2000 PLP 866 (CLC)

5. Against this a detailed counter‑affidavit has been filed by the plaintiff who has stated therein that the defendant instead of filing the written statement has filed this application and, therefore, his right to file written statement is liable to be struck of. He has further gone on to state that he has failed to show the basis upon which the application under Order 7, Rule 11, C.P.C. has been filed as according to him disputed questions of fact are involved which cannot be adjudicated upon without recording of the evidence. He has then gone to reply in detail to each and every objection taken in the application under Order 7, Rules 11, C.P.C.

6. The learned counsel for the plaintiff has admitted that the plaint has been signed and verified not in accordance with the local law but in accordance with the law of Holland. He has also drawn my attention to Annexure "A" of the plaint which is the Article and Memorandum of the plaintiff's Company and has relied on Article 13 which reads as follows:‑‑ "Article 13(1) Each Managing Director individually shall be authorised to represent the Company in and out of Court. "

7. The other sub‑Article is not relevant for the purpose of this application. The learned counsel has then gone to show that once such authorisation has been embodied in the Article and Memorandum of the Company it is enough justification for the Managing Director to do all or any Acts as required for the purpose of institution of any suit in Court and take all actions in connection ‑thereof. The counsel for the plaintiff has further through a statement produced a declaration from the Notary in Holland which shows that the person who has signed the plaint is legally entitled to take action and proceedings in Pakistan on behalf of the Company.

8. The main thrust of the counter‑affidavit has been as regard whether the plaint has been signed and or verified properly and or by any authorised person. He has gone on to show that the Managing Director of the plaintiff company is authorised to sign and verify the plaint. He has also gone on to show that the plaint has been notarised and legalised in Holland and in fact at the time of natirisation the authority of the Managing Director to do the needful must have beer cross checked by the notary. He has relied on bare reading of Order 29, Rules 1 and 2 according to him the Managing Director falls within the ambit of Order 29, Rules 1 and 2 of the plaint and it has been signed and verified properly. According to him the insistence of the Board resolution is not mandatory and, therefore, even if it has not been produced the plaint cannot be rejected on this ground alone. The Advocate for the plaintiff has thereafter repeated what has been stated earlier and the gist is that mixed questions are involved, and therefore, no such application for rejection of the plaint could be entertained at this stage.

9. The learned counsel has gone on to show that the objections raised by the defendants Nos. l and 2 fall within the ambit of conflict of laws. According to him a Company registered and or set up in any particular country shall be guided by the law of that Country in which it is registered and all actions taken therein shall mean and constitute to have been taken legally and properly. The learned counsel has drawn my attention to Halsbury's Law of England, Fourth Edition. Volume 8, paragraph No.703, which reads as under:‑‑ "

703. Recognition of Foreign Corporations, English Law recognises the existences of a corporation duly created in a foreign country, and will allow it to sue and be sued in England in its corporate capacity. The law of the place of incorporation determines who are entitled to act on behalf of the corporation, and also the extent of an individual member's liability for the corporations debt. The English Court is reluctant to interfere in domestic issues between members of a foreign corporation." "

706. Domicile of comorations.‑‑‑ A corporation domiciled in the Court where it is incorporated; Unlike an individual, it cannot change its domiciles, even it carries on business elsewhere." "

707. Powers of ‑foreign corporation.‑‑‑ The powers of a foreign corporation are governed by its constitution as incorporated by the law of its place of incorporation." The learned counsel has drawn my attention to Corpus Jurds Socundum in Volume 19 which reads as follows:‑‑ FOREIGN CORPORATIONS. "

883. Consideration.‑‑‑ A foreign corporation is one that derives its existence solely from the laws of another State, Government or Country. " A foreign corporation is one that derives its existence solely from the laws of another States, Government, or Country, and the term is used indiscriminately, sometimes in statutes, to designate either a corporation created by or under the laws of another state or a corporation created by or under the laws of a foreign Country'." "

893. What Law Governs.‑‑‑ A corporation engaging in business in any state other than that of the creation remains subject to whatever limitation are placed upon its powers by the charter or by laws of the state of the domicile. A corporation necessarily carries its charter wherever it goes whatever disabilities are thereby placed upon the corporation at home it retains abroad, and whatever legislative control it is subjected to at home must be recognized and submitted to by those who deal with it elsewhere. A corporation can exercise no powers in a state other than that of its creation except such as are conferred upon it by its charter and the laws creating and governing it. Furthermore, a corporation is subject in other jurisdictions even to the general laws of the state of its creation, where such laws are intended as restrictions upon the powers of the corporation. In accordance with the foregoing rules, it is held that a corporation's charter and the laws of its domicile govern with respect to the fact and duration of the existence of the corporation, its internal affairs and management, its capacity to sue or be sued, and the power and duties of its directions. Apart from burdens which may be imposed upon them by the laws of a state which a foreign corporation enters and in which it undertakes to do business, the rights and liabilities of stockholders are determined by the charter and governing laws of the state in which the corporation is created. " The learned counsel has drawn my attention to Dicey and Morries on the conflict of law which reads as under:‑ "Rule 156‑(1). The capacity of a corporation to enter into any legal terms action is governed both by the constitution of the corporation and by the law of the country which governs the transaction in question. (2) All matters concerning the constitution of a corporation are governed by the law of the place of incorporation. " Law and Regulation of International Finance states at page 27, Chapter IV Corporate Capacity .... Similarly all matters relating to question such as which officials of a corporation are authorised to act on its behalf are also governed by the legal system to which the corporate entity owes its legal existence. He has further relied on the case of Carl Zeiss Stiftung Trading as Carl Zeiss of Heidenhim, Federal Republic of Germany v. Carl Zeiss Stiftung, Jana, East Germany report PLD 1968 Kar. at page

276. In the case of Modern Cotton Ginning and Pressing Factory (Pvt.) Ltd. of Sarhari: District Sanghar (Sindh) v. Eastern Federal Union Insurance Company Ltd. reported in 1996 CLC at pages 1064, and 1067. Even if the argument4of the plaintiff is to be accepted that the law of Holland is the governing law and that based upon law of Holland and the articles of the memorandum of association the person who has signed this plaint was authorised, this issue can only be proved or disproved after the relevant law is produced before this Court. The other points raised in the application under Order 7, Rule 11, C.P.C., may be A taken up at the time of final arguments. The defendant would be within his rights to raise this issue of the competency also at the time of final arguments and the burden shall be upon the plaintiff to prove that according to the law of Holland once a Managing Director is authorised then no resolution of the Board is necessary. Besides the above, I am personally of the view that efforts should be made by both the parties to try to fight on merits as the overall objective of the Court should be in my own view to do substantial justice rather than decide the matter on mere technicalities specially those which could easily be rectified and which would not effect the basic defence even after it was rectified. Repeatedly the Courts in Pakistan including Supreme Court have observed in countless matters that each party should be allowed to agitate hislE and her own point and thereafter the matter should be decided on merits. Q.M.H./M.A.K./N‑6/K Order accordingly.