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Petitioner: TRADING CORPORATION OF PAKISTAN VS Respondent: RAHAT AND COMPANY
2017 C L D 1761 [Sindh] Before Aziz-ur-Rehman, J TRADING CORPORATION OF PAKISTAN---Plaintiff Versus Messrs RAHAT AND COMPANY---Defendant Suit No. 196 of 1996, decided on 18th January, 2017. Civil Procedure Code (V of 1908)--- ----O. VI, Rr. 14, 15, O. XIV, R. 5 & O. XXIX, R. 1---Suit by Corporation---Signing of pleadings---Legal issue---Suit for recovery of money was filed by a Corporation---Defendant raised the plea that suit was filed without authorization of Board of Directors of the Corporation and was not maintainable---Validity---Objection of defendant regarding lack of authority of person who signed plaint was nor only an afterthought, highly technical, remote but was irrelevant after merger of the plaintiff Corporation into another Corporation and filing of amended plaint duly signed, verified and filed by an official of the Corporation to which the plaintiff Corporation merged---Official of Corporation to which it was merged, under the resolution of its Board of Directors was duly authorized to do the needful---High Court declined to dismiss suit merely for want of said authorization and that too after filing of amended plaint---Suit was maintainable in circumstances. Ghulam Hyder Shaikh for Plaintiff. H.A. Rehmani along with Ms. Naheed Akhtar for Defendant. Dates of hearing: 7th and 19th December, 2016. ORDER AZIZ-UR-REHMAN, J.---On 8th September, 2016, when the above suit came-up before Court for hearing of C.M.A. No.9854 of 2010 [Under Order XIV, Rule 5, C.P.C.], filed by the defendant with a prayer for framing a 'legal issue' to the effect and extent as to "whether the suit has been competently filed without authorization by the Board of Directors of Rice Export Corporation of Pakistan, [the original plaintiff], if not, it's effect". 2. The brief relevant facts leading to the above preliminary issue are as follows:- A. Rice Export Corporation of Pakistan [in short RECP], as being a registered corporation filed the instant suit for accounts, recovery of Rs.56,803,786.64 on 22.1.1996 against M/s. Rahat & Co., carrying on its business as handling agent at Karachi. B. Per RECP version, RECP entered into a contract bearing No.RECP-5/M&M/89-90/2, on 4th January, 1990 and thereby had appointed the defendant for handling the rice crop for the years 1989 -1990. C. The defendant as per terms of the contract was required to exercise all sorts of care in respect of stocks entrusted to the defendant. Per plaintiffs stand defendant was entrusted large quantities of 'rice' of various qualities and gunny bags etc. According to the plaintiff the services rendered and the work performed regarding handling of 'Rice Crop' for the years 1989-1990 was found un-satisfactory, as such, the defendant was asked vide plaintiff letter dated 2" May. 1993 for to inform the plaintiff about balance stock and stores in its possession physically verified but the defendant 'failed' and/'avoided' to do the needful to the satisfaction of RECP/plaintiff. D. The plaintiff, nevertheless, keeping in view the fact that considerable amount of 'rice crop' pertaining to the years 1989-1990, could not be exported and on such account RECP extended the validity of contract dated 4th January, 1990 [which was initially for two years from the date of acceptance of tender] upto 06.01.1993. E. The defendant despite commitments and time and again requests vis-a-vis submitting of account, the defendant's partnership firm failed and/or avoided to submit the account of outstanding stocks. Per plaintiff s version, the defendant firm as handling agent under the 'terms' and 'conditions' said contract, is liable not only to render accounts of stocks entrusted to the defendant firm but also is liable to pay Rs.56,669,87.00 plus Rs.94,310.64 on account of EDS and Rs.39,600/- as claimed on account of losses suffered and of failing to deliver the BARDANA. F. The plaintiff in 'para 15' of the 'original plaint' had also reserved it's right to add further claim, if more shortages came to the knowledge of the plaintiff. Being relevant 'para 15' of the 'plaint' reads as follows:- . . . "15. The plaintiff reserve his right to add claim, if any, further shortages came to the notice of the plaintiff and to add claim of shortages of gunny bags etc, as the account is not yet finalized and to add any other and further amount found due and payable by the defendant and same are not included herein." . . . 3. Upon service the defendant firm filed it's 'written statement' sometime in January, 1997, wherein while, admitting the execution of the agreement/contract between the parties the adverse allegations leveled in 'plaint' were denied vehemently. In the 'written statement', the allegations regarding un-satisfactory performance of the defendant in discharge of it's contractual obligations were also specifically and vehemently denied. Besides, any sort of losses, shortage of stock of rice, non-submission of accounts were also forcefully denied. 4. Per defendant's firm stand, the shortage in stock of rice, if any, besides being within the permissible and/or accepted percentage [%] is natural inevitable and logical and that too to the knowledge of the plaintiff. Moreover, the fact of extension of contract of January, 1990, beyond the initial period of two years up-to 6th January, 1993, per defendant's stand shows/establishes the satisfactory discharge of obligations on the part of defendant firm. According to the defendant, the filing of instant suit is nothing but only to 'obstruct' or 'thwart' the refund of the 'security deposit' to the defendant firm. 5. According to the stand of defendant firm as pleaded/raised in 'written statement' the present suit besides, being mala fide is a coercive exercise of powers on the part of the plaintiff corporation. In the 'written statement', it was also denied that any 'cause of action' as alleged by the plaintiff, was ever accrued in favour of the plaintiff. The plaintiffs suit, as such, per defendant's stand is not only without any cause of action but also liable to be dismissed with special cost. 6. On 12.5.1997, the 'issues proposed' by the parties appearing at page 105 of the Court file were adopted. From bare perusal of Six [06] issues, adopted on 12.5.1997, no any issue was framed vis-a-vis maintainability or in-competency of the instant suit obviously, for the reason that the defendant firm has not raised any objection in it's 'written statement' regarding lack of 'Board's Resolution' of the plaintiff company and/or in-competency of the suit on any such ground. The Six [06] issues adopted vide order dated 12.5.1997 read as follows:- 1. Whether defendants appointed Chowkidars for security of stocks/stores under their custody as requested by plaintiff? 2. Whether in the storage, movement and milling of rice the shortage thereof is natural, inevitable and logical, if so, to what extent? 3. Whether at the time of taking the contract for handling the rice, the fact of natural losses was known to defendants, if so, its effect? 4. Whether defendant failed to submit accounts for 6728.2712 M. Tons of Basmati broken and 562.1677 M. Ton Sindh (PB) sweeping? 5. Whether the defendant is liable to pay to the plaintiff the amount claimed in the suit? 6. What should the decree be? 7. Later on, in the year 2001, the plaintiff it appears, had filed an application under Order VI, Rule 17 read with section 151, C.P.C. [C.M.A. No.6918/2000], in the above suit [M/s Rice Export Corporation of Pakistan v. Rahat & Co.,]. It is needless to say, the plaintiff at the time of filing of the above suit had reserved it's right to add claim of shortage of 'rice' and 'gunny bags' etc, if it came to the notice of plaintiff later on. Para 5 of C.M.A. No.6918/2000 reads as follows:- . . . "5. It is therefore, respectfully prayed that plaintiff may be allowed to add 'Para 13A' in the plaint as under and amend the prayer clause in consequence thereof. The new 'para 13A' and the 'amended prayer clause' respectively read as follows:- i. 13A. That defendant failed to rendered the account of - B Twill/Pt Will bags Hessian Bags, 2,112 Heavy Cess Bags -Poly propylene bags. The defendant as Handling Agent under the, terms and conditions of contract is liable to render account for the bags entrusted to him and is liable to pay Rs.37,002/- being the value of bags found short." ii. (i). Decree for a sum of Rs.56,840,788.64/- against the defendants with interest and for mark-up at 14% per annum from the date of suit till recovery. (ii). In the alternatively the plaintiffs prays for a judgment and decree against the defendant to render true and faithful account of the stocks or rice and Bardana entrusted to defendants as mentioned in the plaint and to pass final decree for the amount ascertained on rendition of account. (iii). Cost of the suit. (iv). Any other relief which this Hon'ble Court may deem fit and proper in the circumstances of the case. 8. On 12.3.2001, the above application [C.M.A. No.6918/2000], was allowed and pursuant thereof an 'amended plaint' was filed on 21.3.2001 wherein, besides incorporation para '13A' in the 'amended plaint' [after original para 13] the prayer clause was also amended to the extent and effect. Later on, an application under section 151, C.P.C. [C.M.A. 6153/2001], was also filed on 18.8.2001. In the application, it was averred that the plaintiff company since has been merged into M/s. Trading Corporation of Pakistan [in short TCP] by order of this Court, as such, all 'assets', 'liabilities' of the plaintiff company consequently stood transferred to M/s. Trading Corporation of Pakistan [TCP]. The said application was granted vide order dated 4.2.2002 and upon granting such application 'amended title' was also filed on 6.2.2002. 9. It is significant to note that the 'amended plaint' was verified and filed by/through an officer of M/s Trading Corporation of Pakistan [Pvt.] Ltd. [in short TCP] in short TCP viz. Muhammad Atiq Khan son of Muhammad Laiq Khan, on 21st March, 2001. The defendant firm, in response of the 'amended plaint' though filed amended written statement on 7th June, 2001, but surprisingly, even in the amended written statement, no any objection regarding in-competency of the suit was taken. Moreover, in view of and on account of merger of RECP into TCP vide judgment dated 19.1.2001, passed by this Court in J. Misc. Petition 36 of 1999, amended title in the above suit was also filed on 6.2.2000 i.e. in compliance with order dated 4.2.2002 passed in the present suit. Pursuant to filing of 'amended plaint' and amended 'written statement' in the year, 2001, later-on, in the year 2003 i.e. on 20.10.2003 one more additional issue in view of the amended plaint and amended 'written statement' was also framed which read as follows:- "Whether the defendant is liable to account for/pay claim of the plaintiff relating to the bags as mentioned in para 13-A of the amended plaint?" 10. Even this time as well, no any issue regarding in-competency/non--authorization of Abdul Rehman Sial son of Wali Muhammad was framed. Subsequently, upon entire conclusion of evidence of the parties office fixed the above suit for arguments and order on C.M.A. No.9854/2010 being an application under Order XIV, Rule 5, C.P.C. The prayer sought in C.M.A. No.9854/2010 reads as follows: "It is respectfully prayed on behalf of the defendants above-named that, in view of the admitted position on record, about the absence of Resolution of the Board of Directors of the then Rice Export Corporation of Pakistan, authorizing the institution of the above suit, the following legal issue be framed by this Hon'ble Court. "Whether the suit has been competently filed without authorization by the Board of Directors of Rice Export Corporation of Pakistan (the original plaintiff) if not its effect". It is in the interest of justice to allow the application." 11. On 18.10.2012, when the above suit came-up before the Court then, learned counsel for the Defendant, upon receipt copy of the application, waived notice of C.M.A. No.9854 of 2010. The said application under Order XIV, Rule 5, C.P.C. [C.M.A. No.9854 of 2010], nevertheless, after passing about 2-1/2 years was opposed by the plaintiff through a 'counter-affidavit' filed on 12.5.2016. In the 'counter-affidavit', it is needless to say, not only the contents of the application were denied/controverted but in the 'counter-affidavit it was also averred that the 'plaint' originally filed in the above suit, has also been 'signed' by an 'authorized person' of RECP viz. Mr. Abdul Rehman that is to say on the basis/strength of 'Note Sheet' available on record. 12. Per the plaintiffs Corporation stand [now TCP], Mr. Abdul Rehman Sial, Technical Director of the RECP, was also duly competent/authorized to sign the 'plaint'. It was also prayed in 'counter-affidavit' that C.M.A. No.9854 of 2010, filed by the Defendant Firm if, not dismissed then, the plaintiff s company besides being suffering irreparable loss shall be seriously injured/prejudiced. 13. Nevertheless, on 8th September, 2016 C.M.A. No.9854 of 2010 [Order VI, Rule 17, C.P.C.] was granted. Being relevant order dated 8.9.2016 is reproduced hereinbelow: . . . 08th September, 2016 M/s. H.A. Rehmani and Naheed Akhter, Advocates for the Defendants. ................. "1. This is an application under Order XIV, Rule 5, C.P.C. read with section 151, C.P.C. for framing of an Additional Issue, as according to learned counsel for the defendants, the instance cause has been filed without a Board Resolution and according to him the suit was not competently filed. Syed Shabbir Hassan, Advocate, holding brief for Mr. Ghulam Haider Shaikh, Advocate for the Plaintiff, states that latter is busy before another bench of this Court and has opposed listed application on the grounds mentioned in counter affidavit, inter alia, that in presence of Note Sheet, in which authority has been given to the person, who has signed the plaint, the Objection raised by the Defendant at this belated stage is without substance. Since the issue of non-compliance of Order XXIX, Rule 1, C.P.C. goes to the very root of the case, it is to be addressed first, particularly in the light of various judicial pronouncements staring from a case reported as PLD 1966 Supreme Court 684 (Messrs Muhammad Siddiq Muhammad Umar and another v. The Autralasia Bank Ltd.). Consequently, following additional issue is framed: "Whether the suit has been competently filed without authorization by the Board of Directors of Rice Export Corporation of Pakistan (the original plaintiff) if not its effect." To give a fair opportunity to the plaintiff's side, the matter is adjourned to 03.10.2016 at 11.00 a.m., on which date, the representative of Plaintiff-TCP should be present along with relevant record as a witness of plaintiff. Since onus to disprove is on the plaintiff therefore, plaintiff's representative will be examined." [Underlining is mine]. . . . 14. Subsequently, on 3rd October. 2016, when again the above matter came up before the Court then the following order was passed:- "03rd October, 2016 Mr. Ghulam Haider Shaikh, Advocate for the plaintiff along with Muhammad Atiq Khan. M/s. H.A. Rehmani and Naheed Akhter, Advocates for the Defendants. ................ In compliance of the order dated 08.09.2016, today Mr. Muhammad Atiq Khan, representative of the Plaintiff, appeared and his deposition has been recorded and marked as Ex.6. He produced his counter affidavit to the C.M.A. No.9854 of 2010 along with Annexure "I" as Ex. 6-A. In the present case, the point of law vis- -vis Order XXIX, Rule 1 of C.P.C. has been agitated by the Defendant's side and according to Mr. H. A. Rehmani, learned Senior Counsel, earlier Division Bench decision reported in 2007 CLC (Civil Law Cases) page-1811 (Trading Corporation of Pakistan v. Merchant Agency, the Trading Corporation Case) is per incuriam. Since in couple of cases, I have followed the above judgment, therefore, it would be in the interest of justice that this matter may be placed before some other learned Bench. [Underlining is mine]. However, office is directed to place this matter before the Hon'ble Chief Justice for necessary directions. 15. Later-on, when this matter was placed vide 'office note' dated 5.10.2016, before the Hon'ble Chief Justice for perusal and passing thereon, an appropriate/necessary order. In the light of 'Administrative order' of Hon'ble Chief Justice, on 22.11.2016, as per 'roster' when the above suit came-up before me, then on the issue i.e. "Whether the suit has been competently filed without authorization by the Board of Directors of Rice Export Corporation of Pakistan (the original plaintiff) if not its effect." I heard Mr. Ghulam Haider Sheikh, learned counsel for the Plaintiff and Mr. H. A. Rehmani, learned counsel for the Defendant on the 'Preliminary issue' and also gone through available record with their valuable assistance. 16. Per Mr. Ghulam Haider Sheikh, the defunct Plaintiff-Corporation [RECP], was a duly registered corporation under the Company Act/Ordinance 1984, and was owned by the Federal Government. The main function of RECP, was to perform function relating to receive, storing, inspecting, handling, clearing, forwarding and shipment of rice for export for and on behalf of Government of Pakistan. While, defendant is a partnership firm carrying on business at Karachi, as handling agents. Upon accepting the tender of the defendant the plaintiff thereafter had entered into a 'written contract' bearing No.RECP-5/M&M/89-90/2 with the defendant on 4th January, 1990. The defendant was thus appointed as a Contractors/Handling Agents for handling the 'rice crop' years 1989-90, at Landhi Rice Godown of the Corporation as well as for the handling of any other rice stock which the plaintiff may entrust the defendant during the currency of the said contract. As per 'terms' and 'conditions' of the contract, defendant was under 'contractual obligations' to exercise all care, in respect of stocks including its by-products etc. entrusted to defendant. Per plaintiffs stand, the defendant 'partnership firm in terms of the contract is liable to make good loss[es] or damage suffered by the plaintiff [now TCP Ltd]. Per clause 4(a) of the Tender documents, no doubt, the period of contract was initially for two years from the date of acceptance of tender, but due to non-export of a considerable amount of 'rice crop' 1989-90, the plaintiff management decided to extend the validity period of contract upto 06.01.1993. 17. Mr. Ghulam Haider Shaikh, learned counsel for the plaintiff vehemently contended that the instant suit signed, verified and filed by one Mr. Abdul Rehman Sial the then Director Technical of RECP [now merged in TCP] was not only authorised to sign the plaint but was also competent to institute, the above suit on the basis/strength of 'Notings 99 onwards' [Exh.6- 1]. Learned counsel next contended that the instant suit is not only competent in law but also deserves to be decreed in the light of evidence already led and recorded in pro and 'contra' of the issues settled long ago. According to the learned counsel for the plaintiff, no any weight can be given to the objections of defendant raised at the time of arguments particularly when no any objection regarding authorization and/or in-competency of the officer who had initially signed, verified and instituted the instant suit on behalf of Rice Export Corporation of Pakistan [now merged in TCP], was ever taken/raised in the original 'written statement' and/or amended written statement as well. 18. Mr. Ghulam Haider Shaikh, next contended that the objection vis- -vis authority of the person who had originally 'signed', verified' and 'filed' the plaint, is of a very technical nature. Per learned counsel, under Order XXIX, Rule 1, C.P.C., the pleadings in a suit by or against a corporation may be signed and verified on behalf of the corporation by the Secretary, any Director or any other Principal Officer of the Corporation who is able to depose the facts of the case. According to the learned counsel, in the case in hand the 'plaint' has been 'signed' and 'verified' by Abdul Rehman Sial son of Wali Muhammad, Technical Director of the DEFUNCT Rice Export Corporation of Pakistan [Pvt.] Ltd. Karachi [RECP], who, of course, in terms of 'Notes' Nos. 97, 99, 107, 108 and 118 was quite competent/authorised to sign, verify the plaint and institute the suit. Moreover, the objection vis-a-vis non-competency of the said officer at this stage of argument, is not only after-thought but also of no legal effect. 19. In support of his contention, reliance has been placed on Kathiawar Cooperative Housing Society Ltd. v. Macca Masjid Trust and others [2009 SCMR 574] and Trading Corporation of Pakistan (Pvt.) Ltd. v. Merchant Agency [2007 CLC 1811]. The relevant portions relied upon by the learned counsel for the plaintiff for the aforesaid case-laws respectively read as follows:- A. "8. Coming now to the second issue vis-a-vis the competency of the person, who has signed and verified the plaint, it would be seen that no such plea was taken in the written statement by the respondents and only a general objection was raised as to the maintainability of the suit, to cover which issue, the learned Civil Court framed Issue No.1 viz. whether the suit is not maintainable according 'to law and Issue No.8 whether the suit is barred by section 92, C.P.C. Indeed, under cross-examination, the plaintiffs witness Amin Ghazi has not been asked any question at all regarding the authorization of Mr. Muhammad Amin Chottani to sign and verify the plaint. Similarly, in the affidavit-in evidence filed by Iqbal Shakoor defendant No.4, this issue has not been adverted to at all and only an objection has been taken as to the permission of the learned Advocate-General under section 92, C.P.C. In this view of the matter and in the light of the provisions of Order XXIX, rule 1 of the C.P.C., where no specific objection has been taken by the respondent regarding the competency of the person, who signed and verified the plaint to do so either in the written statement or in the evidence produced before the learned Civil Court, this can hardly be done at the appellate stage. Indeed, where such an objection had been taken, it could very well have been rectified by the appellant by producing the requisite authority for Mr. Chottani to sign and verify the plaint, since per settled law, this is a mere irregularity which can be set right and cannot be the basis of non-suiting a litigant. [Underlining is mine]. . . . B. "Learned counsel for the appellant contended that though no formal resolution authorizing filing of the recovery suit was filed along with the suit, yet there was ample material to show that the then Directors of the respondent had given their approval for filing recovery suit against the respondent. He therefore, maintained that learned single Judge committed error in dismissing the suit on the ground that no resolution was filed. Learned counsel for the appellant took us to various notings on the internal file of the appellant that related to the authorization of the then Directors of the appellant for filing recovery suit against the respondent. A bare perusal of noting No.124 on the internal file of the appellant show that three Directors including the then Chairman of the appellant gave their respective approval on 19 1-1988 and 20-1-1988 to the filing of recovery suit against the respondent and only after such approval Suit No.167 of 1988 was filed against the respondent on 25-1-1988. Article 106 of the Articles of Association of the appellant provides that minimum quorum for the meeting of Board of Directors shall be two. In this background even if no formal meeting of Directors was called for passing the requisite resolution, the approval of three Directors including the Chairman can be treated as "resolution by circulation" under Article 113 of the Articles of Association of the appellant, granting authorization for filing the recovery suit. Thus, we hold that though there was no formal resolution passed in a meeting for filing recovery suit against the respondent, there did exist approval of the requisite number of Directors in terms of Article 113, who authorized the filing of the suit. In such circumstances absence of formal resolution could only be treated as technical omission which in the peculiar circumstances cannot be regarded as incurable defect. Furthermore, the appellant, out of abundant caution, has filed a formal resolution of appellant's Board of Directors signed by six Directors including its Chairman, ratifying the act of the person who filed the suit on behalf of the appellant." [Underlining is mine]. 20. In contra, Mr. H.A. Rehmani, learned counsel for the defendant firm forcefully argued that no any 'RESOLUTION OF THE BOARD OF…
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