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Petitioner: JAHANGIR SIDDIQUI VS Respondent: NOMAN ABID INVESTMENT MANAGEMENT LIMITED and 3 otherss
Court Name: Sindh High Court Judge(s): Muhammad Ali Mazhar Title:JAHANGIR SIDDIQUI vs NOMAN ABID INVESTMENT MANAGEMENT LIMITED and
3 otherss Case No.: Suit No,1731 of 2009 Date of Judgment:2012-05-24 Reported As: 2013 CLD 1965 Result: Order accordingly Judgment ORDER ' MUHAMMAD ALI MAZHAR, J.---By this order, I intend to dispose of C.M.A. No,10987 of 2009 filed by the plaintiff under Order XXXIX, Rules 1 and 2, C.P.C. Read with section 151, C.P.C. And C.M.A. No,78 of 2010 filed by the defendants Nos.1 and 2 under Order VII, Rule 11, C.P.C. 2. The plaintiff has filed this suit for declaration, recovery and damages with the following prayers:- - (a) Declare that the plaintiff was entitled to redemption of 466,343.0867 Units of RIF within six working days of the request of redemption and the' defendant No,1 is liable to pay the plaintiff NAV of Units at the rate as on 22-10-2008. (b) Declare that failure of the defendant No,1 to redeem the units of the plaintiff as per his request as NAV as on 22-10-2008 is illegal, malicious, and fraudulent and in contravention of the provisions of law. (c) Pass judgment and decree against the defendants Nos.1, 2 and 3 jointly and severally for an amount of Rs,24,233,917 in favour of the plaintiff being the redemption amount of the Units and mark up 18 % w,e,f, 30-10-2008 till the date of payment. (d) Award a sum of Rs,2d Million to the plaintiff by way of compensation/damages against the defendant No, 1. (e) Direct the defendant No,4 to initiate appropriate proceedings against the defendant No,1 and take strict penal action against the defendant No,1, its Chief Exergue, Directors, officers etc. In accordance with law.
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(f) Direct the defendants Nos.1 to 3 to deposit the sum of Rs,24,233,917 along with mark up @ 18 % w,e,f, 30-10-2009 till date with the Nazir of the Court during the pendency of the case. (g) Prohibit the defendant No,1 from receiving any further investment in the Units of RIF i,e, defendant No,2 till the payment of Rs,24,233,917 with mark up is made to the plaintiff. (h) Grant such relief which may be deemed fit and proper in the circumstances of the case. (i) Grant costs of the suit. 3. Brief facts as narrated in the plaint are that the plaintiff is a businessman and the defendant No,1 is a Non-Banking Finance Company (NBFC) under license from the defendant No,4, to function/operate as an Asset Management Company. The defendant No,1 is managing the defendant No,2 i,e, Reliance Income Fund (RIF). The plaintiff made investment in RIF and purchased 466,343.0867 Units of RIF on 27-6-2008 and the plaintiff was allocated Account No, 146 by defendant No,l. The plaintiff submitted his request for redemption of above Units on 22-10-2008 and under Regulation 66(5) of the NBFC Regulations 2007. Which was in field when the plaintiffs redemption request was submitted. The defendant No,1 was liable to redeem the Units and make payment within a period of six working days of the request for redemption by the plaintiff as a Unit Holder. The NBFC Regulations, 2007 were repealed and substituted by the NBFC Regulations, 2008 in which also, the defendant No,1 was liable to redeem the Units and make payment within a period of six working days at a prevalent Net Asset Value (NAV), however instead of discharging its statutory obligation by making payment within the stipulated period, the defendant No, I vide letter dated 30-10-2008 informed the plaintiff that they have come to know that the plaintiff has withdrawn his request for redemption of Units and the defendant No,1 would treat the request as cancelled, which letter was completely false, fabricated and misleading as the plaintiff never agreed to withdraw the redemption request.. The plaintiff replied the letter on 31-10-2008 and clearly stated that there was no withdrawal of the request. Vide letter dated 31-1-2008, the defendant No, 1 informed that it was under tremendous pressure for redemption of Units from different Unit 'Holders and requested the plaintiff to get redeemed 50 per cent Units immediately and the remaining Units would be redeemed within two weeks. The defendant No,1 requested for bifurcation of the plaintiffs redemption request into two portions to which the plaintiff reluctantly agreed, however the plaintiff clearly informed air defendant No,1 that he is ready to accept redemption payment in two installments as indicated above, the NAV of all the units should be on the rate existed at the time of initial request of redemption. The plaintiff sent two blank undated redemption forms for redemption but the defendant No,1 once again defaulted in redeeming the Units as per its commitment. 4. The plaintiff has filed application under Order XXXIX, Rules 1 and 2, C.P.C. Whereas the defendants Nos.1 and 2 have filed application under Order VII, Rule 11, C.P.C. For rejection of plaint or in alternate return the plaint under Order VII, Rule 10, C.P.C. Since, the defendants Nos.1 and 2 claimed the rejection of plaint, hence, 1 would like to take-up and decide C.M.A. No,78 of 2010 first. 5. The defendants Nos. 1 and 2 in their application under Order VII, Rule 11, C.P.C. Pleaded that the dispute pertains to "Mutual Funds" and its redemption which is exclusively to be dealt with by defendant No,4, hence this court has no jurisdiction to entertain the suit. The defendant No,4 denied the relief to the plaintiff in its order that on the basis of available information the matter cannot be concluded, meaning thereby tliat the claim of the plaintiffs lacks evidence. 6. Although no counter affidavit has been filed by the plaintiff to the C.M.A. No,78 of 2010, however, the learned counsel for the plaintiff requested that the averments made in the plaint may be considered for deciding the instant application. 7. The learned counsel for the defendants Nos.1 and 2 'argued that the matter of redemption of units is highly technical in nature and this matter falls squarely within the powers and ambit of Securities Exchange Commission of Pakistan. He further argued that in the light of SECP's
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Notification bearing No,1061(1) of 2005 dated 18-10-2005, various powers including those listed below emerging from Companies Ordinance 1984 have been delegated to the Executive Director (NBFCs Department). The relevant Sections of Companies Ordinance 1984 relied upon by the learned counsel of defendants Nos. 1 and 2 are as under:-- Sr. No. Section of Companies Ordinance 1984Nature of Power/Function 24. Section 282D(1) To issue direction to NBFCs. 25. Section 282D(2) To modify or cancel the directions issue and impose conditions. 26. Section 282H(1) To monitor financial position of an NBFC and to order special audit. 27. Section 282-1 To cause inquiry or inspection and to exercise other related powers. 28. Section 282J (1) Impose fine on the NBFC and its officers (including auditors). 29. Section 282J (3) Cancellation of Licence. 8. He further argued that right of appeal under section 33 of Securities and Exchange Commission of Pakistan Act, 1997 was available to the plaintiff in the special jurisdiction which the plaintiff failed to avail and he rushed to this court seeking reliefs on the disputed claim raised by him. Lastly, it was contended that this court has no jurisdiction to entertain and adjudicate the suit and the plaint is liable to be rejected. In support of his arguments, the learned counsel for the defendants Nos.1 and 2 referred to following case-law:-- (1) 2009 SCMR 1392 (Securities and Exchange Commission of Pakistan v. Mian Nisar Elahi). In this matter, the honourable Supreme Court held that before approaching High Court the respondents should have exercised alternate remedies available under sections 33 and 34 of the Act. The dispute is highly technical in nature and can amicably be resolved only through special expertise; High Court itself observed that the SECP would be more appropriate forum, to pass such interim order". The very object of the Act would be frustrated, if for one reason or the other, the initial orders of the SECP are directly challenged before the High Court. (2) PLD 2001 Karachi 256 (National Accountability Bureau v. Zahida Sattar). In this matter, it was held that assumption of jurisdiction by the learned Single Judge specifically militates against the Scheme of the Ordinance which provides for a procedure whereby Accountability courts have been established throughout the country to bring corrupt persons to book and the moneys which they, have made unlawfully recovered, for the general good of the country. Such a procedure essentially contemplates the eradication of corruption and corrupt practices and as provided in section 12 of the Ordinance gives the power to the Chairman of the National Accountability Bureau or the Accountability Court to freeze the property of any person being tried for an offence before it. (3) PLD 1969 SC 187 (Adnan Afzal v. Capt. Sher Afzal). In this matter, it was held that a comparison of these provisions thus indicates that the provisions of the West Pakistan Family Courts Act are of a more beneficial nature which enlarge not only the scope of the enquiry but also vest the court with powers of giving greater relief with a right of appeal either to the District Court or to the High Court. Furthermore, the combined effect of sections 5 and 20 of the Act is clearly to give exclusive jurisdiction to the Family Courts.
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(4) 2009 CLD 1537 (Fouzia Bequm v. Govt. Of Pakistan through Secretary, Ministry of Finance, Islamabad). In this case, it was held that as far as second prayer for direction to NAB for holding of any inquiry against respondents Nos.4 and 5 is concerned SECP which is Regulatory Body of respondent No,7 has already seized of the matter which after holding the inquiry has removed certain, irregularities and in order to safeguard the interest of the depositors has arranged the sale of bank in open bidding whereupon respondent No,9 has purchased the bank on 26-6-2007. It is felt appropriate that the bank should continue to work in order to revive the confidence of general public in the bank. In such circumstances if any direction is issued to respondent No,8/NAB it will not only hamper the progress and the working of the bank but it will also ruin the business of bank as confidence of general public will be shaken. (5) PLD 2002 SC 408 (Mst. Zahida Sattar v. Federation of Pakistan). In this case, it was held that the question arises whether a Civil Court is vested with the jurisdiction to entertain a suit to try an issue which is subject-matter of a criminal charge for which an accused is being tried in a Criminal Court under special law i,e, NAB Ordinance. The answer: to this question revolves around the decision on the question whether the Civil Court can try a criminal charge which is exclusively tribal by a criminal Court under the special law. The answer cannot be, but in the negative. In a case where accused holder of public office is being tried for accumulation of wealth acquired by him by illegal and corrupt practices by misusing his official capacity in the name of his spouses and other relatives, the dispute is not of a civil nature between two private parties. (6) 2003 CLD 1185 (M. Nagar Monnoo. Member Central Managing Committee v. All Pakistan Textile Mills Association through C.E.O.). In this case, it was held that the contention that the plaint cannot be rejected in part under Order VII, rule 11, C.P.C. Is not material as a perusal of the prayer clauses show that all of them are hit by section 12 ibid and section 32 ibid; the question of rejecting the plaint in part does not arise as in the present form the plaintiff is seeking reliefs which are dependent on and connected with each other. (7) PLD 1997 Peshawar 72 (Qauyum Nawaz Khan v. Regional Manager. Agricultural Development Bank of Pakistan, Dera Ismail Khan). In this case it was held that the trial Court on the one hand came to the conclusion that it has got no jurisdiction and returned the plaint under Order VII, Rule 10, C.P.C. For presentation before the proper forum, but at the same time allowed the appellants to amend their plaint. The dispute between the parties relates to the recovery of Advance and the Banking Tribunal has the exclusive jurisdiction, therefore, the learned trial court was right in returning the plaint to the appellants under Order VII, Rule 10, C.P.C. For presentation before the proper forum. 9. On the other hand, the learned counsel for the plaintiff argued that the plaintiff made an investment in RIF (Reliance Income Fund) and purchased units from defendant No,1 on 27-6-2008. He further argued that under Rule 57(4) of the NBFC and National Entities Regulations, 2008, the defendant No,1 was liable to redeem the units and make payment within a period of six working days of the request for redemption by the unit holder. He further argued that the defendant No,1 has not referred to any provision of either the Act, 1997 or Ordinance, 1984 which provides any specific remedy to the plaintiff for redemption of amount nor any provision barring jurisdiction of this court. So far as contention of defendant No,1 that letter dated 25-8-2009 was an order appealable under section 33 of the Act, 1997, the learned counsel for the plaintiff contended that the defendant No,1 has failed to show under what provision of law this order was passed in the first instance, secondly, it must show that it was such an order which could be appealed against. He further argued that section 33 of the Act, 1997 provides appeals against orders passed by the. Commission/Commissioner. By no stretch of imagination, the letter dated 25-8-2009 can be treated as an order passed by Commission or the Commissioner. An order must decide or dispose of the case and not merely advise the party to amicably settle the matter or approach the
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appropriate forum. The defendant No,1 has also failed to point out as to what was the forum under the law which the plaintiff was required to approach. He further contended that where rights are exclusively created by statute and specific remedies are also provided under that statute only then jurisdiction of civil court could be ousted and that too when the order is passed in accordance with law and in good faith, otherwise, the jurisdiction of civil court is never ousted. He further submitted that all the powers delegated to Executive Director under S.R.O.1061(1)/2005 are relatable to executive functions and not powers of adjudication which may be the subject matter of appeal under section 33. In support of his arguments, the learned counsel relied upon the following case- law:-- (1) PLD 1997 SC 3 (Abbasia Cooperative Bank (Now Punjab Provincial Cooperative Bank Ltd. v. Hakeem Hafiz Muhammad Ghaus). In this case, the honorable Supreme Court held that civil courts under S.9, C.P.C. Were competent to try all suits of civil nature except those which were ousted from their jurisdiction either expressly or by necessary implication. Provisions contained in statute ousting Jurisdiction of courts of general jurisdiction should be construed very strictly and unless case fell within letter and spirit of barring section, no effect should be given thereto. Where jurisdiction of civil courts to examine validity of any action or order of Executive Authority or Special Tribunal was challenged on ground of ouster of jurisdiction of civil court, it must be shown; that Authority or Tribunal was validly constituted under the Act; that order passed or action taken by Authority of Tribunal was not mala fide; that order passed or action taken was such which could be passed or taken under law which conferred exclusive jurisdiction on Authority or Tribunal; and that in passing order or taking action, principles of natural justice were not violated. Unless all such conditions were satisfied, order or action of Authority or Tribunal would not be immune from being challenged before civil court. Where, therefore, Authority or Tribunal had acted in violation of provisions of Statutes which conferred jurisdiction on them or such action or order was Made in excess or in absence of jurisdiction or mala fide or was passed in violation of principles of natural justice, such order could be challenged before civil court in spite of provision in Statute barring jurisdiction of civil court. (2) PLD 1968 Karachi 797 (Amin Cotton Company v. Karachi Cotton Association Ltd.). In this case, learned single judge of this court held that when rights created by a statute are required by statute to be adjudicated only by a Tribunal to be set up under that statute, then the civil courts have no jurisdiction to grant relief. But where, a statute confers exclusive jurisdiction on a tribunal for determining claims in respect of common law rights, then the jurisdiction of the courts will not be excluded until the tribunal required by the statute is set up. (3) 1986 CLC 2561 (Shah Muhammad v. Mst. Resham Bibi). In this case, learned single judge of this court held that although one of allegations in plaint was action of Martial Law Authorities' against plaintiff on basis of which land was transferred to defendants, and such action was described to be mala fide and without lawful authority, yet no relief was claimed in suit to declare orders of Martial Law Authorities as without lawful authority. Defendant making application for rejection, of plaint. Only appropriate course for trial court, held, was to frame issue with regard to jurisdiction of court on base of averments made in application for rejection of plaint, and after allowing parties to lead evidence thereon should have considered question of jurisdiction of court. (4) 2006 PTD 219 (Collectorate of Central Excise Karachi v. Sired Muzakkar Hussain). In this judgment, learned divisional bench of this court held that jurisdiction of civil court, invoking of, even where barred by statute. Suit for declaration and permanent injunction was filed by the respondent in order to challenge the notices issued to him by the Authority for the deposit of excise duty in respect of excisable services which were provided. High Court (Single Judge) decreed the suit. Appeal was filed by the Authority against the decision of the Single Judge. Contention of the Appellant/Authority was that the suit was not maintainable as the jurisdiction of the court was
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barred under S.40 of the Central Excise Act, 1944, and secondly, even if the plaintiff had felt aggrieved by the notices, then the remedy available to him was under the hierarchy of the Central Excise Act, 1944 itself and the same could not have been questioned by filing a suit. Plaintiff had not filed the suit calling in question any order passed under the Act or questioned any assessment or levy or collection of any duty under it, but had only questioned the notice issued by the Authority on the ground that the same had been issued mala fide without any jurisdiction or lawful authority. When special law provided hierarchy for redress of grievance, then one could not normally be allowed to circumvent the same by invoking jurisdiction of civil court, however, if prima facie any mala fide could be shown on the part of the authority, or illegality, which was floating on the surface, and or absence of jurisdiction, Alen the jurisdiction of civil court could be invoked in the matter. Plea as to bar of jurisdiction could only be sustained if it could be shown that the impugned order was passed in the bona fide exercise of powers under the statute. When it was established that the very act questioned was without lawful authority and jurisdiction, then instead of asking a party to go under the agony of lengthy departmental proceedings where possibility of getting relief were limited, civil court could grant relief to deserving party by holding that the act was without lawful authority. Jurisdiction of civil court can be excluded by the Legislature by special Acts which deal with the special subject but the statutory provision must expressly provide for such exclusion or must necessarily and inevitably lead to such inference. Bar created by the relevant provision of statute excluding jurisdiction of civil court cannot operate in cases, where the plea before the civil court goes to the root of the matter and would, if upheld, lead to conclusion that the impugned order is nullity. Even where the jurisdiction of civil court is barred and conferred upon special Tribunal, civil court being court of ultimate jurisdiction will have the power to examine the acts of such forums to see whether their acts are in accordance with law or are illegal or even mala fide. (5) PLD 2009 Karachi 38 (Ataullah v. Sanaullah). In this matter, learned single Judge of this court held that plaint could only be rejected under Cl. (d) of Order VII, R.11, C.P.C if from the statement in the plaint court came to the conclusion that the same was barred by any law. For deciding an application under O.VII, R.11, C.P.C. The contents of the plaint had to be taken as true on its face value and the pleas raised in defence could not be looked into. Jurisdiction of civil courts is ousted only in cases where statutory functionaries have jurisdiction to entertain, adjudicate and dispose of or determine any matter, under Cooperative Societies Act, 1925. If dispute is of such nature that the same cannot be referred to arbitration under S.54 of Cooperative Societies Act, 1925, for adjudication and decision, then S.70-A of Cooperative Societies Act, 1925, would not bar jurisdiction of Civil Courts. 10. The crux of the arguments advanced by learned counsel for the defendants Nos.1 and 2 that lis pertains to mutual funds, therefore, matter relating to mutual funds can be dealt with exclusively by the defendant No,4, which is Securities and Exchange Commission of Pakistan. The learned counsel further argued that instead of filing present suit in this court, remedy was available to the plaintiff to file appeal under section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 which enjoys special jurisdiction which has not been availed by the plaintiff. The learned counsel made much emphasis on the Notification issued by Securities and Exchange Commission of Pakistan on 18th October, 2005, SRO No,1061(1)/2005, which was issued in exercise of powers conferred by Section 10 of the Securities and Exchange Commission of Pakistan Act, 1997, whereby several powers provided-under numerous sections of Companies Ordinance, 1984 were delegated to its Commissioners and Officers. Paragraph No,4 of the aforesaid Notification mentions powers vested in the Executive Director, NBFC. The powers to deal the sections 282D(1), ' 282D(2), 282H(1) and 2821 and 282J(2) have been granted to the Executive Director who can deal and exercise aforesaid powers and decide the matter accordingly. The sections reproduced hereinabove shows that section 282D pertains to the powers of Commission to issue directions to
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NBFC. Section 282H provides that Commission shall monitor general financial condition of NBFC and at its discretion may order. Special audit and an Auditor to carry out detailed scrutiny of the affairs of NBFC. Section 2821 gives powers to the Commission to cause enquiry or inspection to be made by any person appointed in this behalf into the affairs of the NBFC. Section 282J is related to the penalty in case NBFC fails or refuses to comply with any provisions contained in part-VIII of the Companies Ordinance, 1984 or any of the provisions or rules or regulations made under section 282B or regulations, circulars or directives or any directions or 'order passed by the Commission and subsection (2) of the same section pertains to issuance of show-cause notice in case of contravention of any provisions of the Ordinance or rules or regulations or non-compliance of any directions given or order passed by the Commission, while subsection (3) of section 282J pertains to cancellation of license of Non-Banking Finance Companies. 11. According to the learned counsel, the Executive Director passed the order against which the plaintiff should have availed the remedy of appeal under section 33 of the Securities and Exchange Commission of Pakistan Act, 1997. For the convenience and ready reference, section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 is reproduced as under:-- 33. Appeal to the Appellate Bench of the Commission.---[(1) Except as otherwise provided any person aggrieved by an order of the Commission passed by one Commissioner or an officer authorized in this behalf by the Commission, may within thirty days of the order, prefer an .Appeal to an Appellate Bench of the Commission constituted under subsection (2). ' Provided that no appeal shall lie against ---- (a) an administrative direction given by a…
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