He also admitted that as a licensee he had to pay all electricity and gas charges and municipal taxes; but asserted that he has paid all such charges and taxes.

29. Practically the whole for the argument of Mr. Shamsul Arfin was devoted to showing that the impugned order was without jurisdiction; and it was only while replying to the arguments of Mr. Afzal Nabi and Mr. S.A. Majid‑‑‑and that too at my specific urging ‑‑‑ that Mr. Arfin advanced any argument on the question of the alleged fraud. According to him, the particulars of the fraud committed by the defendants are set out in paras. 8, 11, 16, 17, 18, 19, 23 (last part) and 34(g) and (j) of the plaint. In those paragraphs, the plaintiff has set out various proceedings which took place in Suit No.36 of 1971, viz. on the 17th May, 1971 preliminary decree was passed by consent in terms of a compromise application and Habib Bank Limited was appointed Receiver; on 2nd December, 1971 an application (C.MA. 1972/71) under Order 23, Rule 3, C.P.C. was presented; on 4th April, 1972, the order dated the 3rd December, 1971, appointing the plaintiff Receiver, was recalled and Habib Bank Limited was again appointed Receiver; on 20th December, 1972, Jamil & Co. (Sole Proprietor, Jamil Ahmed) was appointed licensee to run the factory: on 15th August, 1973, an application (C.M.A. 1974/73) under Order 23, Rule 3, C.P.C. was filed; on 3rd January, 1974, the plaintiff herein revoked the power of attorney given by him to Jamil Ahmed; and on 14th October, 1975, the, impugned order was passed although, according to the plaintiff, it was explained to the learned Judge who passed the order that the factory had been burdened, in terms of the compromise application, with liabilities incurred by the licensee from time to time which liabilities did not, in law and in principle, devolve on the plaintiff. Mr. Shamsul Arfin contended that, as alleged in clauses (g) and (j) of para 34 of the plaint, the facts that the defendant No .2 pressed for acceptance of the compromise. application and that, by the compromise application, liabilities incurred by the licensees were mulcted on the plaintiff were proof of the fraud and collusion on the part of the defendant.

30. Mr. Afzal Nabi, the learned counsel for the defendant No.l, referred to the transactions outlined above, upto the 9th January, 1971, when the defendant No.2, acting as the plaintiffs attorney, sent a notice (Exh.8/16) to the defendant; and contended that it is clear that at least upto that date there was no question of any fraud or collusion. He further contended that there was no fraud in the proceedings in the suit and no fraud on the Court has been alleged. He submitted that the compromise filed on 15th August, 1973, was more or less in the same terms as the compromise which had been filed on 2nd December, 1971, and which had been withdrawn in view of the doubts about the plaintiffs status as alien enemy; and that it has not even been alleged that the earlier compromise was fraudulent.

31. Mr. SA. Majid, the learned counsel for the defendant No.2, contended that not only there was no fraud but that the plaintiff was aware of the proceedings including the comrpomise application in Suit No.36 of 1971.

32. On analysis of the pleadings, the evidence and the arguments, it' appears that the sole ground on which the impugned order is characterised as fraudulent is that the plaintiff has been burdened, by the compromise, with the liabilities created by the licensees. However, there appears to be nothing in the compromise application whereby any liability created by a licensee (including the defendant No.2 in his capacity as a licensee) is required to be satisfied or discharged by the plaintiff; and no clause, in the compromise, to that effect was brought to my notice. In any case, as contemplated by the order dated the 24th June, 1974, passed in Suit No.36 of 1971, the receiver will have to decide the question of liability of the factory in respect of any claim arising out of liabilities created by licensees; and the factory continues to be in the possession of a receiver. The defendant No.2 has admitted that he has, without the permission of the Court, invested certain sums of money in the factory. If that be so, it will be for the receiver to determine whether, by doing so, the defendant No.2, as a licensee, can have any claim against the factory and, consequently, against the plaintiff; and it will be open to the plaintiff to contest such a claim. In this view of the matter, it is not possible to hold that the plaintiff has been burdened with any liability created by the defendant No.2 as a licensee. As for the other licensees, no liability created by them was brought to my notice. In fact, the plaintiff has admitted that he had not examined the records and accounts, filed in Suit No.36 of 1971, regarding the factory. The allegation, therefore, has been made without any basis.

33. Finally, as contended by Mr. Afzal Nabi, the compromise dated the 15th August, 1973, was in more or less the same terms as the earlier two compromises which were never challenged (and have not been challenged even in the present suit) by the plaintiff although he was admittedly aware of them. Even with respect to the last compromise, the plaintiff was aware of it by at least the early part of the year 1974 and was represented since then by Mr. Mohammed Ahmed, Advocate; yet, no action to challenge it as fraudulent was taken by him at least upto the 14th October, 1975. And even after the compromise was accepted by the Court, he waited until 1977 to file the present suit.

34. My answer to issue No.3 is, therefore, that the impugned decree is not null or void or. vitiated by fraud. 35 The suit of the plaintiff is, in the circumstances, hereby dismissed with costs. AA./S‑796/K Suit dismissed,