1975 PLP 300 (SCMR)

HAMOODUR RAHMAN, C. J.‑The petitioner‑Company, which is a private limited company, was incorporated in the year 1962 under the name and style of Pakistan Progressive Cement Industries Limited with the primary object of acquiring two Cement Factories in Pakistan belonging to Dalmia Cement Industries Limited of India, In July 1962, Mr. Eruch Shaw Maneckji, the then Managing Director of the petitioner‑Company, entered into an agreement dated 24‑7‑1962 with the said Dalmia Cement Industries Limited of India for the purchase of the aforesaid two Cement Factories, one of which was located at Karachi and the other at Dandot in the District of Jhelum. The said agreement was amended by a supplementary agreement dated 2‑11‑1962. The time originally fixed for the completion of the transaction under the said agreements was 31‑12‑1962 but, by mutual consent, it was from time to time extended till the 30th September, 1964, when a deed of sale was executed by the Dalmia Cement Industries Limited India in favour of the petitioner‑Company. Under this deed, the movable properties were valued at 2,00,00,000 (Rupees two crores) and the immovable property w v' valued at Rs. 33,17,

000. The agreement and the sale‑deed, it is alleged, were entered into with the full consent and knowledge of the Government of Pakistan and the deed was duly registered in Pakistan. In pursuance of the agreement, the National Bank of Pakistan also gave an undertaking in favour of the Indian Concern guaranteeing that the Bank would be liable force p91raent of the balance of the consideration in case in case vendee failed to supply cement as stipulated and undertaken under the agreements to the Dalmia Concern in India. The said undertaking was also made a part of the sale deed as its 6th schedule. For the fulfilment of the undertaking given byte h0aonal Bank of Pakistan, the petitioner entered into another contract with the said Bank and in terms thereof deposited a sum of Rs. 80 In 04 the Bank, mortgaged all the properties of the petitioner‑Comply amt 4ts Managing Director, namely, the aforementioned Eruch Shaw Maneckji and his other family members with the Bank and the said Managing Director also gave a personal guarantee to reimburse the Bank for any amount that it may have to pay either by way of commission or otherwise for pwuq11the foreign exchange for making payment in India. Unfortunately, the cement stipulated to be supplied to the vendor in terms of the agreements and the deed of sale could not be made as no valid despatch instructions were received by the petitioner.6mpm'li from India. In this state of affairs, war broke out between India and Pakistan on the 6th of September 1965 and an emergency was declared which was followed by the promulgation of the Defence of Pakistan Ordinance the Rules framed thereunder. Under this Ordinance, Dalmia Cement Industries became an enemy concern and, consequently, no trading could be done with it thereafter. Subsequently, in exercise of powers under rule 182 of the Defence of Pakistan Rules, the Government appointed a Deputy Custodian in respect of the payments to be made in satisfaction of the agreements deed above referred to by two notifications dated 29‑9‑65 and 25-4-66. The Deputy Custodian was also authorised to issue appropriate instruction for the delivery of cement on behalf of the vendor, to demand anemia payments for such deliveries and to do all other things incidental and consequential thereto. Again under a notification dated 6‑6‑67, ‑under ale II(I);(1)(v) of the Defence of Pakistan Rules the Government vested all the rights of the vendors under the agreements and the sale‑deed into Deputy Custodian and the latter, in exercise of the powers vested in him, on the 21st March 1966 directed the petitioner‑Company to deliver 7500 tons of cement to his nominees. On 5‑6‑1966 the Indian rupee was devalued by 36.5 Per cent. As a result of this, the petitioner‑Company claimed that the sale price payable to Dalmia became reduced film Rs. 2,33,17,01633 to Rs. 144,11,561 and offered to pay the Custodian in cash the said amount in liquidation of all his dues to Dalmia Cement Industries Limited, India. The Deputy Custodian, by his letter of the 17th September 1966, provisionally accepted the offer and asked the petitioner, on 5‑1‑1968, to pay monthly instalments of Rs. 3 lacs each. The petitioner claims that it made payments of various instalments amounting to Rs. 38,50,000 to the Deputy Custodian. The petitioner also maintains that in view of the changed circumstances, the obligation of the National Bank of Pakistan to pay to Dalmia under the agreements and the sale‑deed had ceased. It, therefore, requested the National Bank of Pakistan either to refund the sum of Rs. 80 lacs deposited with it or to pay the same to the Custodian in adjustment of the dues of Dalmia Cement Industries, India. A letter was also written to the Deputy Custodian on the 24th March 1967, requesting him to collect the amount from the National Bank of Pakistan in liquidation of the petitioner's debts to the enemy concern. The Deputy Custodian, by his letter of 19‑5‑1967, promised to look into the matter but took no further steps. In the circumstances, the petitioner filed a suit against the National Bank of Pakistan, being Suit No. 54 of 1967, in the High Court of Sind & Baluchistan at Karachi praying for the refund of the said amount of Rs. 80 lacs. The Custodian was also made a party of the suit and the same is still pending in the said High Court. Notwithstanding the above facts, the Deputy Custodian, on the 28th July, 1967, demanded payment from the petitioner of the sum of Rs. 1,32,81,685 as a first instalment. The petitioner protested against this demand by its letter of the 13th September, 1967, but, continued to make further payments in instalments pending the settlement of the dispute. Dalmia Cement Industries Limited, India, had, in the meantime, how ever, initiated arbitration proceedings against the National Bank of Pakistan under the rules of arbitration of the international Chamber of Commerce for the recovery of the sale price of the property. The petitioner was not made a party to the proceedings but the National Bank of Pakistan contested the same. Thereafter, the National Bank of Pakistan filed a suit against the petitioner in the High Court, being Suit No. 142 of 1968, for the recovery of, a sum of Rs. 3,51,37,619 on account of its anticipated liability to Dalmia. The Custodian is also a party to this suit and has filed a written statement contesting the suit. Thereafter, on 9‑2‑1968, the Central Government, superseded the earlier notifications under rule 182 of the Defence of Pakistan Rules and issued a fresh notification again vesting the Custodian with all the powers of the vendor under the agreement of 24‑7‑1962 and subsequent agreements. In this state of affairs, in September 1970, Martial Law Regulation No. 70 was promulgated empowering the Custodian to take steps to realize monies due to an enemy by a summary process and in the exercise of these powers, the Custodian, on 9‑12‑70. demanded from the Managing Director of the petitioner‑Company a sum of Rs. 2,99,65,502.47 alleging that the same was the balance of the sale price due from the petitioner to the enemy firm of Dalmia. On 11‑i2‑1970, the petitioner was also prohibited by another order of the Custodian from operating upon its bank accounts. The petitioner‑ Co9pany and its Managing Director then applied to the Special Tribunal constituted under the said Martial Law Regulation No. 70 challeng ing the legality of the above‑mentioned two orders. In the proceedings before the International Chamber of Commerce, the arbitrators, on 1‑3‑1971, gave an award against the National Bank for a sum of Rs. 70,50,000 alongwith interest and cost totaling Rs. 1,03,43,

000. This was followed on 3‑3‑1972 by a second award in favour of the Dalmia industries Limited for a sum of Rs. 2,57,15,

451. Both the amounts were made payable in Sterling in India. The Dalmia Cement Industries, it is said, have since fled a suit in Eagland for the realization of the said amounts and the same is still pending there. After these awards the National Bank, in April 1970, applied for the amendment of their plaint in Suit No. 142 of 1968 for enhancing the amount of the claim to Rs. 7,80,42,

169. This application was, however, disallowed by the High Court. Against this order, the petitioner‑Bank has approached this Court and obtained special leave to appeal as also a stay of the pro ceedings in the said suit. In the proceedings before the Tribunal under/Martial Law Regulation No. 70, an order was made on the 27th June 1974, declaring the orders of the Custodian dated 9-12-1970 and 11‑12‑70 illegal and invalid as having been made in disregard of the principles of natural justice. Nevertheless the right of the Custodian to demand payment of even disputed amounts was upheld. Certain adjustments claimed by the petitioner‑Company were allowed to the extent of Rs. 85,03,862.122 but' the adjustment of the deposit of Rs. 80 lacs with the national Bank was disallowed and certain demands for adjustments Were left open for examination by the Custodian. It was also held that the petitioner‑Company was liable to pay interest from 1‑10‑,962 on the total sale price. The matter was, however, referred back to the Custodian for re‑examination in the light of the ‑Tribunal's observations. The Custodian of Enemy Property, on the 22nd October 1974, issued fresh notice to the petitioner to show cause as to why it should not tenta tively pay a sum of Rs. 3,44,87,447.37. The petitioner challenged this order by a writ petition in the Lahore High Court being Writ petition No. 2098 of 1974. This has been dismissed in limine. The petitioner now seeks special leave to appeal. It is contended that the learned Judge in the High Court has failed to notice that the jurisdiction given to the Custodian under Martial Law Regulation No. 70 was merely of an executing nature and under this Martial Law Regulation, the Custodian could only demand sums that were `due' to the enemy. It did not give the Custodian any right to determine as to what was due to the enemy. In the circumstances, the demand of the Custodian impugned before the High Court was without jurisdiction, as, it was for the Civil Courts to decide as to what was due and suits for that purpose were actually pending. The jurisdiction of the civil Courts to determine as to what is due to the enemy has not been taken away by Martial Law Regulation No.

70. It is, also commenced that the learned Judge was' wrong in taking the view that the writ petition was pre‑mature, because, it had failed to notice that the petitioner had already approached the Tribunal set up under Martial Law Regulation No. 70 and the said Tribunal had given findings adverse to the petitioner on almost all his contentions. On the facts stated by the petitioner, if correct, a very serious questions of law arises, namely; as to whether the petitioner can be asked to pay the consideration which was payable to Dalmia Cement Industries twice over once to the National Bank of Pakistan and again to the Custodian of Enemy Property. If the National Bank of Pakistan has already paid to Dalmia Cement Industries Limited or has to pay it in terms of the award made by the International Chamber of Commerce then there will be nothing further due' to the enemy which the Custodian can realize from the petitioner. National Bank of Pakistan has already filed a suit for recovering from the petitioner the amount for which it has been made liable under the award of International Chember of Commerce. The Custodian is also a party to the said suit. All disputes can be decided in that suit. The High Court can also decide to whom this amount is payable, whether to the National Bank of Pakistan or to the Custodian of Enemy Property. As in an inter -pleader suit. The petitioner cannot be made liable Trade liable twice: over for the same dues,""' Difficult questions of law, therefore, arise in this petition not only a. to the interpretation of Martial Law Regulation No. 70, but also as to the jurisdiction of the Custodian there under and the liability of the parties it', a transaction of this nature. These are also questions of first impression. The amount involved is also unusually large. Leave is, accordingly, granted as prayed for. The petitioner will furnish security for costs in the sum of Rs. 2,

000. The appeal will be made ready as expeditiously as possible for hearing at an early date. Each party will have liberty to mention for fixation of an early date of hearing as soon as the appeal is ready. No further proceedings shall be taken in pursuance of the order of tile Deputy Custodian dated 22-10-1974 during the pendency of the appeal in this Court. Leave granted.