1979 PLP 338 (CLC)

(3) What amounts, if any, were invested by or an behalf of the plaintiff and defendant 1 ? If so or not, its effect ? (4) Did the defendant No. 1 transfer the rights under agreements specified at Nos. 1 and 2 in Schedule to the plaint to the defendant 2 as pleaded by the defendant No. 1 ? If so, its effect ? (5) Is the transfer, if any fictitious and fraudulent as pleaded by the plaintiff ? If so or not, to what effect ? (6) Were the documents and records specified in schedule to the plaint removed by defendant No. 1 as pleaded by the plaintiff ? (7) Has the suit been undervalued ? If so, with what effect ? (8) Did any cause of action accrue to the plaintiff against the defendant No. 2 ? (9) Has plaintiff omitted to seek further relief of specific performance of contract ? If so, with what effect ? (10) Is the plaintiff-Company-entitled to claim benefits of the agreements dated 5-11-1963 and 28-12-1963 despite its incorporation after the date of the said agreements ? (11) Whether the two agreements dated 5-11-1963 and 28-12-1963 were mutually cancelled by their executants ? If so, with what effect (12) What is the effect of the agreements dated 29-7-1966 executed between the defendants Nos. 3 and 4 with the defendant No. 2 in respect of the suit land ? (13) To what reliefs, if any, is the plaintiff entitled against the defendants." The plaintiff examined D. W. 1 Abdul Razzak, Superintendent in the office of the Commissioner, Karachi, (2) Muhammad Ismail Clerk in the office of the Mukbtiarkar, Karachi, (3) Mr. Riasat Hussain Rizvi who was the paerokar and Officer and General Attorney. of National Bank at the relevant time. Plaintiff also examined P. W. Muhammad Sultan Qazi, Chief Draftsman of K. D. A. and P. W. 5 Dhanji Shah Byramji Ghadiali, a land lord and land development agent, and P. W. 6 Muhammad Arjumand Malik who was the Managing Director of the plaintiff-Company. A number of documents were produced. The P. Ws. were cross-examined at length by the counsel of defendants. Defendants Faiz Muhammad Gabool and Abbas Khan Gabool did not file their written statements, but they were represented by Syed Mazbar Ali Advocate who also appeared for defendant Abdul Basit. None of the defendants offered himself as a witness in the suit proceedings and their counsel [made a statement on 5-I1-1969 that they have no oral evidence to lead and will rely upon the documents already exhibited. Mr. Ghulam Hussain Abbasi, the learned counsel for the appellant has taken us through all the documents and deposition as he contended that the finding arrived at by the learned Judge were not justified according to the state of evidence. But before dealing with the submissions of the learned counsel on the merits of the evidence we will first consider his objection in respect of the maintainability of the suit. The learned Single Judge has considered this aspect under Issues Nos. 1 and 9 where he seems to have taken a view that in a suit under section 42. of the Specific Relief Act, a mere declaration is not enough to seek if the plaintiff is entitled to seek further relief of specific performance and he omits to do so. But, the learned Judge did not give his specific finding in respect of lack of prayer for specific performance but instead of that he held that since admittedly the plaintiff is not in possession, it cannot be said that he was not in the need of consequential relief and therefore held that the suit in his opinion would be incompetent. We may say at the outset that we do not agree with this finding of the learned Single Judge as no one had taken any objection in respect of the in competency of the suit on the basis of the plaintiff being out of possession and hence the same was not in issue and no decision could therefore be based on the basis of possession. The plaintiff was seeking a declaration that it was entitled to all the rights in respect of the agreements which had been entered into by the defendant/respon dent No. 1 with the sellers of land as detailed in the schedule to the plaint and the plaintiff was further seeking the possession or recovery of the said agreement from the respondent/defendant No. 1 and it was further seeking a relief of injunction against the respondent No. 1 restraining him from disposing or transferring those agreements or his rights under the said agreement and if the plaintiff felt that it's right would be safeguarded by seeking only this relief, they could not be said to have omitted any further relief in the matter. Hence their suit could not be said to be incompetent on that account under section 42 of Specific Relief Act. In any case, the question of possession of the property did not arise in this case as the possession had always remained with the sellers of the property and the notional possession which was admitted in those agreements to have been given to the defendant/respondent No. 1 Raisuddin was only for the limited purpose of getting the land surveyed and therefore, the possession of the land was not really in issue till such time that the plaintiff would have been required to file a suit for specific performance of the contract against the owners of the land and thereafter seek possession of the land from them. Since in the present suit, the plaintiff was seeking its main relief from respondent No. 1, therefore, it could not seek the relief of specific performance and possession and hence the finding that the suit was incompetent on account of lack of prayer for possession in the plaint was not justified. However, in respect of the incompetency of the suit on account of failure to seek relief against Abdul Basit and respondents Nos. 3 and 4, we will comment later. Mr. Ghulam Hussain Abbasi wants us to hold that in view of evidence led by the plaintiff and the surrounding circumstances, had been proved that respondent/defendant No. 1 Raisuddin was merely Benamidar for the plaintiff in respect of the 7 agreements mentioned in the Schedule of the plaint. He says that the entire evidence in the case has been led by the plaintiff alone and no evidence has been led in rebuttal by the defendants/ respondent and since the respondent/defendants have failed to come in the witness-box, therefore an adverse inference against them should be drawn under section 114 (G) of the Evidence Act, He has particularly relied upon the depositions of Mr. Riasat Hussain Rizvi who alleges to have managed these agreements on behalf of the plaintiff in the name of Raisuddin and who has deposed that he made all the payments on behalf of the plaintiff to the sellers of the land. The deposition of Mr. Riasat Hussain Rizvi is alleged to be supported by deposition of Mr. Arjumand Malik who is admittedly the Managing Director of the plaintiffs. Some support is also sought from the evidence of Mr. Ghadially as corroborating the statements of Mr. Riasat Hussain Rizvi and Arjumand Malik. Mr. Abbasi has contended that even if the oral evidence of the three P. Ws. mentioned above is not entirely believed, as the learned Single Judge has found some faults with their depositions, still the documents produced on behalf of the plaintiff fully establish that the agreement had been made on behalf of the plaintiff in the name of Raisuddin. He particularly relies heavily on Exh. No. 44 dated 5-8-1964 which is addressed by Azizuddin Siddiqui, the brother of Raisuddin in his capacity of Director Shalimar Limited addressed to the Commissioner Karachi, In para. 2 of the said letter there is a mention to this effect, "in furtherance of our object we have entered into transaction of purchase by us of the plots of land Nos. 351 and 354 admeasuring 32 acres 28 ghuntas belonging to Messrs Faiz Muhammad Gabool and Abbas Khan Gabool". This letter ends with a request to the Commissioner of Karachi to grant lands to Shalimar Limited which are adjacent to plots Nos. 351 and 354 and which are lying vacant and are owned by the Government. Mr. Abbasi has also placed reliance on Exhs. 31 and 32 dated 4th March 1965, letters written by Faiz Muhammad Gabool and Abbas Gabool to the Deputy Commissioner, Karachi seeking permission to transfer their 50 % shares in Survey Nos. 351 and 354 situated in Deh Gujro, Karachi to Messrs Shalimar Limited. Apart from these three documents, there is Exh. 40 dated 5-11-1964 written by Mr. Ali Nazar Advocate on behalf of Shalimar Town to K. D. A. for no objection certificate which was forwarded by K. D. A. to the Chief Town Planner on 19-11-1964 by Exh.

52. Apart from those there are certain other documents showing that Messrs Shalimar Limited had something to do with Plots Nos. 351 and 354 but these documents are all of subsequent date and therefore would not be of much significance except in support of the aforementioned documents. Real question is what was the original intention. Mr. Abbasi has contended that Mr. Raisuddin in his written statement has admitted that Mr. Azizuddin was his brother and was his nominee in the Shalimar Ltd., and therefore, the application Exh. 44 dated 5-8-1964 which is signed by Mr. Azizuddin as Director of Shalimar Limited has a very great importance, inasmuch as, Mr. Azizuddin has written in the said application that Shalimar Limited has purchased Plots Nos. 351 and 354 from Faiz Muhammad and Abbas Khan Gabool. These documents with the applications Exhs. 31 and 32 by Faiz Muhammad Gabool and Abbas Gabool sent to the Deputy Commissioner on 4-3-1965 for permission to sell their shares in Survey Nos. 351 and 354 to Messrs Shalimar Limited is according to Mr. Abbasi a sufficient proof of the fact that agreement of purchase in respect of these lands had really been entered into by Mr. Raisuddin as Benamidar for the proposed Shalimar Limited. Mr. Abbasi has stated that the said letter of Mr. Azizuddin had been clearly mentioned as a document relied upon in the plaint, and therefore it was necessary for the defendant/respondent to meet that point and his failure to depose shows that he admits the same. Mr. Abbasi has also submitted that the deposition of Riasat Hussain Rizvi wherein be has stated clearly that he was acting on behalf of Shalimar Limited and he had made the payment to the sellers involved in the agreements on behalf of Shalimar Limited should be accepted as true in view of those letters of Azizuddin Exh. 44 and the application of Abbas Khan Gabool and Faiz Muhammad Gabool Exhs. Nos. 31 and

32. He also says that the evidence of the Managing Director of the plaintiff-namely Arjumand Malik also supports the version of Riasat Hussain Rizvi where he has stated that he paid Rs. 62,000 and Raisuddin paid Rs. 80,000 all the money was entrusted to Riasat Hussain Rizvi. Mr. Abbasi has contended that the written statement of Raisuddin should be completely disregarded as he has not appeared before the Court and for this submissions he relies upon P L D 1912 S C

25. This is no doubt correct and we would therefore not place much reliance upon the written statement of Raisuddin. It is also correct that Mr. Azizuddin was nominee of Raisuddin in the plaintiff-Company and therefore, whatever he did as a Director of the Company, Mr. Raisuddin could be burdened with responsibility of the same as Mr. Azizuddm would not ordinarily do anything which was against the interests or against the instructions of his brother Mr. Raisuddin, particularly more so, when it is an admitted position that Mr. Azizuddin did not pay the amount towards shares of the plaintiff Company. But the effect of these admissions in respect of Benami nature has to be determined. We cannot lose signt of the fact that the 7 agreements starting from 5-11-1963 to 24th September 1964 had been entered in the name of Raisuddin and there is an acknowledgment in those agreements of the advance moneys having been paid to all the sellers by Raisuddin and therefore prima facie the agreements have been entered into by Raisuddin with the sellers and he has paid the advance money. Since the plaintiff wants the Court to believe that the agreements at their inception had been executed benami in the name of Raisuddin but for the benefit of Shalimar Limited, the burden is upon the plaintiff to prove that it was the plaintiff-Company, or the proposed plaintiff-Company through its promoters which really entered into these transactions but for the purpose of show, it allowed the name of Raisuddin to mentioned as the purchaser. It has been held in A I R 1931 P C 175, A I R 1924 Cal. 467 and P L D 1960 Kar. 852 that the burden of proof lies upon the persons who alleged that an agreement has been entered into by some one else, but in the name of another person. Now the plaintiff wants us to hold that the 7 agreements were entered into by them or by their promoters but in the fake name of Raisuddin. In this respect, it would be necessary to examine the two most important questions as to whether, (1) the agreements were initially entered into by the plaintiff, or on behalf of plaintiff by its promoters, because under section 23(g) of the Specific Relief Act, a public limited Company can apply for specific performance of the contract if the same has been entered into by its promoters for these purposes. We will not go into the question whether the plaintiff-Company could not avail of the provisions of the section 23(g) of Specific Relief Act, as it was not a Public Limited Company, as the matter can be decided on the point whether the contracts in question had been entered in benami for the benefit of the plaintiff. Another question of significance would be whether (2) the money has come from the plaintiff or not. It has been consistently held by various authorities that in respect of the allegation of benami transactions most important criterion is to consider from what source the money comes. Suffice to refer to P L D 196 Kar. 852, which decision was upheld in 1968 S C M R 574(7). Even in P L D 1975 Kar. 1006 which is relied upon by the appellant it was held that source of purchase money is an important criterion to determine the character of Banami transactions, but in case of no proof of payment, the case has to be dealt with on reasonable probability. However in A I R 1931 P C 125, it was also held that the surrounding circumstances, position of the parties and their relation and subsequent conduct must be considered when considering the benami transaction, But this was a case of gift which was being challenged as benami and not a purchase. In any case the intention at the time of the initial acquisition to be ascertained from different circumstances most important being the source of money. Since, it is an admitted position that the plaintiff was incorporated as a Company on 24-7-1964, therefore, the five agreements which had been entered into by Raisuddin with the sellers before 24th July, 1964 could be utmost regarded as having been entered into by the promoters of the Company and therefore one has to see as to when the promoters started the idea of floatation of the plaintiff-Company. In this respect, the statement contained in the plaint is completely vague. Similarly, the statement made by Riasat Hussain Rizvi does not give any specific date as to when the idea to promote the plaintiff-Company was decided upon. Even, the statement of Mr. Arjumand Malik in the examination-in-chief is quite vague about the time of promotion of the plaintiff-Company, but in the cross-examination he has made a statement that in January, 1963 it was decided to expand 'Bijnore Town' into Shalimar Town and float Shalimar Limited for the purpose of execution of Shalimar Town Scheme. This statement alone provides a basis of determining the date of promotion and in view of lack of any statement from the defendants side, we can act upon this statement if there was no other evidence available on record contrary to this petition. But, unfortunately for the plaintiff there are two documents on record which are obstacles in the way of accepting this statement of Mr. Arjumand Malik Exh. 11 which is a sketch of `Bijnore Town Scheme' produced on behalf of plaintiff which bears a date 17-12-1963, therefore this sketch clearly establishes that by 17-12-1963 it is only the 'Bijnore Town Scheme' which is in existence and "Shalimar Scheme" which is alleged by the plaintiff to be an expansion of Bijnore Town Scheme has not so far been even conceived and if Shalimar Scheme has not even been conceived by this date, viz. 17-12-1963, then by no stretch of imagination it could be said that first agreement Exh. 19 dated 5-12-1963 had been entered into by Raisuddin either as promoter of Shalimar Limited or on behalf on Shalimar Limited and hence there could be no question of an intention of acquiring the same for plaintiff. This document therefore completely, negatives Mr. Arjumand Malik that Shalimar Town acid Sh21imar Company bad been decided upon in January 1963. Another document which is of great significance in this respect is the sketch of 'Shalimar Town' which is Exh. 13 on the record and was also produced by the plaintiff acid this bears the date of 18-7-1960, and therefore it could be safely assumed that the "Shalimar Town Scheme" and consequently, the promotion of the plaintiff Company had been conceived only about this time or may be even a month or so earlier which placed the conception of the plaintiff -Company sortie time in June, 1964 by which date the agreements (1) Exh. 20 dated 26-12-1963 (2) Exh. 17 dated 2-3-1964, (3) Exh. 14 dated 20-4-1464, (4) Exh. 15 dated 30-5-1964 had come into being and had been entered into by Raisuddin. Even, if we allow further allowance that Shalimar nvay have been conceived in May, 1964 even then there are at least 4 agreements, -viz. Exh. 19, Exh. 20, Exh. 17 and Exh. 14 which have come into being between 5-11-1963 and 20th April, 1964 by which date the plaintiff had evidently not been even thought of and therefore it would be difficult to hold that these agreements had initially been entered into either by the plaintiff or on behalf of the plaintiff by its promoters and consequently there, could be no question of the consideration having come from them. This position would then adversely effect the other agreements, viz. Exh. 15 dated 30-5-1964, Exh. 16 dated 20-8-1964 and Exh. 18 dated 24-5-1964. There is no evident reason to presume earlier not into by Faisuddin as promoter of Shalimar Limited but he entered the latter three agreements on behalf of Shalimar Limited. It is correct that Exhs. 44, 31 and 32 show that in August, 1964, the plaintiff-Company is being shown in the role of the purchaser of Plots Nos. 351 and 354 but these documents are not sufficient to discharge the burden of proof in respect of Benami transactions. Because the agreements for the lands shown in Exhs. 44, 31. and 32 could not have been entered info for the benefit of Shalimar Limited as Shalimar Scheme or the Company had not even been conceived by January, 1.964 as held by us earlier whereas agreements in respect of there Plots Nos. 351 and 354 had been concluded by the end of December, 1954. Syed Ahmad Farooqi, the learned counsel for the respondent Raisuddin has given various explanations for the letter Exh. 44 written by Azizuddin but one explanation that has appealed to us is that though Raisuddin had entertd into the agreements for sale of these plots himself, but since he has allowed his brother to become a Director of the plaintiff as his nominee, therefore, later on in order to make the plaintiff succeed in its' business, the defendant-respondent Raisuddin allowed the plaintiff in August, 1964 to assume the role of the purchaser of Plots Nos. 351 and 354 in order to enable it to secure grant of contiguous government lands. Therefore one can come only to one conclusion that the agreements for purchase of Plots Nos. 351 and 354 could not be for Shalimar Town but they could be either for Bijnore Town or for Mr. Raisuddin or for any other scheme on behalf any other person or bank, but these are all conjectures and there is no positive proof on record. Another strong circumstance which militated against the agreement having been entered into by the promoters of the plaintiff or by the plaintiff itself that Mr. Arjumand Malik has stated that the plaintiff-Company in its first meeting held one week after the incorporation on 24-7-1964, which would place the meeting in the first week of August, 1964, had decided to ask Mr. Raisuddin to transfer in favour of the plaintiff-Company all the agreements so far executed by him with the sellers of lands, but yet we find that agree ment Exh. 16 dated 20-8-1964 and agreement Exh. 18 dated 24-9-1964 have still been entered into by Raisuddin in his name without any protest by the Company. It is inconceivable that the plaintiff-Company in spite of having resolved in the first week of August to have the previous agreements in the name of Raisuddin to be transferred in its favour, would allow subsequent agreements to be entered into in the name of Raisuddin, although, it has been formally been incorporated as a company and has started functioning as a company and has gut its Managing Director in Mr. Arjumand Malik. The upshot of this discussion is that these agreements in question do not seem to have been entered into benami for the plaintiff-Company and the plaintiff has not been able to prove that they were benarni for plaintiff. Mr. Abbasi says that the agreements were benami as money had come from National Commercial Bank. That may be so or may not be so, but we do not comment upon this aspect of the question as this issue is not before us and in fact this issue could be relevant in Suit No. 39 of 1969 which has been filed by the National Commercial Bank against Raisuddin, M. L). Malik, Shalimar Limited and others, and is pendi g in this High Court. For the present purposes it is enough to state that it has not been proved that Raisuddin had acted as benami for the plaintiff. The fact that he had allowed the plaintiff to make use of those agreements from August, 1964 for their business purpose and for the purpose of getting more land from the Commissioner of Karachi does not prove that this was the intention in December, 1963 or up to May, 1964. The plaintiff has failed to discharge the burden of proof in this respect. The most important criteria for determining benami nature of the tran saction is the source of money and in this respect too, there is hardly any evidence from the side of the plaintiff which can convince this Court in concluding that the course of payment of advances for these agreements was the plaintiff or it's promoters. The plaint is again very vague in respect of the source of money is not clearly stated as to where from the money came. Mr. Riasat Hussain Rizvi has said he made all the payment to all the sellers of the land and he had been paid Rs. 80,0(`0 by Raisuddin and Rs. 62,000 by Arjumand Malik. He says he was getting money from National Commercial Bank on the authority of Raisuddin. The money therefor. seems to have come from National Commercial Bank and not from the plaintiff and on what account the money was advanced by the National Commercial Bank is not on record and no party has made any effort to tender any proof in respect of the same. Mr. Arjumand Malik has stated that his qualifying shares in the plaintiff Co. were acquired by the money supplied to his brother who was in turn allowed clean overdraft by National Commercial Bank. The financial position of Mr. Arjumand Malik does not seem to have been sound and therefore it is difficult to believe him or Riasat Rizvi on the point that Rs. 62,000 were contributed by Arjumand Malik. There is no documentary proof that the bank did advance that amount to him or his brother. Then again one does not know whether Mr. Arjumand Malik, after procuring money from any source, gave a loan to plaintiff-Company or invested on his own. In any case the plaintiff-Company does not seem to be in a position to have any money of its own and therefore it could not be said to have supplied any money to Raisuddin for those agreements. No accounts of the plaintiff Company have been proved. It is difficult to believe Riasat Hussain Rizvi when he says that he was keeping all the cash with him in an Almirah in the room of Mr. M. D. Malik. Why the money of the plaintiff was not deposited in any account with National Commercial Bank when the bank or at least the two important officials of the Bank namely M. D. Malik and Raisuddin had promoted it. The learned Single Judge was not wrong when he disbelieved R.iasat Rizvi particularly when he was not having anything to do with the plaintiff-Company. Both Riasat Rizvi, and Arjumad Malik have stated that Raisuddin had contributed Rs. 80,0)

0. Such being the case then the source of money is Raisuddin himself and not the plaintiff. The total advances paid to the sellers in the 7.agreements in question before us amount to only Rs. 64,641.75 only and the same is less than Rs. 80,000 admitted by both Riasat Rizvi and Arjumand Malik to have been contributed by Raisuddin therefore the entire money for these agreements seems to have come evidently from Raisuddin himself or through his sources and not from the plaintiff and hence Raisuddin could not be benamidar for the plaintiff, but on the other hand the circumstances suggest that the plaintiff was itself a benamidar for Raisuddin and may be Mr. M. D. Malik. Even the amount of Rs. 24,525 for removing bandish has not been paid by the plaintiff as Mr. Arjumand Malik has admitted that he did not pay the same and the same was evidently advanced either by Raisuddin or on the authority of Raisuddin by the National Commercial Bank. Therefore the plaintiff has failed to prove that money for these agreements was provided by plaintiff or it's promoters at the time of inception of these agreements. The suit could not therefore succeed. Another aspect to which our attention was drawn by Mr. Abdul Naseer Khan, 4earned counsel for respondent Abdul Basit, is that Mr. Arjumand Malik has admitted in his cross-examination that he had known before the filing of the suit that Raisuddin had surrendered his right in respect of Exhs. 19 and 20 in favour of respondent Abdul Basit and yet the plaintiff neither sought any relief against Abdul Basit nor asked for cancellation of the agreement between Abdul Basit, Faiz Mohammad Gabool and Abbas Khan Gabool. This assertion of Mr. A. Naseer Khan finds some support through P. W. 2 Mohammad Isrnail, a clerk of mukhtiarkar, Karachi, who produced in Court Exh. 8 which is an order dated 24th February, 1967 passed by the Deputy Commissioner, Karachi permitting Faiz Mohammad Gabool and Abbas Khan Gabool to sell their respective eight annas shares in agricul tural Survey Nos. 351, 354, 570 and 571 of deh Gujroo to Mr. Abdul Basit. Therefore at least before the decision of this suit in question Raisuddin had surrendered his interest in these lands and agreements Exhs. 19 and 20 had lost their efficacy. In this state of circumstances, the suit would be bad as there is no prayer for any decree against Abdul Basit and no prayer for cancella tion of his agreement with Faiz Mohammad and Abbas Khan Gabool. To this extent, at least the suit should be held to be incompetent as there could be no effective decree in respect of lands covered by agreements Exh,. 19 and

20. We would therefore. hold that the appellant had failed to discharge their burden of proof that the 7 agreements in question were benami for the benefit of the appellant and on this ground we would dismiss this appeal. But we would not award costs as there are circumstances in this case which did not leave good impressions about the defendants.

1. MAIIMUD, J. -1 agree. Appeal dismissed.