1980 PLP 324 (CLC)

And whereas the entire purchase price of the said 5000 shares amounting to Rs. 7 lakhs (Rupees Seven Lakhs only) was paid to the West Pakistan Enemy Property Management Board through Funds provided by the Second Party and upon the distinct understanding (as evidenced by an agreement dated 2nd June, 1971) that the First Party shall hold the said 5000 shares as also the additional 100 shares in trust for and on behalf of the Second Party and that the real ownership of the said shares would vest at all times in the Second Party. (I have underlined* for emphasis). And whereas, as a result of the aforesaid arrangement and the premises recited earlier above the Second Party becomes vitally interested in the affairs of the Company and is desirous of making certain provisions with regard to the future management and conduit of the business and affairs of the Company. And whereas the Second Party would like to enter into a con tract with the First Party in relation to the above matters. THIS AGREEMENT WITNESSETH: (1) With effect from the date the amicable settlement between the Second Party and the Litigants in the various suits comes into effect, the First Party shall be deemed to be the Resident Director of the aforesaid Company, exercising such powers as would be assigned to him by the Board of Directors of the Company. (2) The First Party shall, in consideration for the services to be rendered by him to the Company as its Resident Director, be entitled to the following emoluments ; (i) Basic Salary of Rs. 5,000 (ii) House Rent of Rs. 1,500 (iii) Entertainment Allowance of Rs. 300 (6) The First Party herein acknowledges and confirms having execut ed the transfer forms in respect of his entire shareholdings in the said Company and delivered them to the Second Party. The Second Party shall be entitled to transfer the said shares to him self or to his nominees and the said transfers will be registered in the books of the Company as and when notified. Notwithstanding anything herein contained, the First Party shall continue to hold his 100 qualification shares of the Company in his own name but in trust for the Second Party and/or his nominees." (Underlined 'is mine for emphasis). It is obvious from the recitals and the provisions of clause 6 that the plaintiff by the said agreement acknowledged and confirmed that he held 100 shares of the company in his name but in trust for defendant 2 and or his nominees. Defendant 2 in his affidavit filed alongwith the application under Order XXXIX, rule 4, C. P. C. dated 29th April, 1979 (C.M.A. No. 1824 of 1979) has denied that he or defendant 3 or defendant 6 have threatened or coerced the plaintiff. He has stated that the plaintiff at his request tendered his resignation from the Board of Directors of defendant, on 22nd January, 1979, without any threat or coercion in the meeting of the Board held on the same day he attended, which was accepted. He has annexed a letter dated 22nd January, 1971, addressed to the Board of Directors of defendant 1 whereby he tendered his resignation. He also annexed a photostat copy of Form XII dated 23rd January, 1979, filed with the Registrar, Joint Stock Companies, Karachi under which he had informed the Registrar, Joint Stock Companies, Karachi, about the resignation of the plaintiff from the Board of Directors and other sup porting documents. He has further claimed that the plaintiff was holding the directorship of defendant 1 as his nominee. In support of the claim that the plaintiff was not the owner of 100 shares he has annexed to the affidavit a copy of letter dated 6th June, 1970, which was delivered by the plaintiff to Mr. Fakhruddin G. Ebarhim (now Mr. Justice Fakhruddin G. Ebrahim) to be delivered to defendant

2. It will be useful to repro duce this letter in extenso: Karachi Dated June 6, 1970. Dear Mr. Saddruddin, I confirm having arrived at the following settlement; (1) That I have, by separate documents, agreed to sell to you 5,100 shares in Messrs B. R. Herman & Mohatta Ltd., i.e. 100 shares standing in my name and 5000 shares which the Custodian has agreed to transfer in my name. The price of 5000 shares has been advanced by the Muslim Commercial Bank Ltd. under your instructions and on payment of the said amount by you to the Bank. (2) I agree that I will make every endeavour to have the said 5,000 shares transferred in your name or the name/names of your nominee/nominees. Please, however, note that if I cannot trans fer the said shares in your name I will be holding the said shares on your behalf and for your exclusive benefit. I will be only a nominee shareholder of 5100 shares. (3) I further agree that if I am appointed as receiver of the said Company or otherwise become entitled to manage the said Company, I shall be doing so on your behalf and under your instructions and for your benefit. (4) That I agree to abide by whatever instructions that will be issued by you or on your behalf in relation to the business of the said Company. (5) Please note that this letter is to be read in conjunction with our previous agreement of sale of 5000 shares by me to you. He has also annexed to the affidavit a photostat copy of blank transfer deed of 100 shares duly signed and signature verified which was, according to him, delivered to him He has further stated that 100 shares wer4 transferred by the Board of Directors of Company defendant 1 at its meeting held on 22nd January, 1979, to his nominee which meeting was attended to by the plaintiff. In the affidavit-in-rejoinder the plaintiff has denied that he had attended the meeting held on 22nd January, 1979, or that he voluntarily resigned from the directorship of the company on 22nd January, 1979, or such resignation was accepted. His case is that on that date be was in Lahore and be had returned to Karachi on 23rd January, 1979, by Flight No. PK-303 reaching Karachi after 3-00 p m. With regard to the letter dated 6th June, 1970, his stand is that this was a privilege communication between him and his counsel while the case of defendant 2 is that this letter was delivered by the plaintiff to his counsel for delivering it to him (defendant 2). He has also denied that he ever gave the original share certificate of 100 shares to the plaintiff and desired an order by the Court for production of the original share certificate if he delivered the same to the defendants as claimed by the defendants. He has however, not denied the execution of the blank transfer deed and has also not explained as to how defendant 2 came in possession of the blank transfer deed. He, however, claims to be the owner of the shares and in support of the claim he has annexed a photostat copy of a certified copy of Form--E issued by the Registrar, Joint Stock Companies, Karachi on 4th April, 1979, which contains a list of share-holders of defendant 1 as on 21st May, 1978, which shows that he was the owner of 100 shares on that date. Here I may mention that while arguing the case Mr. A. K. Brohi, learned counsel for defendants 7 to 10 produced in Court the original share certificate which was seen and returned to him which according to him bore the signature of the plaintiff as director of the company, defen dant. On the other hand learned counsel for the plaintiff was unable to produce the original script if the same was still in his possession and he was still the owner of 100 shares. I have perused all the documents pointed out by the learned counsel for the parties and on the basis of the present record I am unable to prima facie find that the plaintiff is the holder of 100 shares of defen dant

1. The letter dated 6th June, 1970, and the agreement dated 2nd September, 1974, the execution whereof is not denied by the plaintiff show that he was holding 100 shares as nominee and trustee of defen dant

2. He has also not denied the execution of the blank transfer deed in respect of the said shares and has not explained as to how and in what circumstances he delivered that blank transfer deed to defendant and in view of the fact that he has not produced the original share certificate and has also not explained its absence and on the other hand production of the original certificate by the defendants and the fact that he resigned on 22nd January, 1979, from the Board of Directors by the letter dated 22nd January, 1979, are all factors which when taken into consideration lead to one conclusion for the purposes of prima facie finding that he is not the owner of 100 shares. His stand that he was in Lahore and returned to Karachi on 23rd January, 1979, by Flight No. PK-303 reaching Karachi after 3-00 p.m. and therefore he could not have taken part in the meeting alleged to have been held on 22nd January, 1979, is vague for be has not stated since when he was in Lahore and if he had gone to Lahore on 22nd January, 1979, by what flight he had gone there. As regards the form containing the list of persons holding shares in defendant 1 annexed to the affidavit marked as Annexure'A/2', which shows him as holding 100 shares, but this list shows him so on 21st May, 1978, and this has to be read in conjunction with the agreement dated 2nd September, 1974, and other documents which show him bolding these shares in trust for defendant

2. I have therefore, come to the conclusion that the plaintiff has failed to show prima facie that he is a share-holder of defendant 1 and therefore, he is not entitled to any interim relief. 1, therefore, dismiss the application and vacate the interim order of injunction passed on 2nd May, 1979. The other two applications also stand disposed of. I may note that all or any observations made in this order are of tentative nature and have been made only in relation to interim relief claimed by the plaintiff and the main case will course, be decided on merits after the parties have led their evidence. M. A. K. Appeal dismissed.