2007 PLP 1023 (SCMR)

RANA BHAGWANDAS, J.

This petition has been pending for the last more than two years and arises out of Sindh High Court, judgment dated 28-6-2004 passed in High Court Appeal against order of learned Single Judge of the Sindh High Court dismissing petitioner's application under section 12(2) .of the Code of Civil Procedure, 1908.

2. Petitioner-Pakistan Steel Mills Corporation vide letter of allocation dated 1-1-1990 allocated industrial Plot No.DSU-19 measuring 5.00 acres to respondent No.2 for establishment of an industrial unit in the Downstream Industrial Area for a period of 60 years. The petitioner received a sum of Rs.3.06 million by way of lease amount from respondent No.2 with the stipulation that after construction of the industry on the plot with the approval of the lessor a lease deed would be duly executed. Respondent No.2 obtained financial facility from respondent No.1-PICIC for setting up industrial unit and mortgaged the property with them as security for repayment of the finance. On failure of respondent No.2 to discharge its financial obligation, respondent No.1 instituted Suit No.730 of 1990 against the said respondent for recovery of the sum due, which was decreed as a result of settlement between the parties vide consent order dated 23-12-1998 followed by a decree. In order to execute the decree, an execution application was filed on the original side of the High Court, in which the petitioner filed objections under Order XXI, rule 58, C.P.C. claiming its right, title and interest in the plot duly mortgaged with respondent No.1. Without obtaining any order on the objections, the petitioner filed an application under section 12(2), C.P.C. on 21-12-2001 before the High Court, which was registered as J.M. No.1 of 2002 and on scrutiny dismissed vide elaborate order dated 4-12-2003.

3. Petitioner being dissatisfied filed High Court Appeal before a Division Bench but without any success vide judgment impugned in this petition for leave to appeal.

4. We have heard Mr. G.M. Dastagir, learned Advocate Supreme Court for the petitioner while Mr. Habibur Rehman, learned Advocate Supreme Court has entered appearance on behalf of respondent No.1. Notice could not be served on respondent No.2 as they are no longer available at the given address.

5. Sole point urged by learned counsel for the petitioner in support of this petition appears to be that vide letter of allocation dated 1-1-1990 no saleable and marketable interest accrued in favour of respondent No.2, therefore, the plot owned by the petitioner-Corporation could not be sold out in execution of a consent decree. This objection was considered in elaborate terms by learned Single Judge of the High Court on original side as well as by the Division Bench in the Intra Court Appeal. We find from the record that the petitioner had received Rs.3.06 million from respondent No.2 in the shape of equity participation in the company. It is evident from promoters agreement Annexure-2 that the petitioner as well as respondent No.2 had agreed to set up a joint venture in the name and style of Multipole Industries Limited with a paid up capital of Rs.60 million, out of which 5,694,000 shares were to be subscribed by the Managing partners and 30,000 shares were to be subscribed by the petitioner being the value of 5 acres of land allocated in the Downstream Industrial Estate, Zulfiqarabad.

6. Article 3.04 of the promoters agreement dated 15-8-1989 between the petitioner and respondent-company stipulated for mutual consent between the promoters on a variety of issues namely winding up of the company, increase and decrease of the share capital, loans to be granted by the company to its subsidiaries or shareholders etc. Clause (h) of this article clearly lays down that furnishing of security or creation of a charge/mortgage on the assets in favour of a bank or financial institution in the normal course of business would not come within the scope of mutual consent. Division Bench of the High Court found that since the petitioner had received the consideration for grant of lease to the respondent-company vide allocation letter whereas terms of promoters agreement between the parties did not require prior permission of the petitioner for creation of charge or mortgage on the company's property/assets, mortgage of the property in favour of respondent No.1 was without any exception.

7. Learned counsel appearing on caveat has pointed out that by way of abundant caution respondent company had obtained "no objection certificate" from the petitioner-Corporation before entering into mortgage deed with respondent No.1. Such letter dated 3-1-1990 addressed to the Managing Director of respondent No.2 is available in the paper book at page 65 and clearly states that Pakistan Steel has no objection to the creation of parr passu mortgage of the Plot No.DSU-19, which clearly demolishes the stance of the petitioner.

8. Needless to observe, petitioner, in our considered view, utterly failed to substantiate and make out a case of commission of fraud, misrepresentation or want of jurisdiction on the part of respondent No.2 when the suit of respondent No.1 was decreed against respondent No.2. In law, petitioner-Corporation being a shareholder and Director in respondent No.2-company would be legally bound by contracts, acts and deeds executed and performed by and on behalf of the company and cannot be heard to say that Pakistan Steel was not impleaded as party to the suit.

9. For the foregoing facts, circumstances and reasons, in our considered view, no ground for grant of leave is made out with the result that petition fails and is hereby dismissed. S.A.K./P-8/SC??????????????????????????????????????????????????????????????????????????????????????????????? Petition dismissed.