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Petitioner: Digri Sugar Mills Limited and others VS Respondent: Mian Danish Elahi and others
Court Name: Sindh High Court Judge(s): Muhammad Junaid Ghaffar Title: Digri Sugar Mills Limited and others vs Mian Danish Elahi and others Case No.: Suit No. 1076 of 2013 Date of Judgment:2020-02-19 Reported As: KLR 2020 Civil Cases 386, PLD 2020 Sindh 678, 2020 SHC 168 Result: Appeal allowed
Judgment ORDER Muhammad Junaid Ghaf far, J. This is a Suit for Declaration, Injunction, Cancellation, Rendition of Accounts and Recovery , whereas, through listed application the Plaintif fs seeks a restraining order against Defendants No.1 & 2 from presenting the cheques mentioned in the application for encashment; or to use the same for any criminal proceedings or otherwise. It appears that pursuant to some investment by the Defendants 6 different Agreement(s), in identical terms were entered into for Investment and Commission on various quantities of sugar , and the Plaintif fs had also signed Delivery Orders, Promissory Notes, Personal Guarantees and postdated cheques. Now the parties are in dispute in respect of encashment of cheques in question; hence, instant Suit. 2. Learned Counsel for Plaintif f No. 1 has contended that the six cheques in question were given as security pursuant to Agreement(s) entered into with the Defendants in respect of investment and commission for a total quantity of 8947 metric tons of sugar and it is the case of the Plaintif fs that the agreed quantity of sugar has already been supplied, hence; the cheques in question are to be returned duly cancelled; that since they were given as security they cannot be encashed; that the Plaintif fs in advance have already approached and advise the concerned Bank not to encash such cheques and have stopped payment of the same; that the Defendants cannot, on the basis of such cheques initiate any proceedings of criminal nature; that if stance of the Defendants is even accepted, then they ought to have filed a summary Suit under Order 37 CPC; but instead they have chosen to file a Suit bearing No.1177/2013 for Specific Performance of the Agreement(s) in questio n asking for supply of purported sugar; hence, the Defendants by their own conduct, cannot seek encashment of cheques and initiate any criminal proceedings on the basis of such postdated cheques; that from the record, it reflects that there was an Agreement(s) between the parties, whereas, the personal guarantees and promissory notes were also executed, and therefore, if there is any dispute between the parties, the appropriate remedy lies with the Civil Court and such remedy has already been availed by the Plaintif fs as well as Defendants by cross Suits; that a specific quantity for
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supply of sugar has been identified in the Agreement(s) in question; therefore, the cheques given as security and as a guarantee cannot be used for causing threat or harassment; that as per the account reconciliation, the quantity of sugar claimed stands duly delivered, and it is the case of the Plaintif fs that excess amount is to be recovered from the Defendants; that before settlement of the accounts, the cheques cannot be utilized or encashed; that in the Suit of specific performance filed by the Defendants the injunction application was allowed; however , in High Court Appeal, it was set aside, therefore, the Defendants are not in a position to oppose the listed application; that even after passing of the Appellate order , the Defendants have never made an attempt to amend their pleadings; that the Civil Petition for Leave to Appeal filed against the Appellate order is though pending, but no restraining orders have been passed; that by conduct the Defendants have sought delivery of the purported short supply of sugar , and if that is the case, then at the same time they cannot seek encashment of the postdated cheques; that the bar contained under Section 56(e) of the Specific Relief Act 1877 does not apply to the present proceedings as till filing of this Suit, no criminal proceedings had been initiated as yet; that Section 53 of the Specific Relief Act read with Order 39 Rule 1 & 2 CPC allows a Civil Court to pass temporary injunction, whereas, Section 56 relates to permanent injunctio ns and therefore, even otherwise, the bar contained under Section 56(e) of the Act ibid is not applicable; that temporary injunctions are not affected by Section 56 as in terms of Section 53 the Court independently grants temporary injunctions read with relevant provisions of CPC; that it is a question of determination of liability; hence, it is only the Civil Court which has jurisdiction in the matter; that all ingredients for grant of a temporary injunction including a prima facie case, balance of convenience and causing of irreparable loss to the Plaintif fs are present in this case; hence, the injunction must be grante d; that the Plaintif fs have come before the Court for cancellation of cheques much prior to the Defendant' s Suit for Specific Performance, whereas, in any case, the Defendants have not sought enforcement of the such cheques and have rather opted for Specific Performance of the Agreement(s), and therefore, even if they are successful in their Suit ultimately , it is the delivery of the sugar which would be the maximum relief given to them, and not by way of any encashment of cheques or recovery of money; that the Defendants after dismissal of their High Court Appeal, have suddenly got active in proceeding with this case, as earlier no urgency of any nature was sought, and it reflects badly on their conduct in respect of the listed application, depriving them from exercise of any discretion in their favour . In support he has relied upon Trading Corporation of Pakistan V. Devan Sugar Mills Limited and others (PLD 2018 SC 828), Nooruddin Hussain and another V. Diamond Vacuum Bottle Manufacturing Co. Ltd., Karachi and another (PLD 1971 Karachi 720), Ahmad Din and others V. Faiz Ali and others (PLD 1954 Lahore 414), Kazi Mohammad Akbar V. Province of Sind and another (PLD 1952 Sind 32), Muhammad Akbar V. The State and another (PLD 1968 SC 281), A. Habib Ahmed V. M. K. G. Scott Christian and 5 others (PLD 1992 SC 353), Badaruddin V. Mehr Ahmad Raza, Additional Sessions Judge, Jhang, Etc. (NLR 1993 Criminal 593), Mian Allah Ditta V. The State and others (2013 SCMR 51), Abdul Sattar V. The State and another (PLD 2013 Lahore 173), Muhammad Munir Ahmad V. The State and another (2010 MLD 1838 ), Digri Sugar Mills Limited and 2 others V . Mian Kamran Ilahi and another ( 2018 CLD 449 ). 3. Mr. Salim Salam Ansari Advocate appearing on behalf of Plaintif fs No.2 & 3 in addition to adopting the arguments of learned Counsel for the Plaintif f No.1 has contended that the Plaintif fs No.2 & 3 being Directors / shareholders of Plaintif f No.1 are signatories of the cheques in question; that the said cheques were given on behalf of the Company for security purposes pursuant to the Agreement(s) between the parties, whereas, the sugar stands supplied / delivered, and therefor e, no encashment could be enforced; that in terms of Section 9 of the Negotiable Instrument Act 1881, the Defendants are not holders in due course; that after supply of the agreed quantity of sugar , the cheques are no more valid and by presumption stands cance lled; that proper delivery orders and acknowledgments are on record regarding supply of the agreed quantity of sugar , and therefore, no proceedings can be initiated before proper evidence is recorded at the trial of the Suit. 4. Learned Counsel for Defendant No.2 has contended that the cheques in question were not given as security; but to cover any default on the part of the Plaintif fs in supplying the agreed quan tity of sugar; hence, they were presented for encashment, but were returned by the Bank with endorsement of 'stop payment' instructions; that the Suit was filed by the Plaintif fs after dishonoring of cheques, whereas, after 'stop payment' instructions and refusal
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of its encashment on the date of filing of the present Suit, there was no cause of action available with the Plaintif fs to seek any restraining orders; that the Suit is not for rendition of accounts as contended, but to stop / stay the criminal proceedings which may be initiated by the Defendants; that Section 56(e) of Specific Relief Act 1877 provides that no injunction can be granted to stay any criminal proceedings; hence, listed application is liable to be dismissed as this Court is barred in law from exercising any such jurisdiction; that the Defendants vehemently dispute the claim of the Plaintif fs that sugar has been delivered as it is the case of the Defendants that the original delivery orders issued to them are still in their possession, whereas, due to a default clause, the quantity has increased as well; that if the Plaintif fs, as claimed, have made deliveries, then from the pleadings itself they ought to have established such fact which is not the case in hand, whereas, through rejoinder affidavit they have tried to improve their case which is impermiss ible; that material facts have been concealed by them regarding the understanding / Agreement(s) between the parties starting from 2011 wherein also, they had defaulted and had requested to execute fresh Agreement(s) against fresh postdated cheques; hence, they are not entitled for any injunctive relief due to their conduct; that the Agreement(s) provide in clear terms that if delivery is not made, then cheques would be encashed and there are no restrictions or conditions attached to any such encashment; that neither sugar has been supplied, nor the amount advanced as loan / investment has been repaid, therefore, the Plaintif fs have no case for grant of any injunction; that Section 56(e) applies to both perpetual as well as temporary injunctions and Order 39 Rule 1 & 2 CPC is not applicable exclusively; that the case law relied upon by the Plaintif fs' Counsel in support of his contention is not relevant inasmuch as all decisions referred to were rendered either , under the Constitutional Jurisdiction or the criminal jurisdiction of the Courts, whereas, in this matter it is the case of the Defendants that a Civil Court cannot grant an injunction as it is barred under Section 56(e) of the Specific Relief Act, 1877. In support he has relied upon Aamir Shehzad V. The State (PLD 2005 Lahore 568), State Life Insurance Corporation V. Haji Abdu l Ghani and 3 others (1986 MLD 1245 ), Messrs Petro commodities (Pvt.) Ltd. V. Rice Export Corporation of Pakistan (PLD 1998 Karachi 1), Marghub Siddiqi V. Hamid Ahmad Khan and 2 others (1974 SCMR 519) and Faisal Kapadia and another V. Motorola Ltd. And 2 others ( 2010 MLD 518 ). 5. I have heard all the learned Counsel and perused the record. It appears that instant Suit has been filed by the Plaintif fs for Declaration as well as Permanent Injunction, Cancellation, Return and Rendition of Accounts as well as Recovery of the excess amount. Their precise case is that a declaration be given to the effect that the cheques given to Defendants were without consideration and were tendered as a security and they may be permanently restrained from causing any harassment and blackmailing by using such cheques with a further prayer for restraining them from initiating any criminal proceedings related to the cheques in question. From the record which does not appear to be in much dispute, it appears that there are 6 separate Agreement(s) between the Plaintif f No.1 Company and Defendants No.1 & 2 which are precisely termed as Investment and Commission Agreement(s) for different quantities of refined sugar , and describe the Defendants as Investors, whereas, the Plaintif fs as Sellers and further postulate that certain amount has been deposited by the Investors, whereas, there is a deposit price; payment date; quantity of sugar as well as the delivery schedule. Clause 9 of such Agreement(s) describes the securities which includes delivery orders; promissory notes; personal guarantees of Plaintif fs No.2 & 3 as well as postdated cheques. In essence the Agreement(s) are more or less identical, the only difference being in the quantity of sugar and consequently , the amount involved. It is the case of the Plaintif fs that as per the Agreement(s) the quantity of sugar stands supplied and in fact according to them some excess supply has been made; hence, the post-dated cheques which were given as security pursuant to the Agreemen t(s) in question, are liable to be returned and cannot be used for any encashment or for any other purpose including criminal proceedings pursuant to dishonor of such cheques, if any. It is also the Plaintif f's case that after the quantity was supplied and cheques were not returned, they have approache d their Bank and requested stop payment' of these cheques and as a consequence thereof, when some of the cheques were tried to be encashed, the Bank has referred back these cheques with an endorsement of stop payment'; hence, even otherwise, it is not a case of any dishonesty , contemplating criminal proceedings. On the other hand, the Defendant's case is that they are holding the cheques which have been dishonored, and notwithstanding any Agreement(s), since the quantity agreed has not been
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supplied, whereas, the Plaintif fs have defaulted in making supplies as well as returning the invested amount, they are entitled to seek encashment of the cheques and upon their dishonor they could resort to initiate criminal proceedings, if so desired. The Defendant's further case is that in view of Section 56(e) of the Specific Relief Act, 1877, this Court cannot grant any injunction in respect of any criminal proceedings. To this, Plaintif f's Counsel has argued that firstly , Section 56 only applies in respect of permanent injunctions, whereas, through listed application, the Plaintif fs are seeking a temporary injunction under Section 53 of the Specific Relief Act, and such injunctions are governed by Order 39 Rule 1 & 2 CPC and therefore, the bar , if any , under Section 56 ibid would not apply . 6. Before proceeding any further , it would be advantageous to refer to the relevant provisions of Section 53 and 56 of the Specific Relief Act, 1877 which reads under: "53. Temporary injunctions. Temporary injunctions are such as are to continue until a specified time, or until the further order of the Court. They may be granted at any period of a suit, and are regulated by the Code of Civil Procedure. Perpetual injunctions. A perpetual injunction can only be grante d by the decree made at the hearing and upon the merits of the suit: the defendant is thereby perpetually enjoined from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the plaintif f." 56. Injunction when refused. An injunction cannot be granted- (a) to stay a judicial proceeding pending at the institution of the suit in which the injunction is sought, unless such restraint is necessary to prevent a multiplicity of proceedings; (b) to stay proceedings in a Court not subordinate to that from which the injunction is sought; (c) to restraint persons from applying to any legislative body; (d) to interfere with the public duties of any department of [the Central Government], 2*** or any Provincial Government], or with the sovereign acts of a Foreign Government; (e) to stay proceedings in any criminal matter; (f) to prevent the breach of a contract the performance of which would not be specifically enforced; (g) to prevent, on the ground of nuisance, an act of which it is not reasonably clear that it will be a nuisance; (h) to prevent a continuing breach in which the applicant has acquiesced; (i) when equally efficacious relief can certainly be obtained by any other usual mode of proceeding except in case of breach of trust; (j) when the conduct of the applicant or his agents has been such as to disentitle him to the assistance of the Court; (k) where the applicant has no personal interest in the matter ." 7. Section 53 as above contemplates two situations for grant of injunctions i.e. temporary and perpetual. Temporary injunctions are such as are to continue until a specified time or until a further order of the Court, and they may be granted at any period of a Suit, and are regulated by the Code of Civil Procedure, whereas, perpetual injunction can only be granted by the decree made at the hearing and upon the merits of the Suit. By way of a perpetual injunction the Defendant is thereby perpetually restrained from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the Plaintif fs. It is clear from the aforesaid provisions of Section 53 that insofar as temporary injunctions are concerned, they are to be regulated by the Code of Civil Procedure and in that Code for grant of such injunctions Order 39 Rule 1 & 2 CPC regulates such injunctive orders. It is also important to note that by now the law regarding ingredients for grant of an injunction is settled, whereby , a Plaintif f coming before the Court must establish that he has a prima facie case and balance of convenience lies in his favour and if the injunction is refused he would suffer irreparable loss. Insofar as the provisions of Section 53 ibid are concerned, they fall under Chapter IX of the Specific Relief Act, 1877, which pertains to injunctions generally and in Chapter X perpetual injunctions have been specified starting from Sections 54 to 56 ibid. Section 54 deals with the situation when perpetual injunctions can be granted; Section 55 deals with mandatory injunctions; Section 56 provides situations when injunction cannot be granted or must be refused and Section 57 deals with injunctions to perform negative Agreements. The Defendants have placed reliance on Section 56(e) whereby , the injunction cannot be granted to stay proceedings in any criminal matter . For the present purposes, I am not inclined to give any definite findings on this controversy and aspect of the matter that when a permanent injunction cannot be
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granted under Section 56(e), then a temporary injunction under Section 53 read with Order 39 Rule 1 & 2 CPC cannot be granted as well, for the simple reason that in the peculiar facts of this case and insofar as I am concerned, the provisions of Section 56(e) are not relevant and applicable at this stage of the proceedings. It is nobody's case that any criminal proceedings are presently pending and the Plaintif fs are seeking stay of such proceedings. In fact, there is a report placed on record through written statement of Defendants No.3 to 9 wherein, they have stated that no case is pending with them nor they have got any conce rn with the present dispute. The law as is in field in Pakistan and as relied upon by the Defendants Counsel is only to the effect that an injunction cannot be granted to stay proceedings in any criminal matter . What in fact the Plaintif f is seeking through listed application is that the Defendants be restrained from seeking encashment of the cheques in question with a further prayer that if any encashment is sought and if the cheques are returned duly endorsed by the Bank as stop payment', then the Defendants be further restrained from taking any further action as to the cheques in question. Here, for the present purposes neither any reference has been made by the Plaintif fs to any pending criminal proceedings, nor any such particular pendency has been brought on record on behalf of the Defendants; hence, the question of seeking any restraining order to that effect is not an issue for the present purposes while deciding the listed application, nor the bar contained in Section 56(e) ibid would come in the way of this Court. Any such conclusive effort in the present facts would be an exercise in futility; hence, does not warrant any such adjudication as contended on behalf of the Defendants. 8. Though as discussed hereinabove, it is not necessarily needed to delve upon this aspect of the matter regarding the bar contained in s.56(e) and its applicability; or whether the bar is absolute as contended; however , for the sake of clarity I may observe that the argument that if no permanent injunction could be granted in terms of s.56(e) or that it is barred and precludes the jurisdiction of the Court to do so; then there is no reason to entertain an injunction application under s.53 ibid as pleaded, does not appear to be that attractive. In my view, even if there is any such bar; it is definitely not absolute and there are exceptions to it. And one such exception is itself provided in s.56(b) which provides that no injunction can granted to stay proceedings in a Court not subordinate to that from which the injunction is sought; therefore if s.56 in its entirety was to hold field and override s.53 (including temporary injunctions), the Court would also had been precluded or barred from passing any restraining order against even a Sub-Ordinate Court. This is admittedly not the case. 9. To further strengthen this argument one may refer to the case reported as Kazi Mohamed Akbar v Province of Sindh (PLD 1952 Sind 32). In that case an Appeal came before the erstwhile Sindh Chief Court wherein the Plaintif f / Appellant was seeking an injunction which was primarily hit by the bar contained in s.56(d), which forbids the granting of any injunction which would "interfere with the public duties of any department of Government of Pakistan or the Local Government ........". However , the Plaintif fs / Appellant' s Counsel then made an alternative argument that the Suit is one for restrainin g the Defendant No.1; but that was also repelled by the learned Division Bench speaking through Tayabji. J., the then Chief Justice. Interestingly , while dismissing the claim of the Appellant the learned Division Bench went on to observe that, however , they are not in Agree ment with the argument that no interim injunction could be granted against Defendant No.1, merely because perpetual injunction could not be ordered at the end of the Suit. The Court went on to hold that: A very large number of other questions arising in the suit were discussed before us. It appears to us to be quite un- necessary to refer to them here. We may, however , mention, that we are not in Agreement with the view that no interim, injunction could be granted again st defendant 1, merely , because the perpetual injunction, prayed for as one of the reliefs, could not be ordered at the end of the suit against defendant 1. It appears to us to be clear that the considerations upon which a Court may grant or refuse to grant an interim injunction, pending the disposal of the suit, may be, and often must be, entirely different from the consideration upon which a Court may grant or refuse to grant a perpetual injunction at the end of the suit. As is clearly laid down in section 53 of the Specific Relief Act, temporary injunctions are regulated by the Code of Civil Procedure. 10. A learned Judge of the Lahore High Court (kaikus, J. as he then was) in the case reported as Ahmad Din and others V. Faiz Ali and others (PLD 1954 Lahore 414) had the occasion to deal with similar facts and the precise question before the Court was that (i) can an injunction be issued at all to restrain judicial proceedings (ii) and can it
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be issued to restrain proceedings pending in a Court which is not subordinate to the Court issuing injunction. The learned Judge also repelled the argument as raised on behalf of Defendants in that case in the following terms; I hold that an injunction can be issued to restrain judicial proceedings. It should be obvious, however , that it will be issued only where the proceedings in which it is issued can, directly or indirectly , affect the proceedings that are stayed. I will now deal with the question whether section 56 (b) of the Specific Relief Act prevents the Court from restraining (by temporary injunction) a proceeding pending in a Court not subordinate to the Court issuing injunction. In order to find out whether the power of Court to stay a judicial proceeding is affected by the fact that the Court in which proceeding is pending is not subordinate to the Court issuing the injunction, we have to determine what is the source of this jurisdiction. Order 39 rules 1 and 2 do not apply . It is only in the exercise of its inherent jurisdiction that the Court issues such injunctions. When we speak of inherent, jurisdiction, we refer to a jurisdiction that is necessarily involved in a jurisdiction that admittedly exists. Civil Courts have jurisdiction to grant relief in civil matters and if the exercise of a power be necessary for granting full relief, that power should be deemed to exist in the absence of statute or settled practice. For granting full relief it is essential that a power to maintain the status quo should exists, for a party to a…
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