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Petitioner: Sindhl Messrs SYNERGY ADVERTISING LIMITED through Manager Administration VS Respondent: ALL PAKISTAN NEWSPAPER SOCIETY through Executive Director and 3 others
Court Name: Sindh High Court Judge(s): Syed Hassan Azhar Rizvi Title:Sindhl Messrs SYNERGY ADVERTISING LIMITED through Manager
Administration vs ALL PAKISTAN NEWSPAPER SOCIETY through Executive Director and 3 others Case No.:Suit No,1307 and C.M.As. Nos. 10906, 11009 of 2011C.M.As. Nos. 10906, 11009 of 2011M.As. Nos. 10906, 11009 of 2011 Date of Judgment:2011-11-24 Reported As: 2012 CLD 716 Result: Order accordingly Judgment ORDER SYED HASAN AZHAR RIZVI, J.---This order will dispose of the above mentioned two C.M.As. Which have been filed in this suit. C.M.A. No,10906 of 2011 is for grant of interim injunction filed by the plaintiff under Order XXXIX, Rules 1 and 2, read with sections 94 and 151, C.P.C. Seeking suspension of the operation of Circular/Letter No,APNS/2011/199 dated 25-10-2011 along with provisional NOC issued by defendant No,1 in favour of defendant No,2 and further restrain the defendant No,2 its officials, officers, office bearers, assigns, successors or agents from conducting any business, inter alia, including publication of advertisements in print and electronic media through the defendant No,3 or any other person/agency until the outstanding amount of Rs,125,879,406 is deposited with defendant No,1 and Rs,377,866,308 is deposited with defendant No,4. C.M.A. No,11009 of 2011 filed by the defendant No, 2 under Order XXXIX, Rule 4 read with section 151, C.P.C. With the prayer to set aside the ex parte interim order passed on 31-10-2011 on C.M.A. No,10906 of 2011. 2. This suit for declaration, permanent injunction and recovery of Rs,503,745,714 has been filed by plaintiff against the defendants with the following prayer:- "(a) To declare that the Circular/Letter No,APNS/ 2011/ 199 dated 25th October, 2011 granting provisional NOC (Annexure P/43) and Letter No,APNS/2011/11177 dated 27th October, 2011 (Annexure P/45) issued by defendant No,1 in favour of defendant No,2 are issued without lawful authority in violation of Rules and Regulations of defendant No,1 for Governing Conduct of Advertising Agencies, in violation of principles of Natural Justice and also in violation of fundamental rights of the plaintiff
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as envisaged in the Constitution including Articles 10-A and 18 read with Article 4 and to declare these letter, provisional NOC and Circular as cancelled and void abs initio. (b) To declare that defendants Nos.1 and 4, their officials, officers, office-bearers, assigns, successors or agents have no authority to issue provisional or permanent NOC/Clearance Certificate in favour of defendant No,2 without receiving the total disputed amount in case of defendant No,1 of Rs,125,879,406 and Rs,377,866,308 in case of defendant No,4 on behalf of plaintiff as Trust Money. (c) To permanently restrain the defendant No,2 its officials, officers, office bearers, assigns, successors or agents from conducting any business through the defendant No,3 its officials, officers, office bearers, assigns, successors or agents or any other person/company etc. Until the disputed amount of Rs,125,879,406 is deposited with defendant No,1 and Rs,377,866,308 is deposited with defendant No,4 as per rules and further permanently restrain defendant No,3/Manhattan from releasing any advertisement both in print and electronic media in relation to the defendant No,2/Warid till payment of the disputed amount to the plaintiff or until it is deposited with the defendant No,1/APNS and defendant No,4/PBA. (d) Direct the defendant No,2 to pay a sum of Rs,503,745,714 to the plaintiff along with interest at the prevailing bank rate. (e) Any other just, legal, equitable and constitutional remedy which this honourable Court may grant in favour of plaintiff and against the defendants in the interest of justice in accordance with law and constitution. (f) Cost of the proceedings." 3. The brief facts of the plaintiff's suit are that the plaintiff is an accredited advertising agency of defendant No,1 Society since the year 2006 under Rules and Regulations Governing Conduct of Advertising Agencies. It is averred in the plaint that plaintiff entered into an agreement dated 1-8- 2005 with the defendant No,2 for providing advertising and marketing services including planning, preparing, placing advertisement on both print and electronic media. It is averred in the plaint that initial term of the agreement dated 1-8-2005 was of two years but under clause 1.1 this agreement was to automatically renew for continuing cycle unless a review is requested by either party and Clause 6 of the said agreement provided the method of payment. It is further averred in the plaint that under clause 6.3 of the said agreement, it was agreed by the defendant No,2 that upon completion of job they will make payments within 30 days of all invoices raised by the plaintiff and also further agreed in clause 6.4 that in case defendant No,2 fails to pay within 30 days then they shall be liable to pay Late Payment Surcharge to plaintiff at the rate of 22% on the total outstanding amount of each individual invoice. It is also averred in the plaint that since entering into the business relationship the plaintiff has provided satisfactory advertising and marketing services to the defendant No,2 and the plaintiff through all its invoices has reiterated the condition that in case no payment is made within 30 days of the receipt of the invoice, a 22% of finance charge/LPS will be charged. It is stated in the plaint that the defendant No,2 since the very inception of the business relationship has delayed in making payments/clearing invoices of the plaintiff in time, but the plaintiff with the aim to avoid punishments from defendants Nos.1 and 4 pays dues of member publications and broadcasters within stipulated time and arranged these payments by the plaintiff through its own resources. It is also stated that to resolve the issue of delayed and outstanding payments various meeting were also held between the management of the plaintiff and defendant No,2 but no material progress was made, therefore, in order to maintain constant cash flow, it is necessary to charge LPS form the defaulting party as charging LPS is a trade practice, which has never disputed or denied these claims of the plaintiff by defendant No,2. 4. The defendants Nos.1 to 4 have filed their separate courtier-affidavits to injunction application and denied the assertions made by the plaintiff in the application and its supporting affidavit. It
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has been stated that the plaintiff suit is based on mala fide and based on falsehood as the defendant No,1 in pursuance of rules and regulations issued the NOC/Clearance Certificate to the defendant No,2 to appoint defendant No,3 as an advertising agent and as such the injunction application merits dismissal as the plaintiff is seeking to achieve indirectly what he cannot seek directly to compel the defendant No,2 to continue placing advertisements through the plaintiff. It has been denied that plaintiff and defendant No,2 entered into a formal agreement and the relationship was governed through an informal mechanism. It has been submitted that the alleged 'financial charge' of 22% on invoices due beyond 30 days was never mentioned in either the estimate and budget summary provided by the plaintiff or in the corresponding service order. It has also been submitted that plaintiff has annexed a purported agreement as Annexure P/8 with the suit, which contains a forged signature of Hamid Farooq, who was the then CEO of defendant No,2. This purported agreement between the plaintiff and defendant No,2 was itself provided to the defendants Nos.1 and 4 by the plaintiff. It has been submitted that defendant No,1 approached Hamid Farooq directly who categorically denied ever having signed or executed the purported agreement and after investigation the defendant No,1 concluded that the purported agreement was false and therefore the plaintiff was not entitled to recover the alleged 'financial charge' from defendant No,2. It has been further submitted that the plaintiff has never in its regular reconciliations and statements of accounts which it sent to defendant No,2 periodically, ever claimed or raised the issue of financial charges on invoices that were paid beyond 30 days from their date and the plaintiff has failed to mention the same ad due and outstanding in its audited financial statement. It has been submitted that the plaintiff has created this issue with a mala fide intention simply so as to blackmail defendant No,2 and prevent it from shifting to another advertising agency. It has further been averred that last time the plaintiff raised the issue of financial charges was in January 2008 when defendant No,2 had first intimated to the plaintiff that it wished to appoint another advertising agency in place of the plaintiff and asked for a provisional NOC and when defendant No,2 agreed to continue the relationship this claim was dropped by the plaintiff and this issue was never raised until 2011 although the parties regularly reconciled their outstanding amount. It has also been stated that the plaintiff has approached this Court with unclean hands and is not entitled to any relief whether equitable or otherwise. It has further been stated that the plaintiff has failed to make out a prima-facie case nor the balance of convenience lies in its favour. It is submitted that it is a settled law that no injunctions are granted in a suit for the recovery of money as there is an effective alternate remedy available and a plaintiff cannot suffer irreparable loss. Therefore, the application under reply is liable to be dismissed with compensatory cost. Learned counsel for the plaintiff has also filed counter-affidavit to application under Order XXXIX, Rule. 4, C.P.C. And denied all contentions/allegations raised therein. It was stated that the defendant No,2 has come before this Court with unclean hand by submitting incorrect and the documents relied upon by the defendant No,2 are tempered. It was also stated that the defendant No,2 has abstained from disclosing a very important fact that PBA has not issued any NOC in their favour and due to the refusal of NOC by defendant No,4 no advertisements can be aired on the electronic media. It was averred that being a foreign investment based company does not mean that any preferential treatment should be afforded to the defendant No,2. It was further denied that interim stay order tantamount to death sentence for defendant No,2 and jeopardized their future due to, the stay order dated 31-10-2011. It was also stated that due to illegal action of defendant No,2 the plaintiff is suffering from severe financial crises and the defendant No,2 by not making timely payments and Late Payment Surcharge (LPS) has exposed the plaintiff to not only sanctions from regulatory bodies i,e, defendants Nos.1 and 4 but also brought them on the verge of bankruptcy. It was further stated that the defendant No,1 in collusion with defendants Nos.2 and 3 has illegally issued the impugned circular, which can be gauged from the simple fact that the
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matter was allegedly decided by defendant No,1 even prior to arbitration proceedings and issuing impugned circular by defendant No,1 mislead the plaintiff, member publications and other agencies into believing that defendant No,2 has deposited the disputed amount. It was stated that every acknowledged/received invoice mentions the charging of 22% financial charge/LPS, which condition has never objected by defendant No,2. It was stated that all the sensational pleadings are aimed to misguide this Court and in actual it is the plaintiff who is suffering at the hands of defendant No,2. It is, therefore, prayed that the application under reply merits dismissal with heavy cost. 5. I have heard Mr. Abid S. Zuberi, learned counsel for the plaintiff, Messrs Khalid Anwer, Rashid Anwer, Salahuddin Ahmed, Tasawur Ali Hashmi and Saman Rafat Imtiaz, advocates appearing on behalf of defendants Nos.1 to 4 and perused the material available on record. 7. Mr. Abid S. Zuberi, learned counsel for the plaintiff argued that plaintiff is accredited advertising agency of defendant No,1 and the Rules and Regulation Governing Conduct of Advertising Agencies of defendant No,1 are applicable on it. He contended that under Clause 9 of the said Rules, the defendant No,1 empowers and authorizes to impose various types of penalties including late payment surcharge, suspension and black listing on a confirmed advertising agency when it fails to make payment to its member publication within the stipulated time. He contended that for obtaining NOC for appointment by clients and/or to change/shift the agency by any advertiser, it should follow Rules and Guidelines for Appointment by Clients. He made reference to Clauses 3, 4 and 6, which read as under:-- "(3) If the client is already listed under any accredited agency or intend to change the agency, the clearance certificate from the outgoing agency should be obtained and forwarded to APNS Secretariat in original immediately. (4) In case the clearance certificate of the outgoing agency is not provided with the appointment letter for the new agency, the APNS Secretariat will ask the outgoing agency to send its clearance/objection if any, within 7 days, failing which, the appointment would be regularized by the Society. However, if a claim of outstanding dues is received by the Society it would arrange settlement/arbitration among the clients and the outgoing agency and the clearance would be issued after settlement/decision of the Society. The decision of the Society in this regard would be final. (6) If a dispute is established on issuance of the clearance certificate/NOC, the APNS Secretariat may issue a provisional clearance on receipt of payment of the disputed amount as trust money by the clients for arbitration by the APNS Secretariat." 8. Learned counsel further argued that Secretary of defendant No,1, who has no jurisdiction, reached the conclusion that the dispute relating to the payment of LPS did not fall within APNS's purview and ought to be determined by another forum. He contended that LPS charges were demanded when the plaintiff started defaulting to the members publication and will be apprehending of its black listing. He contended that plaintiff is not expecting fair hearing from defendant No,1, as defendant No,1 issued NOC to defendant No,2 without issuance of clearance certificate by the plaintiff in favour of defendant No,2. He contended that grant of provisional NOC is fraudulent, which will cause huge loss to plaintiffs reputation and business. He urged that the defendant No,2 through its letter dated 11-8-2011 received on 12-8-2011 informed the plaintiff that defendant No,2 has decided to discontinue the Media Buying services of plaintiff Company with effect from 29-8-2011 and sought forwarding of pending Media Bills for reconciliation and settlement of all amounts outstanding and further requested for issuance of Provisional NOC onwards from 29-8-2011. He urged that again on 12-8-2011, the plaintiff via Fax also received another letter purportedly dated 5-8-2011 issued by defendant No,1 wherein the plaintiff was informed that on 5-8-2011 the defendant No,2 had decided to appoint defendant No,3 as their
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Advertising Agency. He pointed out that along with this letter another letter purportedly dated 5-8- 2011 (bearing receiving of defendant No,1 of 11-8-2011) was also faxed, which clearly shows that defendant No,1 maliciously put the date of 5-8-2011 on these two letters so that the 7 days objection period lapsed, which was only done so that the plaintiff was de-barred from filing objections in time. He submitted that upon learning such facts, the plaintiff immediately contacted the defendant No,1 and asked about the discrepancy in dates of the letters, Who realizing such glaring discrepancy admitted this as their mistaken act vide its letter dated 15-8-2011 and informed the plaintiff that erroneously the date of letter was mentioned as 5-8-2011 instead of 11-8-2011. He submitted that all this was done by defendant No,1 in collusion with defendants Nos.2 and 3 with the aim to facilitate them in their illegal and malicious designs and to usurp the rights of the plaintiff. He further contended that in reply to the above referred letters, the plaintiff through its letter dated 20-8-2011 informed the defendant No,2 regarding its request for Provisional NOC, for 29-8-2011 onwards, that in view of the ongoing work and reconciliation of substantial outstanding we would like to issue you a full and final NOC upon clearance of all our outstanding. He also made reference to Clause 18 of APNS Rules. He submitted that similar provision is incorporated in Pakistan Broadcasters Association ("PBA") under clause 18 of Advertisement Rules and Code of Ethics. He further made reference to Clause 13 of APNS Rules, which is in respect of appointment of a new agency by Advertiser. 9. Learned counsel for the plaintiff contended that by illegally putting the outstanding payments on hold, the defendant No,2 intensified the financial crisis of the plaintiff which disabled the plaintiff to pay the outstanding of the member publications and member broadcasters. He contended that the plaintiff in its letter dated 10-10-2011 approached the defendant No,1 and informed that the total amount payable by defendant No, 2 to the plaintiff against its print media bills is Rs,125,879,406 and supplied all necessary record and statements of accounts. He also contended that similar letters dated 6-9-2011 and 17-10-2011 were also issued by the plaintiff to Pakistan Broadcasters Association informing them about the outstanding payments from defendant No,2 on account of electronic media bills. He submitted that for obtaining provisional NOC/Clearance Certificate from the defendant No,1 or defendant No,4, it is a condition precedent that the defendant No,2 deposits the complete disputed amount and not only the amount which it considers outstanding. However, in the present case the defendant No,2 in a mala fide and illegal manner only deposited part of the disputed amount with defendant No,1 and the defendant No, 1 in utter violation of its rules and the plaintiffs rights issued the provisional NOC thereby seriously prejudicing the plaintiff. He further submitted that the defendant No,1 on one hand admitted the dispute between the plaintiff and defendant No,2 but on the other hand without calling the Arbitration proceedings or deposit of the complete disputed amount it has issued provisional NOC/Clearance Certificate to the defendant No,2. He also urged that the claim of the plaintiff regarding 22% levy of financial charges/late payment charges was part of the invoices and was also demanded in year 2006 and 2008 when the dispute arose prior to any issuance of NOC, which the defendant No,2 never denied or disputed the claims of plaintiff regarding outstanding amounts of LPS but always avoided payment of the same on one pretext or the other. He urged that the amicable settlement of year 2008 was subject to payment of LPS but till date the defendant No,2 is avoiding to pay the same. He submitted that the action of defendant No,1 of issuance of the NOC dated 25-10-2011 is totally illegal and mala fide which has been undertaken to get favours from defendant No,2, which is one of the largest cellular companies of Pakistan. He urged that the defendant No,1 by not following its own rules and regulations has usurped the rights of the plaintiff and their action besides being illegal, arbitrary, mala fide, fraudulent, is violative of the fundamental rights of the plaintiff including Articles 18, 25 read with Article 4. He submitted that the total amount outstanding against defendant No,2 is Rs,503,745,714. He further submitted that the letter dated 27-10-2011 is also illegal and violative of
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the principles of natural justice as these illegal actions have financially ruined the plaintiff, who are no more in a position to serve their debts towards banks and bills/invoices towards member publications and member broadcasters. He also submitted that in a similar claim pending before the defendant No,4 but the defendant No,4 has refused to give in to the illegal demands of the defendant No,2 and has told them to first deposit the complete disputed amount claimed by the plaintiff agency and then only the provisional NOC/Clearance Certificate for the purpose of appointing defendant No,3 as new Advertising Agency will be issued. He, therefore, submitted that the provisional NOC issued by the defendant No,1 in favour of the defendants Nos.2 and 3 is illegal and liable to be suspended and set aside. He submitted that the plaintiff has made out a strong good prima facie case and the balance of convenience is also in its favour and if the instant application is not granted, the plaintiff shall be seriously prejudice and likely to sufkr irreparable loss and injury. 10. Learned counsel for the plaintiff in support of his submission has placed reliance upon the case of MANSAB ALI v. AMIR and 3 OTHERS (PLD 1971 SC 124), wherein the Hon'ble Supreme Court has held that "it is an elementary principle that if a mandatory condition for the exercise of jurisdiction by a Court, tribunal or authority is not fulfilled, then the entire proceedings which follow become illegal and suffer from want of jurisdiction." He also relied upon the case of MUHAMMAD MATIN v. MRS. DINO MANEKJI CHINOY AND OTHERS (PLD 1983 Karachi 387), wherein it has been held that the plaintiff only needs to show that he has a prima facie case, that the balance of convenience betweeh the parties as well as for avoidance of complications would lie in favour of the party seeking the injunction, and lastly, that the plaintiff would suffer irreparable harm by refusal of an injunction. He further placed reliance on the case of PURI TERMINAL LTD. v. GOVERNMENT OF PAKISTAN (2004 SCMR 1092), wherein the Hon'ble apex Court held that injunction is a form of equitable relief and is to be issued in aid of equity and justice, but no to add injustice. For grant of such relief, it is mandatory not only to establish that petitioner has a prima facie case, but also that balance of convenience is on his side and that he would suffer irreparable injury/loss unless he is protected during the pendency of suit. He also placed reliance on the case of DOLLAR INDUSTRIES (PVT.) LTD. v. NISAR TRADERS AND 7 OTHERS (2011 CLD 847). 11. Mr. Salahuddin Ahmed, learned counsel for the defendant No,1 (APNS) has urged that the plaintiff never filed any complaint or statement of outstanding claims against the defendant No,2 with the defendant No,1 since 2005 about non-payment of LPS by defendant No,2 as per Rule 9-A and until such time as the defendant No,2 sought an NOC/Clearance Certificate for changing advertising agencies from the defendant No,1 in August, 2011. He urged that the plaintiffs claim for late payment surcharges relate to invoices dating back to 2005 and a majority of the said claims are, in any event, time barred and the plaintiffs claim in relation thereto are barred under the doctrines of acquiescence, waiver and estoppel. He denied that there is collusion between the defendant No,1 and defendants Nos.2 and 3 nor does the defendant No,1 bear any malice against the plaintiff. He submitted that on the request of defendant No,2 for NOC/Clearance Certificate, the defendant No,1 wrote letter to the plaintiff dated 11-8-2011 asking them to forward its objections to the same, if any, within seven days, but no such objections were communicated to the defendant No,1 within the stipulated time. He submitted that the plaintiff vide letter dated 10-10-2011 supplied the details of its claim against the defendant No,2 to the defendant No, 1. He further contended that as per plaintiffs own letter dated 10-10-2011 and statement of dues, the total claimed amount of Rs,125,879,406 includes a sum of Rs,119,414,316 by way of late payment surcharge. He also contended that the claim of LPS at the rate of 22% after 30 days of receipt of invoice is patently unreasonable and is hit by section 74 of the Contract Act as well as injunction of Islam. 12. Learned counsel for the defendant No,1 further contended that defendant No,1 lawfully issued NOC for change of advertising agency. He contended that as per the plaintiffs own statement, the
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actual amount owed by the defendant No,3 in respect of advertisements placed through the plaintiff was Rs,6,465,090, which amount was duly deposited with defendant No,1 prior to issuance of the said NOC. He submitted that the real purpose and intent of all of defendant No,1 Rules and Regulations is to serve and protect the common interest of the defendant No,1 member publications as opposed to that of advertising…
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