2000 PLP 787 (CLC)

1. Civil Miscellaneous Application No.6705 of 1999 is‑ an application under Order I, Rule 10(2), C.P.C. filed by defendant No.9 to delete or strike out his name or dismiss the suit against him on the ground that he has not signed any document whereby he can be held liable for the debts of defendant No. l and has, therefore, been wrongly impleaded as a party in this suit. Civil Miscellaneous Application No: 6706 of 1999 is an application under‑section 10 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 for leave to defend the suit and thereafter, delete his name as prayed in Civil Miscellaneous Application No.6705 of 1999. ' Mr. Khan, learned counsel for defendant No.9 has referred to a mortgage deed executed by defendant No. l company on 15‑5‑1995 whereby the company mortgaged its property to secure the loan granted by the Bank to the company. The common seal of the company was affixed on the document under the authority of the Board of Directors in the presence of its Director Mr. Muhammad Shafiq who also signed the deed as a Director on behalf of the Company ‑ (defendant No. 1) before the, Registrar of Conveyances. Mr. Khan also referred to Annexures "H" and "H‑1" of the plaint which are copies of two personal guarantees dated 19‑4‑1999 executed by several persons and submitted that the said guarantees do not contain the signature of defendant No.9: He referred to 1993 CLC 1222 and 1983 CLC 1042 to contend that defendant No.9 cannot be held liable for the debts of defendant No.l on the basis that he had signed the Registered Mortgaged Deed as a Director of the Company. Mr. Pingar submitted that all Directors who execute documents on behalf of the Company in such capacity are personally liable. Further, they are necessary parties because their presence is necessary to prove the documents executed by them on behalf .of the Company. It is an established principle of law that a company, which is a juri‑tic person, is distinct and different‑from its shareholders, directors and. officers. The directors and the company cannot be equated‑ and one cannot be held responsible for.the acts of the other Needless to state that a company, which is a person, by fiction of law cannot perform any act by itself but transacts business through its Directors and Officers who at as its agents. Therefore, when a person sign a document to the capacity of director of a company he does so as an agent of the company and not in his personal capacity and any contract so executed by hits cannot be enforced against him personally (section 2,30, Contract Act. There is also no provision in the Companies Ordinance, 1984 barring misconduct and fraud whereby a director can be held responsible for the debts of a Company if he signs or executes a document in the capacity of a director pursuant to a Board, Resolution or the Articles of Association of the company. When asked as to why the plaintiffs had included Muhammad Shafiq defendant No.9 as a defendant in the proceedings Mr. Pingar learned counsel for the plaintiff, submitted that if a person executes a document in the capacity of a director he becomes a necessary party and is required to be impleaded as a defendant and referred to Order 1, Rule

3. C:P.C. in support of his argument. He added that in the prayer clause he has sought relief against defendant No‑9 and consequently the latter becomes a necessary party in the proceedings. Order 1, Rule 3, C.P.C. reads as follows: "3.Who may be joined as defendants.‑‑‑ All persons ‑may be joined as defendants against whom any right to relief in respect of or arising out of the same act or transaction of series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if separate suits were brought against such, persons any common question of law or fact would arise." A bare reading of the above provision indicates that only those persons may be joined as defendants against whom any right in respect of a transaction or a series of transactions is alleged to exist‑whether jointly or severally or in the alternative and where if separate suits were brought against such persons a common question of law and fact would arise. The learned counsel has not shown what right of the plaintiff has been breached by defendant No.9 or how any cause of action has arisen against him. He has also not shown how and under which cause of action the plaintiff can file a separate suit against defendant No.9. If the argument that every officer who signs a document on behalf of Company which could include hundreds of letters written by officers and directors of a company is accepted then, every person who corresponds on behalf of a company with an outsider would have to be made a party defendant which would mean that there would be hundreds of defendants in a suit especially if the plaintiff‑company is a large one so that the plaintiff may have an opportunity to prove all the documents relied upon by it‑ The argument is preposterous and cannot be accepted. 1f a director or an officer of a company has not executed a document in his personal capacity, he cannot be made, a party defendant because no relief can be granted against him. In the present case also plaintiff cannot claim any relief against defendant No.9 because he has not executed any document in his personal capacity to secure the loan given to defendant No.

1. As regards the signatures on the guarantees Mr. Pingar concedes that the,signature of defendant No.9 does not appear on the guarantees but seeks time to compare the photo copies with the original Guarantees. Stych request is unreasonable. Mr. Pingar has himself chosen to file photo copies which clearly show the signatures of all executants and do not require any comparison with the originals. Had he considered the original documents to be necessary at the time of arguments he should have brought the same with him. The request made by him at the time of argument is not bona fide and rejected. The arguments advanced by Mr. Pingar, learned counsel for the plaintiffs to oppose the application of defendant No.9 are mala fide and patently vexatious to his knowledge and are accordingly rejected. Consequently, both applications are allowed with special costs of Rs.10.000 and the name of defendant No.9 is ordered to be deleted from the array of defendants. Office is directed to strike out the name of defendant No.9 from the title in red ink. Q.M.H./M.A.K./H‑107/ K Applications allowed.