Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: Sui Southern Gas Company Limited VS Respondent: Karachi Electric Supply Company Limited
Court Name: Sindh High Court Judge(s): Muhammad Junaid Ghaffar Title:Sui Southern Gas Company Limited vs Karachi Electric Supply Company
Limited Case No.: Suit No. 1641 of 2012 Date of Judgment:2019-10-07 Reported As: PLD 2020 Sindh 385, 2019 SHC 406 Result: application dismissed Judgment Muhammad Junaid Ghaf far J. This is a Suit for recovery and Damages valued at Rs. 55,705,000,000/-, and application at Serial No.1 has been filed under Order 39 Rule 1 & 2 CPC for restraining defendant from selling or disposing of the properties so mentioned in the application, whereas, application at Serial No.2 has been filed under Order 38 Rule 5 CPC for attachment of the movable and immovable properties of defendant No.1, as mentioned in the application. Both these applications have been heard and are being decided through this order . 2. The precise facts, as stated in the plaint are, that pursuant to certain agreements entered into between the predecessor-in interests of Plaintif f and Defendant gas has been supplied by the Plaintif f to Defendant and it is the case of the Plaintif f that despite supply of natural gas for a very long period; the defendant has defaulted in payment of its dues and as of 21.11.2012, an amount of Rs.45,705,000,000/- is outstanding against monthly gas bills and markup thereon. The Plaintif f has filed instant suit for recovery of the same along with these two applications. 3. Learned Counsel for the Plaintif f has contended that initially two separate Agreements both dated 09.11.1978 were entered into between the predec essor-in-interests of the parties, and as per the Agreements, if the outstanding bill was not paid within time, then an interest at the rate prescribed by State Bank of Pakistan plus 3% is to be paid and in default thereof, even the supply can be disconnected. According to him thereafter another Agreement was entered into on 5.10.2007, wherein, various clauses provided for payment of the bill and levy of surcharge, whereas, an amount of Rs.7.80 Billion was outstanding; but has not been paid. He has further submitted that a third Agreement was entered into by the parties on 30.06.2009 in which the previous amounts were acknowledged as outstanding and an arrangement for payment in installments was agreed. Per learned Counsel, it is the case of the Plaintif f that till 30.06.2012, 37.66 Billion in principal and along with interest, an amount of Rs.41.934 Billion was outstanding and despite making admissions in their response and several
---
## Page 2
correspondence, the defendant has failed to pay this amount. According to him as and when the supply was disconnected, the defendant has approached the Federal Government as well as the Sindh Government and has set up a defence that huge amount is outstanding against Karachi Water and Sewerage Board ("KWSB"), which should be adjusted against the dues of the Plaintif f. He, however , submits that Plaintiff has got nothing to do with this kind of settlement between the Provincial and the Federal Government. He has further contended that the owners and management of defendant have gone into liquidation abroad and despite ad-interim orders passed on 03.12.2012, the defendant is maintaining and withdrawing money from its accoun ts; hence the listed applications be granted. He has further contended that though the Plaintif f is a Public Limited Company with government majority share; but it is still an independ ent company and not a Federal Government entity; hence there is no question of any adjustment of the dues of the government department or for that matter the circular debt; hence this objection of the defendant is misconceived. In support of his contention he has relied upon the cases of Messrs Tuwairqi Steel Mills Ltd. through Authorized Representative v. IIIrd Senior Civil Judge (South), Karachi and another reported as 2017 CLC 1322 and Dr. (Mrs.) Anwar Mangi v. Messrs Pak Commodities International and 2 others reported as PLD 2018 Sindh 339. 4. Mr. Abid S. Zuberi, appearing on beha lf of the defendant, has firstly contended that the present applications as well as the case of the Plaintif f does not fall within the contemplation of either under Order 39 Rule 1 & 2 CPC or Order 38 Rule 5 CPC. Per learned Counsel there are various other litigation(s) pending against the Plaintif f including defendant' s Suit No. 91/2013 and C.P No.D-1088/201 1, as time and again the Plaintif f has threatened disconnection and / or less pressure of gas supply , whereas, ad-interim orders in favour of the defendant are operating in these matters, therefore, the present applications cannot be decided in favour of the Plaintif f. According to him since now the defendant has been privatized and at the time of its privatization, an agreement was entered into between the Federal Government and the defendant, whereas, time and again the Government has failed in implementation of the said agreement, therefore, Plaintif f has no case. According to him it is a case of circular debt as well as adjustment of dues of K-Electric against various government departments and pursuant to the agreement in question such matter has to be referred to and decided by the Federal Adjuster but the Federal Government has failed to come up with any acceptable solution. He has further argued that certain meetings were conducted and it was agreed that terms of reference would be settled for this issue and the Plaintif f is also a party to such settlement of the terms of referen ce, but once again they defaulted in this, compelling the defendant to file C.P No.D-4615/2018, which is also pending and various orders have been passed . According to him once on the directives of the Federal Government, the Plaintif f has entered into a settlemen t of terms of reference for this amount, then they cannot simultaneously proceed with this matter and seek orders for attachment and / or restraining the defendant in any manner. Per learned Counsel pursuant to the orders in these petitions, the defendant is regularly paying the current bills and the Plaintiff has been restrained from any disconnection of gas supply. Learned Counsel has then referred to some correspondence between the parties in respect of the outstanding dues of the defendant against KWSB and has contended that the willingness of the Federal Government to settle this issue goes against the case of the Plaintiff. Learned Counsel has referred to the correspondence entered into between Plaintiff and defendant and the dispute in respect of various clauses of Terms of Reference, which were initially consented and then deleted, and on this basis he has argued that at least no case for any interim injunction or attachment is made out. He has further argued that amount in question cannot be paid to the Plaintiff in absence of any settlement of the outstanding dues of the defendant, which are also admitted and are not in dispute. Per learned Counsel in a similar fashion earlier an application under Order 38 Rule 5 CPC filed by the Plaintiff stands dismissed vide Order dated 16.11.2016, wherein, the Plaintiff had alleged that the defendant is involved in selling of its shares, which order of dismissal has since attained finality and was never challenged; therefore, no case for any attachment at the present moment is made out. According to him, it is merely a Suit for Recovery, which requires evidence as to the fact that whether defendant would ultimately be liable to make any payment, whereas, the attachment application is also vague in nature and no specific property has been specified; nor it has been brought on record that the defendant has made any attempt to sell out such property in order to avoid enforcement and / or any execution of a future decree in favour of the
---
## Page 3
Plaintiff, which may be passed by the Court. Per learned Counsel neither prima-facie case is made out nor balance of convenience lies in favour of the Plaintiff, whereas, no irreparable loss is being caused and on the other hand, it is the defendant who would be caused irreparable loss, if such an application is granted. He has further argued that in fact the application under Order 39 Rule 1 & 2 CPC is also seeking the same relief as sought in Order 38 Rule 5 application, whereas, the ingredients of an application under Order 39 Rule 1 & 2 CPC are completely lacking in this case, as it is not a case related to any property and / or its right being claimed and it is simply a money claim, wherein, the provisions of Order 39 Rule 1 & 2 are not attracted. In support of his contention he has relied upon the cases of KASB Corporation Limited through Chief Executive Officer and another v. Bank Islami Pakistan Limite d through President reported as 2019 YLR 345, Al-Tamash Medical Society through Secretary v. Dr. Anwar Ye Bin Ju and 9 others reported as 2019 CLC 1, Muhammad Saad and another v. Amna and 27 others reported as 2015 YLR 1, Shahzada Muhammad Umar Beg v. Sultan Mahmood Khan and another reported as PLD 1970 Supreme Court 139. 5. While exercising his right of rebuttal, learned Counsel for the Plaintiff has contended that the Plaintiff has no concern with any adjustment and / or the settlement of dues of defendants against the Federal Government as there are various shareholders of the Plaintiff, therefore, this argument is misconceived. According to him though reliance has been placed on the agreement entered into at the time of privatization of the defendant; however, no steps have ever been initiated by the defendant in furtherance of the said agreement, therefore, reliance on the same is of no help to the defendant's case. He has further argued that the transaction between Plaintiff and Defendant is of a commercial nature based on an agreement and once the outstanding amount is not denied; then there is nothing left for the defendant not to pay the said amount and make an attempt to seek shelter under some negotiations with the Federal Government. He has further argued that even if some settlement is reached between Federal Government and the defendant, the same would not, in any manner, be binding on the Plaintiff; hence this defence is of no use for their case. According to him, the amount which is outstanding is increasing day by day as admittedly the interest and mark up is adding up and as of June 2019 approximately the outstanding amount is Rs.100 Billion. He has also referred to the financial accounts of the defendant and has argued that the debt owed to the Plaintiff is acknowledged in these financial statements, therefore, a prima facie case is made out by the Plaintiff for the grant of these applications. Per learned Counsel the Plaintiff apprehends that since the parent company of the Plaintiff has gone into liquidation, the amount and money will go out of the country leaving nothing of the Plaintiff to seek execution of its judgment and decree; hence both these applications merit consideration and be allowed as prayed. 6. I have heard both the learned Counsel and perused the record. As noted hereinabove, on the basis of the facts, so stated, this appears to be primarily a Suit for Recovery and Damages. It is case of the Plaintiff that huge amount is outstanding against the defendant, which according to the Plaintiff has not been specifically denied, whereas, the Plaintiff apprehends that the defendant in order to avoid the ultimate execution of the decree, which may be passed in this matter is disposing of and / or removing the properties from the territorial jurisdiction of this Court. It appears that when this Suit was filed on the very first date i.e. 03.12.2012, an exparte ad-interim order was passed, whereby, the defendant was restrained from selling their properties. The defendant being aggrieved immediately impugned the said ad-interim order through FICA No.158/2012, which was decided on 26.02.2013. The operating para thereof reads as under:- "In the first instance et this matter be fixed on 08.03.2013 at 11:00 am, on which date the learned Single Judge shall fix the date and time as recorded above. The order dated 08.12.2012 in Suit shall continue subject to any order as may be passed by the learned Single Judge after hearing the parties. It is expected that all the senior counsel shall appear before the learned Single Judge on said date and adjourned date, and in case any of the learned counsel is unable to attend the Court on date so fixed, he shall ensure that the matter may be proceeded by their associates or some alternate arrangement may be made. Any adjournment may be visited by substantial cost. In view of the foregoing, appeal along with all pending applications stand disposed off."
---
## Page 4
7. Despite such clear directions, as above, thereafter no serious effort appears to have been made by any of the parties to follow the spirit of the order passed by the Appellate Court. It further appears that the Plaintif f instead of pursing these applications, subsequently filed CMA No. 15884/16 again under Order 38 Rule 5 CPC and sought the following relief:- "To attach all receivable of the Defendant including but not limited to the payments made by and all dues/receivables from the Karachi Water & Sewerage Board, the Provincial Government, and the Federal Government, and/or direct that all amounts received by the Defendant from the aforesaid Governments/Government entities shall be deposited with the Nazir of this Court." 8. This application, without issuance of any notice, was dismissed by a learned Single Judge of this Court on 16.11.2016 in the following terms:- "2. This is an application for attachment before judgment. Learned Counsel has gone through the contents of the affidavit and has relied upon para-4 which relates to private shareholding of the defendant as they are being offered to sale. Without prejudice such sale of private shares will not materially af fect the claim of the plaintif f. The grounds for Order XXXVIII Rule 5 CPC are such that the defendant with an intent to obstruct the decree that may possibly be passed is inclined to dispose of all such shares, which is neither the intention of the defendant nor to such extent the case is made out by the plaintif f. Accordingly the application is dismissed." 9. It appears that the Plaintif f on its own choice and volition never assisted the Court to first decide the earlier application under Order 38 Rule 5 CPC, as directed by the Appellate Court and instead filed a fresh application on the apprehension as noted hereinabove and the Court was pleased to dismiss such application in limine by observing that the Plaintif f has failed to spell out any intention of the defendant that the sale of shares was intended to obstruct the decree that may possibly be passed by the Court. It is not clear and understandable as to how the Plaintif f without getting its first application under Order 38 Rule 5 CPC decided as directed by the Appellant Court, could have filed a second application under the same provisions and keep it maintainable and even after its dismissal and no further challenge, can, at the same time, press upon the first application of a similar nature, which in fact had a very wide scope of attachment, as noted from the contents of the application. It would be advantageous to reproduce the contents of the first application under Order 38 Rule 5 CPC i.e. CMA No. 12799/2012:- "For the facts and circumstances mentioned in the accompanying affidavit, it is most respectfully prayed on behalf of the Plaintiff above named that this Hon'ble Court may be pleased to attach the moveable and immovable properties mentioned here-in-blow before passing the judgment and decree in the captioned suit, as there is reasonable apprehension that the Defendants will going day by day to the worst position as huge amount are outstanding against the Defendant No.1 of the Plaintiff as well as the other financial institution and government departments. i. Aimai House located at Abdullah Haroon Road, Karachi. ii. Defendant No.1 Head Office situated at (U/O 39 Rule 1 & 2 CPC)B, Sunset Boulevard, Phase-II, Defence Housing Authority , Karachi, 75500. iii. Other immovable properties of the Defendant No.1 situated at dif ferent areas in Karachi. iv. All moveable and immovable properties of the Defendant No.1 which will be pointed out by the representative of the Plaintif f at the time of attachment. v. Bank Accounts of the Defendant No.1 maintained in dif ferent banks in Karachi. vi. Power generation units, machineries, transformers, poles, wires, vehicles etc. In view of the aforesaid facts and circumstances, it is therefore, prayed that this Hon'ble Court may please be appoint the learned Official Assignee may kindly be appointed as a Commissioner to prepare inventory and attach the properties/accounts of the Defendant No.1 in this request." 10. If the argument of the Plaintif f in maintaining both the applications is on the ground that the second application was filed on the basis of some subsequent and emergent cause of action as reflected from the contents of the separate affidavit to that application, whereby , it was pleaded that defendant is in the process of selling the controlling shares in the defendant company to some other foreign investor and this would have significant impact
---
## Page 5
on the outstanding dues and this is being done with an intent to obstruct the execution of the decree, which could ultimately be passed in their favour , then apparently the first application is not on any better footing than the second application under Order 38 Rule 5 CPC, which stands dismissed and has attained finality. As is reflected from the contents of the affidavit, the Plaintiff had rushed to the Court with a fresh application that shares are being sold; hence the said ground falls within order 38 Rule 5 CPC and an attachment order be passed. When such a ground has not been appreciated by the Court, (notwithstanding the fact that apparently shares were and are in the process of being sold to some other investors) then now this Court fails to understand and to agree, as to how the application filed in 2012 and that too in a very generic form can be sustained. It would be advantageous to refer to the provisions of Order 38 Rule 5 which reads as under:- Order XXXVIII ARREST AND ATTACHMENT BEFORE JUDGMENT . 1.---------------- 2. 3.---------------- 4. 5. Where a defendant may be called upon to furnish security for production of property .--(1) Where, at any stage of suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him:- (a) is about to dispose of the whole or any part of his property , or (b) is about to remove the whole or any part of his property form the local limits of the jurisdiction of the Court, the Court may direct the defendant, within a time to be fixed by it, either to furnish security , in such sum as may be specified in the order , to produce and place at the disposal of the Court, when required, the said property or the value of the same or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security . (2) The plaintiff shall, unless the Court otherwise directs, specify the property required to be attached and the estimated value thereof. (3) The Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified. 11. From perusal of the above, it appear s that where, at any stage of Suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against it is about to dispose of the whole or any part of his property , or is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court, then the Court may direct the defendant either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security. The provision further provides in Sub Rule (2) that the plaintiff shall, unless the Court otherwise directs, specify the property required to be attached and the estimated value thereof and finally Sub Rule (3) provides that the Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified. When the application in question filed under Order 38 Rule 5 CPC is examined in juxtaposition, it appears that the same is not within the terms of this provision. It is in an unspecified manner and is too generic as to the attachment of all properties of the defendant without being specified, except one property. As of today, after passing of the ad-interim order, the defendant has not shown any intent to sell out this property so specified in this application. In fact, if that would have been the position then the defendant would have come forward seeking recalling of the said order. This establishes that for the present purposes the defendant is not the one, who falls within the above provisions, whereby, it could be inferred that the defendant with the intent to obstruct or delay the execution of any decree is selling or alienating the property in question. Insofar as the other properties are concerned they are unspecified, and therefore, they are not covered under Sub Rule (2) of Rule 5 of Order 38, which firstly requires to specify the property which is to be attached, and secondly, its estimated value thereof; hence on the face of it, the contents of the application are vague and do not fall within the contemplation / parameters as provided under Order 38 Rule 5 CPC.
---
## Page 6
12. It is settled law that a relief under Order 38 for attachment otherwise is definitely a very harsh order to be made against the defendant. In granting such relief the Court has to be satisfied that plaintiff's cause if of a prima facie nature, based on an unimpeachable averment / claim in the plaint, and Court must have reasons to believe on the basis of material before it, that unless jurisdiction is exercised and orders as solicited are not passed, there is a real danger that defendant may remove itself from the territorial jurisdiction of the Court and an intent to avoid passing of a decree must be clearly shown with reasonable clarity. In fact the provisions of Order 38 Rule 1 & 5 as well as Section 94 and 151 CPC as relied upon on behalf of the plaintiff in a case like this are not to guarantee the plaintiff availability of an asset to satisfy the decree which ultimately be passed, but to ensure non abusing of process of Court by a defendant. Moreover, it is not the case of the plaintiff that the defendant in order to frustrate the decree which may ultimately be passed in this Suit, is running away or for that matter, is selling its assets. In fact there appears to be no such real danger in hand in this case. And these ingredients I am afraid are completely lacking in the plaintiffs case as placed before this Court. It is also a settled law that order of this nature definitely burdens the defendant for a variety of reasons, and if there is any ambiguity or doubt in the case of the plaintiff, then such benefit of doubt must go in favor of the said defendant. 13. As to the facts of this case, there is one point, which needs to be appreciated for deciding this application inasmuch as though the learned Counsel has contended that the Plaintiff has no concern with the Federal Government and or its directions, but at the same length while confronted as to why coercive measures for disconnection of supply were never taken, he candidly conceded that firstly, it would create an issue of great difficulty for the citizens of Karachi, and secondly, the Federal Government from time to time has been intervening in this respect. This aspect of the matter for the present purposes is crucial, as the stance of the Plaintiff is contradictory. This is further substantiated from the decision of the Cabinet Committee of Energy dated 23.04.2018, which reads as under:- "Case No. CCE-9/3/2018 ISSUE RELA TING TO K-ELECTRIC Dated: 23 April, 2018 DECISION The Cabinet Committee on Energy (CCE) directed as follows: i) Sui Southern Gas Company Limited (SSGC) to supply of gas to K-Electric immediately . ii) SSGCL and K-electric will initiate process for signing Gas Sales Agreement for natural Gas as well as LNG within 15 days. iii) ToRs for reconciliation / settlement of dues between SSGCL, K- Electric and Karachi Water & Sewerage Board (KWSB) to be finalized and signed within 15 days. Advisor to the Prime Minister on Finance to ensure that required action are…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.