2016 PLP 1510 (CLC)

SYED HASAN AZHAR RIZVI, J.

By this application, under Order XXXIX, Rules 1 and 2 r/w Section 151, C.P.C., filed by the plaintiff with the prayer to restrain the defendant No.1 from floating 3rd WAPDA Sukuk issue during the pendency of this suit and as against defendant No.2 from becoming a trustee to handle the said 3rd WAPDA Sukuk issue at all. The application is duly supported by an affidavit Syed Owais Wasti, Principal Officer and attorney of the plaintiff.

2. Counter-affidavit to the listed application has been filed on behalf of defendants Nos.1 and 3 denied the contents of the listed application being false and misconceived and prayed for dismissal of the same with costs. It was specifically stated that the suit of the plaintiff is not maintainable for the reasons that it is based on a series of surmises and conjectures and apprehension. It was further stated that the suit is also not maintainable as it is barred by limitation as no cause of action in favour of the plaintiff has arisen and plaintiff's claims are based on a series of transactions which occurred in February, March and April, 2009, therefore, the instant suit is hopelessly time barred and liable to be summarily dismissed. It was also averred that the suit is barred by the provisions of Order II, Rule 2, C.P.C. It was stated that plaintiff filed Suit No.1497/2009 before this Court, which is still pending on the basis of same alleged cause of action and omitted therein to sue for the relief being claimed in the present suit and is therefore precluded from suing for the same at this belated stage. It was also averred that defendants Nos.1 and 3 are issuing the 3rd WAPDA Sukuk certificates in order to enable them to raise funds for the vitally required energy projects which are badly needed to cope with the energy crises being faced by Pakistan. It was further stated that the relief being prayed for by the plaintiff, if granted, would seriously prejudice the business of the defendants Nos.1 and 3 and thereby impact the working of the Federal Government in that it would hinder its efforts to deal with the energy crises. It was further averred that plaintiff has no locus standi. It was stated that purports to be filing the instant suit in the public interest but is self-evidently motivated by mala fides inasmuch as the suit seeks to pressurize the defendants Nos.1 and 3 to accept the plaintiff's claim before raising further finances for public sector energy projects. It was also stated that plaintiff has chosen not to join proceedings before the Civil Court at Lahore and has not entered appearance before the Hon'ble Lahore High Court in RFA 779/2010. In these circumstances the mala fide motivation of the plaintiff is to exert pressure on the defendants Nos.1 and 3 to settle with the plaintiff. It was also stated that the suit is barred by principle of res subjudice as enshrined in Section 10, C.P.C. It was further stated that all the Sukuk certificates were issued at Lahore, the headquarters of the defendants are located at Lahore, the disputed transactions, which are now to be decided/adjudicated upon by the Civil Court at Lahore, took place at Lahore, the cause of action has arisen entirely at Lahore and hence this Court has no territorial jurisdiction in the matter. Therefore, the instant suit is not maintainable and nor is the plaintiff entitled to the relief prayed for.

3. I have heard Mr. A.I. Chundrigar, Advocate for plaintiff, Ms. Ayesha Hamid Advocate for the defendants Nos.1 and 3 and M/s. Jahanzeb Awan and Mustafa Ali, Advocates for the defendant No.2. 4 Mr. A.I. Chundrigar, learned counsel for the plaintiff argued the matter on the same line as stated in the memo. of plaint. He contended that earlier plaintiff filed Suit No.1497/2009 which was in respect of Sukuk certificates purchased by the plaintiff from defendant No.4 in the said suit namely M/s. Swift Engineering Solutions and the transfer of the Sukuk Certificates of Rs.180.0 million were verified by First WAPDA Sukuk Co. Ltd. on 09.3.2009 and on 13.3.2009 as appears from Paras 7 to 9 of the plaint in the said suit. He further contended that to the surprise of the plaintiff WAPDA sent letter of 29.4.2009 and First WAPDA Sukuk Company Ltd. sent a letter of 09.09.2009 to the plaintiff as appears from Paras 11 and 13 of the plaint of said suit. He contended that in the first mentioned letter WAPDA had stated that further transactions regarding the Sukuk Certificates transferred to the name of fund under management of plaintiff be stopped until further instructions given by WAPDA, while in the 2nd letter it was stated that certificate Nos.512.390 to 512.395 with distinctive Nos.0946501 to 0982500 to First WAPDA Sukuk Company Ltd. issued to M/s. Swift Engineering Solutions as a result of transfer to M/s. National Fertilizer Corporation of Pakistan Ltd. 72 physical certificates was based upon 'Fake documents' and therefore M/s. Swift Engineering Solutions were not bona fide title holder of Sukuk certificates worth Rs.180.0 million who had sold the same to fund under management of plaintiff 'Al-Meezan Investment Management Ltd.' and plaintiff was not entitled to receive Ijaraha rental of Rs.13,640,900/- already paid on 2.1.4.2.009 through Citibank (paying agent). He stated that plaintiff replied the said letters denying the claims of WAPDA. He further contended that as to the demand for amount of Ijarha rental of Rs.13,640,900/- through letter of 29.09.2009 by First WAPDA Sukuk Company Ltd. was unwarranted, and apparently no counter claim or counter suit has been filed against the plaintiff. He also contended that First Sukuk was issued on 05.01.2006 and matured on 22.10.2012, the certificates have matured its holding of the Sukuk Certificates and in any case WAPDA as well as First WAPDA Sukuk Company Ltd. having taken the stand that the certificates already named by the plaintiff were 'fake'. He submitted that fraud committed in respect of the certificates became apparently by the enquiry conducted by FIA as well as the highlighting of the same in various news articles and a documentary telecasted on Dunya News. He further submitted that similar reports appeared in some other newspapers on various dates and detailed documentary was also telecast by 'Dunya' Channel. He referred to the report dated 03.9.2009 published in 'Daily Times' mentioned that FIA had arrested six accused and recovered Rs.30.0 million and that the fraud involved senior official of WAPDA.

5. Learned counsel for the plaintiff in order to anxious consideration of this Court has formulated the important points and mentioned the same in Para-11 of the memo. of plaint. For convenience sake, relevant points are reproduced below:- (i) Purchasing various Sukuk, including from among those floated by WAPDA under the First Sukuk floatation and the purchase was from the secondary market. (ii) Plaintiff has been utilizing 'public money' since investors are small investors, limited companies, financial institutions, investment companies, investment banks, etc. (iii) It is now established fact that fraud was committed mainly by the employees of WAPDA; moreover the Sukuks purchased by plaintiff for its Fund were genuine, as before purchase these were verified by WAPDA's subsidiary on 09.3.2009 and 13.3.2009 and later were also transferred in its CDC Account through Central Depository System of defendant No.2 CDC. The fund under management of plaintiff also received rental in April, 2009 on the Sukuk certificates purchased by the plaintiff. Hence there is no doubt that the Sukuks purchased by the fund under management of plaintiff were genuine and therefore, WAPDA is bound to honour these Sukuk Certificates, as the doctrine of indoor management is applicable. There is also vicarious responsibility of WAPDA since as per Para 8 above, various officers of WAPDA had embezzled at least Rs.190.0 million including Rs.180.0 million which was face value of the relevant Sukuks, in respect of the lst issue of Sukuk and fiduciary relationship came into effect, when the plaintiff had purchased the Sukuk certificates from the market. A fiduciary relationship arises between two parties when one of them stands in a position of trust to the other person. In fiduciary relationship one cannot be allowed to take advantage of the breach of his/their obligation by virtue of such relationship. The contents of Section 88 of the Trust Act are very relevant. A person who possesses the confidence of another will not be allowed to take advantage of that situation, although the relationship of solicitor and client or principal and agent may not be strictly constituted between them. (iv) The investors, who reposed trust in the plaintiff stand to suffer losses in respect of the First WAPDA Sukuk issue as is clear from copies of the 2 plaints which have been annexed as annexures 'C' and 'D' to this plaint also show clear attitude of WAPDA who had concealed fraud by its own officers in connection with fiduciary relationship Section 88 of the Trusts Act may be quoted:- "Where a trustee, executor, partner, agent, director of a company, legal adviser or other person bound in a fiduciary character to protect the interest of another person by availing him of another person by availing himself of his character, gains for himself any pecuniary advantage or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he roust hold for the benefit of such other person the advantage so gained." (v) The plaintiff is entitled to mandatory interim injunction even if its case does not fall within the four corners of settled principles for grant of injunction under Order XXXIX, Rules 1 and 2, C.P.C. The Hon'ble Court also has inherent powers to pass an order of mandatory injunction as per Section 151, C.P.C. Besides WAPDA is under obligation/duty to the plaintiff and it does not matter that there is no specific contract on this account. WAPDA ought to be restrained by this Hon'ble Court from floating a fresh 3rd Sukuk Issues, since in respect of the First Sukuk Issue fraud was admittedly committed by its officers. (vi) WAPDA ought to be restrained by the Hon'ble Court from floating a fresh Sukuk Issue, as it has very weak controls, which resulted in fraud by its officers to an exorbitant amount of Rs.180 million in First WAPDA Sukuk Issue. These weak controls may lead to more fraudulent activities in future and could have a devastating impact on the capital markets of the country and could shatter investors confidence. (vii) Fraud is a multi-dimensional concept, an active concealment in the instant case with regard to fraud by WAPDA's officers is an actual fact of fraud. It is not a question any more for mere suspicion. (viii) The rules of 'public policy' do change from time to time and this Hon'ble Court should take notice of the same. (ix) The plaintiff has annexed with this plaint copies of authentic documents and they must be taken into consideration for purposes of granting reliefs. (x) In inter-pleader suit filed by WAPDA in December, 2008 before SCJ, Lahore which was dismissed on 21.5.2010 by CJ, 1st Class, Lahore, the relief claim was only in respect of the plaintiff's wanting the Court to decide which of the defendants is the lawful owner of some of the Sukuk Certificates under First WAPDA Sukuk issue of Rs.8.0 billion of 01.5.2006.

6. Learned counsel for the plaintiff urged that the suit is within time as the time starts from the date of knowledge and from the denial of plaintiff's right by defendants. He, therefore, prayed for grant of listed application. In support of his submission he placed reliance on the cases of Wali and others v. Akbar and 5 others (1995 SCMR 284), Dr. Saghir Alam etc. v. Mst. Kaniz Fatima etc. (1982 CLC 68) and Arif Zaman v. Pir Dost Ali Shah and others (2005 MLD 98).

7. On the other hand, Ms. Ayesha Hamid, learned counsel for the defendants Nos.1 and 3 argued that the present suit is not maintainable for the reasons that it is based on a series of surmises and conjectures and apprehension, therefore, no cause of action has arisen to the plaintiff for filing the instant suit against the answering defendants. She further argued that plaintiff has no locus stanch and it purports to be filing the instant suit and application under reply in the 'public interest' but is self-evidently motivated by mala fides inasmuch as the suit/application seeks to pressurize the defendants Nos.1 and 3 to accept the plaintiff's claim before raising further finances for public sector energy projects. She also argued that plaintiff has belatedly realized that its Suit No.1497/2009 is likely to fail therefore, it chosen not to apply to join proceedings before the Civil Court at Lahore and has not entered appearance before the Lahore High Court in RFA 779/2010. She contended that the suit and application under reply are barred by Section 10, C.P.C. She further contended that the entire circumstances in which the plaintiff claims a cause of action accrued are those relating to the disputed Sukuk Certificates and that matter is directly and substantially in issue and not only the inter-pleader suit filed by the defendants Nos.1 and 3 as well as the RFA # 779/2010 which is a continuation thereof but also in the plaintiff's own suit bearing No.1497/2009. Therefore, the instant suit is not maintainable and nor is the plaintiff entitled to the relief prayed for in the application under reply. She has referred to Clause 17(b) of Schedule-2 of the Declaration of Trust the Courts at Lahore are to have jurisdiction with respect to any disputes in connection with the Declaration of Trust or the Certificates and this Court has no jurisdiction in the matter for the simple reason that all the Sukuk Certificates were issued at Lahore, the headquarters of the defendants are located at Lahore, the disputed transaction, which are not to be decided upon by the Civil Court at Lahore, took place at Lahore, the cause of action has arisen entirely at Lahore and hence this Court has no territorial jurisdiction in this matter.

8. Learned counsel for the defendants Nos.1 and 3 while highlighting the background of the case urged that NFC claims title and possession of the real Sukuk Certificates originally issued by the answering defendants. She urged that this claim is supported by the fact that it has in its possession the original 72 physical certificates issued by the answering defendants alleged purchased from NFC by Swift Engineering Solutions and from Swift Engineering Solution by the plaintiff and onward by the plaintiff to Bank Islami Pakistan Limited, Soneri Bank limited and Meezan Bank Ltd. She, therefore, urged that the suit is also by mis-joinder and non-joinder of necessary parties. With regard to the contention of learned counsel for the plaintiff in respect of 1st Sukuk Certificate, she stated that as soon as such embezzlement came into defendants knowledge they immediately constituted a team of officers to examine the 72 certificates received vide letter dated 12.2.2009 who found the same were forged and immediately informed CDC that further transfer/transaction of subject Sukuk Certificates be stopped till further instructions issued by WAPDA. She further stated that defendant No.1 registered Inquiry No.76/2009 with FIA Crimes Circle, Lahore and on the basis of FIA inquiry, FIR No.28/2009 dated 05.8.2009 under Sections 409, 419, 420, 467, 468, 471, 109, P.P.C. and 5(2)47 of the Prevention of Corruption Act was lodged and accused named therein arrested and trial of the said accused is pending in the court of the Special Judge Anti-Corruption (Central), Lahore.

9. Apart from above, learned counsel for the defendants Nos.1 and 3, with regard to 3rd Sukuk Certificates submitted that the Economic Coordination Committee of the Federal Cabinet approved the 3rd issue of Sukuk Certificates of Rs.10 billion on 26.2.2013; the term sheet finalized by the two banks has been approved by the Ministry of Finance vide letter dated 18.6.2013; the Government of Pakistan is processing the issue of sovereign guarantee for the 3rd issue; the two banks have already locked the required amounts from the market, and the funds are urgently required for financing, inter-alia, the Neelum-Jhelum project which will add 1000 MW to the national grid on completion. She further stated that the answering defendants are not responsible for the news item appearing in the print media therefore not required to make any responses either to the contents of the said news item or to plaintiff's comments on the same. She also urged that the multiplicity of the litigation in respect of the Sukuk disputed certificates of the 1st floatation is entirely unconnected with the imminent floatation of the 3rd Sukuk certificates, as such the relief sought by the plaintiff on issue of 3rd floatation has no rational link with said dispute relating to the 1st issue of the sukuk certificates. She further urged that the answering defendants are not liable to the plaintiff in regard to sukuk certificates purchased by the plaintiff from the open market which the plaintiff no explicitly acknowledges to be fake certificates and final determination in this matter is to be made in the inter pleader suit. She submitted that in order to culminate the chances of fraud 3rd Sukuk Certificate shall be floated through CDC and not by the answering defendants. She also submitted that this Court is to decide factual disputes and not hypothetical imaginations and grant of injunction seeks prevention of an entirely hypothetical eventuality. She, therefore, prayed for dismissal of listed application with heavy cost. In support of her submissions, she placed reliance on the cases of Asma Jillani v. Government of Punjab (PLD 1972 SC 139), Naveed Akhtar Cheema v. Chairperson Teveta (2011 PLC (CS) 803) and Zulfiqar Cheema v. Technical Education and Vocational Trading Authority (2011 PLC (CS) 914).

10. In rebuttal, Mr. A.I. Chundrigar, learned counsel for the plaintiff reiterated the same facts with more vehemence. He made reference to Clause 16.2 of the Declaration of Trust Deed dated 15.11.2005, which exclusively defines the jurisdiction of Courts at Karachi. He further added that plaintiff had purchased the 1st Sukuk. Certificate at Karachi in the open market, even though the Sukuk Certificates may have been issued at Lahore, this Court is fully competent to entertain this suit. He further drew my attention to the judgment passed by the Special Judge (Central) Lahore dated 13.09.2013 and submitted that in the said judgment it was recorded that 72 physical WAPDA Sukuk-I Certificates to Rs.180 million were fraudulently transferred from National Fertilizer Company's Account to M/s. Swift Engineering Solutions, which were latter converted into six higher denominations certificates and then even were transferred into CDC and sold these Sukuk to a Karachi based mutual fund. The judgment also states that the WAPDA high officials were fond of immense, gross and disgusting negligence which led to occurrence of this fraud by the WAPDA Official. He urged that weak controls in defendants Nos.1 and 3 operations are evident and with these weak controls issuance by WAPDA of additional WAPDA Sukuks-III may lead to further frauds/forgery/ misappropriation or whatever name it may be called. These grounds are sufficient for the Hon'ble Court to declare injunction against WAPDA to float WAPDA Sukuks-III. He further submitted that defendants Nos.1 and 3 have acknowledged that they are floating third sukuk certificates for purpose of raising funds, then it is more necessary that ad-interim injunction as prayed for by the plaintiff in the application is granted without any delay keeping in view the past conduct of WAPDA has not been enviable so far. 11 I have given due consideration to the arguments advanced by the learned counsel for the parties, minutely examined the material available on record and the case law cited at the bar.

12. The plaintiff filed this suit against the defendants for permanent injunction and declaration with the following prayer:- "I. AS AGAINST DEFENDANT NO.1 WAPDA. (a) Permanent mandatory injunction and temporary and ad-interim mandatory injunction against WAPDA not to float 3rd WAPDA's Sukuk issue, due to the various reasons given hereinabove, including weak control within WAPDA which resulted in fraud by its different officials amounting to exorbitant sum of Rs.190.0 million (including rentals of Rs.10.0 million) re. First WAPDA Sukuk Issue. (b) Mandatory injunction restraining WAPDA from floating 3rd WAPDA Sukuk Issue, until settlement of entire pending claims viz-a-viz unpaid rentals and principal of Rs.180 million pending since maturity of First WAPDA Sukuk Issue, as the plaintiff on behalf of Fund under its management had purchased these Sukuks after complete verification, which later were also transferred into the CDC Account of the Fund in Central Depository System and on which rental was also received in Aril, 2009, hence, there is no doubt that the Sukuks purchased by the Fund, and later sold in the secondary market in normal course of business were genuine. (c) Mandatory injunction in restricting WAPDA from floating 3rd WAPDA Sukuk Issue as Sukuk holders holding First WAPDA Sukuk amounting to Rs.180 million at par which were sold by the Fund under management of plaintiff in normal course of business or who purchased these from the secondary market are approaching the plaintiff for non-receipt of rentals and principal upon maturity which would cause substantial loss to the plaintiff, who purchased the genuine Sukuk Certificates for its Fund after all necessary verification. (d) Mandatory injunction restricting WAPDA from floating 3rd WAPDA Sukuk Issue, as the plaintiff (on behalf of Funds under its management) is one of a major investors in Government issued debt securities, including GoP Ijarah Sukuks hence with weak controls at WAPDA, it may not be able to invest in new 3rd WAPDA Sukuks Issue thereby, depriving its investors of a good investment opportunity. (e) Mandatory injunction directing WAPDA to honour the "original" Sukuk Certificates as well as 'alleged fake' Sukuk Certificates under First WAPDA's Sukuk Issue, later on, the various grounds including vicarious liability for embezzlement by its officials, WAPDA is liable to pay rentals in arrears to the 'original certificates' holder as well as to holders of "alleged fake" Sukuk holders. The alleged and 'false certificates' were in fact verified twice by First WAPDA's Sukuk Co. Ltd. on 09.3.2009 and 13.03.2009. (II) AS AGAISNT DEFENDANT NO.2 I.E. CENTRAL DEPOSITORY COMPANY OF PAKISTAN LIMITED. (a) Not to deal with 3rd WAPDA's Sukuk Issue if floated, since in terms of the trust deed which is executed, the WAPDA Sukuk Certificates can be issued either in physical form or in book entry form. Book entry form WAPDA Sukuk Certificates are issued by induction in the Central Depository System set-up by defendant No.2 pursuant to the provisions of the Central Depository Act, 1997 which is reproduced in PLD 1997 Central Statute

6. The title of the book entry securities is conclusively determined on the basis of entries in the Central Depository register maintained by Central Depository Company. Section 11 of the Act, 1997 contains a specific part on the rectification of Central Depository register to ensure smooth functioning of the Central Depository System. (b) Restrain the defendant No.2 from accepting induction of 3rd WAPDA's Sukuk in Central Depository System if floated by defendant No.1, WAPDA who has contravened Section 11 of the Central Depository Act, 1997 in respect of First WAPDA' Sukuk Issue. (c) A declaration that WAPDA has become disentitled to float any further Sukuk Issues because of its past conduct, through its various officials who have embezzled money in connection with First WAPDA's Sukuk Issue. (d) A declaration that WAPDA does not have any fixed infallible procedure for floating of issues of Sukuk Certificates and the public including the plaintiff is likely to suffer. (iii) Cost of the suit. (iv) Any other reliefs as may be deemed fit and proper by this Hon'ble Court."

13. In the case in hand the plaintiff based his case entirely on new items published in the print media. No documents available with the plaintiff to show any alleged fraud in issuing 3rd WAPDA Sukuk Certificates. The plaintiff alleged that earlier fraud has been committed by the WAPDA Officials in respect of issuance of 1st WAPDA Sukuk Certificate, which plaintiff had purchased from open market, therefore this time again the same thing is alleged to be happened. The plaintiff brought its case entirely on the basis of surmises, conjectures and apprehensions that if the defendants Nos.1 and 3 are allowed to issue the 3rd WAPDA Sukuk certificates and if the plaintiff again purchases Sukuk certificates and if another fraud is perpetrated and if the plaintiff and other investors lose money then a situation would arise whereby the plaintiff would suffer. Moreover, the plaintiff in respect of earlier fraud committed by the WAPDA officials criminal case is pending before Special Court (Central) at Lahore. Additionally, the relief sought by the plaintiff for restraint on issue of 3rd floatation has no rational link with said dispute relating to the 1st issue of the Sukuk certificates and on such basis defendants No.1 and 3 cannot be restrained from raising funds in the public interest for energy project vitally required by Pakistan.

14. It is settled law that party seeking an interim injunction must show that a prima facie case exist in his favour; the Court be satisfied that if injunction is not issued, irreparable damage or injury would be caused to such party; and, the balance of convenience is in favour of the grant of injunction. In the case in hand plaintiff itself admitted in Para 11(v) of the memo. of plaint that plaintiff's case does not fall within the four corners of settled principles for grant of injunction under Order XXXIX, Rules 1 and 2, C.P.C. It may be observed that the Courts do not decide abstract hypothetical or contingent questions or give mere declarations in the air. The determination of an abstract question of constitutional law divorced from the Concrete facts of a case, floats in an atmosphere of unreality; it is a determination in vacua and unless it amounts to a decision settling rights and obligations of the parties before the Court it is not an instance of the exercise of judicial power. There is no duty cast on the Courts to enter upon purely academic exercises or to pronounce upon hypothetical questions. The Court's judicial function is to adjudicate upon a real and present controversy which is formally raised before it by a litigant. If the litigant does not choose to raise a question, however, important it might be, it is not for the Court to raise it suo motu. The matter thus remained where it was to this day, as no one raised the question before the Court. The instant case is premature and not ripe for adjudication as it was based on mere apprehension or a speculation. Furthermore, fraud occurred in respect of sukuk certificates has no bearing or connection with the launch of the 3rd sukuk certificates. It may be added that Economic Coordination Committee of the Federal Cabinet approved the 3rd issue of Sukuk Certificates and the term sheet finalized by the two banks has also been approved by the Ministry of Finance and Government of Pakistan is processing the issue of sovereign guarantee for the 3rd issue of Sukuk certificates and the two banks already locked the required amount from the market i.e. Rs.10 billion, which is urgently required for financing the Neelum-Jhelum project which will add 1000 MW to the national grid on completion. It may also be added that 3rd Sukuk Certificates are to be floated through CDC, which culminate the issue of commission of fraud.

15. From the tentative assessment of material available on the record, I am of the considered view that the plaintiff has failed to make out a prima facie case nor balance of convenience lies in favour of grant of injunction and the plaintiff will not suffer injury or loss if injunctive order sought through the instant application is refused. Consequently, the application being meritless was dismissed by short order dated 21.10.2013 and above are the reasons for the same. SL/A-60/Sindh Injunction declined.