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Petitioner: MESSRS SHALIMAR LTD., KARACHI VS Respondent: RAISUDDIN SIDDIQUI AND 3 arms
Court Name: Sindh High Court Judge(s): Muhammad Zahoor-ul-Haq, I. Mehmood Title: MESSRS SHALIMAR LTD., KARACHI vs RAISUDDIN SIDDIQUI AND 3 arms Case No.: High Court Appeal No, 13 of 1972 Date of Judgment:1978-11-08 Reported As: 1979 CLC 338 Result: Appeal dismissed
JUDGMENT
JUDGMENT ' MUHAMMAD ZAHOORUL HAQ, J.-This is a High Court appeal arising from a judgment and decree in suit No, 150 of 1966, dated 6-11-1972. The appellant is a private limited company incorporated under the Companies Act, 1913, on 24th July, 1964. It filed a suit in the High Court on 2nd August, 1966 against Raeesuddin for declaration, injunction and recovery of documents. Later on 3 more defendants, viz. (1) Abdul Basit, (2) Faiz Muhammad Gabool, (3) Abbas Khan Gabool were added as defendants in the said suit and amended plaint was filed. The plaintiff company had alleged in the said suit that it had it's Directors (1) Muhammad Arjumand Malik, (2) Saddat Farooq Butt, (3) Azizuddin Farooqui, and (4) Mst. Shahida Begum. The aims and objects of the company were to own, purchase and acquire etc., land with or without construction and to form and establish Housing Estates and to dispose them of. It was alleged in the said plaint that a township scheme was conceived and introduced by one Mr. S. Riasat Hussain Rizvi, who was an employee of National Commercial Bank as their paerokar. This scheme was for the welfare of the employees of the National Commercial Bank and since the defendant Raisuddin was working in the said Bank as a Branch Manager therefore, the scheme was got approved from him and was named as Bijnore Town. This name Bijnore Town was assigned to this scheme as Raisuddin belonged to Bijnore. It was alleged further that this scheme was re-examined and reconstituted into much larger scheme named as Shalimar Town Scheme and for this purpose, the plaintiff-Company was proposed to be incorporated. The plaint showed Raisuddin and Muhammad Arjumand Malik as Promoters of Shalimar Town and Shalimar Limited. It was alleged that Mr. Raisuddin had nominated his own brother Azizud Din and Mst. Shahida Begum as his nominee, in the said scheme and the proposed company, who subscribed to the Memorandum of Association and Articles of Association of
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proposed Shalimar Limited, the plaintiff-Company. No dates were mentioned in the plaint. It was also alleged that Raisuddin volunteered to organise the preliminary stage for Shalimar Limited with the assistance of Mr. Riasat Hussain Rizvi and that Mr. Raisuddin, thus made agreements of purchase with owners of Agricultural land. The agreements are 7 in number and are detailed in the schedule of the plaint. The plaint further stated that the agreements for purchase of land were made on behalf of the proposed Shalimar Limited and applications were made for permission of sale and conversion of Agricultural land involved and that no objection certificate had been sought from K. D. A. For the approval of Shalimar Town Scheme and also an application was made to the Commissioner, Karachi for purchase of land adjoining the land which was subject-matter of the two agreements mentioned in the schedule to the plaint. It was further alleged that in the finalisation of the scheme, the value of the land increased and Shalimar Limited wanted to sell the said land, but Mr. Arjumand Malik, the Managing Director of the plaintiff-Company had to proceed to Rawalpindi in April, 1965. The negotiation for the sale of land in question by the plaintiff- Company were going to be finalised when Mr. Riasat Hussain Rizvi proposed that 50 % of the net profit to be made by the plaintiff-Company should be placed at the disposal of the staff of National Commercial Bank. This idea was not liked by Raisuddin and he therefore put obstacles in the negotiations of sale and therefore removed the valuable documents and record of the plaintiff-Company and thus, caused wrongful loss to the Company. In spite of the notice in, the newspaper, the defendant Raisuddin did not return the documents and records to the plaintiff. It was also alleged, that Raisuddin was contemplating to have the agreements, with the agricultural land owners, enforced and to relinquish the rights under the said agreements. The suit in question was therefore filed against the defendant Raisud Din by the plaintiff seeking (1) a declaration that the agreements for purchase referred to in schedule of the plaint belong and pertain to and vest in the plaintiff, (2) injunction against the defendant from incumbering, selling, transferring etc. The aforesaid documents and record of rights thereunder, (3) recovery and restoration of the agreements and record, etc. ' In the amended plaint para. 16-A was added to the effect that defendant/ respondent Raisuddin jointly with newly-added defendant Abdul Basit has managed to part with and surrender fictitiously right under the agreements dated 5-11-1963 and 28-12-1963 in favour of Mr. Abdul Basit with the help of Messrs Faiz Muhammad Gabool and Abbas Khan Gabool. In the prayer clause, however, no amendment was made and the prayer of the original plaint was allowed to continue. ' The defendant/respondent No, 1 Raisuddin filed his written statement on 23-2-1967 and took up preliminary objection that suit as framed was not competent and plaintiff having no right to sue, the suit is rendered not maintainable and that the suit was barred by the Specific Relief Act. The defendant/respondent No, 1 admitted that the plaintiff was promoted by the persons mentioned in the plaint, but he stated that the Directors did not pay any share money and they had not obtained qualifying shares. He further denied that Mr. Riasat Hussain Rizvi had introduced township scheme, he also denied that the scheme of Shalimar was approved as alleged in the plaint. He claimed that he, in his own right and to the exclusion of the plaintiff or the employees of National Commercial Bank had entered into agreement with the sellers of land in question. He further stated that sale consideration was not raised or provided by the plaintiff and the plaintiff have no locus standi or interest in the property in question. He further denied that Shalimar scheme was floated for benefit of plaintiff or that Raisuddin was personally interested in the affairs of the township scheme. Raisuddin, however, admitted that he was approached by the plaintiff to join in the venture of the township and he therefore, put forward the names of his wife and brother as his nominee in the proposed plaintiff-Company, but he alleged nothing tangible transpired except the incorporation of the said Company. In the alternative he pleaded that the plaintiff by their own conduct had abandoned and waived their claim, if any, and plaintiff was estopped from seeking any relief. The
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rest of the allegations in the plaint were denied by defendant/respondent No, 2 and he claimed exclusive property in the agreements and he denied that he had removed the ageeements but on the other hand he claimed that he had the agreements always with him in his own right. The defendant/respondent No, 1 further claimed that in view of his independent right under the agreements he is fully entitled to deal with the agreements in his own volition and he denied misappropriation of the agreements. In the end he prayed for dismisaal of the suit. ' The defendant No, 2 had filed his separate written statement and he claimed that agreements dated 5-11.1963 and 28-12-1963 were mutually cancelled by defendant/respondent No, I on the one hand and defendants/ respondents Nos 3 and 4 on the other hand before the filing of the suit and that he had entered into an agreement on 29th July, 1966 with defendants/ respondents Nos 3 and 4 for the purchase of the land in question in his own independent right. He further stated that the plaintiff-Company having been incorporated after the 2 agreements in question were executed, therefore, the plaintiff is not entitled to claim any benefits in those agreements and that the plaintiff being able to seek further relief for specific performance of the contract have failed to do so and hence the suit was bad in law. ' The following issues were re-cast by the Court on 29-2-1968 :- "(1) Is that suit incompetent and non-maintainable as pleaded by defendant No, 1 ? If so, its effect ? (2) Whether the agreements specified at Nos I to 7 in Schedule to the plaint entered into ostensibly in the name of defendant l, on behalf of the plaintiff and for its benefit as pleaded by the plaintiff. If so, its effect ? (3) What amounts, if any, were invested by or on 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 Mukhtiarkar, 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 landlord 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 Mazhar Ali Advocate who also appeared for defendant Abdul Basit. None of
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the defendants offered himself as a witness in the suit proceedings and their counsel made a statement on 5-11-1969 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 net 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 incompetency 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/respondent 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 that 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
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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 he 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 PLD 1972 SC 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
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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 sign 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 fade 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 be mentioned as the purchaser. It has been held in AIR 1931 P C 175, AIR 1924 Cal. 467 and PLD 1960 Kar. 852 that the burden of proof lies upon the persons who alleged that an agreement has been intered 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 limitated 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 PLD 19 Kar. 852, which decision was upheld in 1968 SCMR 574(?). Even in PLD 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 AIR 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 is 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
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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 potition. 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…
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