1986 PLP 1356 (MLD)

"Nazir of this Court is appointed Receiver to take over all the plant, machinery and equipment of the plaintiff, which is lying at site, details whereof are given in Annexure 'C' to the plaint and ,prepare its inventory. This order appointing. Nazir as Receiver will become effective on 1‑1‑1986. In case Uzin, defendant No.2 furnishes a security in the sum of Rs. 1,00,00,000 to the satisfaction of the Nazir of this Court by 31‑12‑1985, this order of appointment of Receiver shall stand automatically recalled. Such security will protect the interest of the plaintiff ASIACON in respect of its claim .relating to plant, machinery and equipment." The plaintiff ASIACON and the defendant No.2 U21N aggrieved by the said order have filed separate appeals. Mr. Muhammad Sharif, learned counsel for the appellant in High Court Appeal No. 90 of 1985 has raised the following contention: (i) That it has been held by the learned Single Judge that there is no privity of contract between the parties and therefore, the applications filed by the ASIACON should have been dismissed on such findings. (ii) Inconsistent pleas have been taken by the plaintiffs. (iii) The plaintiff has to succeed on the case set up in the plaint and no case has been set up by the ASIACON in the suit. (iv) The order of appointment of Receiver is not justified, as the conditions for appointment of Receiver as 'laid down under Order XL, rule 1, C.P.C. do not exist and if the order of appointment of Receiver is not justified the conditions attached to such order also goes away. (v) The basic requirement of Order XL, rule l,~is that it is just and convenient. The word and has never been interpreted as 'or'. The plaintiff must establish a strong case for seeking injunction convenience of both the parties has to be seen and not one of the parties to the suit. Reliance has been placed on AIR 1957 Nag.1. In. the same context it is further argued that the suit of the plaintiff is for money decree and in such sets appointment of Receiver must be sparingly used. Reliance has been placed on P L D 1965 Kar. 584, PLD 1977 Lah. 830 and 1980 C L C

494. The necessity of appointment of Receiver arises so that the property must be protected from the damages if the plaintiff ultimately succeeds. The moveable property has not been claimed by the plaintiff against the other defendants and only money has been claimed against them. The amount of use of the machinery has been assessed in the suit. No prima facie case has been made out by the plaintiff and it is not a case of ASIACON that the UZIN is illegally using the machinery. He has referred to 1940 Appeal Cases (A.C.) 1014. Hudson's Building and Engineering Contracts and 1957 Volume NLR 1012 relevant page 1104. (yi) under Article 20 of the Main Contract the M.I.C. has to provide the machinery and the machinery has been provided and the UZIN under the Contract is entitled to use the same. Reliance is placed on 1965 Volume 3 A ‑E R

785. The question of security cannot be divested from attachment a the object of Order XXXVIII, rule 5, is attachment before judgment is to prevent an attempt on the part of the defendant to obstruct of delay the execution of any decree that may be passed against him. When there is a specific provision for dealing with such matter then the inherent power cannot be used. The facts and circumstances of the case do not justify for demand of security and unless security is demanded the attachment cannot be made. Reliance has been placed on: A I R 1955 Bom. 251, A I R 1955 Kutch 14, A I R 1936 All. 438.1 Reliance has also been placed on A I R 1958 Mad. 411 in support of the plea that in every money suit a Receiver cannot be appointed. Reference has been made to 1940 A C 1019. It is further contended that there are no inherent powers to demand security. Reliance has been placed on A I R 1941 All. 212 which lays down that where the Code has specifically provided for the contingency which has arisen in a case there is no room for the application of power arising under inherent jurisdiction. Reliance has also been placed on A I R 1941 All. 212 A I R 1941 All.

219. Security can only be demanded when the conditions laid down under. Order XXXVIII, rule 5, exist, and when there are expressed provisions providing reliefs to aggrieved party Court will not invoke inherent power. Reference has been made to PLD 1980 Kar. 926, P L D 1976 Lah. 298, P L D 1979 Kar. 734, P L D 1977 Kar. 722, P L D 1982 Kar. 701, 1982 CLC 1360. On the other hand, it has been urged by the learned counsel for ASIACON that privity of contract exists between the parties and, therefore, the application under Order XXXVIII, rule 5 read with section 151, C.P.C. is maintainable and the purpose of such order would be that a Receiver may be appointed and the defendants be restrained from using the machinery of the plaintiff and the bills to be attached are in the hands of Attock and they so restrained from making payment to Uzin. No complaint has been made against ASIACON that it had violated any terms of the contract. The suit for recovery of machinery and in the alternate for the decree or money is competent. Under the contract Uzin has not given any power to take possession of ASIACON's machinery. The right to take away machinery can only be by law or contract. There is no allegation that ASIACON has violated any terms of contract. Articles 20 and 37 of the Main Contract do not apply to ASIACON. Machinery belongs to ASIACON. The authorities cited by the learned counsel for Uzin have been distinguished by the learned counsel. It is stated that 1965 A E R would not apply. This was a case in which damages were claimed by one against the other. ASIACON has not brought the machinery on behalf of the M.I.C. The word 'provide' as defined in the dictionary would be applicable. So also reference to Hudson is not relevant. Reference has been made to Building Contract and Practice, Seventh Edition page 349 by William M. Gill, where the relation between the principal contractor and sub‑contractor has been discussed. Clauses 20 and 21 of the Main Contract would not apply with regard to the machinery of the plaintiff. It is, therefore, contended that Uzin are trespassers to the movable goods of the plaintiff. Reference has been made to Halsbury's laws of England, Fourth Edition page 699, para 1491 which contemplates that trespass to goods. is an unlawful disturbance of the possession of goods by seizure or removal, or by a direct act causing damage to the goods. The subject‑matter of trespass td goods must be a personal chattel which is the subject of lawful possession. The plaintiffs have been deprived of its goods and if the defendant is holding some body's property the Receiver can be appointed. Reference has been made to A I R 1976 A J a K 30 and P L D 1976 Kar.

645. It is contended that Receiver can be appointed in money suit and the case of the plaintiff is not of simple money suit. Reference has been made to P L D 1983 Kar.

303. The learned counsel has contended that ASIACON has made out a case for the appointment of Receiver without asking for security. The "appeal filed by ASIACON against the same order challenging that part of the order whereby the Court allowed the application of Receivership but postponed the effective date of taking charge by 1‑1‑1986. The prayer made in the appeal is that the order dated 16‑12‑1985 passed by the trial Judge to the extent of dismissal of the application under Order XXXVII, Rule 5 read with section 151, C.P.C and Order XXXIX, Rules 1 and 2, C.P.C. and grant the application with costs. In order to appreciate the respective contentions of the learned counsel it is necessary to refer to the main contract itself. UZIN entered into a Turn Key Contract with ATTOCK CEMENT for construction of a Cement Plant. UZIN was authorised under the main contract to appoint sub‑contractors. According to the contract all the constructional plant/ machinery/equipment reserved for the construction on the site could be used for the completion of the project. M.I.C. was authorised to appoint sub‑contractors for carrying out any part of the contract work. On 9‑7‑1983 M. I. C. appointed ASIACON as their sub‑contractors for carrying out jobs of mechanical erection and steel structure works. Certain provisions of the contract executed between M.I.C. and ASIACON are relevant for the termination of the controversy between the parties. Articles 20 and 37 of the contract are relevant, which read as follows: ‑ Article

20. Constructional Plan and Temporary Works (a) The sub‑contractor shall "provide" all constructional plan and temporary works required for the expeditions and satisfactory construction of the work in accordance with the sub‑contract documents. In case of breakdown of or damage to any part of the constructional plant or temporary works, the sub‑contractor shall take immediate steps for the repair or renewal or same so that any delay occasioned by such breakdown or damage shall be minimized to the fullest possible extent. Sub‑contractor shall keep on the site an ample supply of spare parts of all constructional plant. Sub‑contractor shall be held solely and entirely responsible for the safety and security of all constructional plant and temporary works, whenever provided or erected by the Sub‑contractor. Neither the examinations by the Agent of proposals, drawings or documents relating to constructional plant and temporary works submitted by the Sub‑contractor to the Agent for the approval expressed by the latter with regard thereto, whether with or without modifications, shall absolve the sub‑contractor from any responsibility of liability imposed upon him by any of the provisions of the sub‑contractor. All constructional plant and Temporary works and materials "provided" by the sub‑contractor shall when brought on to the site be deemed to be exclusively, intended for the construction and completion of the works and the sub‑contractor shall not remove the same or any part thereof save for the purpose moving it from one part of the site to another without the consent in writing of the contractor which shall not be unreasonably withheld. The sub‑contractor shall at all times keep the constructional plant and equipment exempt from claims of third parties from legal attachment and shall not alienate/change or assign the same or any part thereof or allow any lien to arise thereon. The sub‑contractor may remove any constructional plant, temporary works and surplus materials brought at site and belonging to the sub‑contractor only if the same are no longer required for (c) After having obtained the Agent's written consent the whole of the constructional plant, temporary works and unused materials shall be removed by the sub‑contractor when they are no longer required and in such manner as the Agent may direct. Before the granting of the provisional Acceptance Certificates the site shall be left and in good order to the Agent's satisfaction. (d) If sub‑contractor fails to remove any part of the constructional plant, temporary works or unused materials in accordance with sub‑clause (c) of this clause within a reasonable period of time after the completion of works, as may be allowed by the Agent, then the contractor may sell the same and shall after deducting the cost charges and expenses of and in. connection with such sale from the proceeds pay the balance, if any, to the sub-contractor. That Article 37 of the same contractor reads as follows: ARTICLE 37 POWER OF ENTRY. (a) In case The sub‑contractor does not commence the works without substantial reasons, in accordance with the provisions of the sub‑contract documents, or (2) At any time in the Agent's opinion, based on communicated written substantial grounds, fails to carry cut the works in accordance with the provisions of the sub‑contract documents or (3) At any time suspends work on the works for a period of 30 (thirty) days without authority from the Agent, or (4) At any time in the Agent's opinion, based on communicated written substantial grounds, fails to supply sufficient or suitable constructional plant, temporary works, labour or materials, or (5) Commits, suffers or permits any other breach of any of the sub‑contract documents provisions and persists in any of those breaches for 14 (fourteen) days after notice in writing has been given to the sub‑contractor by the Agent requiring such breach to be remedied,‑or (6) Abandons the works, or (7) Sublet the work or any part of the work in defiance of the contractors instructions to the contrary, or (8) During the continuation of the sub‑contract become bankrupt or after being declared insolvent makes any arrangements with his creditors or permits any execution to be levied/or enter into liquidation (not being merely a voluntary Liquidation for the purpose of amalgamation or reconstruction). Then and in any such case, the contractor shall have the power to enter upon the works and operate in any of the following manner: (a) The contractor may himself complete the works or may employ any other sub‑contractor to complete the works and may use for such completion so much of the constructional plant temporary works and materials which have been deemed to be reserved exclusively to the construction and completion of the works under the provisions of this contract as the contractor may think proper and the contractor may at any time sell any of the said constructional plant, temporary works and unused materials and apply the process of sale in or towards the satisfaction of any sums due or which may become due to him from the sub contractor. (b) The contractor shall, as soon as may be practicable after any such entry and expulsion of the works, certify that amount has at the time of such entry and expulsion been reasonably earned by the sub‑contractor in respect of the works then actually done by him and what was the value of any of the said unused or partially used materials, any construction plant and any temporary works which shall be considered for the settlement of the sub‑contractor's accounts as hereinbefore mentioned. (c) If the contractor shall enter and take possession of the works and expel the sub‑contractor under this clause, the contractor shall not be liable to pay to the sub‑contractor any money on account of this contract until the expiration of the period of maintenance according to the contract provisions and thereafter until there have been ascertained the money paid to the sub‑contractor prior to his expulsion from the contract, the cost of completion and maintenance of works, penalties for delays in completion and all other expenses incurred during the execution of the works. (d) The sub‑contractor shall then be entitled to receive only such sum or sums as the contractor may certify would have been due to the sub‑contractor upon due completion by him after deduction the said amount, but if such amount to be deducted shall exceed the sum which would have been payable to the sub‑contractor on due completion by him after deducting the said amount but if such amount to be deducted shall exceed the sum which would have been payable to the sub‑contractor on due completion by him then the sub‑contractor shall upon demand pay to the contractor the amount such excess and it shall be deemed a debt due by the sub‑contractor to the contractor and could be recovered on the basis of the contract that shall be executory. (e) If the contractor will be expelled from the contract by the employer on grounds for which the sub‑contractor is not liable to the sub‑contractor shall be released from day of his obligations under the contract and could not be compelled to bear any costs, compensation, damages, penalties or any other expenses which the contractor shall be field liable for by the employer. Third parties. If the contractor shall be expelled as aforesaid, the sub‑contractor shall be expelled as aforesaid the sub‑contractor shall be entitled to be indemnified by the contractor in respect of any expenses or damages incurred by the contractor in respect of any expenses or damages incurred by the sub‑contractor arising from such events. (f) If any such case as aforesaid the contractor may assign the contract to any other company, the sub‑contractor shall bear all costs incurred further due to increased rates set by the new sub‑contractor against the provisions herein contained. (g) Should the contractor by reason of its completing the works in accordance with this clause, incur any expenditure in excess of the expenditure which would have been incurred by the contractor if the works would have been completed by sub‑contractor (due amounts being taken or any extra work or work omitted then the amount of excess as certified by the Agent and supported by documentary evidence shall be deducted from any money which may be in hand for work done. by the sub‑contractor or any of the temporary works and any deficiency shall be, reimbursed by sub‑contractor. A bare perusal of Article 20 would show that under the terms of the contract the M.I.C. had to provide all constructional plant which were required for the construction of the project and under Article 37 UZIN had a right of entry which has been used in the present case and according to this article all constructional plant machinery etc. which were present at the site for the purpose of construction can be used by the appellant as per terms of contract after it exercised the right of entry. The contract between M.I.C. and UZIN was entered in 1980 and became effective in July, 1981. The M.I.C. appointed ASIACON as a sub‑contractor for carrying out the work mentioned in the said contract. ASIACON was appointed on 9‑7‑1983 and under Article 1.4.2 it was specifically provided that in case of exercise of right of re‑entry by UZIN, ASIACON would only have claimed for damages against M.I.C. Under Article 8 of the contract between M.I.C. and ASIACON the terms of the main agreement between UZIN and M.I.C. were adopted and under this contract it has been specifically provided that if there is anything inconsistent the provisions of this contract will prevail. The ASIACON while entered into the contract with M.I. C. was fully aware of the terms and conditions of the contract between UZIN and M.I.C. Articles 20 and 37 of the contract had been incorporated in their contract by virtue of Articles 8 and 8(1) of the contract between M.I.C. and ASIACON. Another view of the case is that in May, 1983 a Suit No. 559/83 was filed by UZIN against M.I.C. for injunction on the allegation that M.I.C. wanted to remove essential machinery from the site. Interim order in favour of UZIN was granted and ultimately M.I.C. agreed not to remove from the site any machinery. During the pendency of the Suit M.I.C. also filed Suit for damages being Suit No. 383/84 against UZIN which is still pending. UZIN filed Suit No. 17/85 against M.I.C. alleging therein that they were interfering with the use of machinery etc. on the site. In this Suit it is alleged that M.I.C. wanted to remove some machinery from the site and on account of this reason UZIN exercised their right of re‑entry as provided under Article 37 of the main contract and after exercising such right filed the Suit. Interim injunction was granted by a single Judge of this Court to certain extent on the application of M.I.C. Mr. Fida Hussin G. Ebrahim was appointed as Commissioner by the Court to prepare an inventory of the machinery lying on the site and also to measure the work done by M. I. C. The inventory was prepared by the Commissioner and ASIACON also assisted in the preparation of the inventory, though their application under Order 1, rule 10 praying that they may be impleaded in the Suit was dismissed by the Court. Thus ASIACON has not been taken by surprise. It was fully aware that UZIN had taken possession of the machinery under the terms of the contract. In the said Suit the learned Single Judge by means of order, dated 18‑4‑1985 allowed the injunction application permitting UZIN to use the machinery. Against the said order appeal was filed by M . I . C . which was dismissed by a Division Bench of this Court. The effect of the two orders would be that the right of UZIN to use machinery has been accepted tentatively. It is also contended by the learned counsel for UZIN that during the pendency of the injunction application and the application of ASIACON under Order 1, rule 10, C.P.C. tenders for awarding the work which was subject‑matter of the contract between UZIN and M.I.C. to other contractors were invited and one of the terms of the contract was that the machinery provided by previous sub‑contractor namely M.I.C. were available on the site for use but no objection was taken either by M.I.C. or by ASIACON. This contention of UZIN .has not been controverted. Another factor which goes against ASIACON is that in Suit No. 383/84 as application was moved by them stating therein that Nazir of the High Court should take over possession of their machinery from UZIN and hand over the same to them as contract of M.I. C. was terminated. UZIN had requested ASIACON to continue with the work but they refused to do so on the ground that they could not do it independent of M .I . C . After the machinery was seized and an order was passed in Suit No. 17/85 ASIACON filed Suit against UZIN and others and claimed the relief which has been mentioned above. In this Suit Nazir was appointed by the Court to prepare another inventory of the machinery. The Nazir gave his report and also mentioned the damaged condition of some of the items of the machinery. UZIN has also stated that ASIACON could remove machinery from the site which are not required by them. The learned Judge held that it was not a case where injunction ought to be granted nor a case for attachment before judgment was made out by ASIACON. He however, appointed the Nazir as receiver to take over all the plants/machinery/equipment of ASIACON lying on the site. The operative part of the order reads as under: "It was also contended by Mr. Muhammad Sharif that even if I come to the conclusion that prima facie UZIN has no right to use the said machinery yet this is not a case for appointment of a receiver to take over such machinery. According to the learned counsel, the plaintiff has assessed their damages in pecuniary terms; no irreparable damage will be caused to them if receiver is not appointed; balance of convenience also lies in not appointing a receiver and that in case a receiver is appointed it will cause clossal loss to UZIN, as the completion of the entire project which is at its closing stages, will be in jeopardy. I do not agree with Mr. Muhammad Sharif that this is not a case for appointment of a receiver. It has already been noticed that admittedly the plant, machinery and equipment in respect of which interim relief by way of appointment of a receiver is sought by the plaintiff, belong to plaintiff ASIACON; the said plant, machinery and equipment is being used by new sub‑contractor of UZIN; and that during such use such plant machinery and equipment must obviously be undergoing deterioration and wastage and that prima facie such use of plaintiffs machinery is unauthorised. Nevertheless, I am mindful of the serious complications that may arise for UZIN in case a receiver is appointed, as this is bound to delay the completion of the project. I have decided to put certain terms in my order to protect the rights and interests of both the plaintiff ASIACON as well as UZIN." We are of the opinion that the observation of the learned single Judge that the machinery being used by UZIN is unauthorised to ou mind is not correct. Once it is admitted that UZIN had exercised their right of re‑entry then this observation is contrary to the facts and conditions of the contract. Then under the contract between M.I. C. and ASIACON ASIACON has accepted that his claim for damages etc; would be against M.I.C. It is the case of ASIACON that there existed privity of contract between UZIN and ASIACON and the learned t ' g Judge has come to the conclusion that there does not exist any privity of contract between UZIN and ASIACON. Once this conservation has been made then the above‑noted finding goes contrary to the earlier observations. Additionally, once the prayer for injunction has been refused how the prayer for appointment of receiver could be entertained and if the receiver cannot be appointed then the demand of security t our mind is not logical. The Court cannot grant an injunction or demand security if the plaintiff has failed to establish prima facie his case for such relief. ASIACON has been appointed as a sub‑contractor by M.I.C. It is contended by the learned counsel for ASIACON that the contract was granted to ASIACON with the consent of UZIN and then there is a privity of contract between UZIN and ASIACON. We see no force in this contention. The terms of the contract executed between UZIN and MIC, are also a part of the contract between M.I.C. and ASIACON. ASIACUN had stepped into the shoes of M.I.C. and therefore, rights and liabilities have to be judged in the light of the main contract executed between UZIN and M.I.C. ASIACON has to execute and perform such engineering work which was part of the main contract between UZIN and M.I.C. During the subsistence of main agreement, M.I.C. entered into a contract with ASIACON. At that time neither the contract was rescinded nor modified. Let us examine the case from another angle. If a receiver is appointed then the losses to be suffered by UZIN would be clossal. He had invested million of rupees in the adventure, advanced a considerable amount to M.I.C. for carrying out the work. The entire project would come to stand still. There is no allegation that the owner has done any act of misfeasance or non‑feasance. Due to the dispute between ASIACON and UZIN the main sufferer would be the owner. This is an additional ground for not granting the relief to ASIACON. Then the list of the machinery present at the site has been prepared ASIACON assisted in preparation of such list/inventory. UZIN has specifically mentioned the machinery, which he is using. The cost of such machinery can be adjusted in terms of money. The remaining machinery can be taken away by ASIACON. In fact ASIACON has assessed the damages and it is claimed in the suit filed by it. Another feature of the case is that according to ASIACON they stopped the work at the instance of M.I.C. If they had themselves stopped the work then interim relief against UZIN in the said circumstances would be against equity and principle of justice: It is the application ASIACON has stated that they have been caused loss by the acts and omissions of UZIN and no allegation o breach of contract against ATTOCK CEMENT has been made in th plaint. When the prayer in the suit is for a decree jointly and severall against all the defendants then why' UZIN has been singled out for th temporary relief, The learned single Judge has held that "the condition required to be satisfied by a plaintiff before an order for attachment before judgment of the properties of the defendants can be passed have not been satisfied by the plaintiff. The pleadings do not show prima facie that UZIN with intent to obstruct or delay the execution o the decree that may be passed against UZIN in the present suit is" about to dispose of the whole or any part of its property". It has been further observed that "it is not prima facie established that UZIN has repatriated any amount with intent to obstruct or delay the execution of the decree that may be passed against UZIN, and he is also no inclined to grant temporary injunction restraining defendant No.3 fro making payment of any nature whatsoever in respect of any bill to UZIN. The claim for damages will have to be established by the plaintif (ASIACON) through evidence to be recorded in the present case. Prim facie no suspicion attaches to the payment being made by ATTOC CEMENT to UZIN. No case has been made out for the grant of temporary injunction." From the aforesaid facts, it is clear that M.I.C. have not bee able to prove that they have a prima facie case or that balance of convenience lies in their favour or the damages are irreparable. One the other hand the inconvenience caused to UZIN would be more than the inconvenience caused to ASIACON. The effect of any order such as injunction, appointment of receiver or demanding security would amount to an adverse order against a party against whom no allegation has been made. The decree if, passed would be jointly and several and it could be executed against any of the defendant. Therefore, in these circumstances, the order impugned in this appeal to our mind I cannot be sustained. The aforesaid facts would show that it ASIACON has not mad out a case either under Order XXXVIII, rule 5 or Order XL, rule 1 0 Order XXXIX, rules 1 and 2, therefore, the question that if a case i not covered by any of the aforesaid provisions section 151, C.P.C would apply requires no consideration as the injunction cannot be granted ex delicto justitiae. In the result the H.C.A. No. 90 of 1985 filed by UZIN is accepted and the appeal filed by ASIACON being H.C.A. No. 26 of The observations made by us on the merits of the case are tentative in nature and the trial Court may come to a different conclusion after the parties led evidence on the issues to be adjudged by the Court. There will be no order as to costs. Order accordingly.