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Petitioner: TREASURER OF CHARITABLE ENDOWMENT FOR PAKISTAN VS Respondent: INAMUR REHMAN JUDGMENT
Court Name: Sindh High Court Judge(s): Rasheed A. Rizvi Title:TREASURER OF CHARITABLE ENDOWMENT FOR PAKISTAN vs INAMUR REHMAN
JUDGMENT
Reported As: 2000 CLC 135 Result: Order accordingly Judgment JUDGMENT ' This suit is for recovery of Rs,64,75,341.39 filed by the Treasurer of Charitable Endowments for Pakistan on behalf of Fauji Foundation, a Trust created under the Charitable Endowments Act, 1890 established for the benefit of ex-servicemen and their families. The defendant was a promoter and shareholder of Rahmania Fauji Sugar Mills Ltd., a public limited company which was incorporated under the Companies Act, 1930 (hereinafter referred to as R.S.M.). 2. The case of the plaintiff is that R.S.M. Was established in collaboration with the Directorate Welfare and Rehabilitation, General Headquarters, Pakistan Army for setting up a sugar mill at Khoski, District Badin, Sindh for which financial assistance was provided by Pakistan Army to the following extent:- (i) By advancing a loan of Rs,90 lacs on easy terms to Shamimur Rehman and Mst. Shamim Khatoon son and wife respectively of the defendant for investment in the project. (ii) By investing a sum of Rs,40 lacs in the debentures which were to be issued by the Company (but were never issued.) (iii) By purchasing shares of the Company of the value of Rs,25 lacs. (iv) By entering into firm commitments with the PICIC to render further financial assistance to the extent of Rs,110 lacs." 3. The main grievance of the plaintiff is that the defendant, who, at the time of setting up of R.S.M. Represented himself on behalf of the said company had entered into negotiation for purchase of plant and machinery for the sugar mill with Messrs A & W Smith and Company, the U.K. (hereinafter referred to as AWS) and obtained commission equal to 10% of the F.O.B. Price of L19,95,902 which
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was paid to the defendant on behalf of the company and which was illegally retained by the defendant. This amount was subsequently remitted by invoking provisions of M.L.R. 104 which now is being claimed by the plaintiff. It is further case of the plaintiff that sum of L 6655 and L 5000 were again paid in February, 1971 and October, 1971 respectively to the defendant as representative of the company for reimbursement of the money paid by the company on account of some debts, demurrage charges, bill of lading and short shipments which amount was illegally retained by the defendant. Lastly, it is claimed that the defendant also imported a Mercedes car through A.W.S. Declaring the same as personal baggage by one 0. D'Hotman and was used by the defendant; therefore, he is liable to pay the value thereof in the sum of L1,44,000. Initially, when the suit was filed on 13th September, 1974, the amount of L 1,70,000 as 10% commission was excluded as the plaintiff filed a petition before the authorised officer appointed under the Foreign Exchange (Prevention of Payments) Act, 1972. Subsequently, vide order dated 11-3-1992, the plaintiff was permitted to amend its plaint. 4. Mr. Sayyed A. Shaikh has placed reliance on paras. 22 and 82 of the judgment in the case Fauji Foundation and another v. Shamimur Rehman PLD 1983 SC 457 where, according to the learned counsel, Honourable Supreme Court has correctly summarised the plaintiff's case. Para. 82 of the said judgment reads as follows:- "82. Two other contemporaneous factors of which judicial notice was taken. By the High Court require consideration. The first relates to the action taken against Inamur Rehman in freezing the repatriated assets declared under Martial Law Regulation 104. The funds were frozen under the provisions of the Foreign Exchange (Prevention of Payments) Act, 1972 as amended by the Foreign Exchange (Prevention of Payments) (Amendment) Act, 1974. By this action it was stated that the first appellant stood to gain because of the enabling provisions in the said Act which entitled the first appellant to claim it. The background which did not surface in the judgment of the High Court was that Inamur Rehman negotiated for the purchase of machinery from Messrs A.W. Smith & Co. Limited and obtained a secret commission equivalent to 10% of the F.O.B. Price i,e, L 19,95,902. This amount was deposited on commercial basis in the name of the Mill with the Pakistan Overseas Standard Bank Limited, a branch of the Standard Bank Limited, on 30th of December, 1969 and finally adjusted against the payment of 10% commission demanded by Inamur Rehman as a representative of the Mill. In this connection before its adjustment Inamur Rehman had filed an action in the Queen's Bench Division (Commercial Court) on the basis bf an oral commitment for the recovery of the commission but it was subsequently withdrawn as the commitment stood fulfilled. However, Inamur Rehman did not disclose the receipt of the commission to the Board of Directors nor to the shareholders nor even to the G.H.Q. This amount, in fact, belonged to the Mill for which he had acted as an agent and the purpose of taking action against him under the Foreign Exchange (Prevention of Payments) Act, 1972 and the Foreign Exchange (Prevention of Payments) (Amendment) Act, 1974 was to enable the repatriated foreign exchange to be paid to the persons to whom it really belonged. It covered the cases of all those persons who came within its purview. This Ordinance was even challenged by Inamur Rehman when he was removed from the office of the Managing Director of the Bank through Constitutional Petition No,627 of 1973 in the former High Court of Sindh and Balochistan which was dismissed. In this petition he had alleged mala fides against Muhammad Yousuf. Against the order of dismissal he filed a petition for leave to appeal in this Court which was disposed of as infructuous after the banks were nationalized. Inamur Rehman did not repatriate the entire amount of the commission but only a part of it i,e, 1,70,000. He imputed mala fides to the then President and the Chief Martial Law Administrator for singling him out for action. Can it be said by any stretch of imagination that he was the victim of any mala fides when he himself usurped the commission and under the law action was taken against him to retrieve it. Besides these legal legislative instruments were passed by the National Assembly and can one
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legally impute motives to the Members of the National Assembly against Inamur Rehman. Inamur Rehman himself produced no evidence to substantiate his allegation that the so-called action taken against him was not for this purpose, but to deprive him of his lawful gain. His own plea is that he received the commission in the normal course and that he had the authority through oral from the Board of Directors to charge such commission and to pocket it, which on the face of it appears to be absurd. Accordingly, he had no legal right to appropriate it as his own gain if he had acted for and on behalf of the Mill as its agent or in some other fiduciary capacity. In these circumstances, one wonders how the High Court could take judicial notice of this action and draw an inferential conclusion of mala fides...." 5. Following reliefs are claimed by the plaintiff through the amended plaint:-- "(a) Decree for Rs,24,29,657.13 with interest at the rate of 9% per annum from the date of suit till payment. (a-1) Declaration that the plaintiff is the real and true owner of the repatriated foreign exchange and its rupee equivalent together with the amount of bonus totalling Rs,40,48,684.26 and interest accrued thereon, lying in deposit with the State Bank of Pakistan and is entitled to receive its payment. (a-2) Permanent injunction restraining the defendant from obtaining, recovering and receiving the said amount mentioned in clause (a-1) above from the State Bank of Pakistan. (a-3) Decree for Rs,40,45,685.26 with interest/mark up at the rate of 9% per annum from 1-2-1971 till payment. (b) Costs of the suit. (c) .. 6. Defendant in his written statement denied that he was a promoter of R.S.M. But admitted to be one of its share-holders. He denied having received any commission from A.W.S. Or from any other party and claimed that the amount of L 1,70,000 repatriated from the U.K. Is his own and that it is not the amount of commission. He has denied receiving 10% commission and any other amount on behalf of R.S.M. In his lengthy written statement attempts were made to show that the suit filed by the plaintiff is with mala fides. 7. Against the order of this Court dated 11-3-1992, through which the plaintiff was allowed amendments in the plaint, the defendant preferred High Court Appeal bearing No,68 of 1992 which was disposed of by consent of the parties on 9-5-1994 as the partie filed a joint application in Court. As a result of the same, further issues were adopted by consent, in addition to the issues framed by this Court on 4-8-1975 which set the issues as follows:-- "(1) Whether the defendant had negotiated and concluded the purchase of plant and machinery of the Sugar Mill on behalf of Rehmania Fauji Sugar Mills Ltd from A & W Smith & Co. Ltd. Glasgow and obtained a secret commission of 10% F.O.B. Price, amounting to L 2,00,000 ? (2) Whether the defendant had received the sums of L 6,655 and L 5,000 from A. & W. Smith & Co, Ltd as stated in para. 8 of the plaint. If so is the defendant liable to pay the said sums to the Fauji Foundation with interest at 9% p.a.? (3) Whether the defendant had imported a Mercedes car with the funds of the Company, Rahmania Fauji Sugar Mills Ltd? If so is the defendant liable to pay the value thereof i,e, L 1,44,7-0-0 to the plaintiff with interest at 9% p.a.? (4) Whether this Honourable Court has no jurisdiction to grant any relief in the nature of the pleas raised in the written statement and whether the claims in suit are maintainable at law. (5) Whether the suit is bad for non-joinder of necessary parties? If so to what effect? (6) Whether the claim for interest is illegal and unauthorised? (7) Whether the plaint has not been signed by a proper and competent person?
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(8) Was the claim of the plaintiff in relation to the foreign exchange bonus which had accrued to the defendant under M.L.R. 104 pending on the date when the amendment plaint was filed by the plaintiff? (9) Was or is the plaintiff in fact and in law otherwise the real and true owner of the amount of Rs,40,45,684.26 or any part thereof lying deposited in the State Bank of Pakistan or to the interest accruing thereon or is the plaintiff entitled to receive or recover the above sum or any part of it? (10) Does the plea raised in para. 7-c of the amended plaint travel beyond the parameters of the orders of this Honourable Court allowing amendments and is otherwise not maintainable? (11) Is the amended relief claimed by the plaintiff in the suit hit by the Law of Limitation and otherwise time-barred? (12) What should the decree be?" 8. Plaintiff has examined its Chief Accountant Atiqur Rehman as Exh.6/1 while A.H. Slater, Managing Director of A.W.S. Was examined on interrogatories (Exh.7). Defendant has examined himself as Exh.7/1. Before discussing the case on merits, I would like to deal with the legal issues namely Issues Nos.8, 10 and 11. Issues Nos.8, 10 and 11 9. Initially, this suit was filed in the year 1974 for recovery of Rs,24,29,657.13 with interest at 9% per annum from the date of suit till realisation. The breakup of this amount was given in Annexure 'A' filed with the plaint. However, in para. 10 of the first plaint the plaintiff excluded the amount of h 1,70,000 from the total claim. This amount was declared and repatriated by the defendant under M.L.R. 104 which was claimed by the plaintiff to be the amount of 10% commission. After its repatriation plaintiffs filed their claim and reserved their right to file a separate suit for the said amount at a subsequent stage. Meanwhile, in the year 1973 some directions were issued from the State Bank and the defendant feeling aggrieved with such directions filed a Constitutional petition which was dismissed with cost against which appeal was filed before the Honourable Supreme Court by the defendant. A Full Bench of the Honourable Supreme Court was pleased to allow the appeal and held that the provisions of section 6-A of the foreign Exchange (Prevention of Payments) Act, 1972 is violative of Article 25 of the Constitution, 1973. (See Inamur Rehman v. Federation of Pakistan and others 1992 SCM R 563). It was after this judgment that the plaintiff filed application seeking amendment of the plaint. The circumstances which reflected the background of this case to some extent were noted by the Honourable Supreme Court in the case of Inamur Rehman (ibid) in the following words:-- "...While the country was under Martial Law, on 13th January, 1972 the Chief Martial Law Administrator, promulgated the Foreign Exchange Repatriation Regulation, 1972 (M.L.R. 104). Pursuant to the aforesaid Regulation the appellant declared and repatriated foreign exchange amounting to L 1,70,000 through the Standard Bank Limited (subsequently having been merged in the Habib Bank Limited), respondent No,4, of which the appellant is said to have been the Managing Director at that time. As a result of this repatriation of foreign exchange, the Standard Bank received on behalf of the appellant a sum of Rs,20,90,486.77 (which shall be referred to as the 'principal amount'), being the rupee equivalent of the foreign exchange repatriated by the appellant. In addition, the Standard Bank received a further amount on behalf of the appellant in the sum of Rs,19,55,197.49 (to be referred to as the 'bonus amount'), to which the appellant was entitled under para. 3(3) of the said Regulation. The latter amount was transferred, under the instructions of the appellant, by two separate entries, one, dated 21st. April, 1972 and the other, dated 29th June 1972, to the account of the Rawalpindi Engineering Company, a private limited company, owned and controlled by the appellant and his family. So far as the principal amount of Rs,20,90,486.77 is concerned, the same was withdrawn from the Standard Bank and transferred to the National and Grindlays Bank (hereinafter referred to as the 'Grindlays Bank') in Account
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No,230630215. The appellant then drew some cheques on Grindlays Bank, but the same were not cashed and the persons presenting the said cheques were verbally informed that the said Bank had been instructed by the State Bank of Pakistan (to be referred to as the ' State Bank') not to allow the operation of the appellant's account. This fact was verified subsequently by the Grindlays Bank in writing through their letter, dated 30th June, 1972 addressed to the appellant... '...It appears that Fauji Foundation and some others had preferred claims against the appellant before the Authorised Officer which were pending adjudication at the time of the institution of Constitutional Petition by the appellant before the High Court and by order, dated 11th July, 1973 the said Authorised Officer was restrained from passing any order on the pending claims. It has been stated by the learned counsel for the appellant that the aforesaid stay was continued throughout the proceedings before the High Court and when the matter was, brought before this Court by order, dated 20th June, 1977 the proceedings before the said officer were stayed, with the result that no orders have been passed determining the claims so preferred until today." 10. In the case of Inamur Rehman (supra) while dealing with the objection of the respondent that fundamental rights cannot be invoked because on the date of institution of Constitutional Petition they were suspended and were not in operation, it was held that the position in that case was identical to the cases Abul A'la Moudoodi v. Government of Pakistan PLD 1964 SC 673 and Benazir Bhutto v. Federation of Pakistan PLD 1988 SC 416 as in 'the case of Inamur Rehman (supra) where the claims before the Tribunal constituted under the above legislation went before the Supreme Court, were still pending and were yet to be disposed of. It was further held, "It has been rightly urged that any claimants whose claims were pending before the Tribunal, do not have a vested right in the procedure or the forum and that the ordinary forums and remedies would be available to the said claimants in case the legislation is declared unconstitutional." see page 591 of 1992 SCM R 563. 11. The arguments of Mr. Muhammad All Sayeed that the claims of the plaintiff incorporated in the amended plaint became time-barred and that the plaintiff wants to introduce a fresh cause of action, was considered by this Court in its order dated 11-3-1992 after placing reliance on the cases of Karamat Ali and another v. Muhammad Younas Haji and others PLD 1963 SC 191), Mst. Ghulam Bibi v. Sarsa Khan PLD 1985 SC 345, Bashir Ahmed Khan v. Qaiser Ali Khan PLD 1973 SC 503 and National Shipping Corporation v. Messrs A.R. Muhammad Siddik and another 1974 SCM R 131. With the following observations, the objections of Mr. Muhammad Ali Sayeed were overruled by a learned Single Judge of this Court G.H. Malik, J. (as he then was). (see Treasurer Charitable Endowment v. Inamur Rehman 1993 CLC 2033:-- "The argument advanced by Mr. Muhammad Ali Sayeed on the basis of non-availability of the provisions in section 14 of the Limitation Act is obviously not to the point. With regard to the cause of action it is clear that no new cause of action is sought to be set-up by the plaintiff by the amendment which is sought. In fact the claim to the amount of L 1,70,000 arises from the cause of action which has already been pleaded in the suit. Mr. Muhammad Ali Sayeed contended that the cause of action is different because the claims in the suit is a simple claim for money whereas the claim of the plaintiff before the Federal Government was to the amount which was 'repatriated' by the defendant. The distinction may appear to be superficially valid but in substance the claim of the plaintiff is a claim for money and that claim arises from the same cause of action, namely, that the defendant received certain amounts of money from the foreign suppliers and was liable to pay those amounts to the plaintiff who are entitled to it. It may be observed that the amount repatriated by the defendant was converted into rupee and was deposited with the State Bank of Pakistan. The payment of that amount was prohibited by the Government and under section 2(2) of the Ordinance of 1972 (re-enacted by the Act of 1972) any person to whom any amount of money was payable by the person repatriating the amount of foreign exchange or who had
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against such person any claim the value of which could be expressed in terms of money could apply to the Federal Government for the payment of the amount so payable or of the amount representing the value of such claim. It would appear that the claim under section 2(2) was a claim for money and not to the amount 'repatriated' by the defendant... ' In the present case it is clear that the plaintiff has been asserting its claim to recover the money sought to be recovered by the amendment since before the suit was filed and that the claim for that amount was not included in the plaint only because by Ordinance, 1972 the plaintiff was entitled to prefer a claim before Federal Government and had in fact preferred such a claim. It also cannot be disputed that had the plaintiff's claim before the Federal Government not become infructuous in the circumstances outlined above it may not have been necessary to apply for amendment of the plaint. The plaintiffs have applied for amendment within a reasonable time after their claim before the Federal Government became infructuous. In these circumstances, I am of the opinion that special circumstances exist justifying grant of amendment notwithstanding the lapse of between the filing of this suit and the filing of the amendment application and the fact that a fresh suit by the plaintiff to recover the money mentioned in the application would be barred by limitation." 12. In the instant case, the plaintiff was provided with a remedy by virtue of M.L.R. 103 and the provisions of Foreign Exchange (Prevention of Payments) Act, 1972 and was admittedly pursuing such remedies as provided by law. Section 6-A of the Act 1972, was declared to be ultra vires by the Honourable Supreme Court, and therefore, the plaintiff could not pursue the same remedy which by an act beyond their control had become infructuous. It is pertinent to note that the plaintiff is claiming an amount of L 1,99,000 for which they split their claims into two amounts: one was for L 1,70,000 before the Authorised Person and the claim for the remaining amount was incorporated in the suit. It was argued by Mr. Saeed A. Shaikh that the amendments in plaint granted by this Court vide order, dated 11-3-1992 has attained finality inasmuch as the appeal filed against the same bearing No, H.C.A. 68 of 1992 was withdrawn by the defendant/appellant on 9-5-1994. In support of the order dated 11-3-1992, Mr. Saeed A. Shaikh has placed reliance on the cases Muhammad Iqbal v. Mirza Begum and 2 others 1992 M LD 1257, Muhammad Ashraf Sheikh v. Messrs Aeroflot Air Lines, Lahore and another 1993 CLC 555 and Sabir Ali v. Mst. Zubaida Bibi 1993 CLC 321. Mr. Muhammad Ali Sayeed has drawn my attention to the order of learned Division Bench in H.C.A. No,68 of 1992 through which defendant was permitted to withdraw the said appeal subject to the conditions mentioned in the withdrawal application. The defendant was permitted to withdraw the said appeal ' subject to all just exceptions'. It was argued by Mr. Muhammad Ali Sayeed that it was in such circumstances that two additional issues were framed by this Court and therefore, the defendant is competent and entitled in law to challenge the amendment granted at the belated stage. Perusal of order, dated 14-11-1994 passed by this Court will reveal that by consent of both the learned counsel, additional issues namely, 10 and 11 hereinabove were adopted. Both the Issues Nos. 10 and 11 above indicate that the question of grant of amendment is still alive and is to be considered and if it is answered in affirmative then the claim of the plaintiff would stand limited to the extent of unlamented plaint. 13. Now coming to the cases cited by Mr. Saeed A. Sheikh in support of amendments granted by this Court, I would like to point that in Muhammad Iqbal (Supra) a Full Bench of Supreme Court Azad Jammu and Kashmir after considering several case law on the point held that an amendment could be allowed even after prescribed period of limitation and that an application for amendment cannot be rejected on the ground of limitation subject to the rule laid down in the case of Jan Muhammad v. Muhammad Munsif and 2 others PLD 1986 SC (AJ&K) 98. Learned Chief Justice of Azad Jammu and Kashmir Supreme Court in his additional note in support of the judgment observed that if the part of an immovable property is omitted in the plaint due to bona
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fide mistake, the amendment can be allowed to include the same even after the expiry of the period of limitation subject to the condition that if such omission is intentional or due to gross negligence on the part of the party concerned then the amendment should be refused. I would like to refer with advantage a case of Full Bench of our Honourable Supreme Court in Mst. Ghulam Bibi and others v. Sarsa Khan and others PLD 1985 SC 345 which was followed by the Supreme Court of Azad Jammu and Kashmir in the case of Jan Muhammad (Supra). In the case of Mst. Ghulam Bibi it was held that the reason of delay alone in applying for amendment or expiry of the period of limitation or increase in the Court fee and change of jurisdiction is not to be treated as a ground for refusing amendment in the plaint. This rule was made subject to the condition that the nature of suit in so far as its cause of action is concerned is not changed by the amendment. I may also refer here to the case of Mst. Barkat Bibi v. Khushi Muhammad and others 1994 SCM R 2240 wherein the case of Mst. Ghulam Bibi (supra) was followed. It was held, inter alia, that by mere adding an additional prayer in the plaint without changing the contents and averments made in the plaint, the nature of suit is neither changed nor altered. Reference was made to the case Muhammad Din v. Muhammad Shafi and others PLD 1971 SC 762. The objections raised to grant of amendments were already considered by this Court earlier. It is a proved fact that the proceedings filed by the plaintiff for recovery of 10% amount of commission under the provisions of section 6-A of the Foreign Exchange (Prevention of Payments ) Act, 1992 were declared by the Supreme Court to be ultra vires. It cannot be…
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