CLD 2010 Judgments

2010 C L D 500

[Before Arbitral Tribunal]

Before Justice (R) Saiduzzaman Siddiqui, Chairman, Justice (R) Nasir Aslam Zahid and

Justice (R) G.H. Malik, Co-Arbitrators

WI-TRIBE LIMITED and another---Petitioners

Versus

TELECARD LIMITED and another---Respondents

Matter No. 15498/JEM/MLK, decided on 7th January, 2010.

(a) Specific Relief Act (I of 1877)---

----S.12---Specific performance of agreement--Alternate relief in money--Effect---Grant or refusal of relief of specific performance is discretionary with the Court---One of the cardinal principles guiding Court in granting specific performance of contract under Specific Relief Act, 1877, is that the compensation in terms of money would not be adequate relief.

(b) Specific Relief Act (I of 1877)---

----S.12-International Chamber of Commerce Rules, Arts.9(2), 13 & 18(2)--Arbitral Tribunal-Specific performance of agreement-Recovery of damages-Parties entered into Joint Venture Agreement to establish WiMax telecommunication services to be carried out against Local Loop Licences and Spectrum---Claimants alleged that respondents failed to perform their obligations under Joint Venture Agreement and sought specific performance of the same---Claimants also sought recovery of damages on account of terminating Joint Venture Agreement against the provisions of the agreement-Validity---Agreement had given unfettered right to either party to terminate the same and abandon transaction contemplated therein either on or before closing date as provided in the agreement itself and in such event termination did not affect any surviving rights of parties under the Agreement---Either party was entitled under the agreement to terminate the same and abandon transaction contemplated therein after 60 days from the date of Joint Venture Agreement, or where closing date was extended in accordance with the Agreement, which under no circumstances, could go beyond 120 days---Respondents served termination notice which was after the expiry of extended date of closing, which was valid under the Agreement as the Closing had not occurred---Investors' Conditions Precedent were complied with and fulfilled by claimants, however respondents failed to comply with Owners' Conditions Precedent mentioned in the Agreement inasmuch as they neither succeeded in getting charge removed on licences held by Bank under pledge nor they were able to obtain permission from Pakistan Telecommunication Authority for splitting of Local Loop Licences issued to them and transfer of such Licences and Spectrum in favour of Joint Venture Agreement Company and approval of transfer of shares of respondent/company in favour of claimant company---Failure to get charge on licences removed from the Bank and required permission from Pakistan Telecommunication Authority for transfer of re-issued licences to respondent-Company and transfer of shares of respondent-Company to claimant company was on account of failure on the part of respondent to pay amount demanded by the Bank and the Authority in that behalf but such failure of respondents did not amount to material breach of the Agreement--Non obstante clause appended to relevant clauses of the Agreement was not applicable---Failure of respondents to obtain permission from the Authority and removal of charge from the Bank did not take away their right to terminate the Agreement and abandon transaction as closing did not occur---Respondents had validly terminated and abandoned the contract in accordance with the provisions of Joint Venture Agreement---Specific performance of agreement was refused in circumstances.

Rojasara Ramjibhai Dahyabhai v. Jani Narottam Lallubhai MR 1986 SC 1912; Motital and others v. Nanhelal and another AIR 1920 PC 287; The Pan-Islamic Streamship Co., Ltd., v. Messrs General Imports and Export PLD 1959 (WP) Kar. 750; Dalsukh M. Pancholi v. The Guarantee Life and Employment Insurance Co., Ltd., AIR 1947 PC 182; Nan Fung Textiles Ltd., v. H. Pir Muhammad Shamsuddin PLD 1979 Kar. 762 (?); Amina Bibi v. Mudassar Aziz PLD 2003 SC 430(?); Mst. Batul and others v. Mst. Razia Fazal and others 2005 SCMR 544; Ramulu v. Anantha AIR 1966 Andhra Pardesh 70; Nathu Lal Phootchand's case AIR 1970 SC 546; Messrs Badri Narayan Agarwalla v. Messrs Pak Jute Balers Ltd. PLD 1964 Dacca 164; Partabrnull v. K.C. Sethia (1951) 2 AELR 352; Ramaesh Chandra v. Chuni Lal AIR 1971 SC 1238; S.A.P. Devasthanam v. Sabapathi Ppillai and another AIR 1962 Mad. 132; Ryanair Limited v. SR Technic Ireland Limited 2007 EWHC 3089 (QB); Muhammad Sama Mondal v. Muhammad Ahmed Sheikh PLD 1963 Dacca 816; Ashraf Hanif v. Najma Alvi 2001 CLC 1029; Muhammad Yaqoob v. Shah Nawaz 1998 CLC 21; Jamshed Khodaram Irani v. Burjorji Dhanjibhai AIR 1915 PC 83; Tilley v. Thomas 1867 3 Ch. 61; Satyabarata v. Mugneeram AIR 1954 SC 44; Barauer & Co. v. James Clark 1952 All ELR 497; Davis Contractors v. Fareham Urban District 1956 AC 696; A.Z. Company v: Government of Pakistan' PLD 1973 SC 311; CCC Films (London) Ltd. v. Impact Quadrant Film Ltd. 1984 All ER 298 and Hayes v. Dodd 1990 2 All ER 815 distinguished.

Muhammad Ishaq v. Sufia Begum 1992 SCMR 1692; Badridas v. Gour Chandra AIR 1952 Patna 392; Pervaiz Samad v. Konkar Union Council 1987 MLD 2347; Qureshi Muhammad Anwar v. S.A. Qureishi 1994 CLC 733; City Education Board (Registered) Sialkot v. Maqbook Nasreen PLD 2008 Lah. 51; M. Musarat v. Shafiq Hyder 1995 CLC 1323; Haji Abdul Sattar Chapri v. Secretary Karachi Grain & Seeds Merchants Group 1991 MLD 2697; Abdul Wahid v. Government of Pakistan 2007 CLC 1700; Concentrate Manufacturer Company of Ireland v. Seven Rot-fling Company(Private) Limited 2002 CLD 77; Surraya Nasreen v. Niussarat Khan 2007 YLR 2973; Ahmad Hassan v. Government of Punjab 2005 SCMR 186; Syed Imam Shah v. Government of N.-W.F.P. 2003 PLC (CS) 1522; Mahmud Khan v. Government of Punjab 2005 YLR 1133; Punjab Small Industries Corporation v. Ahmad Akhtar Cheema 2002 SCMR 549; Qadri Begum v. Province of Sindh 1999 CLC 2023; Al-Pak Ghee Mills v. Zeeshan Traders 2008 CLC 120; Chief Officer District Council, Sheikhupura v. Haji Sultan Safdar 1999 YLR 1963; Kib-e-Hyder & Company (Private) Limited v. National Bank of Pakistan 2008 CLD 576 and Tahir Jahangir v. Don Waters 2003 CLC 1699 ref.

(c) Contract---

----Enforcement and breach---Applicability of law--Principle -Where a contract contains provisions providing for its enforcement and also provides for consequences of its breach by any of the parties to the agreement, the rights and obligations of parties are to be determined according to the provisions contained in the contract---General law applies only to the extent the contract is silent about it or offers no solution to the controversy arising between the parties.

(d) Specific Relief Act (I of 1877)---

---S.12---International Chamber of Commerce Rules, Arts.9(2), 13 & 18 (2)--Qanun-e-Shahadat (10 of 1984), Arts.117 & 120--Arbitral Tribunal---Specific performance of agreement---Recovery of damages---Mala fide and acting in bad faith-Onus to prove---Claimants sought recovery of damages on account of terminating Joint Venture Agreement against respondents on the ground of their having acted with mala fide in deciding not to proceed with the completion of the agreement---Validity---Burden of proving bad faith and mala fides of respondents was on claimants--Evidence on record showed that before signing the Agreement one of the respondents had approached Pakistan Telecommunication Authority for permission to split up Local Loop Licences issued to them and transfer splitted licenses and Spectrums in favour of other respondent---Respondents remained in correspondence with Pakistan Telecommunication Authority throughout to get required permission for transfer of splitted Licences and Spectrums in favour of other respondent--Mala fides and bad faith had to be pleaded with particularity and evidence must be led to establish facts which constituted mala fide or bad faith--Mere general allegations of mala fide or bad faith were not enough to prove such allegations---Claimants neither disclosed particular acts of respondents which constituted mala fide and bad faith on their part nor led any evidence in support of those allegations-Claimants failed to prove mala fide and bad faith on the part of respondents in failing to complete their obligations under Joint Venture Agreement.

(e) International Chamber of Commerce Rules---

----Art. 31(3)-Arbitral Tribunal---Cost of Arbitration, grant of---Principle--most of Arbitration proceedings in terms of Art.31(3) of International Chamber of Commerce Rules, is to be determined by Arbitral Tribunal---Grant of costs is otherwise at discretion of the Court and it ordinarily must follow the event---Successful party is entitled to his costs unless he is guilty of misconduct or there is some other good cause for depriving him of it such as not coming to Court with clean hands---Test for granting or refusing costs is not whether a party has succeeded completely in the case or not but a party who substantially succeeds in his case is entitled to his costs, although he may not have got the precise form of relief he wanted---Where plaintiff succeeds only on the part of his claim but fails on the most important heads of controversy, the defendant is entitled to the whole costs of the suit.

T.S. Swaminatha Odayar v. Official Receiver AIR 1957 SC 57; Agha Muhammad Aslam v. Jodh Singh AIR 1923 Lah. 513(2) and Devidoss & Co. v. Abboyee Chetty & Co. AIR 1941 Mad. 31 rel.

Arshad Mohsin Tayebaly and Mohsin Tayebaly & Co. for Claimants.

Ali Raza and Awan Raza Respondents.

FINAL AWARD

FACTS OF THE CASE:

Claimant No.1 is an investment holding company incorporated under the laws of Cayman Island. Claimant No.2 is public limited company incorporated under the laws of Pakistan and is a subsidiary of claimant No.1. Respondent No.1 is a public limited company while respondent No.2 is a private limited company; both incorporated under the laws of Pakistan. For the sake of convenience claimants Nos. 1 and 2 and respondents Nos. 1 and 2 will be referred hereinafter in this award as the claimants and respondents respectively.

On 22nd October, 2007 the claimants and respondents entered into a Joint Venture Agreement (JVA). The salient features of the JVA were as follows:---

(1) Pakistan Telecommunication Authority (PTA), which is the regulatory authority of telecommunication in Pakistan, on 4th August, 2004 issued to respondent No.1, 14 local loop licenses in respect of wireless services for all 14 telecom regions of Pakistan namely; Islamabad, Rawalpindi, Karachi, Lahore, Multan, Faisalabad, Gujranwala, Northern Telecom Region I, Northern Telecom Region II, Southern Telecom Region I, Southern Telecom Region V, Central Telecom Region, Western Telecom Region and Haripur;

(2) Respondent No.1 in order to establish WiMax telecommunication services decided to surrender the above 14 local loop licenses issued to them by the PTA and obtain new licenses in lieu thereof. Respondent No. l also decided to set up a new private limited Joint venture Company in Islamabad under the name and style of respondent No.2, with an authorized capital equivalent to Rs. 10,000,000 and an initial paid-up capital of Rs.1,000,000 and transfer the re-issued licenses and spectrums to respondent No.2, at a value of US$22,500,000.

(3) Claimant No.1 agreed to participate either directly or through its subsidiary, claimant No.2, which was already licensed to carry on wireless telecommunication business in Pakistan, in the proposed WiMax business with respondent No.2 by owning and controlling 90% shares of respondent No.2 for a total and cumulative consideration equivalent to Rs.900,000 to be paid by claimant No.1 to respondent No.1 and to further pay a sum of US$22,500,000 to respondent No.1 which respondent No.2 was liable to pay to respondent No.1 on account of proposed transfer of re-issued licenses and the Spectrum by respondent No.1 to respondent No.2, at the closing.

(4) The payments mentioned above were to be made by the claimants to the respondents upon fulfilment of number of conditions mentioned in clauses 4.1.1 to 4.1.14 of the JVA as "Owners' Conditions Precedent" to be performed by the respondents, while claimants were required to perform the conditions mentioned in sub-clauses 4.2.1 and 4.2.2 as "Investors' Conditions Precedent", respectively, before the closing. The claimants could waive conditionally or unconditionally performance of any of the Owners' Conditions Precedent by respondents at any time on or before the closing in terms of sub-clauses 4.3 and 4.4 of JVA.

(5) The closing was to take place at the registered office of respondent No.2 on the seventh business day following, the satisfaction and waiver of all conditions precedent, other than those which were to be performed at closing or at such other place and time as the parties may mutually agree, within 30 days of the execution of JVA. The closing date could be extended by the party not in default; but under no circumstances the closing, date could be extended beyond 120 days of the execution of JVA.

(6) The manner and effect of termination or abandonment of agreement is dealt with in clauses 4.8, sub-clauses 4.8.1 to 4.8.5 and clauses 4.9 to 4.15 of the JVA.

Before the execution of JVA, respondent No.1 had assigned the above-mentioned 14 licenses and spectrums (the subject-matter of JVA) in favour of Faysal Bank Ltd., by creating a charge on them to obtain financial facilities. In accordance with "Owners' Conditions Precedent" respondent No.1 was required to get the said charge removed so that the re-issued licenses and spectrums could be transferred to respondent No.2 free from all encumbrances. Respondent No.1 was also required to apply to the PTA for permission to -transfer the re-issued licenses and spectrums to respondent No.2, and to obtain approval of PTA for change in the share holdings of respondent No.2. These vital conditions of JVA along with other conditions precedent mentioned in the JVA were to be completed/performed within 30 days of the execution of JVA, subject to an extension in the closing date as provided in the JVA.

According to claimants, respondent No.1, prior to the execution of JVA, had applied to PTA on 8th October, 2007, for the splitting of the 1:4 local loop licenses issued to them into 28 licenses so that 14 re-issued new licenses are assigned 3.5 GHz band of radio frequency. In response to this request of Respondent No.1, PTA, on 17th October, 2007, asked respondents No.1 to supply some specific information and called upon them to clear outstanding dues of PTA. respondent No.1, on 25th October 2007, requested PTA to process its request to transfer the new re-issued licenses and spectrums in the name of its subsidiary, respondent No.2. Respondent No.1, vide its letter dated 7th November, 2007 assured the PTA to have the re-assignment of the roll-out endorsement carried out as required by the PTA. Respondent No.1 notified the incorporation of respondent No.2 as a subsidiary of respondent No.1, and forwarded all necessary documents in this behalf to PTA vide its letter dated 13th November 2007. Claimant No.1, in the meantime, vide its letter dated 18th November 2007, informed respondent No.1 that in accordance with the terms of JVA it is decided that claimant No.2 will hold and own the shares of respondent No.2. Claimant No.2 accordingly, vide its letter dated 21st November, 2007, informed respondent No.1, about completion of all the "investors' Conditions Precedent" under the JVA and forwarded copies of relevant documents to respondent No.1.

Since the "Owners' Conditions Precedent" that were to be completed by respondent No.1 by 23rd November, 2007 in terms of the JVA had not been completed, claimant No.2 vide its letter dated 22nd November, 2007, addressed to respondent No.1, granted a first extension of the closing date mentioned in the JVA and extended the closing date up to 22nd December 2007.

In December, 2007 respondent No.1 approached Faysal Bank Ltd., and offered them Rs.68 million in settlement of their outstanding liabilities for issuance of approval letter and removal of registered charges on the 14 licenses held by them. Faysal Bank Ltd., however, demanded a sum of Rs.250 million to issue the requested approvals and removal of charges on the 14 licenses. Similarly, the PTA, in reply to respondent No. 1's letter dated 25th October, 2007 requesting for processing of the transfer of re issued 3.5 GHz local loop licenses in favour of respondent No.2 and to split and re-issue the local loop licenses, informed respondent No.1 vide its letter dated 5th December, 2007, that the requests of respondent No. 1 would be processed upon payment of Rs. 119,771,655 this being the outstanding dues up to 30th June, 2006 and further providing the service wise break up of revenue and cost of revenue for calculation of annual license fee, USF and R&D charges for the year ending 30th June, 2007. Respondent No.1 disputed the above demands of Faysal Bank Ltd., and the PTA and entered into negotiation with them to obtain concession in payment of these amounts. In this background as the Closing Date was approaching fast, claimants granted a second extension of the closing date, extending the closing date until 21st January, 2008 to facilitate the ongoing negotiations between respondent No.1 and Faysal Bank Ltd., and the PTA.

According to Claimants, after the grant of second extension of the Closing Date, they did not receive any status update about the negotiations between respondent No.1 and Faysal Bank Ltd. and the PTA. Therefore, claimant No.2 addressed a letter to respondent No.1 on 9th January, 2008, enquiring about the status of ongoing negotiations between respondent No.1 and Faysal Bank Ltd. and the PTA. The claimants claim that in response to this letter the respondents during discussions informed the claimants about the paucity of funds which resulted in their failure to clear the dues of Faysal Bank Ltd. and the PTA. The claimants accordingly vide their letter dated 16th January, 2008, offered to respondent No.1, the option of payment of the dues demanded by Faysal Bank Ltd. and the PTA by the claimants on behalf of respondent No. 1 at the closing date of JVA.

Respondent No.1 in response to the above letter of claimants dated 16th January, 2008 informed the claimants vide its letter dated 18th January 2008 that 'it had already informed the claimants' consultants of the exact reason for non-payment of the dues of Faysal Bank Ltd. and the PTA.

In response to the letter of respondent No.1 dated 18th January, `2008, claimant No.2 granted the third and the final extension in of the Closing Date on 19th January 2008, extending the closing date until 18th February, 2008, which coincided with the Maximum period of 120 days provided in the JVA for performance of the JVA from the date of its execution.

As respondent No.1, failed to notify the completion of the" Owner's Conditions Precedent" in terms of the JVA, claimants issued a notice to respondent No.1 on 15th February, 2008 to submit to arbitration. Simultaneously the claimants filed a petition before the Civil Court, Islamabad, under section 20 of the Arbitration Act, 1940, requiring the respondent No.1 to file the arbitration agreement in Court so that matter may be referred to the Arbitral Tribunal under the Rules of Arbitration of the ICC 1998 (the "ICC Rules"), as provided in the JVA. The claimants also succeeded in obtaining a restraining order from the Civil Court, Islamabad, against the respondents in respect of 14 licenses and spectrums, the subject-matter of JVA.

Respondents meanwhile served notice of termination of the JVA under clause 4.8.2 of the JVA read with clause 4.9 of the JVA, claiming that as the Closing could not take place within the stipulated period of 60 days, which had been extended by a cumulative 120 day period from the date of JVA, they have exercised the option available to them.. In this background the claimant sent a request to the Secretariat of the ICC International Court of Arbitration (the "ICC Secretariat") for referring the matter to arbitration, which was received by the ICC Secretariat on 10th March 2008 and forwarded to the respondents on 13th March, 2008 and received by the latter on 17th March,. 2008. The answer to the request for arbitration was received by the ICC Secretariat on 15th May, 2008. The nominations of Justices Nasir Aslam Zahid and G.H. Malik as co-arbitrators was confirmed by the Secretary General of the ICC International Court of Arbitration on 14th May, 2008, pursuant to Article (2) of the ICC Rules, and in accordance with the arbitration clause contained in the JVA, the co-arbitrators jointly nominated Justice Saiduzzaman Siddiqui as Chairman of the Arbitral Tribunal. The ICC International Court of Arbitration (the "ICC Court"), at its session of 4th July, 2008, confirmed the appointment of Justice Siddiqui as Chairman of the Arbitral Tribunal upon the joint nomination of the co-arbitrators. The file of the case was transmitted to the arbitral Tribunal in accordance with Article 13 of the ICC Rules on 4th July, 2008. The time limit for establishing the term of reference in accordance with Article 18(2) of the ICC Rules was extended by the ICC Court until February 28, 2009. However, the terms of reference were signed by the parties and the Arbitral Tribunal, much before that date, on 13th November, 2008.

The Arbitral Tribunal, after considering the claim and the reply of respondent, settled the following issues for trial:

(a) Whether the claimants are entitled to the specific performance of the Joint Venture agreement dated 22nd October, 2007 (the 'JVA")?

(b) Whether the respondents failed to perform their obligations under the JVA?

(c) Whether the respondents validly terminated the JVA in accordance with clauses 4.8.2 and 4.8.3 of the JVA? If so, its effect?

(d) Whether the respondents acted in bad faith and with mala fide intentions in deciding not to proceed with the completion of the JVA? If so, what is the effect?

(e) Whether the claimants suffered any loss or damage on account of respondents' refusal to perform the JVA? If so, what amount the claimants are entitled to recover from respondents by way of loss or damages?

(f) What should the award be?

At the time of settlement of terms of reference, the parties agreed to the following procedure and time table for the conduct of arbitration proceedings at Singapore:--

(a) Disclosure of documents by the parties on 17th November, 2008.

(b) Admission and denial of documents by the parties by 25th November, 2008.

(c) Parties agree to lead evidence through affidavit of evidence with right of cross-examination. Affidavits of evidence of witnesses to be exchanged by the parties by 15th December, 2008.

(d) Reply affidavit of evidence, if any, to be filed by the parties by 31st December, 2008.

(e) Evidence of parties from 6th January, 2009 to 13th January, 2009 (Place Singapore).

(f) Written arguments to be submitted by 5th February, 2009 (Place Singapore).

(g) Oral arguments 19th and 21st February, 2009 (Place Singapore).

The parties followed the schedule mentioned at paragraphs (a) to (d) above, but agreed to make slight changes in the schedule mentioned at (e) to (g) in view of flight position from Karachi to Singapore and other difficulties faced by them. Accordingly it was agreed that the Members of the Tribunal will travel to Singapore on 3rd January, 2009 and record evidence of parties from 5th January, 2009 to 9th January, 2009 and to hear the arguments the Members of the Tribunal will travel again to Singapore on 7th February, 2009. Written arguments in the case will be submitted by the parties on 9th February 2009 and oral submissions will be made by the counsel of the parties from 9th to 13th February, 2009. The Arbitral Tribunal, accordingly, recorded evidence of parties at Singapore on the above issues from 5th January, 2009 to 8th January, 2009 and reviewed the recorded evidence with the assistance of learned counsel for the parties on 9th January, 2009. The claimants examined Mr. Mark Sturza (CW-I), an expert witness, who produced his affidavit in evidence and documents CW-I/I; Mr. Mohsin Qazi (CW-2), Chief Financial Officer of claimant No.2, who produced his affidavits in evidence CW-2/1, CW-2/2 and CW-2/3; Mr. Akbar Bilgrami (CW-3), CEO and Director of Bridge Factor (Private) Limited, who produced his affidavits in evidence CW-3/ land CW-3/2; and Mr. Zulqarnain Bhatti (CW-4), Deputy Director Litigation and Adjudication of the PTA, who produced documents CW-4/1 and closed their side. The respondents examined Mr. Shahid Firoz (RW-1) as their only witness and he produced his affidavit in evidence RW-1/1 and closed their side. The Arbitral Tribunal travelled to Singapore to hear the arguments of parties at Singapore, on 7th February, 2009. The parties' submitted their written arguments on 9th February, 2009 and the same day the oral arguments commenced which continued until 13th February, 2009. On conclusion of arguments, the Arbitral Tribunal declared the proceedings closed as required by Article 22(1) of the ICC Rules and judgment in the case was reserved, on 13th February, 2009. The time for rendering the final award was extended from time to time by the ICC' Court; the last extension in this regard is to expire on 31st January, 2010.

The main issue in the case is: Whether the claimants are entitled to specific performance of Joint Venture Agreement dated 22nd October, 2007?

Clause 15 of the JVA contains the arbitration clause as well as it mentions the law that governs the enforcement of the agreement. It reads as follows:-

"15. Governing Law:

(15.1) This agreement shall be governed by, and construed in accordance with, Pakistan Law.

(15.2) Any dispute; controversy or claim arising out of or in connection with this agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in Singapore in accordance with the rules of the International Chamber of Commerce ("ICC") for the time being in force, which rules are deemed to be incorporated by reference to this clause.

(15.3) The Tribunal to be appointed shall consist of one arbitrator, if the amount at issue is less than US$5,000,000 (Unites States Dollars Five Million) or otherwise three arbitrators with one arbitrator to be appointed by the investor and one arbitrator to be appointed by the owner. For the purpose of appointing the arbitrators the owner and the JV Company, if so required, together shall be deemed to be a single party, claimant or respondent as the case may be. The two arbitrators thus appointed shall choose the third who will act as the presiding arbitrator of the Tribunal. The presiding arbitrator shall be appointed by the Secretary General of the ICC if the two arbitrators are unable to agree on the choice of presiding arbitrator within 30 days of their appointment.

(15.4) The seat of arbitration shall be Singapore and the language to be used in arbitral proceedings shall be English.

(15.5) The arbitral award shall be final and- binding upon the parties.

(15.6) It is acknowledged that a party may be damaged in amounts that are impossible to measure upon an actual or threatened breach of the provisions of this - Agreement by the breaching party, and accordingly, the non-breaching parties may not be have an adequate remedy at law, the non-breaching parties shall, therefore, be entitled to obtain immediate injunctive relief restraining a potential or actual breach by the breaching party of its obligations under this agreement pending recourse to arbitration under this clause 15. The breaching party shall not urge, as a defence to any proceeding for such injunctive relief, that the non breaching parties have an adequate remedy at law."

In terms of clause 15.1 of the JVA, the enforcement of the JVA is governed by Pakistani Laws. The case, therefore, is to be decided in accordance with the provisions of Specific Relief Act, 1877 and the Contract 1872 (hereinafter. to be referred as Act I of 1877 and Act of IX of 1872, respectively, for the sake of convenience) as applicable in Pakistan.

Chapter II of Act I of 1877, which contains sections 12 to 30, deals with cases in which the Court may either grant or refuse specific performance. Section 12 of Act I of 1877 mentions the cases in which Court may grant specific performance in its discretion. It reads as follows:

"Section 12.--Except as otherwise provided in this chapter, the specific performance of any contract may in the discretion of the Court be enforced:

When the act agreed to be done is in the performance, wholly or partly, of a trust;

(a) When there exists no standard for ascertaining the actual damage caused by non-performance of the act agreed to be done;

(b) When the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief; or

(c) When it is probable that pecuniary compensation cannot be got for the non-performance of the act to be done.

Explanation:--Unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer moveable property can be, thus relieved."

Section 21 of Act of 1877 mentions the contracts which cannot be specifically enforced. It reads as under:--

"Section 21. The following contracts cannot be specifically enforced:

(a) A contract for the non-performance of which compensation in money is an adequate relief;

(b) A contract which runs into such minute or numerous details, or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the Court cannot enforce specific performance of its material terms;

(c) A contract the terms of which the court cannot find with reasonable certainty;

(d) A contract which in its nature revocable;

(e) A contract made by trustees either in excess of their powers or in breach of their trust;

(f) A contract made by or on behalf of a corporation or public company created for special purpose, or by the promoters of such company, which is in excess of its powers;

(g) A contract the performance of which involves the performance of a continuous duty extending over a longer period than three years from its date;

(h) A contract of which material part of the subject-matter supposed by both parties to exists, has, before it has been made, ceased to exist.

And, save as provided by the Arbitration Act 1940 no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such contract other than an arbitration agreement to which the provisions of the said Act apply and has refused to perform it sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit."

The learned counsel for the claimants contended that the claimants have performed their part of the obligations under the JVA and have always been ready and willing to perform their part of the JVA. It is also contended by the learned counsel for the claimants that the subject-matter of the JVA is so peculiar and unique in nature that it is not readily available in the open market and as such compensation in terms of money cannot be an adequate remedy in the circumstances of the case. The learned counsel went on to argue that the respondents committed a breach of the terms of the JVA inasmuch as they failed to compete the "Owners' Conditions Precedent" relating to removal of charge of Faysal Bank Ltd. on the subject-matter of the JVA (14 licenses pledged with the bank). They also failed to pay the dues demanded by the PTA for transfer of 14 re-issued licenses and spectrums to respondent No.2, which was an essential condition on the part of the owner under the JVA. The learned counsel accordingly urged that as the claimants were always and are still willing and ready to perform their part of the JVA, the Tribunal may direct the respondents to specifically perform the JVA by obtaining release of charge on the 14 licenses after making payments of dues demanded by Faysal Bank Ltd. and by making payments of the dues demanded by the PTA for processing the request of respondents to transfer the re-issued 14 licenses and spectrums to respondent No.2 and for obtaining approval of transfer of shares of respondent No.2 in favour of claimant No.2. The learned counsel also argued that in case the respondents are not willing and ready to perform these essential conditions of the JVA, the claimants may be permitted to make payment on behalf of respondents to Faysal Bank Ltd. and the PTA and adjust the amount from the consideration payable to respondents by the claimant under the JVA. In support of his contentions the learned counsel for the claimants relied on the following reported decisions from Indian, English and Pakistani jurisdictions:--

1. Rojasara Ramjibhai Dahyabhai v. Jani Narottam Lallubhai AIR 1986 SC 1912.

2. Motital and others v. Nanhelal and another AIR 1920 PC 287.

3. The Pan-Islamic Streamship Co., Ltd., v. Messrs General Imports and Export PLD 1959 (WP) Karachi 750

4. Dalsukh M. Pancholi v. The Guarantee Life and Employment Insurance Co., Ltd., AIR 1947 PC 182

5. Nan Fung Textiles Ltd., v. H. Pir Muhammad Shamsuddin PLD 1979 Karachi 762 (?)

6. Amina Bibi v. Mudassar,Aziz PLD 2003 SC 430(?)

7. Mst. Batul and others v. Mst. Razia Fazal and others 2005 SCMR 544

8. Ramulu v. Anantha AIR 1966 Andhra Pardesh 70

9. Nathu Lal Phootchand AIR 1970 SC 546

10. Messrs Badri Narayan Agarwalla v. Messrs Pak Jute Balers Ltd. PLD 1964 (?) Dacca 164

11. Partabmull v. K.C. Sethia (1951) 2 AELR 352

12. Ramaesh Chandra v. Chuni Lal AIR 1971 SC, 1238

13. S.A.P. Devasthanam v. Sabapathi Ppillai and another AIR 1962 Madras 132

14. Ryanair Limited v. SR Technic Ireland Limited 2007 EWHC 3089 (QB)

15. Muhammad Sama Mondal v. Muhammad Ahmed Sheikh PLD 1963 Dacca 816

16. Ashraf Hanif v. Najma Alvi 2001 CLC 1029

17. Muhammad Yaqoob v. Shah Nawaz 1998 CLC 21

18. Jamshed Khodaramx Irani v. Burjorji Dhanjibhai AIR 1915 PC 83

19. Tilley v. Thomas 1867 3 Ch. 61

20. Satyabarata v. Mugneeram AIR 1954 SC 44

21. Barauer & Co. v. James Clark 1952 All ELR 497

22. Davis Contractors v. Fareham Urban District 1956 AC 696

23. A.Z. Company v. Government of Pakistan PLD 1973 SC 311

24. CCC Films (London) Ltd. v. Impact Quadrant Film Ltd. 1984 All ER 298

25. Hayes v. Dodd 1990 2 All ER 815

The learned counsel for the respondents on the other hand contended that the respondents did not commit breach of any of the conciliations of JVA and non-fulfilment of the "Owners' Conditions Precedent" mentioned in the JVA resulted on account of arbitrary payments demanded by Faysal Bank Ltd. And the PTA. The respondents genuinely negotiated with Faysal Bank Ltd. and the PTA to revise their respective demands before the closing, but could not succeed. It is accordingly contended by the learned counsel that as the respondents could not fulfil the "Owners' Conditions Precedent" within the time mentioned in the JVA, they had the option to terminate the JVA under clause. 4.8.2 of the JVA. The learned counsel contended that consequences of termination of the JVA are elaborately stated in the JVA. According to the learned counsel for the respondents, the relief of specific performance or the damages claimed by the claimants cannot be granted to them in view of the stipulation contained in the JVA. The' learned counsel for the respondents also contended that the relief of damages otherwise cannot be granted to the claimants as they have failed to lead any evidence to establish the same. The learned counsel for the respondents relied on the following cases in support of his above contentions:-

1. Muhammad Ishaq v. Sufia Begum 1992 SCMR 1692

2. Badridas v. Gour Chandra AIR 1952 Patna 392

3. Pervaiz Samad v. Konkar Union Council 1987 MLD 2347

4. Qureishi Muhammad Anwar v. S.A. 'Qureishi 1994 CLC 733

5. City Education Board (Registered) Sialkot v. Maqbook Nasreen PLD 2008 Lahore 51

6. M. Musarat v. Shafiq Hyder 1995 CLC 1323

7. Haji Abdul Sattar Chapri v. Secretary Karachi Grain & Seeds Merchants Group 1991 MLD 2697

8. Abdul Wahid v. Government of Pakistan 2007 CLC 1700

9. Concentrate Manufacturer Company of Ireland v. Seven up Bottling Company (Private) Limited 2002 CLD 77

10. Surraya Nasreen v. Mussarat Khan 2007 YLR 2973

11. Ahmad Hassan v. Government of Punjab 2005 SCMR 186

12. Syed Imam Shah v. Government of N.-W.F.P. 2003 PLC (CS) 1522

13. Muhmud Khan v. Government of Punjab 2005 YLR 1133

14. Punjab Small Industries Corporation v. Ahmad Akhtar Cheema 2002 SCMR 549

15. Qadri Begum v. Province of Sindh 1999 CLC 2023

16. Al-Pak Ghee Mills v. Zeeshan Traders 2008 CLC 120

17. Chief Officer District Council, Sheikhupura v. Haji Sultan Safdar 1999 YLR 1963

18. Kib-e-Hyder & Company (Private) Limited v. National Bank of Pakistan 2008 CLD 576

19. Tahir Jahangir v. Don Waters 2003 CLC 1699

The claimants in the present case are seeking specific performance of a contract relating to sale of moveable property (shares). The grant or refusal of the relief of specific performance is discretionary with the Court. One of the cardinal principles guiding the Court in granting specific performance of a contract under Act I of 1877 is that the compensation in terms of money would not be an adequate relief. Section 12 of Act I of 1887, mentions the contracts in which the Court would ordinarily order specific performance. This section specifically provides that the Court shall presume, unless the contrary is proven, that breach of a contract relating to transfer of immovable property cannot be adequately relieved by compensation, while breach of contract relating to movable properties can be thus relieved, meaning thereby that grant of specific performance in a case relating to the sale of immovable property is a rule while it is an exception in the case relating to the sale of movable property. Therefore, apart seeking specific performance of a contract relating to the sale of movable property has to satisfy the Court that the monetary compensation will not adequately relieve the performance of the contract.

The contracts which cannot be ordered to be performed specifically by the Court are mentioned in section 21 of Act I of 1877. This section provides that the Court will not order specific performance of a contract which by its nature is revocable. The learned counsel for the respondents contended that firstly, the JVA cannot be ordered to be performed specifically as it relates to the sale of movable property for which compensation in terms of money is an adequate relief secondly, the performance of the (JVA) issued to respondent No.1 in favour of respondent No.2, and approval of transfer of shares of respondent No.2 in favour of claimant No.2, by the PTA, which was not granted in spite of best efforts of respondents. Thirdly, the JVA clearly provides that on or before the date of closing the parties have the unfettered right to terminate the contract and in that event no liability arise on any of the parties in consequence of such termination. It is lastly contended by the respondents that clause 4.8.2 of the JVA gives the right to either party to terminate the JVA after 60 days of the date of execution of the JVA or after expiry of extended period of date of closing provided closing has not occurred. We will first take up the third and the last contention of the learned counsel for the respondents, because if he succeeds on it, it may not be necessary to decide other contentions of the parties.

Clause 4.8 of the JVA which provides for termination of agreement upon failure to satisfy conditions precedent reads as follows:---

"4.8. This agreement may be terminated and the transactions contemplated hereby may be abandoned at any time on or prior to the closing date (provided that, any termination validly made under this clause 4.8 shall be without prejudice to the surviving rights of parties under the agreement):---

4.8.1 by mutual written consent of the owner and the investor, or

4.8.2 by the investor or the owner at any time after (sixty) 60 days from the date of this agreement if closing shall not have occurred, subject to an extension or extensions notified whereby closing shall be extended by the extension period or extension periods notified provided such extensions or extensions cumulatively do not extend closing by more than 120 (one hundred and twenty) days after execution of this agreement, or

4.8.3 by the investor or the owner, if any governmental authority of competent jurisdiction shall have issued an order, decree or ruling or taken other action restraining, enjoining or otherwise prohibiting the transactions contemplated hereby and such order, decree, ruling to other action shall have become final and on-appealable and including a failure by the relevant Governmental Authority to issue approvals contemplate under clauses 4.1.1., 4.1.2, 4.1.3, 4.1.4 and 4.1.7; or

4.8.4 by the owner, upon a material breach of this agreement by the investor provided the owners' conditions precedent and investors' conditions precedent having been complied with or fulfilled; or

4.8.5 by the investor, upon a material breach of this agreement by JV company or the owner provided the owners' conditions precedent and the investors' conditions precedent having been complied with or fulfilled, or

Notwithstanding the foregoing, no party hereto may affect a termination (other than by mutual agreement) if such party is in material default or breach of this Agreement."

The procedure for and effect of termination is dealt with in clauses 4.9 to 4.13 of the contract which read as follows:-

"4.9 In the event of termination of this agreement and abandonment of the transactions contemplated hereby by the parties hereto pursuant to clause 4.8 hereof, written notice thereof shall be given by the party so terminating to the other party and this agreement shall forthwith terminate and shall become null and void and of no further effect, and the transactions contemplated hereby shall be abandoned without further action by the owner or investor.

4.10 If this agreement is terminated pursuant to clause 4.8, all fillings, applications and other submissions made pursuant hereto shall, to the extent practicable withdrawn from any Government Authority or to whomever made.

4.11. In the event of termination of this, agreement pursuant to clauses 4.8.1, 4.8.2 or 4.8.2 there shall be no liability or obligation under this agreement on the part of owner or the investor or their respective directors, officers, employees, affiliates, controlling persons, agents or representatives.

4.12. In the event of termination of this agreement pursuant to clause 4.8.4 or 4.8.5, the liability or obligation of the owner or the investor, as the case may be shall be limited to 50% (fifty per cent) of US$22,500,000 (United States Dollars Twenty two million five hundred thousand).

4.13. The obligations provided for in clauses 4.9, 4.10, 4.11 and 4.12 shall survive any such termination.

Lock in period (Owner)

4.14. In the event of this agreement being terminated as a consequence of

4.14.1 the owners' failure to fulfil any or all the conditions precedent specified under clauses 4.1.5, 4.1.6, 4.1.9, 4.1.10, 4.1.12, 4:1.13 and 4.1.14 or

4.14.2 failure to obtain any or all of the approvals and consents required to be obtained under clauses 4.1.1, 4.1.2, 4.1.3, 4.1.4, 4.1.7 and 4.1.11 due to the owners' failure to provide and submit the necessary information to the relevant Governmental Authority or PTA, or failure of the owner to act upon any instruction or fulfil any reasonable requirements issued by the relevant Governmental Authority or Regulator, the Owner shall not enter into any agreement to in any way transfer directly or indirectly the ownership; title and interest in the re-issued licenses and/or the spectrum which is held under. the re-issued licenses or the original licenses, ,as the case may be, to any third party fon a period of 6 (six) months (lock in period) from the date of termination of this agreement under clauses 4.14.1 or 4.14.2. It is clarified that the grant of security interest or assignment by way of collateral for securing the financing obligations of the owner shall. not be deemed to be transfer for purposes of this clause.

Lock in Period (Investor)

4.15 In the event of this agreement being terminated as a consequence of;

4.15.1 the investors' failure to fulfil the conditions precedent specified under clauses 4.2.2 or

4.15.2 failure to obtain any or all of the approvals and consents required to be obtained under clauses 4.1.3 and 4.1.4, is due to the investors' failure to provide and submit the necessary information to the relevant Governmental Authority or PTA, or failure of the investor to act upon any instruction or fulfil any reasonable requirements issued by the relevant Governmental Authority or PTA in terms of clause 4.2.1 above;

Neither the investor nor Burraq will directly or indirectly enter into any agreement to purchase or acquire license and/or spectrum in the 3.5 Ghz band from any third party nor directly apply to the PTA for such spectrum for a period of 6(six) months from the date of termination of this agreement as a result of reasons enumerated under clauses 4.15.1 or 4.15.2

Clause 4.8 of the JVA clearly provides that either party may terminate and abandon the agreement at any time on or prior to the closing date. Sub-clause 4.8.2 provides that either party may terminate the agreement after 60 days of the execution of the agreement or if the closing date of the agreement has been extended, which under no circumstances shall be beyond 120 days of the date of JVA, after such extended date provided the closing has not taken place. Under the above-mentioned two clauses of JVA the parties have unfettered right to terminate and abandon the agreement provided the closing has not taken place. Similarly under sub-clause 4.8.3 either party may terminate the contract if the competent Governmental Authority has issued order restraining or prohibiting the transaction contemplated by JVA, or a failure on the part of Governmental Authority to issue approvals contemplated under clauses 4.1.1, 4.1.2, 4.1.3, 4.1.4 and 4.1.17. The closing takes place under the agreement on satisfaction or waiver of all conditions precedent within 60 days of the execution of agreement or within the extended period of closing date as provided in the agreement.

The evidence on record shows that the owners (respondents) could not complete the owners' conditions precedent (4.1.1, 4.1.2, 4.1.3, 4.1.4 and 4.1.5) mentioned in JVA within 60 days of the execution of agreement. This owners' conditions precedent stipulated in, the JVA remained unfulfilled in spite of extensions in the closing date granted by the investors (claimants) which extended the closing date of the agreement to 18th February, 2008. There is nothing on record to show that the investors (claimants) waived" all or any of the owners' conditions precedent mentioned in the agreement. The respondent in this background opted to terminate the agreement under clause 4.8.2 of JVA and issued notice to claimants terminating the Agreement on 25th February, 2008 in terms of clause 4.9 of agreement.

The learned counsel for the claimants contends that respondents could not terminate the agreement as they were in material default and breach of the JVA. The contention is that the respondents failed to pay the dues demanded by Faysal Bank Ltd., to remove the charge on the 14 licenses pledged with them and also the dues demanded by PTA to process the request of respondent No.1 for splitting the. 14 loop licenses and transferring the re-issued licenses and spectrums to respondent No.2 and approving the transfer of shares of respondent No.2 in favour of claimant No.2. These failures according to learned counsel for the claimants constituted material breach of the agreement on the part of respondents.

The learned counsel for the respondent on the other contended that there were genuine disputes with regard td the dues demanded by Faysal Bank Ltd., and PTA and as these disputes could not be resolved within the Closing Date of the agreement in spite of extension of the closing date of the agreement granted by the claimants up to 18-2-2008, the respondent No.1 was well within its right to terminate the agreement in accordance with the provisions of clause 4.8.2 of the agreement as the closing did not occur.

The contention of the learned counsel is not without force. The argument of the learned counsel for the claimant that the respondents failed to pay the dues demanded by Faysal Bank and PTA which amounted to non-completion and non-fulfillment of the owners' conditions precedent and therefore, they were in material breach of the agreement and thus not entitled to terminate the agreement, is apparently based on the non-obstante clause appended to clause 4.8.5 of JVA which reads as: "Notwithstanding the foregoing, no party may effect a termination (other than by mutual consent) if such party is in material default or breach of this agreement." In our view the non-obstante clause is restricted in its application to clauses 4.8.4 and 4.8.5 of the agreement and does not apply to cases falling under clauses 4.8, 4.8.1, 4.8.2 and 4.8.3. The reason for our this conclusion is that clauses 4.8.4 and 4.8.5 deal with situations where owners' conditions precedent and investors' conditions precedent mentioned in the agreement have been completed or fulfilled. It is natural and logical that when owners' conditions precedent and investors' conditions precedent mentioned in the agreement have been fulfilled and complied with, the closing should follow as provided in the agreement. At that stage if any of the parties commits a material breach of the agreement, the other party gets the right to terminate the agreement or the agreement could only be terminated by mutual consent of the parties. The party in default or breach of agreement cannot terminate the agreement in that situation. The cases falling under clauses 4.8, 4.8.1, 4.8.2 and 4.8.3 are distinguishable in as much as the termination of the agreement under these clauses is at a stage when either owners' conditions precedent or investors condition precedent or both were not completed or fulfilled and closing did not occur.

The agreement gives unfettered right to either party to terminate the agreement and abandon the transaction contemplated therein either on or before the closing date as provided in clause 4.8. In that event the termination does not affect any surviving rights of the parties under the agreement. Similarly, either party is entitled to terminate the agreement and abandon the transaction contemplated therein in terms of clause 4.8.2 of the Agreement, after 60 days from the date of the JVA, or where the closing date is extended in accordance with the agreement, which under no circumstances, could go beyond 120 days from the execution of the JVA, after the expiry of extended period of closing date, provided the closing has not occurred. The respondents pleaded that they terminated the agreement under clause 4.8.2 of the agreement. The agreement (JVA) was executed on 22nd October, 2007. The closing date was extended by the investors (claimants) by 120 days which expired on 18th February, 2008. The respondents served the termination notice on 25th February, 2008, which was after the expiry of extended date of closing. This is perfectly valid under clause 4.8.2 as the closing had not occurred.

The evidence on record shows that investors' conditions precedent were complied with and fulfilled by the claimants. However, the respondents failed to comply with the owners' conditions precedent mentioned in the agreement in as much as they neither succeeded in getting the charge removed on licenses held by Faysal Bank Limited under a pledge nor they were able to obtain permission from PTA for splitting of the 14 local loop licenses issued to them and transfer of the splitted 14 licenses and the spectrum in favour of JVA Company (respondent No.2) and approval of the transfer of shares of respondent No.2 in favour of claimant No.2. It is true that the failure to get the charge on the licenses removed from Faysal Bank and the required permission from PTA for transfer of re-issued licenses to respondent No.2 and transfer of shares of respondent No.2 in favour of claimant No.2 was on account of failure on the part of respondent No.1 to pay the amount demanded by Faysal Bank Limited and PTA respectively in this behalf but this failure of the respondents did not in our view amount to "material breach of the agreement" in view of our earlier finding that the non-obstante clause appended to clause 4.8.5 did not apply to the case falling under clause 4.8.2.1 Therefore, failure of respondents to obtain permission from PTA and removal of charge from Faysal Bank did not take away their right to terminate the agreement and abandon the transaction in terms of clause 4.8.2 of the agreement as closing did not occur. We are therefore, of the view that respondents validly terminated and abandoned the contract in accordance with the provisions of clause 4.8.2.

The respondents have also claimed in the alternative that they had the right to terminate the agreement under clause 4.8.3., the relevant Government Authorities had declined/failed to issue the required permission for transfer of license and spectrums in favour of claimants. The evidence on record does not show that PTA at any stage categorically refused to issue the required permission to the respondents for transfer of licenses and spectrum in favour of claimants. The failure to issue the required permission by the PTA for transfer of licenses and spectrums in favour of, claimants was the result of the disputes raised by the respondents with regard to the payment of amount demanded in this connection by PTA. We are therefore, of the view that the agreement could not be terminated by the respondents under clause 4.8.3 of JVA on the ground that there was failure on the part of PTA to issue the required approval for transfer of licenses and spectrums in favour of claimants.

Under clause 4.9 of JVA, if the agreement is terminated under clause 4.8, a written notice by the party terminating the agreement is necessary and on such notice being given the agreement become null and void forthwith and the transaction contemplated under the agreement is abandoned without ally further action by the owner or the investor. It is an admitted position that respondents served a notice on the claimant on 24th February, 2008 (after about 7 days of the expiry of 120 days from the date of execution of JVA which expired on 18th February, 2008) terminating the agreement and therefore, the JVA stood terminated and abandoned forthwith as provided in clause 4.9 and all applications and other submission made by respondent No.1 to PTA or to any other authority also stood withdrawn in accordance with the provisions of clause 4.10 of JVA.

The specific performance of JVA, otherwise in our opinion could not be granted in view of the explanation to section 12 of Act I of 1877 which clearly provides that the Court shall presume that the breach of a contract relating to transfer of immovable property cannot be adequately relieved by compensation in terms of money and that the breach of contract to transfer movable property can be thus relieved. The JVA is for transfer of shares and rights in the re-issued licenses and spectrum, a movable property, and therefore, the claimants have to make out an exceptional case for grant of specific performance of JVA. The learned counsel for the claimants contended that licenses and spectrums, the subject-matter of JVA are unique in nature and are not available in the market. The contention of the learned counsel does not find support from the evidence on record. Claimants' witness Mohsin Qazi (CW-2) in his cross-examination admitted that prior to the signing of JVA the claimants negotiated for purchase of- WLL licenses and spectrums from many other parties. In reply to another question asked in cross-examination this witness admitted that technically it is correct that the claimants could acquire spectrums from Dancom, Worldcall, PTCL, Cybernet and others. Therefore, the subject-matter of JVA was neither unique in nature nor it was such which could not be made available in open market so that compensation in terms of damages or monetary compensation could not be assessed.

The learned counsel for the claimant attempted to argue that the claimants in such circumstances may be awarded 50% of US$22,500,000 as provided in clause 4.12 of JVA. Clause 4.12 of JVA has no application in the facts and circumstances of the present case. This clause is applicable only when the termination of agreement takes place either under clause 4.8.4 by the owner or under clause 4.8.5 by the investor after owners' conditions precedent and investors' conditions precedent mentioned in JVA have been complied with. It is common ground between the parties that the respondent did not comply or fulfil the owner's conditions precedent mentioned in JVA. The respondents claim that they terminated the agreement under clauses 4.8 and 4.8.2. We have already reached the conclusion that the termination of contract by the respondent under clause 4.8 and 4.8.2 of JVA was valid. We are therefore, of the view that clauses 4.12 of JVA has no application in the case.

The case-law cited by the learned counsel for the claimants in support of his contention that his clients are entitled to seek specific performance of JVA against the respondents is hardly of any assistance in view of the clear provisions contained in JVA dealing with the rights and obligations of the parties, method of termination of the contract and the consequences flowing out of such termination. It is well-settled that where a contract contains provisions providing for its enforcement and also provides for the consequences of its breach by any of the parties to the agreement the rights and obligations of the parties are to be determined according to the provisions contained in the contract and general law will apply only to the extent the contract is silent about it or offers no solution to the controversy arising between the parties. We have already discussed above the relevant provisions of the contract which deals with the rights of the parties, their obligations to each other and the methodology of its enforcement in the event of breach. The learned counsel for the claimants was unable to point out anything in the provisions contained in the JVA which limited the right of the respondents to terminate the abandon the contract after the closing date, if they failed to complete and fulfil the owners' conditions precedent mentioned in the JVA.

In Ramjibhi case AIR 1986 SC 1912 the appellant who was tenant of the agricultural land entered into an agreement to purchase it from the superior titleholder of the land. The agreement provided that the vendor will apply for permission to the collector to convert the agricultural land into a village site and sale was to be executed in favour of appellant after the requisite permission is obtained. Soon after the agreement the appellant entered into an agreement for sale of the same land to the respondent. The agreement provided that appellant will get the land converted into village site at his own cost. The appellant applied to the Collector for permission to convert the land into a village site in 1950-51, which was refused. Under Land Reforms Act of 1951, the title of the superior owner of the land was extinguished and appellant was recognized as an occupant of land under the provisions of Bombay Land Revenue Code. In 1958 and 1959 the Revenue Authorities granted permission to appellant for converting the land to non-agricultural use. The respondent called upon the appellant to execute the sale in his favour and on failure instituted a suit for specific performance of agreement of sale in September, 1960. The appellant resisted the suit on two grounds. Firstly, that at the time he entered into agreement of sale with the respondent his title in the land was imperfect; and secondly, the contract for sale executed by appellant in favour of respondent was contingent upon grant of permission to the superior title holder of the land for conversion of the land to non-agricultural use. The contentions were repelled. The Court held that with the extinction of the title of superior holder of land and conferment of occupancy right on appellant under Land Reforms Act of 1951 there was no impediment for sale of land especially when permission was also granted to the appellant by revenue authorities at the time the suit was filed by the respondent. The case is of little assistance to the claimant as in the case before us till the hearing of the arguments in the case no permission from PTA to transfer the re-issued licenses and the spectrum of respondent No.2 and approval of PTA for transfer of shares of respondent No.2 to claimant No.2 was available.

The learned counsel for the claimants very heavily relied on Motilals' case AIR 1930 PC 287 to contend that the Tribunal should pass a decree for specific performance in favour of claimants with the direction to respondents to obtain permission from PTA to transfer the re-issued 14 licenses and the spectrums in favour of claimant No.2 as provided in JVA. Since the decision in this case is the sheet anchor of claimants argument that they are entitled to a decree of Specific Performance against the respondents it is necessary to examine in some details the facts and conclusions of the Court. In this case respondent entered into a contract for purchase of 4 annas share in a village including sir and khudkasht land with cultivating rights in sir land for a consideration of Rs.46,000 and paid earnest money to the seller amounting to Rs.5000 on 9th July, 1914. As she was unable, to pay the balance of the consideration, she arranged for payment of the balance amount to the seller through appellants' father on the condition that she may ask him to convey the land on payment of Rs.41,100 any time within ten years. The appellants' father paid the balance amount and got the conveyance 'of land in his name on 14th August, 1914. On 4th September, 1914, two agreements were executed; one by the appellant's father in favour of respondent and the other by the respondent in favour of appellants' father incorporating the above arrangement. On 18th March, 1918, appellants' father mortgaged 4 annas share in the land to two other persons. On 9th October, 1919, the respondent gave notice to the appellants' father to carry out the contract as she was ready to pay the price of land mentioned in the agreement dated 4th September, 1914. The appellants' father took no notice of the letter of respondent whereupon she instituted the suit for specific performance against the appellants' father and the mortgagees. The trial Court dismissed the suit but on appeal the Judicial Commissioner decreed the suit for specific performance. In appeal before the Privy Council, the appellant urged two points. It was firstly, contended that the agreement entered into between appellants' father and the respondent made no mention of transfer of cultivating rights in the sir land to respondent and secondly, the transfer was dependent on the permission being granted by the Revenue Authorities for transfer of cultivating rights in the sir land which required making of application by one or more of the defendants to the Revenue Authorities for sanction of transfer of cultivating rights in the sir land and Court had no jurisdiction to require the defendants or any one of them to make such an application. Both the contentions were repelled by the Court. On the first point the Court came to the conclusion that the agreement dated 4th September, 1914 between the respondent and appellants' father for transfer of land included the transfer of cultivating right in the sir land also. Repelling the second contention the Court held that the transfer of land was made in favour of appellants' father after permission was granted by the revenue authorities and therefore, the condition for transfer of cultivating rights in the sir land after obtaining permission from the revenue authorities was an implied condition of the agreement dated 4th September, 1914. The Court however, while dealing with the question of sanction of revenue authorities for 'transfer of cultivating rights in sir land in favour of respondent observed "it is not necessary for their lordships to decide whether in this case the application for sanction for of transfer must succeed, but it is material to mention that no facts were brought to their lordships' notice which would go to show that there was any reason why such sanction should not be granted". The case is distinguishable both on facts and on point of law. The case before us relates to the enforcement of an agreement in respect of transfer of movable property (licenses and spectrums) while in the reported case the contract related to the sale of immovable property. Section 12 of Specific Relief Act 1877 which applied to both the cases provides that Court may grant specific performance where the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief. The explanation to section 12 is very important which says that "unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer movable property can be thus relieved". It is therefore, quite clear that different considerations apply by the Court while considering grant of specific performance of a contract of sale relating to immovable property and movable property. Secondly, provisions in the JVA give unfettered right to the parties to terminate and abandon the contract if the closing has not taken place and the date of closing has passed. Section 21 of Act I of 1877 provides that a contract which in its nature is revocable cannot be specifically enforced. It is also to be noted that the respondents applied for grant of permission to PTA for transfer of 14 re-issued licenses and the spectrums to respondent No.2 and shares of respondent No.2 to claimant No.2 but till the hearing of arguments in the case such permission from PTA was not granted. We are therefore, of the view that the ratio laid down in the above-cited case does not advance the case of claimants for grant of specific performance of JVA.

Pan Islamic Steamship Co. Ltd. ,Case PLD 1959 Karachi 750 was an application under section 20 of the Arbitration Act 1940, filed by the plaintiff for a direction to defendant to file the arbitration agreement in Court so that 'the dispute between the parties may be referred to the arbitrators. The contention of the respondent in the case before the Court was that since it has repudiated the contract, which contained the arbitration clause, the arbitration clause is no more enforceable. The Court held that in spite of repudiation of contract by one of the parties, the arbitration 'is enforceable at the instance of the party, which has not repudiated the contract. No such contention arises in the case before us and the cease already stand referred to the Arbitral Tribunal.

Dasukh M Pancholi AIR (34) 1947 Privy Council 182. This was also a case of specific performance of a contract of sale of immovable property. The suit was dismissed as permission was not obtained for sale of property from the executing Court where suit property was attached. The Court held the contract was a contingent contract and as the contingency failed there was no contract which could be ordered to be performed. Firstly, the case relates to the Sale of Immovable property where consideration for grant and refusal of specific performance are different from the sale of movable property. Secondly, in that case the executing Court refused to grant permission for sale of the property and therefore, the agreement of sale which was dependent on the grant of permission for sale by the Court could not be enforced. No such question arises in the case before us. The respondent's contention in the case before us is that they terminated the agreement in accordance with the Provisions of the agreement, which is upheld.

Nan Fung Textile Ltd. PLD 1979 Karachi 750 (sic) this was an application under section 5 of the Arbitration (Protocol and Convention) Act, 1937 for pronouncement of judgment in terms of a foreign award given in favour of the applicant. The respondent in the case opposed the prayer for making the award rule of the Court amongst other on the ground that the contract was frustrated, as the permission required for export of goods was not granted by the State Bank of Pakistan. The Court rejected the contention on the ground that the contract between the parties did not provide that it was subject to the grant of permission by the State Bank of Pakistan. In the case before us the agreement specifically provides that either party may terminate the agreement if the relevant governmental Authority either refused or failed to issue approvals contemplated under clauses 4.1.1, 4.1.2, 4.1.3, 4.1.4 and 4.1.7. We fail to see how this case is of any assistance to the claimant in the facts and circumstances of the case.

Badri Narayan Agarwalla PLD 1966 Dacca 164: It was an appeal filed by the defendant against the order making the award rule of the Court Amongst other contentions the appellant urged before the Court that he could not export the goods because of frustration of contract and relied on section 56 of the Contract Act. The Court rejected the contention holding that at the time the appellant entered into the contract for export of jute he was aware of the existence of the circular which required registration. It was also found that the bar of registration 'came into force on 11th February so the plea that he could not lift the goods in the absence of registration number cannot be allowed to defeat the contract. The decision has no application in the present case as the JVA could not be performed in the absence of required permission from PTA.

Mst. Amina Bibi PLD 2003 SC 430, Batul 2005 SCMR 544, Rumulu AIR 1966, AP 70, Nathulal AIR 1970 546, Ramesh Chandra AIR 1971 SC 1238, Haji Muhammad Yaqoob 1993 CLC 21, Jamshed Rohdoaram Irani AIR 1915 PC 83, Ashraf Hanif 2001 CLC-1029, Tilley 18673 Ch. 61 cited by the learned counsel for the claimants were all cases in which the contracts related to the sale of immovable properties. In some of these cases the Court addressed the question whether time was of the essence of contract. As a general proposition of law the Court held that in case of sale of immovable property time is not treated as an, essence of contract in the absence of a clear and specific provision in the contract expressing the intention of the parties. It was also held that where time was not originally made an essence of contract in clear and express cannot be made essence of contract by subsequent conduct of any party. The ratio decidendi in these cases is of little assistance in the facts and circumstances of the case before us which firstly relate to the sale of moveable property (the license and the spectrum) and secondly, the JVA was to be performed within 120 days of its execution on account of extensions granted by the claimants.

Partabmull Rameshwar 1951 2 All ELR 352, This was an appeal by the seller against the judgment of appellate Court confirming the order of original Court upholding the award given by the committee of the London Jute Association. It was contended by the appellant that the implied term of necessary licenses and quota should have been read as an implied term of the 4 contract for sale of jute. The decision of Court of Appeal that the Court would read an implied term into a contract only where it was clear that both parties intended that term to operate, was confirmed by House of Lords. No such issue arises in the case before us as the condition regarding obtaining of permission for transfer of licenses and spectrum in favour of claimant by the respondent from PTA is specifically mentioned in the JVA.

SAP Devasthanam AIR 1962 Madras 132, this was an appeal by the plaintiff against the decree of the trial Court for Rs.7422 as against the claim of Rs.21744-11-4 being the arrears of lease money in respect of agricultural land. The Court framed two questions for determination. (1) Whether the defendants are liable to pay the rent fixed in the lease deed notwithstanding the promulgation of Ordinance IV of 1952 which was subsequently repealed and replaced by Act XIV of 1952, and (2) whether the plaintiff was bound to receive only fair rent fixed by Conciliation Officer. The respondent/ defendant raised the pleas of frustration of contract which was not raised before the trial Court. The Court in the final analysis held: 'Thus though the law is not settled, the general trend of opinion both in House of Lords and in our Courts in India seems to be that the doctrine of frustration or impossibility of performance will not be applicable to cases of agricultural leases Further as stated already, the theory of frustration cannot be applied to a commercial adventure, and being an agricultural lease, there is no question of impossibility of performance or frustration. These observations do not apply to the case before us as the respondents claims to have terminated the contract in accordance with the provisions of JVA.

Ryanair Ltd. 2007 EWHC 3089 (QB), the case related to enforcement of an agreement under which the SRT (defendant) had agreed to provide Ryanair for a period' of 15 years a section of hanger space at Dublin Airport. The Court framed the questions for decision as "whether the failure of SRT to obtain the consent of the DAA to the grant of a licence for Ryanair to occupy hanger space at Dublin constitute a breach on the part of SRT of its contractual obligation towards Ryanair. The further or alternative question which may arise for decision is whether SRT was contractually entitled to revoke Ryanairs' licence to occupy the hangar space. If these answers are resolved in favour of Ryanair, an issue arises whether Ryanair is entitled (as it claims) to relief in the form of an injunction restraining SRT from revoking Ryanairs' license to occupy the hangar space and/or from refusing to make available to Ryanair the said hangar space or whether (a SRT contends) Ryanairs' remedy lies in damages only." The Court after reviewing the law and authorities of the Courts granted relief of injection against SRT and further directed SRI' to use its best endeavors to obtain consent for a Hangar License Agreement for a term of 15 years. The Court granted relief of injunction in this case upon a finding that failure to obtain consent of the DAA by SRT constituted breach of agreement and directed the defendant to use its best endeavors to obtain the required consent. In the case before us our finding is that failure on the part of respondents to obtain removal of charge on the licenses from Faysal Bank and permission for transfer of re-issued licenses from PTA did not amount to material breach of the agreement and therefore, no such relief can be granted to the claimants.

Muhammad Sama Mondal PLD 1963 DACCA 816, it was an appeal by one of the defendants against consent decree in a suit for specific performance of a contract of sale relating to agricultural land. The appellant contended before the Court that he could challenge the consent decree as it was ex parte against other defendants in the suit and it contravened the provisions (East Bengal) Transfer of Agricultural Land Act 1951. It was also contended that the agreement was contingent upon obtaining of permission from the collector for sale of land and therefore, no decree for specific performance in such case could be passed by the Court. The Court rejected all the contentions. The Court after reproducing the definition of "contingent contract" given in section 31 of the Contract Act held that the condition to obtain permission from collector was not collateral but formed part of the contract and therefore, the contract cannot be held to be a contingent contract. The case is of no assistance to the claimants in the facts and circumstances of the case before us as it is common ground between the parties that permission from PTA for transfer of licenses and spectrums in favour of claimant by the respondent was necessary which was not available.

Satyabrata Case AIR 1954 SC 44, the Court determined in this case the scope of frustration of contract as enunciated in section 56 of the Contract Act 1872 and observed: 'The doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of section 56. To the extent that the Contract Act deals with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English law 'dehors' these statutory provisions...Section 56 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties. In cases, where the Court gathers as a matter of construction that the contract itself contained impliedly or expressly a term, according to which it would stand discharged on the happening of certain circumstances, the dissolution of the contract would take place under the term of the contract itself and such cases would be outside the purview of section 56 altogether. They would be dealt with under section 32 which deals with contingent contract or similar other provisions contained in the Act. These observations of the Court do not advance the case of claimants' in any manner as in the case before us the respondents pleaded that they terminated the agreement in accordance with the provisions of JVA which has been upheld.

Brauer & Co. 1952 All ELR 497, the proceedings arose from an award made by the arbitrators in favour of buyer for damages. The seller appealed to the Board of Appeal of the Seed, Oil, Cake and General Produce Association and requested that the award of the Board should be stated in the form of a special case for the opinion of the Court. Subject to the decision of the Court on question of law the board made an award in favour of buyers. The Court answered the question in favour of seller, thus reversing the decision of the Board. The buyer appealed. The Court was concerned with the interpretation of "force majeure" clause in the agreement. The contract was subject to any Brazilian export license. On facts the Court found there was no prohibition or embargo or physical or legal prevention of export, the sellers were therefore' found not relieved from liability by the "force majeure" clause in the agreement. The Court found that the reason for failure of seller to obtain the license was the rise in the price of goods agreed to be exported which could not justify application of "force majeure clause. The case is of no assistance to the case of claimants as here the respondents have not pleaded "force majeure" but claim that they were entitled to terminate the agreement after expiry of the period of extensions (120 days) which has been upheld.

Davis Contractors Ltd. 1956 AC 696, it was a case of building contract. The contractor had attached to his tender form a letter, which stated it was subject to adequate supplies of labour being available. The contractor pleaded frustration of contract and claimed to be entitled to payment on quantum meruit to a sum in excess of contract price. The Court held that the fact that, without the fault of either party, there had been unexpected turn of event, which rendered the contract more onerous than had been contemplated, was not a ground for relieving the contractor of the obligation which they had undertaken and allow them to recover on the basis of a quantum meruit. No such dispute arises in the case before us and we find case inapplicable to the case before us.

Issues Nos.(b), (c) and (d) are interconnected and can be conveniently disposed of together. There is enough evidence on record to show that respondents failed to perform their obligation under JVA in as much as they could not get the charge of Faysal Bank removed over the 14 licenses pledged with the bank. Similarly, the respondents' also failed to get the permission from PTA for transfer of splitted 14 licenses and the spectrum in favour of respondent No.2 and approval of PTA for transfer of shares of respondent No.2 in favour of claimant No.2. The contention of the claimant is that the respondents acted in bad faith and with mala fide intention in deciding not to proceed with completion of JVA. The burden of proving bad faith and mala fides of respondents is on the claimants. The evidence on record shows that before signing the JVA the respondent No.1 had approached PTA for permission to split up the 14 local loop licenses issued to them and transfer the splitted licenses and the spectrums in favour of its subsidiary respondent No.2. The record shows that respondent No.1 remained in correspondence with PTA throughout to get the required permission for transfer of splitted licenses and the spectrums in favour of respondent No.2. It is true that the respondent No.1 did not pay the amount demanded by PTA to process its request for transfer of splitted licenses in favour of respondent No.2 but the explanation of respondent No.1 is that there existed genuine dispute with regard to the amount demanded by PTA. The correspondence on record shows that different amounts were demanded by PTA in its letters addressed to respondent No.1 from time to time. The fact that respondents did not pay the amount demanded by PTA which was disputed by them and which was ultimately found to be correct, is not sufficient to hold that the respondent No.1 acted in bad faith or with mala fide intentions. Similarly, the amount demanded by Faysal Bank to remove the charge over 14 licenses pledged with them was on the basis of overall liability of respondent No.1 to the bank while respondent No.1 .was offering to pay the specific amount for which charge was created over 14 licenses pledged with the bank. Mala fides and bad faith has to be pleaded with particularity and evidence must be led to establish facts which constituted mala fide or bad faith. Mere general allegations of mala fide or bad faith are not enough to prove these allegations. The claimants have neither disclosed the particular acts of respondents, which constituted mala fide and bad faith on their part nor led any evidence in support of these allegations. We are therefore, of the view that the claimants have failed to prove mala fide and bad faith on the part of respondents in failing to complete their obligations under JVA. While discussing issue No.(a) which related to the relief of specific performance of JVA, we have already reached the conclusion that the termination of JVA by the respondent was valid and therefore, even 'otherwise the allegations of mala fide and bad faith lost their significance. Since we have, reached the conclusion that JVA was validly terminated by respondents the contract stood abandoned and the respondents were not required to proceed further with the completion of JVA.

The next issue relates to the damages and loss suffered by the claimants allegedly on account of non-performance of JVA by the respondents. We have already reached the conclusion that the termination of JVA by the respondents under clause 4.8.2 is valid. Clauses 4.10 and 4.11 of JVA provide that where the contract is terminated under clauses 4.8 or 4.8.2 or 4.8.3 all applications and other submissions made pursuant to the JVA shall to the extent practicable, be withdrawn from any Governmental Authority or whomsoever made. It also provide that there shall be no liability or obligation under the JVA on the part of owner or investor or their respective directors, officers, employees affiliates, controlling persons and agents or representatives. However, clauses 4.14.1 and 4.14.2 provide that in the event of owners' failure to fulfil all or any of the conditions precedent mentioned in clauses 4.1.5, 4.1.6, 4.1.9, 4.1.10, 4.1.12, 4,1.13 and 4.1.14 or on failure of the owner to obtain any or all the approvals and consents required to be obtained. under clauses 4.1.1, 4.1.2, 4.1.3, 4.1.4, 4.1.7 and 4.1.14 due to failure of owner to provide and submit the necessary information to the relevant Government Authority or PTA or failure of the owner to act upon any instruction or fulfil any reasonable requirements issued by the relevant Governmental Authority or Regulator, the owner shall not enter into any agreement in any way to transfer directly or indirectly the ownership, title and interest in the re-issued licenses and/or the spectrum which is held either under the re-issued licenses or the original licenses as the case may be to any third party for a period of six months. This restriction however, does not apply to the creation of security interest or assignment by way of collateral for securing financing obligations of the owner. Apart from these consequences no other obligations arise on the owners. In view of the above provisions in JVA it is highly doubtful if claimants could claim any loss or damages from the respondents on account of termination of JVA.

Apart from it the burden of proving damages and loss suffered by claimants on account of non-performance of JVA is on the claimants. The claimants failed to lead any evidence in this behalf. The claimants in their application for arbitration claimed that on account of delays caused by the respondents which consequently caused loss of business opportunity to the claimants, they suffered loss and damages amounting to US$5,000,000 besides costs incurred by the claimants to the extent of US$350,000. The claimants' witness Mohsin Qazi (CW-2) however, in paragraph 11 of his affidavit of evidence claimed the following amounts:--

(A) Loss on account of additional capital cost on account of requirement of additional equipment and infrastructure due to reduction in available spectrum capacity ……….US$25 million

(B) Loss on account of additional operational costs on account of requirement of additional infrastructure due to reduction in available spectrum capacity …………US$17 million

(C) Loss of profit on account of inability to provide certain high quality services otherwise planned and capable of delivery with the additional spectrum availability ……..US$15 million

(D) Loss on account of delay of availability of spectrum by February 2008 resulting in a delay already extending to over 10 months in commercial roll out of the planned project and additional actual costs on account of redesign of technical architecture and change of equipment amongst other and loss of opportunity cost on value of business……….US$ 5 million

All the above claims remained unsubstantiated in evidence. For instance when questioned about the loss of Rs.5 million which the witness claimed that it was the amount which the claimant No.2 already spent, but not a single document in support of payment of fee to consultant or cost incurred, or for recruitment, the reply was that we had not filed these documents as these were business confidential documents and respondents could cross verify them. Similarly, when the witness was questioned about the cost of acquiring additional equipment and infrastructure on account of reduction in available spectrum capacity, the reply was that the claimants did not acquire any equipment and had only done the planning. Finally when the witness was suggested that the claimants did not actually spend any amount, the reply was in the affirmative. Similarly the claimants could neither substantiate the claim for additional operational cost, which they allegedly incurred on account of requirement of additional infrastructure due to reduction in available spectrum capacity nor any evidence was led to establish the loss of profit. Loss on account of inability to provide certain alleged high quality services otherwise planned and capable of delivery with the additional spectrum availability. We therefore, hold that the claimants failed to prove the amount of damages claimed by them.

On the question of grant of costs of the proceedings there is difference of opinion between the Chairman and the Co-arbitrators. The parties at the final hearing of the case at Singapore did not address any argument on the question of costs. The Chairman and one of the Co-arbitrator (Justice (R) G.H. Malik) are of the view that the respondents are entitled to the ;costs which they deposited towards arbitration proceedings while the other Co-arbitrator (Justice (R) Nasir Aslam Zahid) is of the view that in the facts and circumstances of the case the parties should bear their respective costs. Article 31(3) of ICC Arbitration Rules 1998 provides as follows:

"Article 31(3).--the final Award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties."

The cost of the arbitration proceedings in terms of Article 31(3) of ICC Arbitration Rules quoted above therefore, is to be determined by the Arbitral Tribunal. Grant of costs is otherwise at the discretion of the Court. Costs ordinarily must follow the event. A successful party is entitled to his costs unless he is guilty of misconduct or there is some other good cause for depriving him of it such as he did not come to the Court with clean hands (See T.S. Swaminatha Odayar v. Official Receiver AIR 1957 SC 57). The test for granting or refusing costs is not whether the party has succeeded completely in the case or not. A party who substantially succeeds in his case is entitled to his costs, although he may not have got the precise form of relief he wanted (see Agha Mohammad Aslam v. Jodh Singh AIR 1923 Lahore 513(2)). Where plaintiff succeeds only on part of his claim but fails on the most important heads of controversy, the defendant will be entitled to the whole costs of the suit (see Devidoss & Co. v. Abboyee Chetty & Co. AIR 1941 Madras 31). Keeping in view the above principles we hold by majority (The Chairman and Co-arbitrator-G.H. Malik) that the claimants must bear the costs of arbitration and pay to the respondents the costs deposited by them towards arbitration expenses.

The parties have deposited in advance a sum of US$385,000 towards costs determined by the ICC Court, in equal shares. The ICC Court at its session of 29th October, 2009, has fixed the costs of the arbitration as follows:--

| | | | --- | --- | | Administrative expenses | US$41170 | | Chairmen's' fees | US$124932 | | Co-Arbitrators fees:(US$93,699x2) | US$187 398 | | Expenses incurred: | US$31,500 | | Total: | US$385,500 |

By a majority decision (Chairman & Co-Arbitrator Justice (R) G.H. Malik) we direct the claimants to pay to the respondents US$192500, being the shares of the advance costs paid by the respondents.

As a result of the above discussion our conclusions are as follows:

(A) The claimants are not entitled to the Specific Performance of the Joint Venture Agreement dated 22nd October 2007;

(B) The respondent validly terminated the Joint Venture Agreement on 25th February, 2008 'under clause 4.8.2 of JVA as the owners' conditions precedent .could not be complied with within the extended period of 120 days from the date of execution of JVA;

(C) The respondents could not validly terminate the agreement under clause 4.8.3 on the ground of failure of PTA to issue the required permission/approval for transfer of licenses and spectrum in favour of claimants as the respondents disputed the amount demanded by PTA and for that reason did not deposit the same;

(D) The claimant failed to prove mala fide intentions and bad faith on the part of respondent in completion of JVA;

(E) The claimant failed to prove loss or damages suffered by them on account of non-performance of the agreement (JVA);

(F) The Arbitral Tribunal therefore, unanimously rejects the Arbitration application filed by the claimants and all other claims of claimants against respondents.

(G) The claimant do pay to the respondent US$192500 being the share of advance costs deposited by the respondent. (Majority decision by Chairman & Co-Arbitrator G.H. Malik)

2010 C L D 454

[Competition Commission of Pakistan]

Before Khalid A. Mirza, Chairman and Rahat Kaunain Hassan, Member (Legal)

In the matter of: KARACHI STOCK EXCHANGE (GUARANTEE) LIMITED LAHORE STOCK EXCHANGE (GUARANTEE) LTD.

Appeals Nos. 12 and 13 of 2009, decided on 17th April, 2009.

Competition Ordinance (LII of 2007)---

----Ss. 4, 32 & 42---Competition Commission Appeal Rules, 2007, R.20---Interim relief, grant of---Appeal against order of Commission---Appellants had filed applications for interim relief in their respective appeals against the order passed by Single Member of the Competition Commission in the matter of imposing a floor upon the prices of securities traded at the three Stock Exchanges---Appellate Bench was empowered under S.32 of the Competition Commission Ordinance, 2007 read with R.20 of the Competition Commission Appeal Rules, 2007 to give such direction as it considered appropriate, inter alia, in a matter of urgency and for the purposes of protecting public interest---Under R.20(3) of Competition Commission Appeal Rules, 2007, Appellate Bench was required to exercise its powers to grant interim relief after taking into account all the relevant circumstances, including three crucial factors; (i) the urgency of the matter; (ii) effect on the party praying for relief, if relief was not granted; and (iii) effect on competition, if relief was granted---Urgency in the matter could be appreciated to the extent that in the absence of a restraining order proceedings for recovery of penalty, could be initiated by the Commission---As for the impact on competition vis-a-vis granting or, not granting interim relief, since the floor upon the prices of shares had already been removed, restraining the recovery by grant of interim relief would not have any adverse impact---Appellants also had raised grounds which required due consideration and determination by the Bench which was likely to take time--Held, it was, in circumstances, just and proper, to grant relief to the appellants to the extent that no recovery proceedings for the penalty imposed would be initiated by the Commission till the final disposal of the appeals.

Haider Waheed for Karachi Stock Exchange.

Ahmed Hassan Khan, Chief Regulatory Officer, Lahore Stock Exchange.

2010 C L D 457

[Competition Commission of Pakistan]

Before Khalid A. Mirza, Chairman, Rahat Kaunain Hassan and Dr. Joseph Wilson, Members

In re: PAKISTAN STEEL MILLS CORPORATION (Pvt.) LIMITED (SHOW-CAUSE NOTICE NO.53 OF 2009 DATED 29-4-2009

F. No.3/Dir(M&TA) PSM/CCP of 2009, decided on 15th May, 2009.

Competition Ordinance (LII of 2007)---

----Ss. 3(3) (g) (h), 30 & 33---Abuse of dominant position---Proceedings in case of contravention--Adjournment---Application for---Adjournment must be granted judiciously and should be based on a sufficient cause---Commission took a strict view when considering requests for grant of adjournments where those seemed to be more of dialatory tactics leading to an abuse of process of law---Applicant could not ask a date of its own choice as that was asking for too much indulgence which could not be claimed as a matter of right---Counsel for the applicant had not explained as to what complex issues, if any, were involved which would require further time for preparation although it had been acknowledged that it was a serious matter; and that of public importance---Taking into account the counsel's conduct and his earnest assurances that he would henceforth assist the Commission in timely and proper way, matter was adjourned to the date to which the counsel agreed---Counsel had agreed to provide the written reply to the show-cause notice.

Mazhar Jafri for the Pakistan Steel Mills Corporation (Pvt.) Ltd.

2010 C L D 462

[Competition Commission of Pakistan]

Before Dr. Joseph Wilson, Member, In the matter of: PAKISTAN INTERNATIONAL AIRLINES

File No. 14/DIR (M&TA)/PIA/CCP/09 decided on 3rd November, 2009.

Competition Ordinance (LII of 2007)---

----Ss. 3, 30, 37 & 41---Abuse of dominant position---Complaint against---Government of Pakistan was the largest shareholder of Pakistan International Airlines having 89.93% of the total shares, whereas the remaining shares were held by the public--competition Commission of Pakistan, received various complaints to the effect that PIA was charging a percentage of the ticket fare whenever passengers rescheduled or cancelled flights, which was not only contrary to the practice followed by other domestic and international carriers and was also discriminatory--Said Policy of PIA was verified from its Customer Services Department and was found to support the complaints received by the Commission---Commission took suo motu notice and constituted an Inquiry Committee under S.37(1) of Competition Ordinance, 2007, which conducted a formal inquiry in the matter, completed its report and recommended that proceedings under S.30 of the Ordinance could be initiated against PIA---Section 3 of Competition Ordinance, 2007, which had prohibited abuse of dominant position, would apply only when one undertaking had a dominant position or where two or more undertakings were collectively dominant--Finding of dominance whether individual or collective would involve a ,two-stage procedure: First was the determination of relevant market and the second was the determination, whether the undertaking concerned enjoyed dominant position---PIA having understood the concern of the Commission, had volunteered to remove the discriminatory fee structure and offered a proposal---Appellate Bench appreciated the understanding and co-operation of PIA and ordered; that proposed non-discriminatory re-scheduling fee structure be implemented in letter and spirit as of January 1, 2010; and that a passenger who wished to reschedule his/her flight to an immediate preceding flight, be allowed to do that without any charge---In the light of PIA co-operation and understanding, Bench had taken a lenient view and exonerated the undertaking from any penalty.

Suhail Mahmud, GM Legal and Rashid Aziz, GM (Revenue and Management) and Ali Tahir Qasim, Deputy GM (Revenue and Management) for P.I.A.

Dates of Hearing: 12 October, 2009 and 3rd November, 2009.

2010 C L D 549

[Competition Commission of Pakistan]

Before Khalid A. Mirza, Chairman, Abdul Ghaffar, Member (C, M & T.A) and Ms. Rahat Kaunain Hassan, Member (Legal)

TRADING CORPORATION OF PAKISTAN (PVT,) LIMITED: In the matter of

File No.3(31)/D.D(L)/TCP/CCP/2010, decided on 12th February, 2010.

Competition Ordinance (LII of 2007)---

----Ss. 3, 4, 28(2), 30, 31 & 32---Irregularities and lack of transparency in the tendering process-Competition Commission of Pakistan took notice of the news items that Trading Corporation of Pakistan through its tender terms for the import of white sugar had failed to provide level playing field and equal opportunity to suppliers/partners of all origins for the import of 5,00,000 MT of sugar, thereby preventing, reducing and restraining competition in the relevant market in violation of Ss. 3 & 4 of Competition Ordinance, 2007--commission appointed Enquiry Officer pursuant to the provisions of subsection (2) of S.28 of the Ordinance-Subsequent to the initiation of Enquiry, Commission received letters from different quarters wherein irregularities and lack of transparency in the tendering process of Trading Corporation of Pakistan was complained about--Enquiry Officers in their preliminary enquiry report had pointed out that certain clauses of the terms and conditions of tenders were found to be potentially of concern---Owing to the fact that the tender terms, prima facie seemed to exclude competitors from the tendering process and was likely to result in import of sugar at a higher price which could adversely impact the consumer and the public at large, Commission issued a notice of hearing under Ss. 30, 31 & 32 of Competition Ordinance, 2007-After hearing all the concerned expressed by the Commission and the objections raised by the parties with regard to the terms and conditions of tot. gender, Trading Corporation of Pakistan had agreed that tender to be opened on 13-2-2010 had been merged with the tender schedule for 15-2-2010, accordingly, the quantity of sugar for tender schedule for 15-2-2010 would be enhanced to 2,00,000 MT and would be opened on 17-2-2010; that conditions of clause 15(a) of the terms and conditions for the tenders relating to shipment, would be amended accordingly; that the terms' and conditions of the tenders would be amended to allow containerized shipment as an option on established international terms and conditions and that transshipment in the case of containerized shipment would be allowed in the terms and conditions of the tenders---Trading Corporation of Pakistan, at circumstances, was directed to issue 'a corrigendum and to take all necessary actions in that regard---Concerns raised by the enquiry officers in the preliminary enquiry report and the objections taken by the parties, having stood substantially addressed, further enquiry in that matter was not warranted.

Saeed Ahmad Khan, Chairman, Shahzad Akhtar, GM (Import), Muhammad Sadiq, GM (Dispatches Operation Division), Shahid N. Hassan, GM (Legal) and Mazhar Hussain for Trading Corporation of Pakistan.

Syed Amjad Ali, Sheikh Ali Baakza for Al Khaleej Sugar, Jawad Tariq (Independent Consultant), Samee Anwer for Reliance Company, Mujahid Bashir, R. Pak Trading Company and Sohail Z. Ali Khan. Stakeholders and Public at Large.

2010 C L D 610

[Competition Commission of Pakistan]

Before Maleeha Mimi Bangash and Dr. Joseph Wilson, Members

PAKISTAN INTERNATIONAL AIRLINES: In the matter of

File No.05/Dir(M&TA)Hajj/CCP/09, decided on 20th November, 2009.

Competition Ordinance (LII of 2007)---

---Ss. 3, 4, 33 & 37---Abuse of dominant position-Imposition of penalty-Competition Commission of Pakistan took notice of the media report that PIA was charging exorbitant Hajj fares and thereupon wrote a letter to PIA to determine the facts---Two separate allegations of abuse of dominance had been made against PIA, first pertained to price discrimination between regular passengers who fly on scheduled flights between destination in Pakistan and Saudi Arabia and the other that pilgrims availing the short term package and travel by the scheduled flights--Price discrimination was a term that economists use to describe the practice of selling the same product to different customers at different price, even though the cost of sale was the same to each of them, more precisely, it was selling at a price or prices such that the ratio of price to marginal costs was different in different sales--PIA charged between Rs.41,500 to Rs.46,250 for a round-trip economy class in 2008 from non-Hajj passengers while it charged between Rs.100,000 to Rs.120,000 on the same routes from Hal passengers---From its own submission, PIA had admitted that it charged higher fares from Hail passengers as compared to non-Hajj passengers---Charging of different fares from passengers based on their pilgrims status, amounted to price discrimination, which was prima fade violation of S.3(1) of Competition Ordinance, 2007---PIA's actions were not a State compulsion, neither a regulated conduct that would enable it to enjoy immunity from the application of Competition Ordinance, 2007-PIA, in circumstances, had violated S.3(1) of Competition Ordinance, 2007---On account of unreasonable increase in Hajj fare during the year 2008 as compared to Hajj Season 2007, PIA had abused its dominant position---Taking lenient view a token penalty of rupees ten million was imposed on PIA--On the count of discrimination between Half passengers and regular passengers on scheduled flights, PIA was directed to work out an amount of refund to be paid back to the Hajjis based on the difference of fare between regular passengers and Hajjis within specified period.

Suhail Mahmud, General Manager (Legal Services) and Irshad Ghani, General Manager (International Affairs) for Pakistan International Airlines.

2010 C L D 641

[Competition Commission of Pakistan]

Before Dr. Joseph Wilson, Member

MURREE BREWERY COMPANY LTD.

Versus

SIZA FOODS (PVT.) LIMITED

(File No.03/SEC-3/CCP/08), decided on 24th April, 2009.

Competition Ordinance (LII of 2007)---

---Ss. 2(1)(P), 3(3)(h) & 4(1)---Abuse of dominant position--Complaint against--complainant wrote letter to the company with the request to consider its non-alcoholic beverages for its fast food chain in Pakistan, but no heed was paid by the company to the request made by the complainant-Analysis of purchase orders for beverage sent by the company had revealed that request for supply of soft-drinks were made only to another company and none of the purchase order was issued to any other beverage manufacturer---Analysis of the information gathered led the Inquiry Officer to conclude that the company enjoyed a dominant position by virtue of its market share in the relevant market and also by virtue of its ability to behave independently of its competitors and consumers---Show-cause notice alleged prima fade violation of Ss.3(3)(h) and 4(1) of Competition Ordinance, 2007---In the present cases the practice by the company to acquire products only from one particular company, fell within the scope of S.4 of Competition Ordinance, 2007, which practice was tantamount to exclusive dealing which in its simplest form was an arrangement between a manufacturer and buyer forbidding the buyer from purchasing the contracted goods from any other seller, or requiring the buyer to take all of its needs in the contracted goods from that manufacturer-Where the buyer happened to be dominant player, it inevitably by virtue of its exclusive dealing arrangement with the manufacturer engaged in refusal to deal with the rivals of manufacturer and would attract the provisions of S.3 of Competition Ordinance, 2007---Company, however volunteered to give undertaking to the effect that it would in addition to the products of one particular company sell such other beverages which after review were shown to conform to the global quality standards---Based on the undertaking given by the company and on the fact that the complainant was satisfied that company would give due consideration to the products, the show-cause notice issued to the company stood disposed of.

Amin Muhammad Lakhani, CEO of SIZA Foods, Badaruddin F. Vellani and Vellani and Jamil Mughal, General Manager, Marketing and Real Estate Development present for SIZA Foods (Pvt.) Limited.

Abdullah Zafar, Marketing Manager present for Murree Brewery Company Limited.

2010 C L D 1130

[Competition Commission of Pakistan]

Before Abdul Ghaffar, Member (C, M & TA)

Messrs FECTO BELARUS TRACTORS (PVT.) LTD.---Petitioner

Versus

SHAHZAD TRADE LINKS---Respondent

File No.22/Dir (M&TA) Minsk/CCP/09, decided on 28th May, 2010.

Competition Ordinance (XLVI of 2009)---

----Ss. 4, 37(2) & 41---Prohibited agreement---Complaint against---Appeal to the Appellate Bench of the Commission---Complainant in his complaint filed before the Commission had assailed the legality of an exclusive agency agreement executed between the respondent and another company---Complaint had alleged that by virtue of its exclusive agency agreement, the respondent had captured the entire market of the complainant; and that the respondent was capable of imposing its own terms on the Government for the purchase of tractors---Inquiry report appraised the procurement process of tractors under the scheme and gave findings that said scheme gave the farmers discretion to select the make and model of their own choice from a wide range of tractors available in the market; in view of said report it could not be said that the respondent would be able to monopolize the scheme and impose his own terms and conditions on the Government for the purchase of the tractors by the farmers---Counsel for the complainant requested to dispose of the complaint as not pressed in view of the fact that impugned exclusive agency agreement was no more effective as period for which said agreement was valid had expired.

Nemo for Petitioner.

Amer Raza Naqvi for Respondent.

2010 C L D 1134

[Competition Commission of Pakistan]

Present Khalid Aziz Mirza, Chairman, Ms. Rahat Kaunain Hassan, and Dr. Joseph Wilson, Members

In the matter of: PAKISTAN STEEL MILL

File No. 3/DIR(M&TA)/PSM/CCP/09 dated decided on 22nd March, 2010.

Competition Ordinance (LII of 2007)---

----Ss. 2(1) (e) (P), 3, 37 & 38---Abuse of dominant position---Refusal of deal, conditions for---Imposition of penalty---Pakistan Steel Mills was a body corporate in business of producing and supplying steel products; it having 100% share in relevant market, had complete dominance in the low-carbon steel billet market that entitled the alleged abuse that transpired and could have permitted it to refuse to supply certain of its customers and not others---Commission took suo motu notice of news items appearing in the media relating to the shortage in the supply of steel billets by the Mills to all, but one downstream buyer---Another association also alleged gross malpractice of steel billets by the management of Mills---Commission appointed an Inquiry Officer, who in his report, stated that allegation against the Mills, was true---Show-cause-notice was issued to the Mills, reply to which was not satisfactory---Refusal to supply low-carbon steel had been alleged against the Mills---Terms "refused to deal" was used to describe a situation in which one undertaking refused to sell another undertaking, was willing to sell only at a price that was considered "too high" or was willing to sell only under conditions that were deemed unacceptable, thereby qualifying as an abuse of undertaking's dominant position-"Refusal to deal" could occur either in vertical relations, where an undertaking refused to deal with or supply its product to its competitors---Refusal to deal, could be unilateral or concerted---In the present case, refusal to deal occurred in vertical relation and involved the unilateral refusal by the Mills to supply the downstream purchaser---Additionally the refusal which was unilaterally, did not involve any concerted action between suppliers---Mills was the only supplier of the refused product---Conditions which were typically included to make a finding of refusal to deal, were that the refusing firm must have a dominant position in the market of the product or service, it was refusing; that the product or service that was being refused, must be objectively indispensable input, with no actual or potential substitutes; that refusing firm must not be willing to sell or supply at terms and conditions that would be considered appropriate or reasonable part of the industry standard or in ordinary conduct of business; that such denial of service, must have a material impact on competition in a related market to the detriment of customers; that denial of dealing, supply or service must be without objective commercial justification; and that it was necessary that a remedy could be crafted which ensure that the relevant product was provided on the ongoing basis, at appropriate terms and conditions--Held, Mills, in the case, having abused its dominant position by refusing to deal with customers in violation of S.3(3) (g) of Competition Ordinance, 2007, penalty of Rs.25 millions, would be an appropriate penalty to be imposed on Mills.

Khalid Aziz Mirza, Chairman, Ms. Rahat Kaunain Hassan, Member and Dr. Joseph Wilson, Member for Commission.

Iftikhar Ahmed Javed (GM Marketing) for Pakistan Steel Mill.

Nauman Wazir (CEO) and Zarak Khattak (Director) for Frontier Foundry (Pvt.) Ltd.

2010 C L D 1221

[Competition Commission of Pakistan]

Before Khalid A. Mirza, Chairman and Rahat Kaunain Hassan, Member (Legal)

In re: FECTO BELARUS TRACTORS (PVT.) LIMITED

Appeal No.14 of 2009, decided on 16th March, 2010.

(a) Competition Ordinance (XLVI of 2009)---

---Ss. 4, 37 & 41---Enquiry on complaint---Appeal to Appellate Bench of the Commission---Complaint having been dismissed in terms of the recommendations of the Enquiry report, appeal had been filed by the complainant against order of dismissal of the complaint--Contention of counsel for the complainant was that adverse remarks were made against the complainant in the enquiry without providing an opportunity of hearing and to defend the same-Validity-Where a complaint had been filed and the findings of the enquiry did not indicate any prima fade violation and/or give any adverse findings against the complainant, it would be only fair and in accordance with the principles of natural justice that prior to the disposal of the complaint, an opportunity of hearing be given to the complainant.

[196611 All. E. R. P. C. 545; [1966)3 All E.R. P. C.863; [1982)1 All E.R. P.C. 35; [198413 All E.R. C.A. 201; PLD 1964 SC 410 and 1994 SCMR 1299 ref.

(b) Competition Ordinance (XLVI of 2009)---

---S. 37-Enquiry against complaint---Scope---Commission could initiate enquiry on three instances; on its own (suo motu) upon reference made by the Federal Government and on complaint.

Muhammad Raheel Kamran Sheikh for the Appellant.

Amer Raza Naqvi for Shahzad Trade Links.

2010 C L D 1271

[Competition Commission of Pakistan]

Before Khalid A. Mirza, Chairman and Dr. Joseph Wilson, Member

In the matter of:

APPEALS FILED BY PAKISTAN BANKS ASSOCIATION AND OTHERS NO.4(1) /REG/BANKS/CCP/2008

Appeals Nos.1-10 of 2008, decided on 10th June, 2009.

(a) Competition Ordinance (LII of 2007)---

---Ss. 4, 30, 37 & 41--Entering into prohibited agreements---Proceedings against Bank Association---Imposition of penalty---Appeal--Competition Commission took suo motu notice of the advertisement by Bank Associations, wherein the general public was informed that all banks had decided to introduce an Enhanced Saving Account (E.S.A), which would automatically convert PLS account with an average balance of Rs.20,000 to the E.S.A.--Show-cause notice was issued by the Competition Commission to the Banks Association for violating provisions of S.4 of Competition Ordinance, 2007--Single Member Bench of the Competition Commission, heard the matter and found the Banks Association in violation of S.4(1) of Competition Ordinance, 2007 and imposed penalties--Grounds of appeal as submitted by the Association could be categorized into four main issues: (i)procedural aspects,(ii)regulated conduct, (iii) application of S.4 of Competition Ordinance, 2007 and (iv) public interest---Regarding first category of ground, Association had contended that Competition Commission did not have the suo motu power to issue a show-cause notice under S.30 of the Competition Ordinance, 2007 without following the mandatory procedure of conducting an inquiry as laid down in S.37 of he Ordinance---Validity---While the suo motu power under S.37 of Competition Ordinance, 2007 dealt with conducting enquiries, it was by no means a pre-requisite for initiating proceedings under S.30 of Competition Ordinance, 2007---Had the intention of the Legislature be to have mandatory enquiry in every case before initiating proceedings under S.30 of Competition Ordinance, 2007, plain language could easily had been provided to reflect that intention---Commission was under no obligation to conduct an enquiry into the matter that was before the Single Member of Bench---No reason was available to place fetters on the lawful powers of the Competition Commission---Contention of the Association, was repelled, in circumstances.

Moulana Atta ur Rehman v. Sardar Umar Farooq and others PLD 2008 SC 663, 672 ref.

(b) Competition Ordinance (LII of 2007)---

----Ss. 4, 30, 37, 41 & 57---State Bank of Pakistan Act (XXXIII of 1956), Ss.46-B & 54-A---Entering into prohibited agreement---Imposition of penalty---Appeal against---Jurisdiction of Competition Commission---With regard to second ground of appeal, which was 'Regulated conduct', appellants argued regulated conduct defence, that 'E.S.A'. was launched at the behest and guidance of the State Bank of Pakistan and in light of S.46-B of the State Bank Act, 1956, all directives by government bodies inconsistent with the policies, regulations and directives of the State Bank were void---Non obstante clause was embodied in S.54-A of the State Bank Act, 1956---Competition Ordinance, 2007 also had a non­obstante clause as embodied in S.57 of Competition Ordinance, 2007 and in the light of said S.57, non obstante clause of State Bank Act, 1956 could not override the application of Competition Ordinance, 2007.

Credit Suisse Securities (USA) LLC v. Billing and others 127 S. Ct.2383 (2007) ref.

(c) Competition Ordinance (LII of 2007)---

----Ss. 4, 30, 37 & 41---Suo motu proceedings by Commission---Entering into prohibited agreements--Imposition of penalty---Appeal against---Application of S.4 of Competition Ordinance, 2007---Appellants, in the present case, had alleged that Single Member of Bench had wrongly applied S.4 of the Ordinance---Plea of appellants was that Single Member Bench declared the list of agreements mentioned in S.4(2) of the Competition Ordinance, 2007 to be deemed illegal per se and that Single Bench did not determine the "relevant market" as required by S.4(1) of Competition Ordinance, 2007---Validity---Section 4(2) of Competition Ordinance, 2007, provided a non-exhaustive' list of agreements which had the "object" or "effect" of preventing, restricting and reducing competition---Some agreements, such as naked price fixing agreement among competitors, as in the case, were condemned as per se illegal---Other agreements that imposed ancillary restraints, need to be assessed whether pro-competitive benefits outweighed anti-competitive effects-Depth of inquiry required to assess the effects of the agreements varied on case to case basis---Appellants had failed to appreciate the context in using the word "deemed"---Single Member Bench, in circumstances, was right in declaring the agreement in question per se illegal based on the nature of agreement, deeming the 'object' as anti-competitive.

Arizona v. Maricopa County Medical Society, 457 U.S.332, 102 S.Ct. 2466, 73 and L.Ed.2d 48 (1982) ref.

(d) Competition Ordinance (LII of 2007)---

---Ss. 4, 30, 37 & 41---Suo motu proceedings by Commission---Entering into prohibited agreement---Imposition of penalty---Appeal "public interest"---Appellants had contended that according to S.37 of Competition Ordinance, 2007 even if advertisement by appellant showed a collusive behaviour, it was in public interest and there was no need to proceed against the appellants---Contention was repelled, because proceedings initiated under S.30 of the Competition Ordinance, 2007, other than on a complaint or a reference by the Federal Government, was not dependant on fulfilling the requirements of S.37(4) of Competition Ordinance, 2007--However, even if assumed that somehow S.37(4) of the Competition Ordinance, 2007 did apply, the meaning of "public interest" would have to be searched within the context of the Ordinance--- Public interest arguments raised by the appellants, would not hold ground in front of "public interest" definition established by statutory interpretation---Appellants had failed to produce any valid public interest to allow naked collusive activity of appellants to go unchecked---Appeal, which otherwise was time-barred, was liable to be dismissed.

Muneeb Akhtar, Masood Raza and Nasim Bhatti for Pakistan Banks Association and others.

2010 C L D 1303

[Competition Commission of Pakistan]

Before Maleeha Mimi Bangash, Member

In the matter of: ALL PAKISTAN NEWSPAPER SOCIETY'S SUB-COMMITTEE ON COVER PRICES AND ALL PAKISTAN AKHBAR FAROSH FEDERATION

File No.6/Sec-3/CCP/08, decided on 23rd April, 2009.

(a) Competition Ordinance (LII of 2007)---

----Ss. 4, 30 & 37---Prohibited agreement--All Pakistan Newspapers Society/APNS, which had 292 members, created one cover price formula and issued to all its members without taking into consideration prospective market of each Newspaper---All Pakistan Akhbar Frosh Federation/Akhbar Frosh also entered into an agreement with APNS, whereby Akhbar Frosh would not distribute any Newspaper whose cover price was below the minimum price level---Commission took suo motu action against APNS and its Sub-Committee for setting the minimum price for all the newspapers---Enquiry was initiated under S.37 of the Competition Ordinance, 2007 based on the recommendations made in the Inquiry Report, the Commission initiated proceedings under S.30 of the Competition Ordinance, 2007---APNS had maintained that the formula was not obligatory for its members, however that would make no difference in determining whether the agreement between the members was unlawful---Enough evidence was available to prove collusive behaviour of members of APNS-Sufficient information regarding the price fixing was shared among the members of APNS---Publication of press release had shown that Newspaper publishers did not act independently---Such kind of collusive behaviour only encouraged inefficiency in the market---Negative effect of such collusive behaviour and resultantly inefficiency, would be on the end consumer who would have limited choice of newspaper and no price options in the relevant market---Agreement between APNS and Akhbar Frosh to enforce the decision of minimum price for newspaper, was a vertical agreement for the resale price maintenance of the newspaper---Said agreement between the APNS and Akhbar Frosh was void under S.4(1) of Competition Ordinance, 2007---Resale price maintenance agreement between APNS and Akhbar Frosh served as a tool to monitor the collusive behaviour of members---APNS through its representative, admitted the issuance of Minimum Price Formula, but according to it said Formula was meant to be just a recommendation to members and not mandatory in any way and not a directive---All three undertakings; APNS, its Sub-Committee and Akhbar Frosh, admitted that they had violated the Competition Ordinance, 2007, however they pleaded that their actions were honest mistake and they expressed their willingness to make amends--Ignorance of law was no excuse for violating the law, however to encourage compliance of law and keeping in view the approach of the Commission taking lenient view did not impose penalties for said violation---Parties were warned that in case they were found guilty of violating Competition Ordinance, 2007 in future, major penalties under law would be imposed on them without any leniency.

(b) Competition Ordinance (LII of 2007)---

----S. 4---Prohibited agreement---Agreements, kinds of---Application of S.4 of Competition Ordinance, 2007---Scope---Section 4(1) of Competition Ordinance, 2007, would apply to agreements entered into by an undertaking or decision made by an association of undertakings which had the object or effect of preventing, restricting or reducing competition within the relevant market--Matter involved, in the present case, was price fixing agreement at two levels, especially, horizontal price fixing agreements and one vertical fixing agreement; horizontal agreements were those that were entered into by the competitors at the same level of the production or distribution chain to co-operate with each other, they trigger the violation when competitors making agreements would restrict competition among themselves, such would involve two horizontal price fixing agreements; (a) fixing of minimum cover price; (b) issuance of minimum cover price formula to its members---Second type of agreements were vertical agreements, such agreements were differentiated from horizontal price fixing agreements, because of their specific nature, vertical price fixing agreements would restrict the right of alienation and involve common law theory of property rights; vertical agreements in the form of minimum resale price maintenance, had been allowed only when they would stimulate inter-brand competition among manufacturers selling different brands of the same type of the product by reducing intra-brand competition among retailers selling the same brand---Section 4(1) of Competition Ordinance, 2007, provided that the agreement must have either the object or effect of preventing, restricting competition---Term 'object' mentioned in S.4 of Competition Ordinance, 2007 did not refer to the subjective intention of the parties, but to the objective meaning and purpose of the agreement.

Arshad Zuberi the Editor for Business Recorder for All Pakistan Newspaper Society.

Tanvir Tahir, the Executive Director of APNS for Sub-committee of All Pakistan Newspaper Society.

M. Abdullah Zafar, Marketing Manager and Tikka Khan, the Secretary General for All Pakistan Akhbar Farosh Federation.

2010 C L D 1339

[Competition Commission of Pakistan]

Before Dr. Joseph Wilson, Member

In the matter of: MESSRS TAKAFUL PAKISTAN LIMITED AND TRAVEL AGENT ASSOCIATION OF PAKISTAN

File No. 9/M(A&R) / CAA-TAAP / CCP/ 2007 decided on 29th January, 2010.

(a) Competition Ordinance (XLVI of 2009)---

----Ss. 3, 4, 10, 30 & 37---Competition (General Enforcement) Regulations, 2007, Regln.16---Abusing of dominant position, entering into prohibited agreement and deceptive marketing practices---Imposition of penalty---Competition Commission took cognizance of agreement entered into by Travel Agent Association of Pakistan/TAAP with a company whereby Association introduced an insurance product which comprised: Default insurance plan for travel agents; and passengers' travel insurance at a premium of Rs.300 for domestic ticket and Rs.600 for international ticket---Competition Commission exercising its powers under S.37 of the Competition Ordinance, 2009 and Regln.16 of Competition (General Enforcement) Regulations, 2007 proceeded with the inquiry and constituted Inquiry Committee, to inquire into the matter--Inquiry Committee in its report concluded that scheme under agreement, prima facie, was a trade restrictive agreement between Association and the Company violating S.4(2)(a)(g) which amounted to abuse of dominance in violation of S.3(3)(c)(d) of the Competition Ordinance, 2009 and that said agreement also appeared to constitute deceptive marketing practices by Company and Association in contravention of S.10(2)(a) of Competition Ordinance, 2009---Based on the recommendations made in the Inquiry Report, Competition Commission proceeded under S.30 of Competition Ordinance, 2009 and issued show-cause notices to both the undertakings---Section 3 of Competition Ordinance, 2009 prohibited tie-ins, which occurred when a seller refused to sell one product, which a buyer desired, unless the buyer also agreed to purchase a second product that the buyer would not otherwise wanted from seller on the offered term---Desired product was called the 'Tying' product; the other was the 'tied product'---To prove a claim for tying, the Commission set forth five elements test to be satisfied; (1) a tie existed between two distinct products; (2) the tying seller had dominant position in the tying product market so as to be able to prevent, restrict, reduce or distort competition in the tied product market; (3) coercion by the seller to purchase the two products; (4) the tie restricted competition in the tied product; and (5) the tying seller had some economic interest in the sale of the tied product---In the said five point test, if the first three points were proved, then there was no need to prove the remaining two points---Since all the five elements of the illegal tying arrangement were proved, it was held that tying of travel and medical insurance with default insurance by Company amounted to abuse of dominance in violation of S.3 of Competition Ordinance, 2009.

(b) Competition Ordinance (XLVI of 2009)---

----Ss. 4, 10, 30 & 37---Entering into prohibited agreements and deceptive marketing practices---Scope and applicability of S.4, Competition Ordinance, 2009--Word 'object' as used in S.4---Connotation---Section 4 of Competition Ordinance, 2009 prohibited undertakings from entering into agreements or in the case of association of undertakings from making decisions, which had the object or effect of preventing, restricting or reducing competition within the relevant market---Price fixing would mean any term of sale that would affect the price that the customer must pay---Selling a product for free "would affect the price that the customer must pay" and captured by definition of "price fixing"---Agreement between the Travel Agents Association and Company, in circumstances, had the object of fixing price of travel and medical insurance---Word 'object' as used in S.4 of Competition Ordinance, 2009 did not refer to "the subjective intention of the parties when entering into the agreement, but the objective meaning and purpose of the agreement considered in the economic context in which same was to be applied"---Agreements in the present case, that 'by their very nature' restricted competition were treated as having that object and it was unnecessary to prove that the agreement would have any anti-competitive effect---Compulsory insurance cover by Company for each international ticket sold by Association's member (travel agents) and the Insurance cover passed on passengers for free, had prevented, restricted and reduced competition in the travel insurance market and the Agreements had violated S.4(2)(a) of Competition Ordinance, 2009---Section 10 of Competition Ordinance, 2009 prohibited an undertaking from engaging into such deceptive marketing practice that would give false information to consumers relating to price, character of goods--Inquiry Officers who paid the visit to the premises of undertakings did not find any notice in that respect, displayed conspicuously at the sale points of travel agents participating in the Insurance Scheme informing customers about the 'Passenger Insurance Cover' that was assured by the Association---Participating Association's member travel agents, in circumstances were engaged in deceptive marketing and were violating S.10 of the Competition Ordinance, 2009---Company and the Association had violated Ss.3, 4 & 10 of the Competition Ordinance, 2009---Agreement arrived at between company and the Association was declared void to the extent it violated provisions of Competition Ordinance, 2009---Company would cease immediately and desist to collect contribution from the travel agents in respect of passengers' travel insurance in the future and for abusing dominant position both Association and the company would pay penalties accordingly.?

Aziz H. Nishtar and M. Ashraf Ali Siddiqui (DGM? Operations) Present.

Aziz H. Nishtar and Muhammad Hanif Rinch (Vice-Chairman Region-4) Present.

2010 C L D 1377

[Competition Commission of Pakistan]

Present Khalid A. Mirza (Chairman) and Ms. Rahat Kaunain Hassan, Member

In the matter of: APPEAL FILED BY KARACHI STOCK EXCHANGE (GUARANTEE) LTD. AGAINST THE ORDER OF THE COMPETITION COMMISSION OF PAKISTAN DATED 18-3-2009

Appeal, decided on 26th November, 2009.

(a) Competition Ordinance (LII of 2007)---

----Ss. 4, 30, 37 & 41---Entering into prohibited agreement---Placing a floor based on closing prices of securities---Imposition of penalty---Appeal against---Three Stock Exchanges; Karachi Stock Exchange/KSE, Lahore Stock Exchange/LSE and Islamabad Stock Exchange/ISE, decided to place a floor based on closing prices of securities---Inquiry was held in the matter and in Inquiry Report initiation of proceedings against three Stock Exchanges, was recommended for prima fade violation of S.4 of Competition Ordinance, 2007---Through impugned order Competition Commission imposed a penalty of Rs.200,000 on ISE, one million of LSE and Rs. Six million on KSE against which an appeal had been filed---Action of three Stock Exchanges had the object of preventing, restricting and reducing competition and its effects had to be anti-competitive---Even otherwise, there were adverse effects on competition setting minimum price, fixing price element--Price for the provision of brokerage services to all the interest players, preventing of competitive bidding, reduction of trading volumes by over 98%, trapping of inventors to looking to sell below the price floor level, making investors lay at minimum artificial prices, placing restraint on choice etc., clearly reinforced that point---Accordingly there was no doubt that placing of the floor by said Stock Exchanges, continued a violation of S.4(1)(2)(a) of Competition Ordinance, 2007---Effect of the action operated as fixing price' for brokers' service e.g., making the provision of services subject to trading at the fixed minimum prices for their clients' securities---Provision of brokerage services was linked with a price element i.e. the floor price-Member of Commission, in circumstances had rightly characterized the decision of the Stock Exchanges in the nature of price fixing---Notwithstanding the adament behaviour of the Stock Exchanges, keeping in view the particular facts and circumstances of the case and in line with the spirit of ensuring future compliance, penalty imposed was reduced by 50% restricting same to a nominal sum of Rs.500,000, provided; (a) Karachi Stock Exchange would admit the contravention;(b) would provide assurance to the Commission that no such action would be taken in future; and (c) would deposit the penalty within a period of two weeks from the date of issuance of that order.

Bayer AG v. Commission (2001) 4 CMLR 126, (2004) 4 CMLR 653; (Compagine Royale Astuienne des Mines SA and Rheinzinc GmbH v. Commission (1984) ECR 1679, (1985) 1 CMLR 688.; Lahore Beverage Company (Pvt.) Ltd. v. Muhammad Javed Shafi 2008 CLC .759 and Attaullah Khan v. Samiullah 2007 SCMR 298 ref.

(b) Security and Exchange Ordinance (XVII of 1969)---

---S. 2(1)(m)---Functions performed by stock exchange--Function commonly performed by a stock exchange would include offering a platform used for maintaining or providing a market place through brokers of a stock exchange who were its members.

(c) Competition Ordinance (LII of 2007)---

----S. 2(1)(p)---Undertaking---Definition---Scope---Basic test for the determination of an undertaking was set out in S.2(1)(p) of Competition Ordinance, 2007---Undertaking would include, any person, natural or legal, engaged directly or indirectly in offering services on a market---Definition of undertaking, covered inter alia, a person engaged in the provision of services---Brokers were professionals who offer services individually on the Stock Exchange, in return for a fee---Brokers were members of stock exchanges---In terms of the definition laid down in S.2(1)(p) of Competition Ordinance, 2007, Brokers were undertakings in their own right---Stock Exchanges were classified as associations of undertakings---Term 'association of undertaking' being covered by the definition of "undertaking", show-cause notice fairly and justly classified the stock exchanges and undertakings.

(d) Competition Ordinance (LII of 2007)---

---Ss. 2(1)(d) & 28---Nature and function of the Commission---Scope---Commission was a creature of law and acting within limits and in exercise of its lawful powers---Role of the Commission, like any competition agency, should be understood to be that of a law-enforcement agency---Commission was not a regulator for a particular sector and had been entrusted with a functional role of ensuring competition in all spheres of commercial and economic activity---Sector specific regulators like Security and Exchange Commission of Pakistan, had jurisdiction over matters to incorporation, prospectus and audit requirements etc.---Competition related concerns, however such as abuse of dominant position, agreements regarding price fixing, collusive behaviour etc. had not been addressed in the securities Legislation in Pakistan---Regulatory domain of Securities and Exchange Commission in matters squarely under its jurisdiction, was sacrosanct and respected by the Commission and Competition Commission was not to be viewed as usurping the important functions of sector specific regulators, when its actions were consistent with its legislative mandate and also consistent with contemporary best practices in the extent civilized world.

(e) Competition Ordinance (LII of 2007)---

----S. 28--Powers of the Commission to conduct enquires---Scope---Section 28(1)(c) of Competition Ordinance, 2007 vests the authority to conduct enquires in the Commission, however by virtue of S.28(2) of the Ordinance, the Commission had the power to delegate all or any of its functions and powers to any of its members or officers---Commission through S.R.O. 999(1)/2008 dated 19-9-2008, had delegated to the Members the power to initiate inquiries and to appoint Inquiry Officers---In exercise of that power and through lawful delegation the Inquiry Officer was appointed to conduct an inquiry into the conduct of Stock Exchange, when they imposed the price floor.

Zia Ullah Khan v. Government of Punjab PLD 1989 Lah. 554; Nahid Khan v. Government of Pakistan PLD 1997 Kar. 513 and 2007 MLD 331 ref.

(f) Natural justice, principles of---

----Concept of natural justice over the course of time had broadly been identified with the two constituents of a fair hearings; (a) that the parties should be given a proper opportunity to be heard; and to that end should be given due notice of hearing and (b) that a person adjudicating should be disinterested and unbiased.

Adanan Afridi, Managing Director KSE, Kamal Azfar, Senior Advocate Supreme Court and Haider Waheed Present for Karachi Stock Exchange (Guarantee) Ltd.

Mian Shakeel Aslam Managing Director LSE, Walid Iqbal, Director LSE, Ahmad Hasan Khan, Chief Regulator Officer, LSE and Asif Baig Mirza, Member LSE Present for Lahore Stock Exchange (Guarantee) Ltd.

2010 C L D 1410

[Competition Commission of Pakistan]

Before Dr. Joseph Wilson (Member)

In the matter of: KARACHI STOCK EXCHANGE, LAHORE STOCK EXCHANGE AND ISLAMABAD STOCK EXCHANGE

No.1/Dir(Inv)KSE/CCP/08) decided on 18th March, 2009.

(a) Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 5-A & 8---Placing/fixing a price floor for securities-Transaction on a Stock Exchange must be made between two members of the Exchange---Such a transaction must be done through as a stock broker, which was a regulated profession---No person was allowed to act as a dealer on a security which was listed on a Stock Exchange outside of such Stock Exchange---For securities which were not listed on any Stock Exchange, there was an "over-the-counter market", which was a decentralized market where market participants traded over the telephone, facsimile or electronic network instead of a physical trading floor---No central exchange or meeting place was for such market.

(b) Competition Ordinance (LII of 2007)---

----Ss. 4, 30 & 37---Entering into prohibited agreements---Placing of floor or fixing of minimum price on the trading price-Imposition of penalty-Competition Commission took notice of the undertakings' decision to place a floor on the trading price of all listed securities and initiated an inquiry under S.37 of Competition Ordinance, 2007-Inquiry Officer in his Inquiry Report concluded that the rationale given by all three undertakings, was unsatisfactory to justify the setting/firing of a minimum price at which securities could be traded and that impugned arrangement prima fade had violated S.4(1), in particular S.4(2)(a) of the Competition Ordinance, 2007-Section 4 of Competition Ordinance, 2007 had prohibited undertakings from entering into agreements or in the case of association of undertakings from making decision, which have the object or effect of preventing, restricting or reducing competition within the relevant market, unless exempted under S.5 of the Ordinance--Individual decisions of the undertakings to place a floor on the trading prices of the securities fell within the ambit of term "agreement" which was prohibited by S.4(1) of Competition Ordinance, 2007-Word "object" in S.4 of Competition Ordinance, 2007, did not refer to the subjective intention of the parties, when entering into the agreements, but the objective meaning and purpose of the agreement considered in the economic context in which same was to be applied-Price fixing agreement could be either horizontal or vertical Agreement was said to be horizontal when. Its participants were either actual or potential rivals at the time the agreement was made; and the agreement eliminated some form of rioting among them---Agreement was said to be vertical when its participants were not direct competitors, but had a vertical relation between them---In horizontal agreement, the term price fixing would include not only fixing "explicit price", but also agreements to fix a "price element"---Normally, horizontal agreement among competitors involved fixing of price of "their individual goods or services"---Decisions of the undertakings to place price floor, had the effect of preventing, restricting and reducing competition in the relevant market and violative of S.4(1) of Competition Ordinance, 2007---Ordinarily, in view of the seriousness of the violation, high penalties would be appropriate; however, competition regime was new in Pakistan and market players needed some time to align their activities/business practices to conform with the dictates of the Competition Ordinance, 2007---Taking lenient view, one undertaking was imposed penalty of Rs. Six million, second undertaking was imposed penalty of Rs. One million and third one was imposed Rs. Two hundred thousand, accordingly.

Akhtar Ali Parvez v. Altafur Rehman PLD 1963 (W.P.) Lah.390; PLD 1995 SC 66; Mehr Dad v. Settlement and Rehabilitation Commissions PLD 1974 SC 193; Manager, Khewra Salt Mines v. The Mines Employees and Labour Union PLD 1976 Lah.601; J.K. Manufacturers Ltd. v. The Sales Tax Officer, Kanpur AIR 1970 A11.362; Chempak (Pvt.) Ltd. v. Sindh Employees' Social Security Institution (Sessi) 2003 PLC 380; Federation of Pakistan v. Aitzaz Ahsan PLD 1989 SC 61; PLD 2008 SC 178; The Chicago Board of Trade v. United States 246 U.S.231 at 244 (1918); Polypropylene OJ [1986] L 230/1; [1988]4 CMLR 347, para 87; T-7/89 SA Hercules NV v. Commission [1991] ECR II-1711, [1992]4 CMLR 84; ECJ Case C-51/92 P Hercules Chemicals v. Commission [1999] ECR 1-42: 5, [1999]5 CMLR 976;Soda-ash/Solvay, ICI OJ [1991] L.152/1.[1994]4 CMLR 645, para 55; Compagnie Royale Asturienne des Mines SA and Rheinzinc GmbH v. Commission [1984] ECR 1679, [1985] 1 CMLR 688 paras 25-26; Case C-277/87 Sandoz Prodotti Farmaceutici v. Commission [1990] ECR 1-45; Case T-148/89 Trefilunion v. Commission [1995] ECR II-1063, para 79; Valentine Korah, An Introductory Guide to EC Competition Law and Practice, (Oxford, Hart, 9th ed. 2007) at P.74 citing J Faull and A Nikpay (eds); The EC Law of Competition (Oxford, OUP, 1st ed. 1999) at PP.82-83; Whish, supra Note 38 at 110, citing Consten and Grunding v.' Commission, Cases 56 and 58/64 [1966] ECR 299, P.342; [1966] CMLR 418, P.473; Vds v. Commission, case 45/85 [1987] ECR 299, P.342,119661 CMLR 418, P.473; United States v. Socony-Vacuum Oil Co., 310 U.S.150, 223 (1940); Arizona v. Maricopa County Medical Society, 457 U.S.332, 350-351 (1982); Northern Pacific R. Co. v. United States 356 U.S.1, 5 (1958); Rudolph J. Peritz, The "Rule of Reason" in Antitrust Law: Property Logic in Restraint of Competition, 40 Hastings L.J.285 (1989); Broadcast Music, Inc., v. Columbia Broadcasting System, Inc., 441 U.S. 1 at 9,99 SCt.1551 at 1556; United States v. McKesson and Robbins, Inc., 351 U.S. 305, 76 S.Ct.937, 100 L.Ed. 1209 (1956); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct.811, 84 L.Ed.1129 (1940); United States v. Trenton Potteries Co., 273 U.S.392, 47 S.Ct. 377, 71 L.Ed.700 (1927); United States v. Microsoft, 253 F. 3d 34, 84 (D.C.Cir.2001); The Chicago Board of Trade v. United States 246 U.S.231 at 235 (1918); Robert H. Bork, The Rule of Reason and the Per Se concept: Price Fixing and Market Division, 74 Yale L.J.775 at PP.815-820 (1965); Devkumarsinghji Kusturchandji v. State of Madhye Pradesh and others, AIR 1967 MP 268; Gordon v. New York Stock Exch., 422 U.S.659, 682 (1975); Pan AM World Airways, Inc. v. United Stats, 371 U.S. 296, 305 (1963); Credit Suisse Securities v. Glen Billing et al., 127 S.Ct.2383 (2007); United States v. Philadelphia National Bank, 374 U.S.321, 350-351, 83 S.Ct. 1715, 1734-1735, 10 L.Ed.2d 915 (1963); Merrill Lynch, Pierce, Fenner and Smith v. Ware, 414 U.S., at 126; 94 S.Ct., at 389; Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363, 385-389, 93 S.Ct.647, 659-662, 34 L.Ed.2d 577 (1973); Carnation Co. v. Pacific Conference, 383 U.S.213, 217-218, 86 S.Ct.781, 784-785, 15 L.Ed.2d 709 (1966); Silver v. New York Stock Exchange, 373 U.S., at 357-358, 83 S.Ct. at 1257-1258; United States v. Borden Co., 308 U.S. 188, 198-199, 60 S.Ct.182, 188-189, 84 L.Ed.181 (1939); United States v. National Assn. Of Securities Dealers, 422 U.S. 694, at 719-720, 729-730, 95 S.Ct.2427, 2443, 2447-2448, 45 L.Ed.2d 486; FFC v. RCA, 346 U.S.86, 94, 94, 73 S.Ct.998, 1004 (1953); M N Rao and Amita Dhanda (editors), N S Bhindra's Interpretation of Statutes (Le)dsNexis Butterworths 10th Ed.2007) at P.798 Citing Nihal Singh v. Sri Ram AIR 1939 Lah.388; Manohar Lal v. Emperor AIR 1943 Lah. 1; Goldfarb v. Virginia State Bar, 421 U.S.773, 95 S.Ct.2004 (1975); Arizona v. Maricopa Cy. Medical Soc'y, 457 U.S.332, 102 S.Ct.2466, 73 L.Ed.2d 48(1982); National Soc'y of Professional Eng'rs v. United States, 435 U.S.679, 98 S.Ct. 1355, 55 L.Ed.2d 637 (1978) ref.

(c) Competition Ordinance (LII of 2007)---

---Preamble--Objects of promulgation of Competition Ordinance, 2007--Competition Ordinance, 2007 was promulgated with the objects to provide for free competition in all spheres of commercial and economic activity; to enhance economic efficiency; and to protect consumers from anti-competitive behaviour-Term 'competition' which was not defined in the Competition Ordinance, 2007 referred to business rivalry.

Kamal Azfar, Haider Waheed and Rafique Umer, Company Secretary for Karachi Stock Exchange.

Salman Raja and Waqqas Ahmad Mir for Lahore Stock Exchange.

Aftab Chudhry, Managing Director and Waris Niazi, Deputy Secretary for Islamabad Stock Exchange.

2010 C L D 1454

[Competition Commission of Pakistan]

Before Ms. Rahat Kaunain Hassan, Member (Legal/OFT)

In the matter of: SHOW-CAUSE NOTICES ISSUED TO ASKARI BANK LTD., UNITED BANK LTD, MY BANK LTD. AND HABIB BANK LTD.

No.2(9)/Dir(L)/CCP/2008, decided on 14th January, 2010.

(a) Competition Ordinance (LII of 2007)---

----Ss. 10, 30 & 37--Entering into deceptive marketing practices-Competition Commission took suo motu notice of advertisement issued by the Banks in the print media advertising deposit account along with the associated profit rates for such accounts---Commission took cognizance of the matter when Mutual Funds Association sent a letter to the State Bank alleging that the profit rates being advertised by the Banks, were being calculated using a flawed formula which did not reflect the actual returns earned by the depositor-Enquiry under S.37 of Competition Ordinance, 2007 was initiated and Commission sought clarification from the Banks---Clarification offered by the Banks having not been found satisfactory, show-cause notices were issued under S.30 of Competition Ordinance, 2007---Two core issues involved in the case were as to whether S.10 of Competition Ordinance, 2007, was applicable to the deceptive marketing of services in addition to that of goods; and were the subject advertisements deceptive in that they provided false and misleading information---Banks had contended that S.10(2)(b) of Competition Ordinance, 2007, was not applicable-Validity-Section 10(1) of Competition Ordinance, 2007 was a broadly worded provision and applied to all undertakings, without making a distinction between provisions of goods and services--Said section prohibited all undertakings from entering into deceptive marketing practices---Section 10(2) of Competition Ordinance, 2007 had provided that as to when deceptive marketing practices would be deemed to have been resorted to or continued by an undertaking---All Bank accounts, be it saving accounts, term deposit accounts, current accounts, were considered banking products and were advertised as such---Since bank accounts (including deposit accounts) were "products", they fell within the definition of `goods' under Competition Ordinance, 2007---While ancillary services were attached to a banking product, primarily the service of managing of the account by the bank, the banking product, essentially would remain goods---Even under plain reading of the law, S.10(2)(b) of Competition Ordinance, 2007, would be applicable to the present case.

(b) Competition Ordinance (LII of 2007)---

----S. 10-Entering into deceptive marketing practices--Issue involved in the case was, "whether the subject advertisements were deceptive, in that they provide false and misleading information"---Advertisements made a representation which was material to consumer--Impugned advertisements asked the consumers to make important economic decisions promising in the case of Banks which was "highest profit, security, convenience", and made claims which would govern the financial future of consumers---Such matters which would affect consumers' financial future, would always be material to them, especially in the current climate of economic uncertainty---Most problematic feature of the advertisements was the lack of clarity regarding the rates that were being offered by the Banks---No standard term was used by the Banks, when referring to the rate of return that Banks were offering---Terms 'profit rate', 'yield', 'rate of return', were used interchangeable which could be very confusing for an average ordinary consumer who wanted to make a comparison between the products offered in the advertisement---Banks had failed to use the more universally understood term of simple interest which would bring clarity and ease of understanding for the consumers---Advertisement should have clearly mentioned that the rates being advertised, were based on simple interest rate; it was important to ensure that the material features of the product were significant to the consumers in making their decision, should be displayed clearly, prominently and in terminology that could be easily understood by a lay person---Without the necessary clarifications, the advertisements, continued a deceptive marketing practice with which depositors were being furnished misleading information aimed at inciting them to entrust their savings with the Banks--Misleading advertisement regarding high return on original deposit moneys, was capable of affecting the choices and conduct of people; it was, in circumstances, important that such practices be stopped and Banks be obliged to provide more accurate information in their advertisements regarding their deposit schemes---Impugned advertisements, were held as deceptive and misleading---Commission, however took lenient view of the matter and without imposing any penalty on the Banks,. they were warned that in future, if, similar violations were found to be committed, that could give rise to serious consequences under the Competition Ordinance, 2007.

Kraft, Inc v. Federal Trade Commission, 970 F.2d 311 and Federal Trade Commission v. Tashman, 318 F.3d 1273 ref.

(c) Competition Ordinance (LII of 2007)---

---Preamble, Ss.3, 4 & 10--Purpose and scheme of Competition Ordinance, 2007--When interpreting S.10 of Competition Ordinance, 2007, it was important to bear in mind the purpose and scheme of the law---Competition Ordinance, 2007 prohibited anti-competitive behaviour in every sector of the economy and a reading of S.3 of the Ordinance and S.4 thereof evidenced that said Ordinance extended to the services sector as well as goods---Scheme of the law was such because anti-competitive activities in the services sector were as detrimental to consumer's interest and economic efficiency as any other sector.

Hasan Ali Rana, SVP and Syed Nasik Ijaz, AVP for Askari Bank Ltd.

Tahseen Yousaf, VP/Legal Advisor, M. Nasim Bhatti, OG-I and Shahpur Ahmad, Head of Liabilities for United Bank Ltd.

Muhammad Bilal Sheikh, President for My Bank Ltd. Ali Almani for Habib Bank Ltd.

2010 C L D 1478

[Competition Commission of Pakistan]

Before Ms. Rahat Kaunain Hassan, Member (Legal & OFT)

In the matter of: Messrs CHINA MOBILE PAK LIMITED AND MESSRS PAKISTAN TELECOM MOBILE LIMITED

File No.2(1) / Dir.(L)CCP / 2008) and File No.2(6) / Dir(L) / CCP/2008, decided on 29th September, 2009.

(a) Competition Ordinance (LII of 2007)---

----S. 10---Entering into deceptive marketing practices---Effect---Competition Commission took suo motu notice of the advertisements of undertaking whereunder its '8 Anay per call' offer was advertised on various media channels---Competition Commission found that the information provided by the undertaking_ relating to '8 Anay per call' offer was not in conformity with the advertisement---Show­cause notice was issued to the undertaking-Held advertisement of '8 Anay per call' offer being false and misleading, was deceptive and in violation of subsection (1) of S.10 of Competition Commission Ordinance, 2007 and also of clause (b) of subsection (2) of said section and lacked the reasonable basis regarding the price i.e. call rates, exclusive or inclusiveness of Government taxes being not specified and its character i.e. the duration of call at which the rates were applicable was not stipulated clearly---While those factors were misleading in some way or the other, statement made in the advertisement, was false and contrary to facts advertised---Said advertisement was violative of S.10 of Competition Ordinance, 2007, however the undertaking having stopped its advertisement after issuance of show-cause notice and submitted its willingness to comply with provisions of S.10 of Competition Ordinance, 2007, no penalty was imposed---Undertaking, however, was reprimanded that in future Competition Commission would take a very strict view of any or all non-compliances or contraventions of the Competition Ordinance, 2007.

(b) Competition Ordinance (LII of 2007)---

----S. 10---Entering into deceptive marketing practices---Effect---Competition Commission took suo motu notice of the advertisement of undertaking to clarify and furnish information regarding the advertisement and tariff of U fone's U Won Package, in which the information was disseminated to consumer; that they could now make calls to other networks at the cheapest rates not in Pakistan, not in Asia, but world-wide---Since the claims made by the undertaking of its advertised 'Uwon Package' and the actual facts, appeared to be contradictory and misleading, a show-cause notice was issued to the undertaking---Advertisement pertained to a per minute package and assuring, was the cheapest on the basis of per minute package, it was pertinent to point out that the televised advertisement, unlike the newspaper advertisement, did not mention that the advertised rates to call other networks, were applicable on per minute calls---In the telecom sector, the scope of the term 'consumer' in its wider amplitude would include an ordinary user/consumer, whereas the omissions in disclosure and the implied impression conveyed through representations, were of the nature that were likely to be deceptive, even for a sophisticated consumer---Subject advertisement was violative of S.10 of Competition Ordinance, 2007---For the purpose of deceptive marketing, actual deception need not be shown to carry the burden of proof it was sufficient to establish that the advertisement had the tendency/potential to deceive and the capacity to mislead---Held, omission on the part of the undertaking to disclose in the televised advertisement the duration of call at which the rates were applicable despite the fact that there was a disclaimer as distribution of misleading information to consumers---Since the undertaking had stopped its advertisement after issuance of the show-cause notice, Competition Commission did not impose any penalty on it---Undertaking, however was reprimanded that in future Competent Commission would take a very strict view of any or all non-compliances or contraventions of the Competition Ordinance, 2007.

(c) Words and phrases---

----'False', defined and explained.

(d) Words and phrases---

----'Misleading', defined and explained.

(e) Competition Ordinance (LII of 2007)---

----S. 10---Deceptive market practices---Scope---Section 10 of Competition Ordinance, 2007 talked of deceptive marketing practices which without prejudice to the generality of the provision, broadly included distribution; of false information', or of 'misleading information', to consumers, or and fraudulent use of another's trade mark, firm name or product labelling or packaging---'False information' could be said to include: oral or written statements or representations that were contrary to truth or fact and not in accordance with the reality or actuality; usually implied either conscious wrong or culpable negligence; had a stricter and stronger connotation; and was not readily open to interpretation--'Misleading information' could essentially include oral or written statements or representations that were capable of giving wrong impression or idea; likely to lead into error of conduct, thought or judgment; tended to misinformation or misguide owing to vagueness or any omission; could or could not be deliberate or conscious and in contrast to false information, it had less onerous connotation and was somewhat open to interpretation as the circumstances and conduct of a party could be treated as relevant to a certain extent---Term 'consumer' under S.10 of Competition Ordinance, 2007, was to be construed as an "ordinary consumer", but need not necessarily be restricted to the end consumer of the goods or services.

American Home Products Corporation, A. Delaware Corporation, v. Federal Trade Commission, 695 17.2d 681 (1982-83 Trade Cases 65,081) ref.

Sardar Ejaz Ishaq Khan, Syed Javaid Akbar, Muhammad Naeem Ashraf and Aslam Minhas, Company Secretary Present for Messrs China Mobile Pak Limited ('CMPak').

Ijaz-ul-Hassan, Syed Reza Ali, Akbar Khan, G.M. Marketing, Syed M. Irfan, Senior Manager Legal Affairs, Asher Khan, Chief Marketing Officer, Asif Saeed Malik Head of Marketing and Hajra Faruk, Head of Strategy and Marketing of Ufone Present for Messrs Pakistan Telecom Mobile Limited ('Ufone')

2010 C L D 1586

[Competition Commission of Pakistan]

Present Khalid A. Mirza (Chairman) and Ms. Rahat Kaunain Hassan, Member

In the matter of: SHOW-CAUSE NOTICES ISSUED TO ALL PAKISTAN CEMENT MANUFACTURERS ASSOCIATION AND ITS MEMBER UNDERTAKINGS

F.No.4/2/Sec.4/CCP/2008, decided on 27th August, 2009.

(a) Competition Ordinance (LII of 2007)---

----Ss. 4, 30, 31, 34, 35, 37 & 38---Entering into prohibited agreement---Imposition of penalty-Undertaking / association of cement manufacturers, in pursuance to the agreement arrived at between the members of the undertaking, raised the price of cement by rupees fifteen to rupees twenty per bag across the country---Competition Commission to collect evidence of any suspected collusive arrangement among members of the undertaking, under the powers conferred upon it under S.34 of Competition Ordinance, 2007, authorized a team of four officers of the Commission to enter and search the office of undertaking--Undertaking having obstructed said lawful search process, Competition Commission issued an order for forcible entry under S.35 of the Competition Ordinance, 2007---Agreement arrived at between the members of the undertaking facilitated its members to engage in practices, which prevented, restricted and reduced competition within the cement industry---Said agreement, prima facie, constituted 'prohibited agreement' in terms of S.4(1) of the Ordinance---Competition Commission, accordingly, took suo motu actions under Ss.30 and 31(b) of Competition Ordinance, 2007 and issued show-cause notice to the undertaking and all its members---Certain constitutional and legal objections were raised by the undertaking with regard to forcible entry---Validity---Authorization of forcible entry was granted in an administrative capacity---Both the requirements under S.35 of the Competition Ordinance, 2007, were fulfilled in order to entitle the members of the Commission to order the same-Officers of the Commission were refused, without reasonable cause to conduct the search and exercise powers under S.34 of Competition Ordinance, 2007---If an opportunity of hearing before the forcible entry was conducted, it would defeat the very purpose of the said entry---No question of opportunity of hearing would arise and no implication of the principles of natural justice, was to be invoked, because that was not the incriminating stage---Opportunity of being heard was provided before adjudging and giving a finding for committing any violation of law or imposing any penalties in respect thereof or taking any action for committing such violations--Members of undertaking and undertaking itself entered into agreement to fix output at certain rates, such agreement, itself was violative of S.4(1) of Competition Ordinance, 2007, which called for no leniency---Necessary deterrent effect would be achieved and interest of justice, served, even if a lesser penalty was imposed---Penalty of 7.5% of turnover 'instead of 15% turnover' was imposed, in circumstances.

DG Khan Cement v. Monopoly Control Authority 2006 CLD 1237; Pir Sabir Shah v. Shad Muhammad Khan, member Provincial Assembly N.W.F.-P PLD 1995 SC 66; Akhtar Ali Parvez v. Altafur Rehman reported at PLD 1963 (W.P.) Lahore 390; Mehr Dad v. Settlement and Rehabilitation Commissions PLD 1974 SC 193; Chempak (Pvt.) Ltd. v. Sindh Employees `Social Security Institution (Sessi) reported in 2003 PLC 380 and Federation of Pakistan v. Aitzaz Ahsan PLD 1989 SC 61 ref.

(b) Competition Ordinance (LII of 2007)---

----Ss. 12(3), 19(2), 28, 30 & 54---Powers, functions and independent status of Competition Commission--Disqualification of a Member or the Chairman of the Commission---Independence of the Commission was ensured by expressly placing an obligation on the Federal Government to use its best efforts to promote, enhance and maintain the independence of the C6mmission---To preserve the independence of the Members or Chairman under Competition Ordinance, 2007, their removal by the Government had been made subject to an inquiry by an impartial person or body of persons, unless disqualification would arise from judgment of a court or Tribunal of competitive jurisdiction under S.19 of Competition Ordinance, 2007---Commission being an independent body could not be questioned---Under Competition Ordinance, 2007, the Commission was indeed an autonomous body---List of actions initiated or taken by the Commission since the time of its inception against undertakings, which were strong, influential and with vested interests, would only reinforce the independent aspect of the Commission---Contention that S.28 of Competition Ordinance, 2007 did not grant the Commission the right to take suo motu action, was misconceived---Commission was not restricted in any manner to take action on its own---Section 30 of Competition Ordinance, 2007, also amply empowered the Commission with the exercise of such powers and no provision, whatsoever existed in the Ordinance that would restrict the Commission in any way from acting on its own cognizance---For the purpose of initiating a proceeding under S.30 of Competition Ordinance; 2007, all that was required, was the satisfaction of the Commission that there had been or was likely to be a contravention of any provisions of Chapter II of the Competition Ordinance, 2007---Basis for reaching such satisfaction had not been specified; it could inter alia include a complaint, an inquiry or any other document/material/information, which would become available to the Commission for reaching satisfaction---No prohibition existed on taking a suo motu action by the Commission or initiating proceedings in the absence of an enquiry under S.30 of Competition Ordinance, 2007. ?

(c) Competition Ordinance (LII of 2007)---

----S. 2(1)(k)-- 'Relevant market'---Concept--'Product market' and 'geographical market'---Meanings-Concept of 'relevant market' in Competition Ordinance, 2007, was similar to what existed under the European law---Said concept was used in order to identify product and undertakings that were directly competing with each other in a business---Relevant market' was the market where the competition would take place-'Relevant market' would consist of a 'product market' and a 'geographical market'---Product market could be said to mean the market with respect to the different groups of goods available---Geographical market was the market in terms of the geographic area in which products were either produced and/or traded---In identifying the 'relevant product market', several different factors need to be considered, for instance, substitutability, Competition, prices and product demand elasticity---In the present case, the product was cement; a product that had no reasonable substitute---Each member of the undertaking was concerned in the manufacture and distribution of the same product---Member undertakings were operating in the same relevant product market---Elements to be taken into consideration when defining 'relevant geographic market', would include the nature and characteristics of the concerned product, the existence of entry barriers consumers' preference, difference among the market shares of undertaking in the neighbouring geographic areas as well as significant differences between suppliers' prices and transport costs levels---Members undertakings and undertaking, in the present case, was operating within the 'relevant market' in terms of clause (k) of subsection (1) of S.2 of Competition Ordinance, 2007.?

(d) Competition Ordinance (LII of 2007)---

----Ss. 30 & 37-Initiating proceedings in case of contravention--Power to initiate proceedings under S.30 of Competition Ordinance, 2007 was not dependant upon conducting an enquiry---Scope---Sections 30 and 37 of Competition Ordinance, 2007 were to be read separately and independently of the other---Section 37 of the Competition Ordinance, 2007, merely specified one distinct route to initiate proceedings, without excluding any other manner in which the Commission could be satisfied to proceed--Section 30 of Competition Ordinance, 2007 deals with the proceedings, whereas subsections (1) and (2) of S.37 of the Ordinance, deals particularly with enquiry---Scope s of S.30 of Competition Ordinance, 2007 was distinct from S.37(1)(2)---For initiating proceedings and passing an order under S.30 of Competition Ordinance, 2007 the Commission must be satisfied that there had been or was likely to be contravention of Chapter II of the Ordinance---On the other hand enquiry under S.37(1) of Competition Ordinance, 2007, would allow the Commission to conduct enquiries on its own or upon a reference made to it by the Federal Government and under S.37(2) thereof---Argument that S.37 of Competition Ordinance, 2007 was a necessary prerequisite to S.30 seemed even more' redundant.?

2002 CLD 1583 rel.

(e) Interpretation of statutes---

----Statute as a whole should be read in harmony, however, additions and subtractions, could not be made to individual sections or forced connections between disparate sections imputed where plainly none were intended in order to tailor the provisions of law to suit the requirement of any party.?

(f) Competition Ordinance (LII of 2007)---

----Ss. 34 & 35--Power to enter and search premises---Scope---Section 34 of Competition Ordinance, 2007 had provided an in-built mechanism of how power to enter and search the premises was to be exercised---First the officer to enter and search premises, must be authorized by the Competition Commission subsection (2) of S.34 of Competition Ordinance, 2007 suitably armed the Commission to effectively exercise its function by providing under subsection (1) for example, the power to have full and free access to any place or documents, the power to make a copy of any/all documents, the power to impound and retain any document; even where the information existed on the hard disk of computer-In case of such an action, full co-operation was required by the undertaking whose premises was being searched, which if denied without 'reasonable cause', would cause the deliberation process envisaged under S.35 of Competition Ordinance, 2007 to be invoked: which had its own set of procedure and restrictions---Commission, did not need td satisfy threshold of the presence of 'prima facie' evidence--Instead, the Commission was empowered to authorize any officer to enter and search any premises for the purpose of enforcing any provision of Competition Ordinance, 2007--If the Commission had prima facie evidence, there would be no need to enter and search premises at all as it would then have the necessary basis to initiate proceedings under the Ordinance---Identification of violated provision was again no pre-condition for authorization of power to enter and search premises---Commission could exercise its power under S.34 of Competition ordinance, 2007 for the purpose of enforcing any provision of that Ordinance---Said provision could be enforced where it was the Commission's opinion that doing so would be useful in proceedings under the Ordinance---Detecting cartels and protecting consumers from anti-competitive practices was certainly part of the enforcement of Competition Ordinance, 2007---Carrying out an inspection and search for such purpose was clearly for the purposes of enforcing the provisions of Competition Ordinance, 2007---When Power to search and enter the premises under S.34 of Competition Ordinance, 2007 was duly exercised, no deficiency or legal impropriety existed in the same.?

PLD 1992 SC 96 and DG Khan Cement v. Monopoly Control Authority 2006 CLD 1237 rel.

(g) Words and phrases---

---'Production', defined and explained?

(h) Words and Phrases---

---'Supply', defined and explained.?

(i) Words and Phrases---

---'Distribution', defined and explained.?

(j) Words and Phrases---

---'Control' defined and explained.?

Van Landewyck SARI, and others v. the Commission 1980 ECR 3125 ref.

(k) Competition Ordinance (LII of 2007)---

----Preamble---Objectives of promulgation of Ordinance, 2007---Preamble to Competition Ordinance, 2007, revealed that it was promulgated for the objectives to provide for free competition in all spheres of commercial and economic activity to enhance economic efficiency; and to protect consumers from anti-competitive behaviour---Term 'competition', while not defined in the Competition Ordinance, 2007, referred to business rivalry-Rivalry was the catalyst that was expected to force market players to maximize product output and minimize costs and to take all other reasonable cost reducing or product improving innovative measures to enhance economic efficiency.?

(l) Words and phrases---

---'Enter', defined and explained?

(m) Words and Phrases---

---'Enter into' defined and explained.?

Kowtha Suryanarayan Rao v. Bank of Hondustan Ltd (1953)23 Comp Cas 168 (Mad) and Khan Asfandyar Wall v. Federation of Pakistan PLD 2001 SC 607 ref.

(n) Competition Ordinance (LII of 2007)---

---S.4----Constitution of Pakistan (1973), Art.12---Prohibited agreement-Continuous wrong and an offence prospectively---Protection against retrospective punishment---Article 12 of the Constitution did not deprive the legislature of its power to give retrospective effect to an enactment, which the legislature was competent to act. ?

Raja Muhammad Bashir Advocate Supreme Court for Lucky Cement Ltd, Askari Cement Ltd.-Nzp, Mustehkum Cement Ltd., Bestway Cement Ltd.

Jahanzaib Awan for Al-Abbas Cement Ltd. and others.

Salman Akram Raja and Ghulam Sabir for Maple Leaf Cement Factory Ltd. and others.

Ali Sibtain Fazli, Advocate Supreme Court, Nasar Ahmad and Ahmad Tariq for Pioneer Cement Ltd., Askari Cement Ltd.-Wah.

Sardar Shahbaz Ali Khan Khosa, Asim Mumtaz, Waheed Baloch and Salman Faisal for All Pakistan Cement Manufacturers' Association and others.

Qazi Faez Isa, Advocate Supreme Court and Yousaf Khosa for Attock Cement Pakistan Ltd.

Ajazuddin Qureshi G.M. (Legal and Commercial Affairs) for Dadabhoy Cement Industries Ltd.

2010 C L D 1695

[Competition Commission of Pakistan]

Before Ms. Rahat Kaunain Hassan, Member (Legal/OFT), In the matter of: MESSRS PROCTOR AND GAMBLE PAKISTAN (PVT.) LIMITED

(HEAD AND SHOULDERS SHAMPOO)

File No. 3(1)/DIR(L)/CCP/2009 decided on 23rd February, 2010.

Competition Ordinance (XLVI of 2009)---

----Ss. 10, 30 & 38---Deceptive marketing practices-Proceedings against---Imposition of penalty---Competition Commission, took suo motu notice of the advertisements of the undertaking wherein it had been advertised that the product of the undertaking was world's No.1 antidandruff Shampoo suggesting that its use would render the hair "100% dandruff free"---Undertaking's claim of being 'world's No.1 anti-dandruff Shampoo' was reasonably substantiated on the basis of the report of, the company; submission made on behalf of the undertaking, in circumstances, had some merit, however, with regard to claim of the undertaking "100% dandruff free", message and the claim from the original advertisement was simple and clear and an ordinary consumer was likely to infer only that the product of the undertaking would render the hair "100% dandruff free"---Claim of undertaking with respect to '100% dandruff free' was challenged by a consumer in United Kingdom before the Advertising Standard Agency which vide its order held that advertisements of the undertaking were misleading---Competition Commission of Hungary, also declared advertisement to be misleading and deceptive for the reason that undertaking was not able to show scientific evidence in proof of the claim---Claim of the undertaking in the advertisement of the product suggesting that the use of said product would render hair '100% dandruff free' was deceptive and was tantamount to disseminating misleading information in terms of clause (b) of subsection (2) of S.10 of the Competition Ordinance, 2009 as it lacked reasonable basis regarding the character, suitability of use and/or properties of the product in question---Undertaking, in circumstances, was directed to comply with the Commission's directions within a period of two weeks; to stop advertising in its current form in all segments of media and in future the undertaking would not use the phrase '100% dandruff free' in their advertisement of the product, unless it was properly substantiated by a cogent evidence providing it a reasonable basis for such claim; to modify its claim of '100% dandruff free' to include significant conditions that it 'removes 100% of visible dandruff flakes' and 'the claim is based on the visibility of flakes at two feet distance when used regularly; to file compliance report with the Competition Commission forthwith after implementing the directions---In the event the undertaking would fail to comply with said directions within the specified time period and continue with the contravention of S.10 of the Competition Ordinance, 2009, same would be liable under S.38 of the Ordinance to pay penalty amounting to Rs.25,000,000 and an additional penalty of Rs.2,50,000 per day from the date of the passing of the order.

2000 CLC 1583; PLD 2002 Lah. 369; 2001 YLR 1293; PLD 1997 Lah. 499; Pir Sabir Shah v. Shad Muhammad Khan Member Provincial Assembly N.-W.F.P. PLD 1995 SC 66; Akhtar Ali Parvez v. Altafur Rehman reported at PLD 1963 (W.P.) Lah. 390; Mehr Dad v. Settlement and Rehabilitation Commissions PLD 1974 SC 193; Chempak (Pvt.) Ltd. v. Sindh Employees' Social Security Institution (Sessi) 2003 PLC 380; Federation of Pakistan v. Aitzaz Ahsan PLO 1989 SC 61; PLD 2006 SC 209 and Federal Trade Commission v. Bronson Partners, LLC, 546 F. Supp.2d 119 (2008) ref.

Mehmood Y. Mandviwalla, Taimur Ali Mirza, Usman Muneer and Qaiser Shareef for P&G.

2010 C L D 1783

[Competition Commission of Pakistan]

Before Khalid A. Mirza, Chairman, Abdul Ghaffar, Member (C&M) and Rahat Kaunain Hassan, Member (Legal)

In the matter of: show-cause notices Nos.21 and 22 of 2010 issued to Messrs FAUJI FERTILIZER COMPANY LTD. AND FAUJI FERTILIZER BIN QASIM LTD.

File Nos.8(576)/INV/CCAO/MCA/94 and 8/AC(R&I)/MCA/05 decided on 16th July, 2010.

Competition Ordinance (XVI of 2010)---

----S. 38(l b)---Failure to comply with directions of the Competition Commission---Imposition of penalty---Competition Commission gave certain directions with regard to management of the undertakings---Both the Companies were directed to submit an undertaking within a period of three weeks on behalf of their Board assuring the Commission that due compliance with the terms of order of the Commission would be ensured---Upon expiry of the two years compliance period, companies requested for an extension in the compliance period--Companies did not mention any effort having been made by the Board of both the companies for compliance or even achieving partial compliance of the order---Commission did not find the request of companies satisfactory and issued show-cause notice for non-compliance of the order---Companies deeply regretted the unintentional delay caused in compliance of the order---Counsel for the companies urged that they be allowed and granted further time to comply with directions of the order of the Commission---Fact was that a period of two years was granted for compliance, but not even once the companies approached the Commission to inform of the reasons for any expected delay; and that they approached the Commission upon lapse of the compliance period---Keeping in view the representation made by the counsel for the companies and repeated assurance for the commitment to ensure compliance with the order, and taking into account the plea for a lenient treatment, asserting determination to resolve the issue; extension was granted by Commission subject to certain conditions, which conditions were accepted by the companies.

Syed Shahid Hussain, Brig. Khalid Kibriya (Retd.), Company Secretary, Zahid Riaz, Legal Counsel Orr Dignam and Co. and Akbar Bilgrami for Fauji Fertilizer Company Limited.

Syed Aamir Ahsan, General Manager, Tasneem Murad, Finance Manager and Lt. Col. Muhammad Iqbal Hashmi (Retd.), Senior Executive (Legal) for Fauji Fertilizer Bin Qasim Ltd.

2010 C L D 1840

[Competition Commission of Pakistan]

Before Rahat Kaunain Hassan, Chairperson

SHOW-CAUSE NOTICES Nos.18 AND 19 OF 2010 issues to Messrs ACE GROUP OF INDUSTRIES: In the matter of

File Nos.3 [REG/COMP/BMW/SEC.10/CCP/09 and 4/REG/COMP/H.D/SEC.10 /CCP/09, decided on 16th August, 2010.

Competition Ordinance (XVI of 2010)---

---Ss. 10, 30, 37 & 38---Competition Commission (General Enforcement) Regulations, 2007, Regin.17---Complainant against deceptive marketing practices-Complainants had alleged that a group of Industries was manufacturing offering for sale, selling, exporting leather jackets and was fraudulently and without authorization using complainants' registered trade mark on its products and that such use of complainants' trade mark was fraudulent, mala fide and constituted the acts of "deceptive marketing practices", which was prohibited in terms of S.10 of Competition Ordinance, 2010--Pursuant to said complaints, the Competition Commission appointed Enquiry Officers and initiated the enquiry under S.37 of Competition Commission, 2010 regarding the allegation-Enquiry Officers after analyzing and examining the complaints, concluded the inquiry and in their report and found that though the conduct and attitude of accused company appeared to be innocent and ignorant of special law/Competition Ordinance, 2010, but ignorance of law could not be an excuse Enquiry Officers, in circumstances found that company had violated provisions of S.10(1)(a)(d) of Competition Ordinance, 2010-Competition Commission taking into account recommendations of Inquiry Officers decided to initiate proceedings under S.30 of Competition Ordinance, 2010 and issued show-cause notice to the company-Representative of the company apologized and asserted that being ignorant of existence of such law and unawareness, it had violated the Ordinance by advertising the items bearing the trademark of the complainants-Admission of company, firstly at the inquiry stage and subsequently its undertaking assuring future compliance of the Ordinance, left no doubt that it was using the trade-marks of the other company on the images, available on their website-Plea of ignorance of law taken by the accused company could not be accepted as ignorance of law was no excuse---Deceptive marketing and fraudulent use of trademark by the accused company, was very much capable of harming the business interest of the complainants-Accused company had cooperated throughout the proceedings and even amended their website and having admitted violation of Ordinance, only a token penalty of Rs.2,50,000 (Two Hundred and Fifty Thousand Rupees), was imposed and accused company was reprimanded that in future, the Commission would take a very strict view of non-compliance or contraventions under Competition Ordinance, 2010.

Sikander Hayat v. Haseena Sheikh, PLD 2010 SC 19; Mst. Musarrat Bibi v. Tariq Mahmood Tariq, 1999 SCMR 799; Muhammad Ishaq v. District and Sessions Judge, Jhang, 2000 SCMR 1274; Ahmad Bakhsh and 3 others v. Managing Director, (Superintending Engineer) WAPDA Electric Supply Company, Multan, 1995 PLC 536; American Home Products Corporation, A Delaware Corporation v. Federal Trade Commission 695 F.2d 681 (1982-83 Trade Cases 65,081) and Federal Trade Commission v. Direct Marketing Concepts, Inc., 569 F.Supp.2d 285 (2008) ref.

Chaudhary Tayyab Ali and Chaudhary Tahir Mansoor on behalf of ACE Group of Industries.

Hassan Irfan Khan, Advocate Supreme Court, Ms. Habeeba Ahmad and Ms. Amina Afzal for the Complainants BMW and Harley Davidson.

2010 C L D 1878

[Competition Commission of Pakistan]

Before Ms. Rahat Kaunain Hassan, Chairperson and Ms. Vadiyya S. Khalil, Member (M & A)

In the matter of: SHOW-CAUSE NOTICE NO.20 OF 2010 issues to Messrs TETRA PAK PAKISTAN LTD.

File Nos.2/DIR(INV)/TETRA PAK/CCP/08, decided on 13th August, 2010.

Competition Ordinance (XVI of 2010)---

----Ss. 3, 28, 30 & 34---Competition Commission (General Enforcement) Regulations, 2007, Reglns.30, 33 & 37---Abuse of dominant position---Complaint--"Consumer Awareness and Welfare Association" in its letter addressed to Competition Commission alleged that company was unjustifiably raising prices of its packaging products and was abusing its dominant position in Pakistan---Commission took notice and initiated a preliminary probe in the matter and appointed Enquiry Officers and initiated an enquiry under provisions of S.37 of Competition Ordinance, 2010---Enquiry Officers, after analyzing all material/documents completed the enquiry and produced Enquiry Report stating that the company held a dominant position in the market of beverages products packing industry in Pakistan and that company virtually had no competition in Pakistan and it faced a lesser threat of substitution of Packaging material by its customers, which gave it the ability to influence the market---Report had also shown that company held more than 40% of the relevant market's share and had the ability to behave to an appreciable extent independently of its competitors, customers, consumers and suppliers---Commission taking into consideration findings of the Enquiry Report initiated proceedings under S.30 of Competition Ordinance, 2010 against the company and issued show-cause notice to the company---Counsel for the company did not challenge the findings of the Enquiry Report---Findings in the Enquiry Report with reference to the Trade Compliance clause in the agreement between the company and the milk processors and the fruit juice manufacturers, however, were not premised on sound reasoning---Counsel for the company had repeated assurance for the company's commitment to ensure compliance with Competition Ordinance, 2010 and company's determination to resolve the issues---Commission accepted the application of the company made under Regulations Nos.30, 33 & 37 of the Competition Commission (General Enforcement) Regulations, 2007, subject to conditions, that mandatory maintenance clause would be re-warded and same would be intimated to all the parties concerned; that agreement for installation and commissioning of the equipment would be amended to the satisfaction of the Registrar of the Competition Commission so as to remove the condition of using only company's packing material during the commissioning period under agreement; and that said amendments and consequential changes in the agreement would be intimated to the customers of the company---Said conditions were agreed to and accepted by the representatives of the company---Commission directed that the compliance report in terms of said conditions would be filed with the Registrar of the Commission within a period of six weeks.

Syed Ali Zafar, Advocate Supreme Court, Ms. Huma Ejaz Zaman, Advocate, Azher Ali Syed, Managing Director and Yasir Jumani, Legal Counsel on behalf of Messrs Tetra Pak Pakistan.

2010 C L D 859

[Environmental Protection Tribunal Karachi]

Before Mrs. Ashraf Jahan, Chairperson, Dr. Sami Uz Zaman Member Technical and Abdul Karim M. Memon, Member Legal

SHEHRI-CBE - through Member Executive Committee---Complainant

Versus

SINDH ENVIRONMENTAL PROTECTION AGENCY and another---Respondents

Complaint No.1 of 2010, decided on 5th March, 2010.

(a) Pakistan Environmental Protection Act (XXXIV of 1997)---

----S.12-Pakistan Environmental Protection Agency (Review of Initial Environmental Examination and Environmental Impact Assessment) Regulations, 2000, Reglns. 3, 4 Sched. I & II D(2)-Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2-Complaint against construction of Single Free Corridor in Karachi comprising of series of bridges, flyovers and crossings; at cost of above Rs.50 million without conducting Environmental Impact Assessment (EIA)-Application under O.XXXIX, Rr. 1 & 2, C.P.C., to stop such construction causing adverse environmental effects-Plea of respondent that such project falling under category of "Urban Development Projects" in Sched.-I of Pakistan Environmental Protection Agency (Review of IEE and EIA) Regulations, 2000 did not require EIA, but required Initial Environmental Examination (IEE) study only, which had been carried out and after receiving `No Objection Certificate' from Environmental Protection Agency (EPA) had started such construction and completed upto 40%-Validity-When specific and relevant head was provided under law, then same would be applied and not general head-Regln. 4 & Sched. II-D of Regulations, 2000 under specific head of "Transport" provided for requiring of EIA before commencing construction of highways or major roads with cost of Rs.50 million or above-Language of Sched. II-D of Regulations, 2000 being very relevant and clear for determining whether such. project required EIA or not Head of "Urban Development and Tourism" as provided under Sched.-I of Regulations, 2000 was a vast subject and its application in presence of specific head would be of no legal effect-Such project had been initiated in interest of general public as growing population would necessarily require roads/flyovers to ease congestion in traffic flow in city of Karachi-Stopping of construction work already in progress would not be appropriate-Environmental Protection Tribunal allowed construction at risk and cost of respondent while directing them to submit EIA report before SEPA within one month and further construction would be subject to decision of competent authority; and their failure to submit EIA report would disentitle them from continuing with construction work.

2009 CLD 682 rel.

(b) Interpretation of statutes---

----Matter falling under specific and relevant head or provision provided under law would be applied and not general head or provision.

Roland de' Souza on behalf of the Complainant.

Qaiser Jamil Ahmed Malick for CDGK.

Abdul Maroof, DDPP for the SEPA.

2010 C L D 1507

[Environmental Protection Tribunal Karachi]

Before Mrs. Ashraf Jahan, Chairperson, Dr. Sami-uz-Zaman, Member Technical and Abdul Karim Memon, Member Legal

SARFRAZ KHAN---Complainant

Versus

PROVINCE OF SINDH through Secretary Ministry of Environment and 3 others---Respondents

Complaint No.2 of 2009, decided on 24th June, 2010.

Pakistan Environmental Protection Act (XXXIV of 1997)---

----Ss.2 (xxxiii), 11 & 21(3)(b)--Pollution---Ice factory-Residential area---Leakage of ammonia gas-Proof-Report of Environment Protection Agency-Allegation of complainant was that the ice factory in question was hazardous for the residents of the locality and the same should have been shed from there-Validity-Provincial Environment Protection Agency tried to establish that there was no leakage of ammonia from the plant but the owner/accused himself admitted that annual consumption of ammonia was 400 kg to 500 kg per annum-If there was no leakage of gas then where did go such huge quantity of ammonia gas, which gas was a stable product in closed cycle of plant and there was no evidence of decomposition of the same, meaning thereby that ammonia was leaked in its original form and was stable in atmosphere-Complainant had established that owner/accused was running business of ice factory while using ammonia gas which was hazardous for human life--Factory in question was being illegally run in a residential-cum-commercial area, which was not meant for industrial purpose-Such industrial activity that too of hazardous nature, constantly carrying a high risk of loss of life and ecosystem could not be allowed to continue---Reports of Provincial Environment Protection Agency were against the case of complainant, though Environment Tribunal had serious reservations regarding procedure followed during sampling of air, noise and soil by Provincial Environment Protection Agency, but under such circumstances benefit of doubt was extended to the owner/accused-Environmental Tribunal recommended that industrial activity involving use of ammonia gas should not be allowed in a residential/commercial area-Accused was acquitted in circumstances.

Shehla Zia v. WAPDA PLD 1994 SC 693 and Muhammad Shafiq and others v. Arif Hameed Mehar and others 2008 CLD 1103 rel.

Imtiaz Ali Effendi for the Complainant.

Raza Hashmi for the accused Amanullah.

Abdul Maroof, DDPP for the EPA, Sindh.

2010 C L D 1555

[Environmental Protection Tribunal Karachi]

Before Mrs. Ashraf Johan, Chairperson and Dr. Sami uz Zaman, Member (Technical)

Syed. HAROON AHMED---Complainant

Versus

Messrs DADEX ETERNIT LTD. through Chairman and another---Respondents

Complaint No.2 of 2010, decided on 29th June, 2010.

Pakistan Environmental Protection Act (XXXIV of 1997)---

----Ss.11 & 21---Criminal Procedure Code (V of 1898), Ss. 200 & 249-A---Complaint---Maintainability---Factual controversy---Locus standi---Issue of public interest---Respondent-company filed application under section 21 of Pakistan Environmental Protection Act, 1997, seeking dismissal of complaint on the grounds that the same was incorrectly filed, no statutory notice was given by complainant to respondent and complainant was not an aggrieved person to file the complaint---Validity---Whether respondent company was violating provisions of S.11 of Pakistan Environmental Protection Act, 1997, was a question of fact, which could not be decided on the presumption or assumption except allowing the prosecution full opportunity to lead evidence and prove its case in such regard---Requisition of respondent-company for dismissal of complaint at such stage for want of jurisdiction was misconceived---Upon receipt of complaint, Environmental Tribunal had given thirty days notice to Provincial Environmental Protection Agency for enquiry and report in the matter, therefore, it would be decided after recording of evidence, whether it fulfilled the legal requirement of notice or not---Complainant's brother, since deceased, had been an employee of respondent-company and issue of environmental hazard raised by complainant was an issue of public interest, in which case principle of 'aggrieved person' could not be strictly applied---Even if it was presumed that there had been procedural lapse in entertaining the complaint, again it would be a question worth consideration whether such lapse was incurable or fatal to the proceedings of the complaint or not---Respondent-company had failed to show that due to such reason any prejudice had been caused to it particularly when as a general rule, procedural provisions of law were directory in nature and not mandatory unless so provided by law---Application was dismissed in circumstances.

Ahmed Hussain alias Laloo v. The State 1995 MLD 604; Sheikh Abdul Hakeem v. Shamusddin PLD 2008 Quetta 14 and Digital Radio Paging Limited v. Pakistan Industrial Credit and Investment Corporation and others 2003 CLD 1612 disting.

Shamim v. The State and another PLD 1966 SC 178; Muhammad Aslam and others v. The State and others 2005 PCr.LJ 1352 and Mst. Kishwar Naseem v. Hazara Hill Tract and others PLD 2005 Pesh.136 ref.

Kazi Abdul Hameed Siddiqui for the Complainant.

Jamshed Malik for the Respondent No.1.

Abdul Maroof, DDPP for the EPA, Sindh.

2010 CLD 10

[Karachi]

Before Syed Mahmood Alam Rizvi and Mrs. Qaisar Iqbal, JJ

NIB BANK LIMITED---Applicant

Versus

THE STATE and 3 others---Respondents

Criminal Revision No.108 of 2007, decided on 10th January, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.20 & 22---Criminal Procedure Code (V of 1898), S.439---Limitation Act (IX of 1908), S.5---Criminal revision--Maintainability---Limitation--Scope---Criminal revision application had been directed against judgment passed by Judge Banking Court in criminal complaint under S.20 Finances) the Financial Institutions (Recovery of Ordinance, 2001, whereby respondents/accused were acquitted---Applicant had failed to file appeal against impugned order as provided under S. 22 of the Ordinance---Under subsection (6) of S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001, interim/ interlocutory order, which did not decide the entire case, no appeal, review or revision would lie nor against an order accepting or rejecting an application for leave to defend or any interlocutory order of the Banking Court---Whereas per subsection (1) of S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001, against the final order the appeal would be filed within 30 days---Financial Institutions (Recovery of Finances) Ordinance, 2001 was a special statute and the period of limitation for appeal had not been prescribed in the Ordinance, and in circumstances provisions of S.5 of Limitation Act, 1908 would not apply but if revision would be converted into an appeal same would be hit by limitation---Even otherwise, in presence of clear provisions of S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001, revision could not be converted into constitutional petition--Same, in circumstances was not maintainable---Criminal revision application being not maintainable, was-dismissed.?

Habib Bank Ltd. v. The State and 6 others 1993 SCMR 1853; Abdul Aziz v. Abdul Hameed and 10 others 2004 YLR 2301; United Bank Limited through Principal Officer/ Attorney/Area Manager Multan Zone, Multan v. The State 2005 YLR 1891 and Jam Sooba v. the State 2004 YLR 2302 ref.

Muhammad Naeem Iqbal for Applicant.

2010 C L D 22

[Karachi]

Before Amir Hani Muslim and Irfan Saadat Khan, JJ

Messrs HERO MOTORS LTD. Through Authorized Signatory---Appellant

Versus

BABAR AUTO TRADING AND MANUFACTURING COMPANY through Proprietor---Respondent

High Court Appeal No.233 of 2007 and C.M. A. No.6118 of 2005, decided on 6th October, 2009.

Trade Marks Act (V of 1940)---

----Ss.21, 43 & 74---Specific Relief Act (I of 1877), S.54---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Civil Procedure Code (Amendment) Ordinance (X of 1980), S.15---High Court appeal---Interim injunction, grant of--Infringement of trade mark--Plaintiff had been manufacturing motorcycles since year, 1997 against trademark "Hero" while defendant also started manufacturing motorcycle using trade mark "Asiahero"--Plaintiff sought injunction against use of word "Hero" by defendant in same trade and same class---Validity---Word "Hero" ,was otherwise descriptive and was being employed generally across the board---There was prima fade no possibility of any deception being entertained in the minds of public upon usage of two competing marks---Plaintiff failed to provide any material so as to substitute any possible deception, thus to extend any protection to plaintiff with regard to its mark :`Hero" was uncalled for--Division Bench of High Court agreed with single Judge that balance of convenience tilted in favour of defendant rather than plaintiff for the reason that mark "Hero" had been employed across the board---Division Bench of High Court declined to interfere in order passed by Single Judge of High Court---Appeal was dismissed in circumstances.?

Western Brand Tea v. Tapal Tea (Pvt.) Ltd. PLD 2001 SC 14 and Mehran Ghee Mills (Pvt.) Ltd. v. Chiltan Ghee Mills (Pvt.) Ltd. 2001 SCMR 967 ref.

Miss Shazia Tasleem for Appellant.

Munawwar Ghani for Respondent.

2010 C L D 130

[Karachi]

Before Gulzar Ahmad, J

SONERI BANK LTD.---Plaintiff

Versus

DEWAN SUGAR MILLS LTD.---Defendant

Suit No.B-80 and C.M.As Nos.5431, 5432 of 2009, decided on 25th May, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 16---Civil Procedure Code (V of 1908), O.XXXVIII, Rr.5, 6, O.XXXIX, Rr.1, 2 & O.XL, R.1---Suit for recovery of loan---Attachment before judgment, injunction and appointment of receiver---Application for---Counsel for plaintiff-Bank having apprehended that pledged Stock could be interfered with by the defendant had filed application for attachment before judgment, injunction and appointment of receiver--Nazir of the Court was appointed as Commissioner to make inventory of the pledged stock lying at the godown of the defendant and to submit report within specified period.

Jam Asif Mehmood for Plaintiff.

2010 C L D 135

[Karachi]

Before Tufail H. Ebrahim, J

RECKITT BENCKISER PAKISTAN LTD.---Petitioner

Versus

ADDITIONAL REGISTRAR OF COMPANIES---Objector

Judicial Miscellaneous Application No.23 of 2009, decided on 4th November, 2009.

Companies Ordinance (XLVII of 1984)---

----S.97-Petition for reduction of 2/3rd in paid-up shares capital of company--Company before filing such petition had informed its shareholders and creditors regarding such proposed reduction-Shareholders and creditors had consented to proposed reduction---Financial position of company was sound prior to proposed reduction, and would remain so even after such reduction--None of shareholders or creditors was likely to suffer, rather shareholders would get return of amount without affecting their voting strength and interest in company---High Court accepted such petition in circumstances.

Badaruddin F. Vellani for Petitioner.

Imran Shamsi, Law Officer, SECP for Objector.

Date of hearing: 28th October, 2009.

2010 C L D 139

[Karachi]

Before Gulzar Ahmad and Irfan Saadat Khan, JJ

Syed NASIMUDDIN---Appellant

Versus

PAKISTAN EXPORT FINANCE GUARANTEE AGENCY LTD. through Chief Executive and another---Respondents

First Appeal No.22 of 2009, decided on 31st October, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 22--civil Procedure Code (V of 1908), S.151 & O.I, R.10---Suit for recovery of loan amount against principal debtor and mortgator---Death of mortgagor much before filing of suit---Pendency of application by legal heirs of deceased mortgagor for impleading them as -party in the suit---Application by principal debtor under S.151,C.P.C. seeking dismissal of suit to extent of deceased mortgagor for being not maintainable against dead person---Appeal against order of Banking Court dismissing principal's application and accepting legal heirs' application allowing them to join suit---Maintainability---Suit was still pending---Banking Court through impugned order had decided interlocutory application---Banking Court had allowed joining of legal heirs of deceased mortgagor as defendant in suit and had directed filing of amended title of plaint, thus, case had not yet been decided---High Court dismissed appeal for being not maintainable against an interlocutory order.

Mehr Muhammad v. Deputy Settlement Commissioner and another 1979 SCMR 182; Hafiz Brothers (Pvt.) Ltd v. Pakistan Industrial Credit and Investment Corporation Ltd. 2001 SCMR 1 ref.

S. Shamim Raza for Appellant.

Naveedul Haq for Respondent.

2010 C L D 143

[Karachi]

Before Tufail H. Ebrahim, J

ADDITIONAL REGISTRAR OF COMPANIES---Petitioner

Versus

Messrs NOORIE TEXTILE MILLS LTD.---Respondent

Judicial Miscellaneous Petition No.16 and C.M. As Nos.685 and 686 of 2006, decided on 2nd November, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.305 & 309-Winding up of company, petition for--Non-holding seven consecutive Annual General Meetings by company-Suspension of business by company for last several years Disappearance of substratum of company--Company being used for fraudulent purposes and managed and run by a person having committed fraud with general public High Court allowed petition with costs and ordered winding-up of company in circumstances.

Ijaz Ahmad for Petitioner.

Muhammad Raghib Baqi for Respondent.

2010 C L D 151

[Karachi]

Before Maqbool Baqar, J

SONERI BANK LTD.---Plaintiff

Versus

DEWAN SUGAR MILLS LTD.---Defendant

Suit No.B-80 and C.M.A. No.5432 of 2009, decided on 3rd September, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 15---Suit for recovery of loan---Sale of pledged goods---Application for---Plaintiff/Bank had sought an order for sale of the sugar pledged by the defendant with the plaintiff in respect of suit transaction---On application of the plaintiff-Bank for sale of sugar pledged by the defendant with the plaintiff, mechanism for such sale would be that the defendant would place before the Official Assignee the offer that he could procure-from the market for the sale of the stock or part thereof-Official assignee after verifying such. offer was to be fair and reasonable and issue delivery order upon deposit of the price offered with the Nazir of the High Court---Fate of such sale proceeds would be decided later---Defendant would commence the exercise forthwith so that the entire stock could be sold within a period of three months---Plaintiff--Bank would also be at liberty to procure and submit the purchase offers.

Qutabuddin Saim and Jam Asif Mahmood for Plaintiff.

M. Saleem Thepdawala for Defendant.

2010 C L D 280

[Karachi]

Before Shahid Anwar Bajwa, J

Messrs ADAMJEE INSURA°TCE COMPANY LTD. through Managing Director and another---Appellants

Versus

Messrs CAR CHASE through Partner and another---Respondents

M.A.No.26 of 1993, decided on 4th December, 2009.

(a) Insurance Act (IV of 1938)---

----S.47(c)--Claim under insurance policy for loss of cash in transit---Robbery of cash amount of Rs.5,38,000---Such policy covered claim upto Rs.5,000,00---Effect---Such policy was valid on date of robbery---Claimant could not claim in excess of Rs.5,00,000, which amount Insurance Company was liable to pay to claimant.

(b) Insurance Act (IV of 1938)---

----S.47(c)---Burglary policy, claim under---Stock car taken from showroom by driver for taking its owner-claimant from his house to bank and then to showroom---Robbery of such car at residence of claimant---Plea of Insurance Company that such claim did not fall within ambit of burglary policy---Validity---Burglary policy covered two categories of vehicles firstly stock of new and reconditioned vehicles stored or lying in insured's showroom, and secondly vehicles parked or stored in open space facing both sides of showroom---Vehicle robbed was at residence of claimant at relevant time and was neither in "Stored" condition nor in "parked" condition nor in showroom in specified open space---Vehicle taken for purpose of driving by claimant from his house to bank or showroom was not a vehicle stored or parked in insured open space, thus, was not covered by such policy---Such claim was rejected in circumstances.

Muhammad Ismail Memon for Appellants.

Raja Muhammad Iqbal for Respondent No.1.

2010 C L D 311

[Karachi]

Before Irfan Saadat Khan, J

GHULAM MUJTABA PARACHA---Plaintiff

Versus

MUHAMMAD SALEEM---Defendant

Suit No.359 and C.M.A. No. 2100 of 2006, decided on 11th December, 2009.

Trade Marks Ordinance (XIX of 2001)---

----Ss.36, 40 & 67---Civil Procedure Code (V of 1908), O. XXXIX, Rr.1 & 2---Suit for infringement of trade mark---Continuous use of trade mark "FEASINA" and trade name "Paracha Food Products Karachi 33 Pakistan" by plaintiff since 1980---Application for registration of such trade mark accepted in year, 1982 was later on treated by Registrar to have been abandoned by plaintiff due to non-service of demand notice on him---Registration of such trade mark in defendant's name in year 2001 and its use by him since then---Plaintiffs application under Order XXXIX, Rr.1 & 2, C.P.C., to restrain defendant from infringing such trade mark/name---Validity---According to applications made by parties to Registrar, plaintiff was prior user of such trade mark---Defendant had not coined or invented such trade mark, but had picked up same from market on assumption that same. had been abandoned by plaintiff-Right in a trade mark, despite its non-registration, was created by a prior user and same being a superior right was protected by law---Both packs being used by parties for same goods (one by plaintiff and other by defendant) were having identical colours, wording and trade marks---Such two packs would definitely deceive an ordinary customer into believing that product of defendant belonged to plaintiff, which would cause irreparable loss to plaintiff---Plaintiff had made out a prima fade case for grant of interim injunction in his favour---Application for interim injunction was accepted in circumstances. ?

?

Ghulam Nabi v. Khuda Bux and others PLD 1984 Kar. 245; Simatul Chemical Industries (Pvt.) Ltd. v. Cibatul Ltd. AIR 1978 Guj. 216, ADT Services Ag v. ADT Pakistan (Pvt.) Ltd. and others 2005 CLD 1546; Kala Niketan, Karol Bagh v. Kala Niketan, G-10 AIR 1983 Dehli 161 and Treaties on Trade Mark and Passing Off by P. Narayanan, Third Edition, 122, and Fourth Edition, page ref.

Messrs 'Durafoam Enterprises (Pvt.). Ltd. v. Messrs Vohra Enterprises 2002 CLD 1639; Al Karam Textile Mills (Pvt.) Ltd. v. Mehtab Chawla and others (SB) 2007 CLD 966; Al Karam Textile Mills (Pvt.) Ltd. v. Mehtab Chawla and others (DB) 2007 CLD 1044; Consolidated Foods Corporation v. Brandon and Co. AIR 1965 Bom. 35; Shahi Enterprises Limited v. DFI (Pvt.) Ltd. 2007 CLD 527; Treaties on Trade Marks and Passing Off by P. Narayanan, Third Edition, at page No.53, Treaties on Law of Trade Marks and Passing off By P. Narayanan, Fourth Edition, at page No.42; Telephone Soap v. Lever Brothers 1994 CLC 2135; Mehran Ghee Mills (Pvt.) Limited and others v. Chiltan Ghee Mills Limited 2001 SCMR 967; Ferozuddin v. Muhammad Shaft and another PLD 1975 Kar. 486; Halsbury's Laws of England, Third Edition, Volume XXXVIII at page 594 rel.

Ms. Shazia Tasleem for Plaintiff.

Munawar Ghani for Defendants.

2010 C L D 327

[Karachi]

Before Shahid Anwar Bajwa, J

Messrs GMS LINES CO. LTD. through Applicant No.2 another---Applicants

Versus

Messrs ADAMJEE INSURANCE COMPANY LIMITED-Defendants

Revision Application No.92 of 2006 decided on 4th December, 2009.

(a) Carriage of Goods by Sea Act (XXVI of 1925)---

----S.3---Goods received by shipping company in an unsealed form---Duty of company to satisfy that what he delivered was, what he received.

Trans Ocean Asia v. Alpha Insurance Company Ltd., Karachi 1981 CLC 1028; Hunting Clan Air Transport Ltd. v. Pakistan International Airlines Corporation PLD 1965 Kar. 219; Pakistan National Shipping Corporation v. Adamjee Insurance Company Ltd. 1993 MLD 1841; Messrs Arshad Corporation (Pvt.) Ltd. v. The Ship Maersk Astro and 2 others PLD 1988 Kar.515; Jaffer Brothers (Pvt.) Ltd. v. M.V. Eurobulker Adjourned to a date in office., S.B.L.R. 2002 Sindh 475; Messrs Sattar Cotton Ginning Factory Limited v. East-West Shipping and Trading Company Limited and 4 others 1991 CLC 670; Khan Iftikhar Hussain Khan of Mamdot (represented by six Heirs) v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550; Dr. S.M. Rab v. National Refinery Ltd. PLD 2005 Kar. 478; Messrs Pakistan Oil Mills (Pvt.) Ltd. v. Messrs Peter Shipping Co. Ltd. and others 2005 MLD 1745; Messrs S.M. Abdullah and Sons, Karachi v. Messrs Crescent Star Insurance Co. Ltd. 1993 MLD 1239 and Eastern Federal Union Insurance Company Limited v. American President Lines Limited and another PLD 1992 SC 291 ref.

(b) Civil Procedure Code (V of 1908)---

----O.XXIX, R.1---Suit by company-Plaint accompanied with notarized power of attorney and resolution of Board of Directors of company---Burden of proof---Burden of proving that such power did not exist would lie upon defendant.

(c) Civil Procedure Code (V of 1908)---

----S.115---Scope of scrutiny under S. 115, C.P.C. is limited in terms of parameters prescribed therein.

Naeem Ahmed for Applicants.

Jamil Ahmad for Respondents.

Date of hearing: 6th November, 2009.

2010 C L D 337

[Karachi]

Before Ms. Rukhsana Ahmed, J

SONERI BANK LIMITED---Plaintiff

Versus

ABDUL QADIR JANGDA---Defendant

Execution Application No. 5 of 2009 in Suit No.B- 11 of 2008, decided on 12th January, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19---Execution of decree---Application for---Record had shown that since April, 2009 the execution application had been proceeding for service upon the judgment-­debtor---Under S.19(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, benefit of execution of a decree had been given to the decree-holder and there was no need to exercise procedure of notice on the judgment-debtor, and the execution proceedings should proceed for attachment---Official Assignee was directed by the High Court to conduct the sale of mortgaged properties pledged with the decree-holder within specified period.

Bahzad Haider for the Decree Holder.

2010 C L D 344

[Karachi]

Before Bhajandas Tejwani, J

SABIR AHMED----Applicant

Versus

NAZEER AHMED and another----Respondents

Criminal Miscellaneous Application No.S-341(Hyd) of 2009, decided on 18th December, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 2(a) (c), 20(4) & 7---Penal Code (XLV of 1860), Ss. 489-F & 420---Criminal Procedure Code (V of 1898), Ss.561-A & 249-A---Quashing of proceedings---Accused being the Chief Executive of the borrower company had availed demand and cash finance against various securities including the mortgage of Unit/Mill of the company and in fulfilment of the obligation and in order to adjust the outstanding liabilities he had issued four post-dated cheques, which were dishonoured--Manager of the Bank then got registered an F.I.R. against the accused applicant under Ss.489-F & 420, P.P.C.---Trial Magistrate and the Sessions Court had refused to acquit the accused under S.249-A, Cr.P.C. vide impugned orders--Neither the police had determined its authority, nor the Trial Court had adverted to its jurisdiction while taking cognizance by accepting the F.I.R. and the challan---Matter was governed by the Financial Institutions (Recovery of Finances) Ordinance, 2001, which was a complete Code in respect of transactions between the financial institution and the customer, which were defined by S.2(a) & (c), while S.7 of the said Ordinance had provided the powers of the Banking Court---Subsection (4) of S.20 of the same Ordinance had provided the remedy for a financial institution where the cheque was dishonestly issued and the same was dishonoured because of insufficient balance in the account--Proviso of S.7 of the said Ordinance had clearly envisaged that any offence embodied in S.20 committed by the customer of the Bank would only be subjected by the above mandate of law by way of filing direct complaint, as defined in S.4(h), Cr.P.C. in the Banking Court having jurisdiction--Police, therefore, had no authority to book the accused by lodging the F.I.R. and taking cognizance in the matter on the basis of F.I.R. and assuming jurisdiction by the Magistrate was without lawful authority and cm-am non judice---Financial Institutions (Recovery of Finances) Ordinance, 2001, being a special enactment had overriding effect on the ordinary law and the borrower or customer of the Bank could not be proceeded under the provisions of Pakistan Penal Code--Only remedy available to the Bank and Financial Institution was to invoke the provisions of S.20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, by filing a direct complaint in terms of proviso of S.7 of the said Ordinance--Prosecution of accused under Ss.489-F & 420, P.P.C. on the basis of F.I.R. was abuse of process of the, court and without lawful authority---Impugned orders were consequently set side and the proceedings pending in the court of Magistrate were quashed---Petition was allowed accordingly.?

Muhammad Iqbal v. S.H.O. Police Station Haji Pura PLD 2009 Lah. 541 and Nizar Ali Fazwani v. Messrs Pak Golf Lease Committee Limited 2009 PCr.LJ 325 ref.

Liaquat Hussain v. The State 2009 MLD 1167 distinguished.

Amjad Ali Sahito for Applicant.

N.H. Pirzada for Respondent No.1.

Syed Meeral Shah, D.P.-G.

2010 C L D 351

[Karachi]

Before Mushir Alam and Ather Saeed, JJ

MUHAMMAD TAHIR MAJEED and another---Appellants

Versus

SECURITY LEASING CORPORATION LTD. and another ---Respondents

First Appeal No 16 of 2007 decided on 24th September, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.9---Contract Act (IX of 1872), Ss.124 & 125---Suit for recovery of loan amount by Bank-Lease agreement containing indemnity clause making defendant liable to make good losses incurred by Bank in case of termination of agreement by him---Termination of agreement by Bank at defendant's request after repayment of disbursed lease amount---Effect---Defendant could not back out of such indemnity provided by him---Bank would be entitled to document charges also, which were not adjustable against lease amount disbursed.

Sohail H.K. Rana for Appellants.

Abdul Qayyum Abbasi for Respondents.

2010 C L D 360

[Karachi]

Before Gulzar Ahmed, J

STANDARD CONSTRUCTION COMPANY (PVT.) LTD. through Chief Executive Officer---Plaintiff

Versus

PAKISTAN through Secretary, Ministry of Communication, Islamabad and 5 others---Defendants

Suit No.857 of 2007, decided on Ist September, 2009.

Contract Act (IX of 1872)--

----S.126---Bank guarantee, encashment of--Principles.

The contract of bank guarantee is independent contract in terms of section 126 of the Contract Act, 1872 from that of the contract between the employer and the contractor; and that in the bank guarantee the principal debtor is the contractor while the bank is a surety and beneficiary is the employer; and that contract of bank guarantee has to be enforced on the terms stipulated in the bank guarantee itself; and that the bank must honour the guarantee notwithstanding any dispute between the employer and the contractor on the contract made between them.

Collector, Central Excise and Land Customs v. Rahm Din 1987 SCMR 1840; Royal Book Company v. John Wright and Sons Ltd. 1989 MLD 1191; Binyameen v. Hakim 1996 SCMR 336; State v. Zia-ur-Rahman PLD 1973 SC 49; Muhammad Yousuf v. Urooj (Pvt.) Ltd. PLD 2003 Kar. 16; Mst. Azeemun Nisa Begum v. Ali Muhammad PLD 1990 SC 382; Shahenshah Shahalam Co-operative House Building Society Ltd. Karachi and another v. Housing Building Finance Corporation PLD 1972 Kan 178; Ocean Industries Ltd. v. Industrial Development Bank PLD 1966 SC 738 and Manzoor Textile Mills Ltd. v. Special Judge Banking, Lahore 1996 CLC 422.

United Bank Limited v. Pakistan Industrial Credit and Investment Corporation Ltd. PLD 2002 SC 1100; Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311 and Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191 ref.

Farough Naseem for Plaintiff.

Nadeem Akhtar for Defendants Nos. 1 to 3.

Arshad Tayab Ali for Defendant No.4.

Dates of hearing: 3rd December, 2008, 29th January, 3rd February, 20th February, 24th February, 18th May and 25th May, 2009.

2010 C L D 442

[Karachi]

Before Syed Pir Ali Shah, J

FAYSAL BANK LIMITED---Plaintiff

Versus

BADIN BOARD MILLS and 6 others---Defendants

Suit No. B-42 of 2008 and C.M.A. No.10394 of 2007, decided on 3rd September, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.10---Recovery of loan-Leave to defend the suit---Factual and legal controversies---Recording of evidence---Bank claimed recovery of amount of Rs.65,713,964 with cost of funds as fixed by State Bank of Pakistan from the date of default till realization of entire decreetal amount-Bank also sought attachment and sale of mortgaged property of defendants---Defendant alleged that bank had illegally and wrongfully charged mark-up / profit for more than agreed period and debited penalties with mark-up / profit thereon and other charges without any authority---Defendant also contended that bank with mala fide intention had concealed repayments made towards adjustment of finance facilities availed---Plea raised by bank was that application for leave to defend was in breach of mandatory provisions of S.10 (3), (4) and (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001-Validity---Facts mentioned in application for leave to defend required proper adjudication by way of evidence on factual as well as legal questions-Leave to defend the suit was granted in circumstances.

Messrs Yussra Textile Corporation and others v. RICIC Commercial Bank Ltd. 2003 CLD 905; Messrs Haq Feed Industries (Pvt.) Ltd. v. National Development I Finance Corporation 2007 CLD 975; Messrs ARK Management Ltd. v. Messrs Habib Bank Ltd. PLD 1991 SC 976; Agrofoster (Pvt.) Ltd. and others v. Judge, Banking Court No.5, Karachi and another; (sic) Messrs Habib Bank Limited v. Messrs Schon Textiles Limited 2001 YLR 1244; Messrs Zodiac Industrial International Bank of Ltd. Pakistan NLR 2001 Civil Messrs 536; Messrs Redevelopment C.M. Textile Mills (Pvt.) Ltd. v. Investment Corporation of Pakistan 2004 CLD 587; Citi Bank N.A. v. Riaz Ahmed 2000 CLC 847; Allied Bank of Pakistan v. Masood Ahmad Khan 1994 MLD 1557; Industrial Development Bank of Pakistan v. Al-Mansoor Ltd. and others PLD 1989 Pesh. 191; National Bank of Pakistan v. Messrs Mujahid Nawaz Cotton Ginners 2007 CLD 678; Sh. Muhammad Naeem and others v. Habib Bank Limited 2003 CLD 606; Mushtaq Ahmed Vohra v. Crescent Investment Bank Ltd. 2005 CLD 444; Muhammad Akram and another v. Mst. Farida Bibi and others 2007 SCMR 1719; Zeeshan Energy Ltd. and others v. Faisal Bank Ltd. 2004 CLD 1741; Habib Bank Ltd. v. Messrs Sabcos (Pvt.) 2006 CLD 244 and National Bank of Pakistan v. Al-Asif Sugar Mills Limited and others 2001 CLD 125 ref.

Abdul Sattar Lakhani for the Plaintiff.

Muhammad Saleem Thepdawala for the defendants.

2010 C L D 450

[Karachi]

Before Sajjad Ali Shah, J

MUHAMMAD WAHID---Appellant

Versus

ADNAN MEMON and another---Respondents.

Miscellaneous Appeal No. 19, C.M.A.s Nos.208 and 1465 of 2009, decided on 27th January, 2010.

Copyright Ordinance (XXXIV of 1962)---

----Ss. 4, 39, 41, 56 & 77---Infringement of copyright---Rectification of orders---Appeal---Contention of appellant was that application for registration of copyright filed by him in respect of his product "PONY" (Cable and wire) contained a claim that such artistic label design was being continuously used since 1983; and on the basis of such claim, copyright was registered in his favour which was expunged by the order of Copyright Board---Claim of respondent, on the other hand was that appellant in fact was serving with the respondent and after leaving the job had started a parallel business by adopting the trade name 'PONY' of the respondent---Respondent had contended that he was using trade mark 'PONY' in respect of his product since 1984 and his said trade mark was registered on 1-11-2003---Record had reflected that enterprise which had claimed to be the predecessor-in-­interest of the respondent was using trade mark "PONY" in respect of the product---Evidence on record had proved that trade mark 'PONY' was being used by the respondent since 1995---Appellant could not produce any document/evidence in support of his claim nor he could prove that copyright claimed by him was ever published by him since 1983---Appellant was not able to show anything except his bald affidavit along with application for registration of copyright---Undoubtedly, appellant solely for the purpose of taking the benefit of respondent's good-will with the intention of infringing the respondent's trade-mark to his benefit had taken a shield of getting it registered with the Registrar of Copyright---Well reasoned order of the Copyright Board, whereby they had corrected a blunder, could not be interfered with.

Haji Muhammad Afzal and Muhammad Yousaf v. Messrs Hitachi Limited 2007 CLD 202 and Pakistan Drug House (Pvt.) Limited v. Rio Chemical Company 2003 CLD 1531 ref.

Muhammad Nadeem Qureshi for Appellant.

Ali Mumtaz Shaikh for Respondent No.1.

2010 C L D 460

[Karachi]

Before Ms. Rukhsana Ahmad, J

In the matter of: Messrs INDUS POLYESTER COMPANY LTD. through Official Liquidator??

J.M. No.48 of 2009, decided on 27th January, 2010.

Companies Ordinance (XLVII of 1984)---

----S.387(5)---Civil Procedure Code (V of 1908), S.151---Winding up proceedings--Extension of time--Law and order situation--Directors of Company under winding up, as well as official liquidator made relentless efforts to facilitate sale of assets of the company but all remained fruitless---Winding up process under the provisions of Companies Ordinance, 1984, was to be concluded within a period of one year but due to law and order situation, the same could not be done---Official Liquidator gave notice for extraordinary general meeting seeking consent of members of the company and to resolve that time for conclusion of winding up proceedings might be extended for a period of six months--After diligent proceedings, all members of the company unanimously agreed and passed resolution whereby time for conclusion of winding up proceedings extended for a period of six months---Application was filed by official liquidator for approval of resolution for extension of time---Validity--High Court after perusing annexure which reaffirmed contentions which were written in the application, approved special resolution passed by members and time was extended by another six months for conclusion of winding up proceedings---Application was allowed accordingly.

Omair Nisar for the Petitioner.

2010 C L D 547

[Karachi]

Before Mushir Alam and Aqeel A. Abbasi, JJ, Messrs EMEN TEXTILE through Sole Proprietor and another---Appellants

Versus

HABIB BANK LIMITED---Respondent

First Appeal No.46 and C.M. No.1633 of 2009 decided on 16th February, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 31 9 & 22---Suit for recovery of loan-Award of costs and funds---Appeal---Appellants had impugned judgment and decree, whereby Banking Court had decreed the suit with costs of fund from the date of institution till realization---Counsel for the Bank had submitted that certain discrepancies existed in the amount claimed and decreed by the Banking Court and that proper accounting/ calculation was not done---Counsel for the appellants had conceded to such statement of counsel fur the respondent and did not dispute the veracity of the same---Likewise counsel for the respondent conceded that the cost of fund could not have been granted by the Trial Court from date of the institution of the suit and that in terms of subsection (2) of S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001, cost of fund could only be granted from the date of default till realization---Decree passed by the Trial Court was modified with costs of fund as specified by the statement from the date of default till realization. ?

Mukhtiar Kumber for Appellants.

Aziz Khan for Respondent.

2010 C L D 554

[Karachi]

Before Ms. Rukhsana Ahmad, J

METAL CONSTRUCTION OF GREECE S.A. through Attorney---Plaintiff

Versus

OWNERS OF THE VESSEL M.V, LADY REA---Defendant

ADMIRALTY SUIT No.35 of 2008 and C.M.A. No.1178 of 2009, decided on 16th February, 2010.

Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)---

----S.3(2) --9anun-e-Shandat (10 of 1984), Art.95---Civil Procedure Code (V of 1908), O.VII, R.11---Rejection of plaint--Power of Attorney---Presumption---Defendant, the owner of vessel sought rejection of plaint on the ground that suit was filed by a person in whose favour there was no valid power of attorney executed from a foreign State--Validity---Contention of defendant raised questions/issues of fact and required evidence---Power of attorney was placed in court file supported with proper application

filed by plaintiff-Plaint was filed by a duly authorized person and power of attorney filed along with translation of foreign government's relevant gazette notification, which had been filed in court and taken on record of the court file---High Court declined to reject plaint on the ground that the documents were not explained earlier and Government's gazette notification placed on record had given authority as stated in the gazette---Power of attorney in foreign language had an English translation alongside and no ambiguity or question on the document would require evidence---Application was dismissed in circumstances.

2009 CLD 234; N.V. Nutricia v. Messrs Nutricia Foods International 2000 CLC 866; Ramesh M. Udeshi v. The State PLD 2003 Kar.420 and Rashid Khan v. Shujauddin 1986 MLD 2930 ref.

Qamar Abbas for the plaintiff.

Shaiq Usmani for the defendant.

2010 C L D 558

[Karachi]

Before Ms. Rukhsana Ahmad, J

Messrs MUSLIM COMMERCIAL BANK LTD. (M.C.B.)---Plaintiff

Versus

Messrs WORLD AUTOMOBILES through Proprietor and others---Defendants

C.M.As .Nos.3061, 3058, 3060 and 3059 of 2009 in suits Nos.B-14 of 2004, 46 and B-48 of 2001 decided on 15th February, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.17 & 19-Civil Procedure Code (V of 1908), S.151--Execution proceedings-Compromise decree--Amendment---Procedure---Banking Court passed compromise decree based on the terms and conditions settled between the parties--During execution proceedings, judgment-debtor was claiming for amendment of decree whereas the decree holder was resisting the same--Validity---When compromise decree had been passed by a Court, the same could not be amended without consent of parties to proceedings---Status of compromise decree was that it only amounted to an agreement between parties superimposed by seal of court and superimposition of court's seal did not make the compromise decree untouchably sacred--Parties still had the option to amend the terms thereof mutually---Parties could not amend the same at their own option or deemed the same to have been amended by their agreement---After passing compromise decree, a party could not apply for modification/amendment of such decree unless the same was consented by the other party as well---High Court declined to interfere in the terms and conditions of consent decree passed by Banking Court---Application was dismissed in circumstances.

PLD 2002 Lah.268 rel.

Mushtaq Memon for Plaintiff.

Abdul Qayyum Abbasi for Defendants.

2010 C L D 578

[Karachi]

Before Ms. Rukhsana Ahmad, J

PETROMARK (PVT.) LIMITED---Plaintiff

Versus

ALI TRADERS and 3 others---Defendants

Suit No.250 of 2004, decided on 12th February, 2010.

Trade Marks Act (XIX of 2001)---

----Ss.39 & 40-Civil Procedure Code (V of 1908), O.IX, R.6--Infringement of trade mark---Ex parte decree---Defendants, absence of Plaintiff alleged that defendants were infringing his trade mark by using the same or other colour scheme, design and get up-Suit filed by plaintiff was verified on oath who had also filed his affidavit supported with certain documents in support of his claim--Defendants neither came forward to contest the claim of plaintiff though attempt to serve them was made twice first in year, 2005 and thereafter in the year, 2009, when the case was remanded in appeal but no one turned up to contest the suit-Effect-Contention of plaintiff had gone unrebutted and unchallenged---No material was placed on record as to damages suffered by plaintiff, therefore High Court declined to pass decree to the extent of damages--Suit was decreed accordingly.

Saleem Ghulam Ali for Plaintiff.

Defendants declared ex parte.

Date of hearing: 13th January, 2010.

2010 C L D 591

[Karachi]

Before Gulzar Ahmed and Irfan Saadat Khan, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Appellant

Versus

Messrs BALOCH ENGINEERING INDUSTRY (PVT.) LTD. and 4 others---Respondents

H.C.A.173 of 2004, decided on 10th March, 2010.

Industrial Development Bank of Pakistan Ordinance (XXXI of 1961)---

----S. 39--Law Reforms Ordinance (XII of 1972), S.3--High Court appeal---Recovery of loan---Claim for interim markup, markup for grace period and penalty---Scope---Appellant/Bank filed application under S.39 of Industrial Development Bank of Pakistan Ordinance, 1961 for recovery of amount from the respondent---Respondent had resisted said application and filed its objections---Single Judge of High Court disallowed the claim of appellant on account of interim markup, mark-up for grace period and penalty/fine with regard to claim of insurance premium and excise duty---Case of the appellant-Bank was that respondent had defaulted in making the re-payment according to agreed terms of the finance agreement and had become liable to the imposition of fine/penalty and further to markup of grace period, while the case of the respondent was that it had made all payments within the time limit---No clause existed in the agreement of finance arrived at between the parties, providing for payment of markup of grace period---Merely mentioning mark up of grace period in the Schedule of repayment in itself would not constitute an agreement for payment of markup of grace period similarly agreement of finance stipulated for payment of fine in the event of default in payment by the respondent --Held, claiming of fine, liquidated damages or penalty, solely based upon the terms of finance agreement between the parties itself would not be sufficient to grant fine, liquidated damages or the penalty amount---Liquidated damages or penalty would be awarded by the court to the extent of its reasonableness, if the contract was breached and the damages of legal injury were pleaded in the plaint with sufficient material and was also proved in the evidence by the party---No fact having been pleaded in the application of incurring of any damages or legal injury to the appellant; and no evidence was on record to support the grant of fine as claimed by the appellant---Appeal was dismissed.?

Federation of Pakistan through Ministry of Finance and others v. Haji Muhammad Sadiq and others 2007 CLD 1; Hala Spinning Mills Ltd. v. International Finance Corporation and another 2002 SCMR 450; United Bank Limited v. Messrs Azmat Textile Mills Limited 2002 CLD 542; Industrial Development Bank of Pakistan v. Messrs Haji Dossa Ltd. and 6 others PLD 1985 Kar.71; Shaikh Shaukat Ali v. The Trustees of the Port of Karachi PLD 1975 Kar.1096; N.D.F.C. v. Anwar Zaib White Cement Ltd. and others 1999 MLD 1888; United Bank Limited v. Messrs M. Esmail and Company (Pvt.) Limited and 2 others 2006 CLD 394 and Fateh Chand v. Balkishan Dass AIR 1963 SC 1405 ref.

Azizur Rehman for Appellant.

Tasawar Ali Hashmi for Respondents.

2010 C L D 596

[Karachi]

Before Tufail H. Ebrahim, J

MY BANK LIMITED---Plaintiff

Versus

FIRST DAWOOD INVESTMENT BANK LIMITED---Defendant

Suit No.B-47 of 2009, decided on 24th November, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---Ss.10 (7) & 27---Civil Procedure Code (V of 1908), S.151---Non-appearance of defendant's counsel while Court heard arguments on application in morning and reserved same for orders---Application by defendant's counsel filed in court on same day before passing such order for hearing his arguments---Plea of defendant's counsel that he could not know about fixation of such matter for hearing due to its not listing under his name in computerized list; and that he came to know about reservation of such matter for orders through his colleague---Validity--Defendant's counsel in his affidavit had fully explained his non-appearance in court in the morning---Copy of replication and documents filed by plaintiff had not been provided to defendant's counsel---Non-giving a fair opportunity of hearing to defendant would be violative of principles of natural justice and he would be condemned unheard---High Court fixed plaintiffs application for rehearing in circumstances.

Messrs Baghpatee Service (Pvt.) Limited and 6 others v. Messrs Allied Bank of Pakistan Limited in 2001 CLC 1363 rel.

Jam Asif Mahmood for the Plaintiff.

Irfan Haroon for the Defendant.

2010 C L D 599

[Karachi]

Before Khilji Arif Hussain and Arshad Siraj Memon, JJ

GULSHAN ADAMJEE and others---Appellants

Versus

MUSLIM COMMERCIAL Bank LTD.---Respondent

H.C.A. No.187 of 1991, heard on 31st March, 2009.

(a) Contract Act (IX of 1872)---

----Ss.2, 3 & 4---Negotiable Instruments Act (XXVI of 1881), S.68--Banking Companies Ordinance (LVII of 1962), S.5(d)---Suit for recovery of amount of Fixed Deposit Receipts (FDRs)--Plea of plaintiff that FDRs in his favour were issued in years, 1970 and 1971 by Dacca Branch of the Bank; that in November, 1971, due to deteriorating conditions of East Pakistan, he could not present FDRs to Dacca Branch for encashment, thus, he wrote letter to President of the Bank enclosing therewith original FDRs requesting for transferring its funds to its Branch at Karachi for issuance of fresh FDRs; that President sent such letter along with FDRs to his Karachi Head Office to carry out instructions given by plaintiff, but no action was taken by the Bank, which later on returned FDRs to plaintiff after fall of East Pakistan; and that such act of President of the Bank accepting FDRs had amounted to an undertaking and agreement by Bank to issue fresh FDRs from Karachi and having failed to do so, Bank was liable to pay to plaintiff amounts of FDRs along with interest--Plea of Bank was that FDRs issued by its Dacca Branch had to be presented to Dacca Branch for encashment and could not be sent to its President for such purpose--Validity---FDRs had been issued by Bank acknowledging that amounts mentioned therein were received by Bank for a specific period of time and to pay at agreed rate of interest mentioned therein on production thereof---No condition was mentioned on FDRs that only Dacca Branch would be liable to pay its amount---Such act of President of the Bank accepting FDRs for encashment, even if there was any condition presenting same at issuing Branch, would tantamount to waiver of such condition by corporate entity and Bank was liable to pay amount covered by FDRs together with agreed rate of interest--Plaintiff after fall of East Pakistan could not present FDRs to Dacca Branch due to its closure by Bank---Bank had concealed evidence pertaining to date when FDRs were received for compliance of plaintiffs instructions to transfer amounts thereof to its Karachi Branch---Presumption in such circumstances could be drawn that such evidence, if brought on record, would have gone against the Bank---Plaintiff had deposited amount of FDRs with Bank as legal entity, thus, closure of its Dacca Branch or winding up of its business in a particular area would not absolve Bank from its liability to pay amount deposited with Bank through its Dacca Branch---Suit was decreed in circumstances.

WAPDA v. Ghulam Bari PLD 1991 SC 780; United Bank Ltd. v. Sartazj Industries PLD 1990 Lah. 99; Banking Law by Thomas Chambers Eighth Edition; United Commercial Bank Ltd. v. Okara Grain Buyers Syndicate Ltd. AIR 1969 SC 1115 and Okara Grain Buyers Syndicate Ltd. v. United Commercial Bank (1961) 31 Camp Case.

(b) Banker and customer---

----Obligation of Bank to pay cheque of its customer would rest primarily on its Branch at which he kept his account--Exceptions stated.

The credit balance on a current account with a Bank is payable to the customer at the branch where the account is kept, where it must be remembered, the books of the Bank are and where the signature card is kept, and where any cross claim by the Bank would be known.

A debtor must seek the creditor to make the payment, but in case of banking transaction, the obligation of the Bank to pay the cheques of a customer rests "primarily" on the branch at which he keeps his account and Bank can rightly refuse to cash a cheque at any other branch. There can be exception to this rule, for example deposit is made at a foreign office of a Bank and that office is either closed down or is taken over by the Local Government.

Syed Mamnoon Hassan for the Appellants.

Aziz-ur-Rehman for the Respondent.

Date of hearing: 31st March, 2009.

2010 C L D 628

[Karachi]

Before Gulzar Ahmed and Irfan Saadat Khan, JJ

STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Divisional Head---Applicant

Versus

COLLECTOR OF SALES TAX AND CENTRAL EXCISE---Respondents

Spl. S.T.R.A. No.364 of 2007, decided on 24th February, 2010.

Insurance Ordinance (XXXIX of 2000)---

----S.89---Central Excise Act (I of 1944), First Sched. Part-II, Item 14.14 (as inserted by Finance Act (XXII of 1991) and replaced by Heading 9813.0000 by Finance Act (XII of 1994)---Life Insurance Company---Company allowing its policy-holders to withdraw upto 90% of their paid-up premium as surrender value of their policies---Treating such withdrawal as services provided or rendered by company in respect of advances and loans and its liability to payment of excise duty under Item 14.14 or Heading 9813.0000 of Part-II of First Sched. to Central Excise Act, 1944--Validity---Such transaction between company and its policy-holders was not similar to that of Bank and its customer-In case of Bank, customer after withdrawing money from his account was not obliged to refund same to Bank nor was he liable to pay any mark-up thereon to Bank while, in case of Insurance Company, its policy-holders were obliged to refund such amount to company with mark-up---Such services provided by company to its policy-holders were liable to levy of excise duty--Principles.

Hirjina and Company v. Islamic Republic of Pakistan and another 1993 SCMR 1342 and ICC Textile Ltd. v. Federation of Pakistan and others 2003 PTD 1017 ref.

Civil Appeal Nos.2296 to 2412 of 2001 and Federation of Pakistan v. Muhammad Sadiq and others PLD 2007 SC 133 fol.

Ghulam Ali for the Applicant.

Raja Muhammad Iqbal for the Respondent.

2010 C L D 635

[Karachi]

Before Ms. Rukhsana Ahmed, J

NIB BANK LIMITED---Plaintiff

Versus

TAHA SPINNING MILLS LIMITED and others---Defendants

Suit No.B-65 and C.M.A. No.11316 of 2008, decided on 29th January, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---Ss.9 & 10 (3) (4)---Suit for recovery of loan amount---No denial in leave application regarding utilization of finance facilities by defendant and owning liabilities towards Bank-Leave application not fulfilling mandatory requirements of S.10 (3) (4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Plea of defendant that Bank had charged excess mark-up-Validity-High Court dismissed leave application and directed parties to file their respective breakup statements for adjudication of actual amount due by defendant to Bank.

2003 SCMR 1156; 2007 CLC 1356 and 2007 CLD 217.

Yawar Farooqi and Abdul Qayoom Abbasi for the Plaintiff.

Agha Faisal for the Defendants.

2010 C L D 660

[Karachi]

Before Mushir Alam and Aqeel Ahmed Abbasi, JJ

M.V. "GOLOZ" EX-M.V. "MUSTAFA BEY" through Chief Officer /Person Incharge---Appellant

Versus

Messrs PACMAR SHIPPING (PVT.) LTD. through authorized person in Pakistan

and another---Respondents

Admiralty Appeals Nos.4 and 5 of 2009, decided on 16th March, 2010.

(a) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)---

---Ss. 3, 4(4) & 7---Delinquent vessel---Transfer of ownership---Issuance of writ---Action in personam or rem---Validity---Beneficial title in the delinquent vessel had been passed on to the new owner before the writ was issued and served, the action in rem would not be sustainable---Action in personam would lie against the owner of the vessel during whose ownership cause of action accrued.

(b) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)---

----Ss. 3(2) (k) (l), (m) & 4(4)---Delinquent vessel or her sister ship-Proceeding in rem-Proof-Plaintiffs had to show that they had provided agency services, necessaries, disbursement to the delinquent vessel; that the delinquent vessel was owned by one and the same owner when the cause of action accrued and that when the proceedings in rem were brought against her or her sistership.

(c) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)---

----S. 7---Prejudgment security---Statutory right in rem-Lost ---Effect---Arrest of the offending ship or her sistership had given plaintiff pre judgment security, the institution of action in rem started with the issuance of the writ in rem-Issuance of the writ in rem, had attached to the ship the statutory lien which would remain equally enforceable against a bona fide purchaser for value without notice, unless the vessel had been judicially sold, that is, If there had been change in ownership between the time the cause of action accrued and the time when the action was brought, statutory right in rem would be lost and the cause in personam would survive.

V.N. Lakhani and Co. v. M.V. Lakatoi Express PLD 1994 SC 894; Bangladesh Shipping Corporation v. S.S. Nedon 1982 CLC 142; Kuwait Flour Mills Co. SAK. v. M.V. Kashmir and others 1990 MLD 2196 and Central Insurance Company Ltd. v. M.T. Tasman Spirit 2004 CLD 695 ref.

M.T. N.P. Pong San Fisheries Company Ltd. v. M.V. Zohra-I PLD 1988 Kar. 390; Yakong Ltd. v. M.T. Eastern Navigator PLD 2001 SC 57; Aleem Ahmed Ansari v. M.V. Ashar PLD 1986 Q 54; Kwait Floor Mills Co. Sak v. M.V. Kashmir 1990 MLD 2196; Bangaladesh Shipping Corp. v. M.V. Nedon PLD 1981 Kar.246 and Monica S [1967]2 Lloyd Report 113 rel.

(d) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)---

----S. 4(4)---Delinquent vessel being under-arrest---Knowledge of--Statutory lien---Owner, despite having learnt that vessel was under arrest during the period of purported provisional patentee had over six months time to avoid the sale, or compel the beneficial owner to clear all the liabilities, did not do the same---Validity---Once the owner had chosen to contest the matter without seeking discharge of claim by the owner during whose term of beneficial ownership, cause of action accrued and commenced, statutory lien clinched the vessel, such lien prima facie would be inherited by the successive owner, who despite notice had chosen to obtain final patente registration after confirmation of arrest.

Ship Registration by N.P. Ready, a Lloyd's of London Press Ltd. publication 1991 edition; Kuwait Floor Mills Co. SAK v. M.V. Kashmir and others 1990 MLD 2196; Maritime Trade [1981]2 Llyod Report 153. The Saudi Prince 1982 2 Llyod Report 253 rel.

Mazhar Imtiaz Lari for the Appellant.

Agha Zafar Ahmed for the Respondents.

2010 C L D 676

[Karachi]

Before Muhammad Tasnim, J

JATCO KABUSHIKI KAISHA---Appellant

Versus

REGISTRAR OF TRADE MARKS---Respondent

Miscellaneous Appeal No.34 of 2004, decided on 22nd March, 2010.

(a) Trade Marks Ordinance (V of 1940)---

---Ss.8(1), 10(1) & 14(1)---Revised Trade Marks Rules, 1963, Rr.23 & 24(2)---Registration of trade-mark---Objections---Deception---Jurisdiction of Registrar-Non­advertising in Trade Mark Journal---Application was made by appellant for registration of trade-mark for automobiles, buses, converters for land vehicles, motorcycles, transmission for land vehicles, trucks, electric vehicles, wagons, water vehicles, excluding auto parts, whereas the goods covered by trade-mark already registered in the name of respondent were only restricted to spare parts---Out lets for appellant were different than the consumers of spare parts and goods were not similar to each other---Registrar Trade Marks declined to register trade-mark of appellant on the ground of its resemblance with that of respondent-Plea raised by appellant was that Registrar had wrongly invoked jurisdiction of Ss.8(a) and 10(1) of Trade Marks Act, 1940---Validity--Held, there was no question of deception or confusion for customer for the articles of appellant than for spare parts which were covered under registered trade-mark---Registrar of Trade-Marks had wrongly pressed into service the provisions of S.8(a) and S.10 of Trade Marks Act, 1940--Registrar was to exercise his discretion in matter of acceptance of application and if it patently had come within the prohibition of provisions of Trade Marks Act, 1940, ex fade not to be accepted in that case he might not advertise the application---Discretion vested with Registrar could be exercised on sound principle in accordance with law and not arbitrarily---Goods being produced by appellant were not identical to those goods which were covered under the registered trade-mark already in field---Outlet for sale of both items were different, customers for both the items were entirely different and the goods were neither similar to each other nor created any deception--High Court set aside the order passed by Registrar of Trade Marks and remanded the same to Registrar for decision afresh High Court directed the Registrar to advertise trade-mark of appellant into Trade Mark Journal and to invite opposition, if any, and thereafter decide the matter in accordance with law--Appeal was allowed accordingly.

Seven-Up Company v. Kohinoor Thread Ball Factory and others PLD 1990 SC 313; The Assistant Registrar of Trade Marks, Karachi v. Messrs Lakson Tobacco Company Ltd 1992 SCMR 2323; Messrs Colgate-Palmolive (Pakistan) Ltd. v. Assistant Registrar of Trade Marks PLD 1992 Kar. 15; David Vaughan Racklin v. Deputy Registrar of Trade Marks, Karachi 1986 MLD 166; Azad Friends and Company (Pvt.) Ltd. v. Deputy Registrar of Trade Marks PLD 1993 Kar. 571; Philips Morris Incorporated v. Lakson Tobacco Company Ltd. and another PLD 1986 Kar.482; Erwin Mullar GMBH and Co. v. Assistant Registrar of Trade-Mark 2008 CLD 1003; Transpak Corporation Ltd. v. The Registrar of Trade Marks 1991 MLD 658; Kerly's Law of Trade Marks and Trade Names (Fourteenth Edition 2007); Law of Trade Marks and Passing Off P. Narayanan (Fifth Edition, 2000); Kerly's Law of Trade Marks and Trade Names (Eleventh Edition) para. 4-07 Page 29; Law of Trade Marks and Geographical Indications by K.C. Kailasam and Ramu Vedraman 2003 Edition Page 223: UNI Lever PLC. v. Al-Ameen Industries 2003 CLD 623; The Law of Trade Marks and Passing off by Dr. S. Venkatswaran (Fourth Edition 1963) (Reprint 1999); Ekhlas Ahmad v. DAE Health. 1980 SCMR 625; Senith Laboratory (Pak.) Ltd. v. Messrs British Drug House Ltd. PLD 1970 Dacca 772; The Welcome Foundation Ltd. v. Khawar and others 1990 SCMR 561; Messrs Al-Anis Laboratories v. Messrs Al-Chemist and another 1987 MLD 2823; Bandanawaz Ltd. v. Registrar of Trade Marks, Karachi and another PLD 1967 Kar. 492: Law of Trade Marks and Passing off by P. Narayanan (Fifth Edition paras 17-16 page 224); Crescent Pencils Ltd. v. Indus Pencil Industries Ltd. and another 1989 CLC 2005; Abdul Wahid v. Haji Abdur Rahim and another PLD 1973 SC 104 and Messrs Airport Support Services v. The Airport Manager, Quaid­-e-Azam International Airport, Karachi and others 1998 SCMR 2268 ref.

Ms. Amna Salman for the Appellant.

Salim Ghulam Husein for the Respondent.

Dates of hearing: 3rd and 4th March, 2010.

2010 C L D 692

[Karachi]

Before Shahid Anwar Bajwa, J

Messrs MASTER ENTERPRISES (PVT.) LTD. through duly Authorized Signatory---Appellant

Versus

REGISTRAR OF TRADE MARKS and another---Respondents

Miscellaneous Appeals Nos.45, 34 and 46 of 2008, decided on 26th March, 2010.

Trade Marks Ordinance (XIX of 2001)---

----Ss. 13(4), 17 & 114---Trade Marks Rules, 2004, R.85---Registration of trade-mark---Similarity in trade­marks---Likelihood of causing confusion-Appellant was the owner of trade-mark "Master" and respondent intended to get his trade-mark registered with the name of "Minister"---Plea raised by appellant was that proposed trade-mark of respondent was similar to its trade-mark and there was likelihood of its causing confusion in the minds of customers---Validity---Order passed by Registrar was not a speaking order but since two words "Master" and "Minister" were so clear, so clearly intelligible, so phonetically different and even written in different type faces, therefore, there was no likelihood of those causing confusion or deception High Court declined to interfere in the order passed by Registrar and refused to remand the matter to Registrar for decision afresh-Appeal was dismissed in circumstances.

Nahan Foundry v. Messrs Seth Muhammad Rafique Zarati Foundry and others 1994 MLD 2401; Mollah Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173; The Welcome Foundation Limited v. Messrs Karachi Chemical Industries (Pvt.) Limited 2000 YLR 1376; Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; Messrs Airport Support Services v. The Airport Manager, Quaid-­e-Azam International Airport, Karachi and others 1998 SCMR 2268; Dr. Hakimullah Siddiqui v. Messrs Alphaco (Pakistan), Karachi 1987 MLD 2569; English Laboratories (Pvt.) Limited v. Messrs Chas A Mendoza Pharmaceutical Laboratories 1998 MLD 1234; Muhammad Yaqoob, Lasani Engineering company v. Punjab Engineering Company and others 1992 CLC 2036 and Lipha Lyonnaise Industrielle Pharmaceutique through Authorized Signatory v. Registrar of Trade Marks and another 2009 CLD 1289 ref.

Ms. Shazia for Appellant.

Manzoor Ahmed Arain and Saleem Ghulam Hussain, for Respondents.

Date of hearing: 22nd October, 2009.

2010 C L D 701

[Karachi]

Before Salman Hamid, J

UNITED BANK LIMITED---Plaintiff

Versus

PAK LEATHER GRAFTS LIMITED and 3 others---Defendants

Suit No.B-141 and C.M.As Nos.10511 to 10514 of 2009, decided on 2nd April, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 9 & 10---Contract Act (IX of 1872), S.196---Suit for recovery of finance amount---Leave to defend suit, application for---Objection of defendant that suit had been filed through unauthorized sub-attorney---Replication to leave application filed by Bank through same sub­-attorney---Effect---Bank despite such objection by filing replication through same sub-attorney had ratified his previous act---Authenticity of sub-power of attorney could be thrashed out at the time of trial---Defendant was granted leave to defend suit in circumstances.

Al-Madina Electric Store, Daharki v. H.B.L. 2006 CLD 734; Central Bank of India, Lahore v. Talibuddin Abdur Rauf and another 1992 SCMR 846 and Islamic Republic of Pakistan v. Sabah Shipyard (Pakistan) Limited and another 2009 CLD 999 ref.

Khayam Films and another v. Bank of Bahawalpur 1982 CLC 1275 rel.

(b) Civil Procedure Code (V of 1908)---

----O.VII, Rr.1(e) & 11(a)---Cause of action and date of its accrual not mentioned in relevant paragraph of plaint speaking about cause of action---Effect--No particular form and/or place was prescribed under law for stating cause of action in plaint---Cause of action could be mentioned at any place in plaint and/or same could be deduced from anywhere in plaint---Date of accrual of cause of action could be gathered from documents annexed with plaint---Plaint in such case could not be rejected for want of cause of action-Principles.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---S.9-Limitation Act (IX of 1908), Arts.59 & 132-Suit for recovery of finance amount-Limitation-Filing of suit in November, 2009 on basis of memorandum of deposit of title deeds dated 31-5-2006---Plea of defendant that while reckoning period of limitation from date of finance agreement dated 24-7-2006, suit was time-barred under Art.59 of Limitation Act, 1908-Validity-Twelve years period prescribed under Art.132 of Limitation Act, 1908 for a suit for foreclosure would be reckoned from date of execution of such memorandum-Suit was within time despite reckoning period of limitation under Art.132 of Limitation Act, 1908 from date of such finance agreement-Such plea of defendant was repelled in circumstances.

H.B.L. v. Al-Jalal Textile Mills Ltd. 2003 CLD 1007 ref.

U.B.L. v. Iftikhar and Co. PLD 1990 Lah.111 and Muslim Commercial Bank Limited v. Messrs Malik and company 2002 CLD 606 rel.

Karim Hassan for Plaintiff.

Salman Talibuddin for Defendants.

Dates of hearing: 25 February, 2010 and 10 March, 2010.

2010 C L D 713

[Karachi]

Before Salman Hamid, J

NESAR AHMED SIDDIQUI and another---Petitioners

Versus

MICRO ENGINEERINGS (PVT.) LTD.---Respondents

J.M.No.33 of 2009, decided on 18th March, 2010.

(a) Companies Ordinance (XLVII of 1984)---

----S.305---Winding up of Company-Power of court-Scope-While exercising discretion for passing an order of winding up of a company, court had to act justly and equitably after looking into numerous circumstances.

(b) Companies Ordinance (XLVII of 1984)---

----S.305(e}--Terms "unable to pay debts" and "unwilling to pay debts"-No distinction existed between such two terms.

Shaiq Usmani for the Petitioners.

Nadeem A. Pirzada for the Respondents.

Date of hearing: 9th March, 2010.

2010 C L D 738

[Karachi]

Before Mrs. Ashraf Jahan, Chairperson, Dr. Sami-uz-Zaman, Member Technical and Abdul Kazim M. Memon, Member Legal

NAEEM AHMED MUGHAL, DIRECTOR GENERAL---Complainant

Versus

JABIR HUSSAIN DADA and another---Respondents/Accused

Complaint No.1 of 2009, decided on 2nd December, 2010.

Pakistan Environmental Protection Act (XXXIV of 1997)---

----Ss. 12, 17 & 21---Failure to comply with the environmental laws; complaint against---Facts as stated in the complaint were that the respondents were engaged in construction of multi-storeyed building covering thousands of square yards---Complainant had prayed that respondents be prosecuted under S.21 of Pakistan Environmental Protection Act, 1997 for violation of S.12 of the Act--During pendency of complaint respondents had filed statement that they would submit an Environmental Impact Assessment Report to the Environmental Protection Agency within a period of 2 months; and would comply with all provisions of the Pakistan Environmental Protection Act, 1997 as could be applicable-Respondents having undertaken to submit Environmental Impact Assessment Report to Environmental Protection Agency and to comply with all the provisions of Pakistan Environmental Protection Act, 1997, it was ordered that respondents would submit an Environmental Impact Assessment Report within stipulated period in accordance with law.

Complainant in Person.

2010 C L D 747

[Karachi]

Before Muhammad Ali Mazhar, J

Mst. KHATIJA and 7 others---Plaintiffs

Versus

BANGLAR MAMATA and 5 others ---Defendants

Admiralty Suit No.8, C.Ms. Nos.467, 356 of 2009 and C.M.A. 35 of 2010 decided on 7th April, 2010.

(a) Words and phrases---

----'Tort feasors'---Defined.

Black's Law Dictionary Sixth Edition rel.

(b) Words and phrases---

---'Vicarious liability'---Meaning.

Black's Law Dictionary Sixth Edition rel.

(c) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)---

---S.3-Civil Procedure Code (V of 1908), O.I, R.10---Recovery of damages--Necessary parties-Joint tort feasors---Vicarious liability--Plaintiffs were legal heirs of deceased worker who died on vessel during performing his duties---Plaintiffs arrayed all responsible persons including government official who allegedly cleared documents of vessel, the vessel owner, the surveyor company and others as proper and necessary parties---Plaintiff based their case on the principle of joint tort feasors and vicarious liability and intended to implead "Bureau Veritas" as party to proceedings---Effect---Plaintiffs were at liberty to implead defendants, allegedly found negligent in performance of their duties---It would be seen after evidence that how many persons were involved and committed negligence in performance of their duties due to which the incident took place--High Court found it appropriate to implead 'Bureau Veritas' as defendant in the suit---Application was allowed accordingly.

Province of the Punjab v. Messrs Qavi Engineers (Pvt.) Ltd. 2007 MLD 89; Manzoor Ahmed Khan v. Muhammad Farooq and other 1999 MLD 3329 and Mrs. Rahat Ali v. Dr. Saeeda Rehman 2002 CLC 96 ref.

Muhammad Umer Lakhani for Plaintiff.

Ghulam Murtaza for Defendants Nos.1, 2, 3, 5 and 6.

Imran Taj holding brief for Khawaja Saif-ul-Islam for Defendants Nos.4 and 5.

S. Tariq Ali, Standing Counsel along with Mirza Shahid Baig and Sohail Rana for Defendant No.8.

2010 C L D 753

[Karachi]

Before Muhammad Tasnim, J

In the matter of: Messrs SUNRISE RAGS CO. (PVT.)

J.M.No.15 of 2009, decided on 10th May, 2010.

Companies Ordinance (XLVII of 1984)---

---Ss. 284, 285, 286, 287 & 288---Amalgamation and merger of companies--Petition for---Both the petitioners had desired to amalgamate and merge one company into other-To implement the said desire, petitioners had agreed and entered into an arrangement by way of Scheme of Arrangement for the purpose of merger which had been duly approved--Scheme of Arrangement appeared on record contained the terms agreed between the petitioners---All the formalities had been completed and no objection whatsoever had been received from any quarter---No legal impediment, in circumstances' existed in allowing the petition---Scheme of Arrangement for proposed merger was approved by High Court and petition was allowed as prayed for and one company was ordered to be merged in the other in terms of Scheme of Arrangement.

Ammar Yaser for Applicants.

Ms. Saima, Deputy Registrar of Companies has appeared on Court Notice.

Date of hearing: 7th April and 4th May, 2010.

2010 C L D 757

[Karachi]

Before Salman Hamid, J

Messrs TAHIR OMER INDUSTRIES (PVT.) LTD.---Plaintiff

Versus

M.T. PACIFIC JADE and 4 others---Defendants

Adm. Suit No.30 of 2006 and C.M.A. No.970 of 2007, decided on 1st March, 2010.

Admiralty Jurisdiction of the High Courts Ordinance (XLII of 1980)---

----S. 3(2) (g) (h)---Civil Procedure Code (V of 1908), O.VII, R.11---Transfer of Property Act (IV of 1882), S.135-A---Losses---Claim of---Partial satisfaction---Effect---Plaintiffs filed suit for recovery of sum of US $ 108,465 under admiralty jurisdiction of High Court---One of the defendants filed an application under O.VII, R.11, C.P.C. on the ground that plaintiffs had recovered entire amount under the insurance policy and that losses had been satisfied fully; the plaintiffs could not claim by operation of law any amount as no subsisting right or cause of action to proceed further remained there---Plaintiffs asserted that due to loss of US $ 216,941 only an amount of Rs.6,620,332 towards compensation was paid by the insurance company as its maximum liability under the terms of the policy and that still substantial amount was due and payable by the defendants to the plaintiffs---Validity---Only a part of the plaintiffs' claim had been satisfied in terms of the insurance policy and remaining claim of the plaintiffs was yet to be adjudged through trial---Application under O.VII, R.11, C.P.C. for rejection of plaint was dismissed by High Court in circumstances.

New Jubilee Insurance Co., Ltd. Karachi v. American Orient Lines Inc., New York and 2 others PLD 1977 Kar. 569 and New Jubilee Insurance Co., Ltd Dacca v. The United Oriental Steamship Co., Karachi and another PLD 1975 Kar. 647 ref.

PLD 1977 Kar. 569 and PLD 1975 Kar. 647 disting.

Mazhar Lari for the Plaintiff.

Adeel Abid for the Defendants.

2010 C L D 760

[Karachi]

Before Muhammad Ali Mazhar, J

PAKISTAN KUWAIT INVESTMENT COMPANY (PVT.) LTD.---Plaintiff

Versus

SAADULAH KHAN AND BROTHERS and 14 others---Defendants

Suit No.B-53 of 2008, decided on 5th May, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.3 & 9---Civil Procedure Code (V of 1908), S.20(c)--Suit for recovery of finance---Execution of lease facility agreements at place "L"---Territorial jurisdiction of Banking Court at place "K" to entertain such suit---Validity---Court could entertain a suit, cause of action of which in whole or in part had arisen within its territorial jurisdiction---Core business of plaintiff-Bank was to earn rental on leases and lend money on mark-up basis---All requests for finance, terms of finance, disbursement/ drawdown, additional time for payment and rescheduling etc. had been sent by defendant from place "L" to plaintiffs registered office at place "K"---Sanction letter, release of finance to defendant and its repayments were made at place "K"---Cause of action would accrue to plaintiff/Bank in event of default and material breach committed by defendant in repayments of loans/ instalments---Cause of action would be taken from acts of defendant, whereby he had breached agreements and defaulted in repayment of finance at place "K"---Accrual of action could not be restricted only to execution of lease finance agreements at place "L", otherwise whole purpose and spirit of S.20(c), C.P.C., would become redundant, superfluous and would also negate S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court at place "K", held, had jurisdiction to try such suit.

Messrs Rahmania Trading Company v. Messrs Eagle Star Insurance Company, Ltd. PLD 1960 SC (Pak.)202; United Distribution Pakistan Ltd. v. Al-Syed Agrochemical Services and others 2005 CLC 1659; Pakistan and another v. M. Faiz Ahmad 1983 CLC 1369; State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem 1987 SCMR 393; Nadeem Ghani v. United Bank Limited and others 2001 CLC 1904; Malik Allah Yar Khan v. Mst. Mumtaz Begum 2002 SCMR 1835; Nusrat Mehdi Chaudhri v. Habib Bank Limited and another 2006 CLD 405; Messrs Kadir Motors (Regd.) Rawalpindi v. Messrs National Motors Ltd. Karachi and 3 others 1992 SCMR 1174; National Investment Trust Ltd. V. Lawrencepur Woollen and Textile Mills Ltd. 2002 CLD 527; Messrs Royal Flying Coach Ltd. v. Messrs Toyota Tsusho Kaisha Ltd. 2003 CLC 1744; Malik Ejaz v. Abdul Haleem and others 1999 MLD 1315; Sardar Muhammad Sarwar Khan v. Azad Government of the State of Jammu and Kashmir 1986 CLC 2173; Businet International (Pvt.) Ltd. v. Aranex International (Pvt.) Ltd. 2001 CLC 104; Qazi Noor Muhammad v. Pir Abdul Sattar PLD 1959 (W.P.) Karachi 348; International Cotton Ginners v. Granulars (Pvt.) Ltd. PLD 1994 Lah.97; Muhammad Yasin v. Chaudhry Muhammad Abdul Aziz PLD 1993 SC 395; Suzuki Motors Pakistan v. Tariq Javed 2000 CLC 1093 and Messrs Mehran Solvent Extraction (Pvt.) Ltd. v. I.D.B.P. 2008 CLD 844 ref.

(b) Civil Procedure Code (V of 1908)---

----S.20(c)---Court could entertain a suit, cause of action of which in whole or in part had arisen within its territorial jurisdiction---Principles.

(c) Civil Procedure Code (V of 1908)---

----S.20(c) & O.VII, Rr.1(e), 11(a)---Term "cause of action"---Connotation.

Term "cause of action" refers to every act which if traversed should be necessary for the plaintiff to prove in order to support his right to judgment and if not proved, would give the defendant a right to judgment and for that purpose only the facts stated in the plaint are to be considered to determine whether those facts state cause of action or not. Even a fraction of cause of action is a part of cause of action.

Even a fraction of cause of action gives territorial jurisdiction to decide the case.

(d) Words and phrases---

----"Cause of action"---Meaning.

Black's Law Dictionary, Sixth Edition ref.

(e) Civil Procedure Code (V of 1908)---

----S.20(c)---Territorial jurisdiction of court on basis of cause of action-Scope-Fraction of cause of action for being a part of cause of action would give territorial jurisdiction to court to decide case Principles.

Khalid Mehmood Siddiqui for the Plaintiff.

Abdul Qayoom Abbasy for the Defendants.

Khurram Shehzad Chughtai, Advocate.

Date of hearing: 1st April, 2010.

2010 C L D 802

[Karachi]

Before Qaiser Iqbal and Syed Mehmood Alam Rizvi, JJ

AMIR FEROZ---Petitioner

Versus

STATION HOUSE OFFICER and 4 others---Respondents

Constitution Petition No.D-578 and C.M.A. No.2584 of 2008, decided on 17th April, 2008.

Constitution of Pakistan (1973)---

----Art. 199---Constitutional petition---Credit card facility--Failure of the petitioner to repay the money---Petitioner who availed credit card facility from the bank, repaid amount to some extent, but on account of uncalled for circumstances could not repay the outstanding money--Bank through their staff had illegally acted to pressurize the petitioner and his family to repay the outstanding amount arising out of credit card facility in utter disregard to the provisions of Banking Law---Counsel for the Bank had submitted that Bank would resort to the forum available under the law and no coercive measures would be used for recovery of outstanding amount on account of the credit card facility available to the petitioner---Counsel for the petitioner being satisfied on said assurance of the counsel for the Bank, Constitutional petition was disposed of with direction to the Bank to approach the competent forum for redress available under civil and criminal jurisdiction.

Nadeem Ahmed holding brief for Gohar Iqbal for Petitioner.

M.A. Khan for Respondents Nos.2 and 4.

Neel Keshav for Respondent No.3.

SIP Muhammad Javed of P.S. Zaman Town.

2010 C L D 804

[Karachi]

Before Ms. Rukhsana Ahmad, J

DIGITAL WORLD PAKISTAN (PVT.) Ltd. through Chief Executive ----Plaintiff

Versus

SAMSUNG GULF ELECTRONICS FZE through Managing Director/Chief Executive Officer and another---Defendants

Suit No.1785 and C.M.A. No.11382 of 2009, decided on 29th April, 2010.

(a) Civil Procedure Code (V of 1908)---

---Ss.16, 17, 20 & 120 Provisions contained in Ss.16, 17 & 20, C.P.C., would not apply to High Court in exercise of its original civil jurisdiction-Principles.

Abdur Rahim Baig v. Abdul Haq Lashari PLD 1994 Kar.388 and West Pakistan Industrial Development Corporation v. Sheikh Muhammad Amin 1992 CLC 2047 rel.

(b) Jurisdiction---

----Parties by mutual agreement could not invest or divest a Court of its jurisdiction.

(c) Civil Procedure Code (V of 1908)---

----Ss.16, 17 & 20---Territorial jurisdiction of Civil Court in civil suits, determination of-Test.

The court in whose jurisdiction the cause of action has arisen has jurisdiction to entertain suit, irrespective of the residence of defendant. Where a party suffered some injury on account of some act of omission or commission relatable to the contract inter se, then the cause of action will be considered to have accrued at such place and the Court at such place will always have jurisdiction. Where two courts may have jurisdiction in respect of the same claim, then it is the prerogative of the plaintiff that weighs more in determining the place of suing.

For purposes of assumption and determination of jurisdiction of court, averments made in plaint are to be considered true and accepted.

(d) Jurisdiction---

----Averments made in plaint would be considered true and accepted for purposes of assumption and determination of jurisdiction of court.

(e) Civil Procedure Code (V of 1908)---

---Ss.16, 17, 20 & O.I. R.10(2)---Defendant, if a necessary party to suit, would not be deleted from array of parties on ground of being non-residing or non-carrying on business within jurisdiction of court.

Ittehad Cargo Services v. Rafaqat Ali PLD 2002 Kar.420; Popular Pharmacy v. Nova Bio Medical PLD 1996 Kar.411 and Pak China Chemicals v. Dept. of Plant Protection 2006 CLD 210 rel.

(f) Specific Relief Act (I of 1877)---

---Ss.42 & 54---Civil Procedure Code (V of 1908), S.151. O.XXXIX, Rr. 1 & 2---Suit for declaration and permanent injunction---Joint venture agreement for assembling electronic home appliances under brand name of "Samsung" and its distribution in Pakistan by plaintiff under licence of defendant---Plaintiff claiming to be exclusive assembler / distributor of Samsung brand products in Pakistan under such agreement,. and defendant could neither cancel same nor appoint any other person as an importer / manufacturer / assembler / distributor for such brand---Application under O. XXXIX, Rr. 1 & 2 read with S.151, C.P.C., by plaintiff to restrain defendant from doing any act in violation of such Agreement---Defendant's plea that for last six years, no business between parties was transacted---Validity---Plaintiff had installed factory worth Rs.360 million, wherein 350 skilled workers were employed---Record showed that plaintiff from year, 2000 till to-date had purchased parts worth US$ 93 million from defendant---Both parties had agreed to contribute towards development of brand Samsung and its infrastructure in Pakistan for which plaintiff had invested US$ 7 million---Plaintiff had signed dealership contracts with 650 dealers on behalf of joint venture---Plaintiff by investing millions of dollars had established 46 Samsung plazas as exclusive Samsung retail outlets---Plaintiff had invested hugely in purchase of expensive moulds and state of art technology---Plaintiff had taken loan of Rs.1.6 billion for joint venture---Plaintiffs receivable from market were Rs.356 million---Plaintiff had been brought under great risk in view of sizeable stocks of Rs.1.2 billion---Plaintiff had taken over stocks of previous distributors of defendant---Plaintiffs plea was that damages were inadequate remedy to such case and remedy of filing of present suit was proper---Defendant had not denied business relationship with plaintiff as a duly appointed distributor---Such joint venture was revocable under clause of such agreement and not otherwise---Such joint venture relationship could not be said to be a mere licence terminable at will and if same was treated as agency, then same was an agency coupled with an interest---Plaintiff had established a prima fade case---Termination of such working relationship by defendant, if allowed at such stage, would cause irreparable loss and injury to plaintiff---Balance of convenience lay in favour of plaintiff--High Court granted interim injunction till disposal of the suit.

2006 CLD 210; PLD 2002 Kar.420; 1999 YLR 2162; PLD 1996 Kar.411; PLD 1994 Kar.388; 1992 CLC 2047; 1990 CLC 609; PLD 1982 Lah.49; (1973)1 All ER 992; 1996 CLC 507; 1992 CLC 2540; PLD 1983 Kar.387; 1997 SCMR 220; 2003 CLC 695; 1994 CLC 1601; PLD 1990 Kar. 1; 1983 CLC 1695; 2006 CLC 430; 1997 MLD 1294; 1993 SCMR 183; PLD 1981 Kar.170; 2004 CLD 343; 2005 CLC 1602; 2002 MLD 1714; 1994 CLC 726; PLD 1987 Kar. 112; 1980 SCMR 588; 2004 CLC 1029; 2003 CLC 649; PLD 1968 Kar.222; PLD 1996 Kar.393; PLD 1993 Kar.700; 1998 MLD 1879; Martin Baker Aircraft Co. Ltd. v. Canadian Flight Equipment Ltd. (1955) (2) All E.R. 722; 1997 CLC 1903; PLD 2007 Kar. 278; PLD 1965 SC 83; PLD 1961 SC 17; PLD 1975 SC 667; PLD 1958 SC 41; 2003 SCMR 50; PLD 1978 Kar.1041; PLD 2004 SC 860; 2002 AC 114; PLD 1966 Lah.195; PLD 2002 Kar.83; 1992 CLC 2209 and Pakistan Automobile Corporation Ltd. v. General Motors Overseas Distribution Corporation PLD 1982 Kar.796 at 807-809 ref.

(g) Civil Procedure Code (V of 1908)---

----O.XXXIX, Rr.1 & 2-Observations of court while granting interim injunction-Validity-Such observations would be tentative in nature and would not come in way of either party at time of trial or final decision of suit.

(h) Administration of justice---

---Each case is to be adjudged on its own facts, merits and strength.

Business Computing International v. IBM World Trade Corporation 1997 CLC 1903 at page 1912 rel.

Makhdoom Ali Khan for the Plaintiff.

Mansoor-ul-Arfin and Muhammad Shafi Siddiqui for the Defendants.

2010 C L D 828

[Karachi]

Before Muhammad Tasnim, J

UNITED BANK LIMITED---Plaintiff

Versus

PROGAS PAKISTAN LIMITED---Defendant

Suit No.68 of 2009, decided on 13th May, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 10---Recovery of bank loan---Leave to defend the suit---Application for leave to defend the suit demonstrated that provisions of S.10(3), (4) and (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001, had not been complied with--Effect---If application for leave to defend the suit did not comply with the requirements of S.10(3), (4) and (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001, such application was liable to be dismissed--Defendant failed to show any sufficient cause for its inability to comply with such requirements---As the defendant did not discharge its obligation as per agreement, suit was rightly filed by bank---Defendant failed to make out any substantial question of law as well as facts in respect of which any evidence was required to be led by parties-Application for leave to defend the suit filed by defendants was dismissed by High Court---Suit was decreed in circumstances.

National Bank of Pakistan v. Al-Asif Sugar Mills Limited, and others 2001 MLD 1317 and Habib Bank Ltd. v. A.B.M. Graner (Pvt.) PLD 2001 Kar.264 Disting.

Habib Bank Limited v. Messrs Sabcos (Pvt.) 2006 CLD 244; Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406; Abdullah Bhai and others v. Ahmad Din PLD 1964 SC 106; Younus v. Mrs. Hameeda 1982 CLC 580; National Bank of Pakistan v. Messrs A.I. Brothers (Pvt.) Limited and others 2007 CLD 1356 and Muhammad Arshad and another v. Citibank N.A., Al-Fallah Building, Lahore 2006 CLD 1011 ref.

Ijaz Ahmed for Plaintiff.

Abdul Sattar Lakhani for Defendant.

2010 C L D 838

[Karachi]

Before Muhammad Tasnim, J

NATIONAL BANK OF PAKISTAN---Decree-holder

Versus

Messrs NAYA DOUR MOTORS (PVT.) LIMITED---Judgment-Debtor

C.M.A.No.270 of 2009 and Execution No.232 of 2000, decided on 14th May, 2010.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XLV of 1997)---

---S.18---Civil Procedure Code (V of 1908), O.XXI, R.11 & O.XXXIV, R.13---Execution of decree-Mortgaged property---Second charge---Contention of applicant was that it had second charge over the mortgage property, hence was entitled to have share in the amount which was lying with Official Assignee as decree holder had received extra amount from the Official Assignee---Validity---Applicant did not have mortgage decree in its hand and decree in the hands of applicant was simply a money decree hence the provisions of O.XXXIV, R.13 C.P.C. would not apply to applicant---Decree holder, under decrees in execution, was entitled to mark-up from the date of institution of the suit till the date of payment, hence the decree holder was rightly paid by Official Assignee-Application was dismissed in circumstances.

Messrs J. Tyler and Co. v. Messrs United Bank Limited PLD 1982 Kar.639 disting.

Hussain Bakhsh v. Settlement Commissioner, Rawalpindi and others PLD 1970 SC 1; Industrial Development Bank of Pakistan v. Habib Bank Limited and others Special High Court Appeal No.89 of 2004; Messrs Eagle Star Insurance Co. Limited v. Messrs Usman Sons Limited and others PLD 1969 Kan 123; Messrs Industrial Development Bank of Pakistan v. Messrs Maida Limited and others 1994 SCMR 2248 and Mst. Shanti v. Karachi Transport Corporation and others 2000 CLC 595 ref.

Azizur Rehman for Decree-holder.

Judgment-Debtor absent.

Muhammad Abdul Aziz Khan for Applicant.

2010 C L D 848

[Karachi]

Before Syed Hasan Azhar Rizvi, J

MVIUHAMMAD SERAJULHAQ SYED---Plaintiff

Versus

M.V. BANGLAR MAYA through Master and 3 others---Defendants

Admiralty Suit No.38 of 2008, decided on 28th May, 2010.

(a) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)---

---S.3(2)(F)(N)--Pakistan Merchant Shipping Ordinance (LII of 2001), S.125---Suit for recovery of wages and medical expenses--Plaintiff being Master Marine Engineer holding certificate under Merchant Shipping Act, 1923 met an accident on board defendant's vessel, during Hatch Cleaning operation in capacity of Chief Officer---Surgeon in Chittagong diagnosed comminuted fractures injuring plaintiffs s back and neck of right femur bone and advised him bed rest for 6 weeks after undergoing surgery and internal fixation of Dynamic Hip Screw---Comminuted facture being an injury in which bone was broken, splintered or crushed into a number of pieces--Plaintiff was discharged from Chittagong Hospital after about three months and eight days and brought on wheel chair in injured condition by air to Karachi As per medical certificate issued by renowned Consulting Orthopedic Surgeon at Karachi verified and countersigned by Port Health Officer, plaintiff was unfit for sea service for rest of his life-Defendant had not denied such accident and medical certificate issued to plaintiff-Admission of defendant's witness that his company would not accept any disable person as an employee on board the vessel-According to Agreement for Employment on Ships, member of crew on being discharged by reason of injury not due to his own willful act would be paid full wages for a period of 12 weeks from date of his discharge in addition to wages earned on board the vessel during agreement and cost of any treatment for a period of four months -Plaintiff had spent during four months more than Rs.5,00,000 for treatment of his injuries-According to agreement of employment, in event of injury resulting incapacity of a seafarer during employment on board, owner would pay compensation equivalent to 48 months wages to crew---Such agreement did not provide for constitution of Medical Board by Shipping Master to verify degree of plaintiff's incapacity---Defendant had never bothered to examine plaintiff before Port Health Officer or their own constituted Medical Board to verify degree of incapacity in Chittagong---Comminuted fracture and compound fracture were not the same---Plaintiff could not walk without stick/crutches or wheel­chair--Evidence of parties and medical record produced before court established that plaintiff was completely and permanently incapacitated for rest of his life for sea service---Plaintiff was entitled to 48 months wages and medical expenses---Suit was decreed with costs and mark-up as prescribed by State Bank of Pakistan from date of suit till realization of whole decretal amount.

PLD 1973 SC 1076; 1982 CLC 1128; PLD 1975 Kar.819; 1996 MLD 1819 and PLD 1968 SC 140 ref.

(b) Medical jurisprudence---

----"Comminuted fracture"---Definition.

According to the definition, the comminuted fracture is an injury in which bone is broken, splintered or crushed into a number of pieces.

Aga Faqir Muhammad and Aga Zafar Ahmed for the Plaintiff.

A.H. Mirza for the Defendants.

Date of hearing: 21st April, 2010.

2010 C L D 876

[Karachi]

Before Muhammad Tasnim, J

ELI LILLY AND COMPANY through Authorized Signatory---Plaintiffs

Versus

ATCO LABORATORIES (PVT.) LIMITED through Chief Executive and another---Defendant

Suit No.973 of 2007 and C.M.As, Nos.5437 and 5780 of 2010, decided on 10th June, 2010.

Patents Ordinance (LXI of 2000)---

----S.60---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 &2---Infringement of patent---Suit for permanent injunction to restrain defendant from infringing/counterfeiting plaintiffs patent 'Gemcitabine'---Application for temporary injunction by plaintiff to restrain from producing, marketing or selling any product containing Gemcitabine either by name of GEMITA or any other trade name-Defendant's plea was that he had no concern with process employed by plaintiff for manufacturing of Gemcitabine; that his product was distinct and unique and had no relevance with manufacturing process of plaintiffs product; that chemical formula, empirical formula was different than plaintiffs Gemcitabine--Validity---Such disputed question of facts could not be resolved without recording evidence of parties---Application was dismissed by High Court in circumstances.

Glaxo Group Limited and others v. Evron (Pvt.) Limited and another 1992 CLC 2382; English Pharmaceutical Industries and another v. Shire Biochem Inc. and others 2007 CLD 1570; Glaxo Group Limited and others v. Pakistan Pharmaceutical Products (Pvt.) Limited 1991 MLD 85; Sandoz Limited and another v. Pakistan Pharmaceutical Products Limited 1987 CLC 1571; Smith Kline and French Laboratories Ltd. and another v. Ferozsons Laboratories Ltd. and another 1992 MLD 2226; Rohtas' Industries Ltd. and others v. Indian Hume Pipe Co. Ltd. AIR 1954 Patna 492; MERC and Co. Ing. and others v. Hilton Pharma (Pvt.) Ltd. 2003 CLD 407; Pfizer Limited and another v. Wilson's Pharmaceuticals 2002 CLD 1653; Khawaja Tahir Jamal v. Messrs A.R. Rehman Glass 2005 CLD 1768; Smith Kline Beecham Corporation and others v. Pharma EVO (Pvt.) Ltd. 2006 CLD 716 and Shire Biochem Inc. and others v. English Pharmaceutical Industries 2006 CLD 1038 ref.

Mueen Qamar and Amna Salman for the Plaintiffs.

Abid S. Zuberi, Muhammad Umer Lakhani and Haseeb Jamali for the defendants.

2010 C L D 890

[Karachi]

Before Amir Hani Muslim, J

Messrs EXIDE PAKISTAN LIMITED---Plaintiff

Versus

PAKISTAN ACCUMULATORS (PVT.) LIMITED and 2 others---Defendants

Suit No.33 and C.M.As. Nos. 230, 7623, 7942 and 7856 of 2006, decided on 20th December, 2006.

Trade Marks Ordinance (XIX of 2001)---

----Ss. 5(2), 39(2), 40(1), 46 & 53---Infringement of registered trade mark---Suit for permanent injunction, damages and accounts---Plaintiff had sought restraining order against the defendant on the ground that the plaintiff was the owner of Trade Mark 'EXIDE' and defendant was also manufacturing the same in Pakistan under orders of a foreign based company thereby infringing his registered trade mark---Trade mark of principal of defendant foreign based company, which had been registered under foreign law, would be subordinate to the provisions of the Trade Marks Ordinance, 2001 in Pakistan---Defendant on the basis of such a claim, could not manufacture Batteries "EXIDE" in the name of plaintiff, which ex facie would be violative of provisions of S.40(1) of Trade Marks Ordinance, 2001---Defendant in law had no authority to manufacture batteries under the trade name of "EXIDE" on the strength of an order placed fromabroad---Defendant was restrained from accepting any such order by which right of plaintiff as owner of registered trade mark 'EXIDE' was infringed in terms of Ss.40 & 39 of Trade Marks Ordinance, 2001---Plaintiff, in view of applications filed by the Customs department for rejection of plaint on the ground that plaintiff had failed to implead the Federal Government, the plaintiff was granted two weeks' time to amend the title of the plaint by impleading the Federal Government as party---In case the plaintiff would fail to amend the title of the plaint within said period, suit against Customs department would stand dismissed.

Ms. Shazia Tasleem along with Irfanullah Khan for Plaintiff.

Munawar Ghani for Defendant No.1.

Raja Muhammad Iqbal for Defendants Nos.2 and 3.

2010 C L D 894

[Karachi]

Before Sarmad Jalal Osmany, C.J

NAZIR AHMED TUNIO---Applicant

Versus

STANDARD CHARTERED BANK (PAKISTAN) LIMITED---Respondent

Civil Transfer Application No.56 of 2009, decided on 11th January, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 7(5) (b) (6) (7)---Transfer of Banking suit---Application for---Banking suit pending before Banking Court at place 'K' had been sought to be transferred on the ground that Presiding Officer of the court could be prejudiced against counsel for the applicant, who had assisted the Senior Advocates of Supreme Court, in constitutional petition filed against all those Judges of Superior Judiciary who took oath under P.C.O. which was in violation of the earlier order passed by the Bench of Supreme Court---Validity---Nothing had been said in the transfer application except the apprehension in the mind of the counsel that the Presiding Officer would be prejudiced against him, which was not sufficient for transfer of the case---Transfer application was dismissed in circumstances.

Haq Nawaz Talpur for the Applicant.

Ms. Naheed A. Shahid for the Respondent.

2010 C L D 896

[Karachi]

Before Gulzar Ahmed and Irfan Saadat Khan, JJ

Messrs SPEEDWAY FONDMETALL, PAKISTAN LTD.---Appellant

Versus

NIB BANK LTD.(Formerly PICIC)---Respondent

First Appeal No.27 of 2009, decided on 9th June, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9, 10 & 22---Suit for recovery of finance---Plaint finding mention filing of statement of accounts---Suit decreed by Banking Court after dismissing leave application---Plea of defendant in appeal that no statement of accounts was filed with plaint---Validity---Defendant along with appeal had filed copy of plaint, which found mention filing of certified statement of accounts---Defendant had neither filed copies of statement of accounts with appeal nor requested to court for calling of record of suit so as to enable court to examine as to whether such statement did comply with requirements of S.9(2) of Financial Institutions (Recovery of Finance) Ordinance, 2001--Presumption would be that plaint finding mention filing of certified statement of account was so and not otherwise---High Court 'repelled such plea in circumstances.

PLD 1985 SC 405; PLD 2005 SC 842; PLD 2000 Lah.232 and 2008 CLD 449 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.2(d)---Negotiable Instruments Act (XXVI of 1881), S.5---Pakistan Investment Bond (PIB) sold by Bank---Validity---Such bond being a bill of exchange would be a finance under Financial Institutions (Recovery of Finances) Ordinance, 2001.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9, 10 & 22---Civil Procedure Code (V of 1908), O.XX, R.5---Suit for recovery of finance---Suit decreed by Banking Court after dismissing leave application---Defendant's plea in appeal that Banking Court had not considered in its judgment issues raised by him in leave application---Validity---Provisions of O.XX, R.5, C.P.C., would apply to a suit wherein issues had been framed and only then court would be required to state its finding with reasons on each issue---Questions of framing of issues and then deciding matter as per O.XX, R.5, C.P.C., by Banking Court would have arisen, if defendant's leave application had been granted and suit put to trial---Suit had never went to trial due to dismissal of defendant's leave application, thus, no occasion had arisen to frame issue and make compliance of O.XX R.5, C.P.C.---High Court repelled such plea in circumstances.

Emmadul Hassan for Appellant.

Syed Mamnoon Hasan for Respondent.

Dates of hearing: 3rd and 9th February, 2010.

2010 C L D 903

[Karachi]

Before Muhammad Tasnim, J

BANK OF PUNJAB---Plaintiff

Versus

FIRST NATIONAL EQUITIES LIMITED---Defendant

Suit No. B-64 of 2009, decided on 25th May, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 10---Suit for recovery of finance---Leave to defend suits---Raising claim of set-off or counter claim by defendant in application for leave to defend suit---Effect---Defendant by raising such claim would not become entitled to grant of leave to defend suit---Granting of leave on such ground would change complexion of suit instituted under a special law---Such claim could properly be dealt with by court of competent jurisdiction including Banking Court in accordance with law through separate proceedings--Leave on such ground was declined in circumstances.

Rahat Badaruddin Bandey v. Union Bank Limited through Duly Authorized Attorneys 2005 CLD 1080; Philippine Airlines Inc. v. Paramount Aviation (Pvt.) Limited and others PLD 1999 Kar.227; Chartered Bank, Share Quaid-e-Azam's case 2005 CLD 1067; Agricultural Development Bank of Pakistan through Branch Manager v. Allah Ditta 2004 CLD 1657; Agricultural Development Bank of Pakistan through Manager v. Sakandar Hayat 2004 CLD 752; PICIC v. Frontier Ceramics Ltd. and others 2000 CLC 287; Mrs. Tehmina Bashir v. Abdul Rauf and another 1995 CLC 973; Messrs Alvera Enterprises v. Federation of Pakistan and others W.P.No.9304 of 2010; Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406; Habib Bank Limited v. Messrs Sabcos (Pvt.) 2006 CLD 244; Muhammad Arshad and another v. Citibank N.A., Al-Fallah Building, Lahore 2006 CLD 1011; National Bank of Pakistan v. Messrs A.I. Brothers (Pvt.) Limited and others 2007 CLD 1356; American Express Bank Ltd. v. Adamjee Industries Limited 1995 CLC 880; Messrs Razzaq and Company v. Messrs Riazeda (Pvt.) Ltd. 1990 CLC 1243 and Siddique Woolen Mills and others v. Allied Bank of Pakistan 2003 SCMR 1156=2003 CLD 1033 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.9---Contract Act (IX of 1872), S.176---Suit for recovery of finance by Bank without selling pledged goods/shares---Maintainability---Pawnee/pledgee having a concurrent right either to bring a suit upon debt or sell pledged goods after giving reasonable notice of sale---Bank had rightly filed such suit in circumstances---Principles.

Salim Adamjee v. Al-Faysal Investment Bank Ltd. and another PLD 1999 Kar.468 and Messrs Crystal Enterprises and 6 others v. Platinum Commercial Bank Ltd. and 2 others through General Attorney 2002 CLD 868 rel.

Abdul Sattar Lakhani for Plaintiff.

Saalim Salam Ansari for Defendant.

Date of hearing: 19th May, 2010.

2010 C L D 920

[Karachi]

Before Zahid Hamid, J

M. MUHAMMAD SHAFI & CO.---Appellant

Versus

A. REHMAN ENTERPRISES and 3 others---Respondents

First Appeal No.34 of 2004, decided on 28th June, 2010.

(a) Civil Procedure Code (V of 1908)---

----O.XXXVII, Rr. 2 & 3---Suit for recovers of amount on basis of dishonoured cheque---Placing on record by plaintiff photocopy of cheques instead of original---Failure of defendant to furnish surety in compliance of order granting leave to defend suit---Liability of suit amount not only admitted by defendant in his letter, but also not disputed during cross-examination of plaintiff--Defendant not volunteered for his cross-examination on affidavit filed in support of leave application-Effect--Plaintiffs claim stood established in circumstances---Principles.

Messrs M.A. Majeed Khan v. Karachi Water and Sewerage Board and others PLD 2002 Kar.315; Messrs Ahan Saz Contractors v. Pak Commercial Limited 1999 MLD 1781; Messrs Chowdhury Allah Bux Moula Bux v. Messrs Aijaz Moula Bux and another PLD 1973 Kar.468; Gulab v. Coast Lines and others 1994 CLC 2284; Messrs Combined Enterprises v. Water and Power Development Authority, Lahore PLD 1988 SC 39; Abdullah v. Shaukat 2001 SCMR 60 and Fayyazul Hasan v. Messrs National Feed (Pvt.) Ltd. 2001 MLD 1630 ref.

(b) Partnership Act (IX of 1932)---

----S.69---Proceedings in name of firm instituted by a partner---Objection regarding non-registration of firm and its locus standi to sue not raised by defendant---Effect---Such objection would be deemed to have been waived---Principles.

Under section 69 of the Partnership Act, 1932, no suit to enforce a right arising from a contract can be instituted in any Court by or on behalf of a firm against any third party, unless the firm is registered and the persons suing are or have been shown in Register of Firm as partners in the firm. It is an established position in law that a partner may file proceedings in the name of the firm. However, it is for the defendant to point out to the Court any legal infirmity in the proceedings and if the objection is not raised as to non-registration of the firm and its locus stands to sue, the objection may well remain unnoticed by the Court, escape its attention and may be deemed to have been waived.

(c) Civil Procedure Code (V of 1908)---

----O.XXXVII, Rr. 2 & 3---Partnership Act (IX of 1932), S.69---Suit for recovery of amount on basis of dishonoured cheque by partnership firm---Maintainability---Basically bill, on being dishonoured gave right to sue to its holder---Such suit would be decided independently of a right arising from a contract as referred to in S.69 of Partnership Act, 1932---Court seized of matter under summary procedure would not be obliged to advert to subterranean contract between parties giving rise to a right to sue particularly when leave was refused or not availed.

(d) Qanun-e-Shahadat (10 of 1984)---

----Art.2(4) (5)---Terms "proved" and "disproved" as used in Art.2(4) & (5) of Qanun-e-Shahadat, 1984---Connotation---Not conclusive proof of a fact in physical form, but only positive probability or likelihood of its existence would be required---Principles.

In the given circumstances, one should not assume that the requisite evidence in relation to any fact is to be proved conclusively in a physical form. Obviously, the words "so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists" would mean something falling within the scope of positive probability far short than being conclusive. The degree of clarity of a fact is to bear proximity with probability or likelihood of its existence and that is all.

Jam Asif Mehmood and Tauqeer Ahmed Bokhari for Appellant.

Muhammad Safdar for Respondents.

Date of hearing: 2nd March, 2010.

2010 C L D 935

[Karachi]

Present Sarmad Jalal Osmany, C.J and Zahid Hamid, J

Messrs KOHISAR ENTERPRISES through Partner---Petitioner

Versus

PROVINCE OF SINDH through Secretary and another---Respondents

Constitution Petition No.D-232 of 2009, decided on 7th May, 2010.

Constitution of Pakistan (1973)---

----Art.199---Constitutional petition---Tender notice---Procedural fairness---Transparent proceedings---Subsequent increase in rate---Refund of earnest money---Petitioner claimed refund of earnest money on the ground that revision in rate of royalty was arbitrary, unilateral and mala fide---Validity---Tender notice was virtually a liquid, partly concealed and inchoate invitation to offer and acceptance on the part of petitioner would amount to offer which was responded to by variation of proposal by specifying and almost doubling the liabilities---Increase in rate demanded subsequently was substantially raised by 50% above the existing rate and such rate was introduced immediately within a few days of tender, under notification---If increased royalty rate could be conceived by parties publishing tender notice as the process in all probabilities was in offing why the same information was not spelt out---Authorities might be knowing that increase in royalty rate was going to rise by 50% above the stipulated rate specified in public notice but such information was withheld by not mentioning that the rise could go up to 50% of the given rate---Authorities, therefore secured an advantage to twist the transaction in their favour if they so liked at a later stage---Procedural fairness of transaction was completely lacking which had betrayed the outcome of transaction itself-Courts under such circumstances had the power to ensure substantive fairness of transaction---Petitioner was entitled to refund of earnest money, which was wrongly stated to be the security deposit---Petition was allowed accordingly.

Pakistan Industrial Development of Pakistan v. Aziz Qureshi PLD 1965 (W.P.) Kar.202; City School (Pvt.) Ltd. Lahore Cantt v. Privatization Commission Government of Pakistan and others 2002 SCMR 1150; Malik Muhammad Nawaz v. Municipal Committee Pattoki and others 2003 SCMR 1191; East Asiatic Co. (India) Ltd. Bombay v. Messrs Rugnath Tricumdas AIR 1953 Saurashtra 122; Messrs Shams and brothers v. Government of Pakistan and others 2007 CLD 125; S.M. Saleem v. Province of Sindh and others 2007 YLR 2001; Pakistan Steel Products v. Messrs Indus Steel Pipes Ltd. 1996 CLC 118 and Abdul Rahim and 2 others v. UBL PLD 1997 Kar.62 ref.

Irfan Ahmed Memon for Petitioner.

Sarwar Khan, Additional A.G. along with Abdullah Memon, Director-General, Mines and Mineral Development, Government of Sindh.

Date of hearing: 2nd April, 2010.

2010 C L D 942

[Karachi]

Before Muhammad Tasnim, J

Haji MUHAMMAD RAFIQ through Constituted Attorney and 2 others---Plaintiffs

Versus

EMAAR GIGA KARACHI LIMITED and 6 others----Defendants

Suit No.111 and C.M.A. No.764 of 2010, decided on 4th June, 2010.

(a) Companies Ordinance (XLVII of 1984)---

----Ss.86(1), 92 & 94---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2--Specific Relief Act (1 of 1877), Ss.42 & 54---Suit for declaration and injunction---Company through resolution agreeing to issue 54,198,510 ordinary shares of Rs.10 each with aggregate value of Rs.541,985,100 by offering as Right shares to existing members in proportion to number of shares held by them in accordance with S.86(1) of Companies Ordinance, 1984---Plaints plea that he was shown in Board of directors' meeting in which impugned resolution was passed, but his dissent was not entertained by the Board---Application for interim injunction by plaintiff for suspending operation of impugned resolution---Validity---Such company, if authorized by its Articles of Association, might alter conditions of its memorandum for increasing its authorized capital and that too by passing resolution in general meeting of Board of Directors and getting same approved from Securities and Exchange Commission---Neither conditions of memorandum of defendant-company nor its authorized capital was being altered---Right shares were being offered through impugned resolution for amount unissued capital within limit of authorized capital---Defendant-company had taken impugned decision just to improve its financial condition for achieving object of its formation---Provisions of Ss.92 & 94 of Companies Ordinance, 1984 would not apply to facts of present case---Plaintiff had no prima fade case for grant of injunction---Balance of convenience did not lie in plaintiffs favour---Suspension of impugned resolution would cause serious prejudice to defendant-company---Application for interim injunction was dismissed in circumstances.?

Messrs China Fiber Co. Ltd. v. Abdul Jabbar PLD 1968 SC 381; Muhammad Aref Effendi v. Egypt AIR 1980 SCMR 588; Jamil Ahmed v. Provincial Government of W. Pakistan PLD 1982 (Lahore) 49; Molasses Export Co. Ltd. v. Consolidates Sugar Mills Ltd. 1990 CLC 609; Balaglam Oil Mills Ltd. V. Sha Karachi Trading AG PLD 1990 (Karachi)1; Mrs. Naz Shaukat Khan v. Mrs. Yasmin R. Minhas 1992 CLC 2540; Nooruddin v. Messrs Sindh Industrial Trading Estate Ltd. 1993 CLC 2204; Mian Ejaz Siddiq v. Mst. Kaneez Begum 1992 CLC 1658; Hafizullah Khan v. Al Haj Ch. Barkat Ali PLD 1998 (Karachi)274; Al-Jamiaul Arabia Ahasanul Uloom and Jamia Masjid v. S. Sibte Hasan 1999 YLR 1634; AM Fabric (Pvt.) Ltd. V. IDBP 2003 CLD 1321; Jahangir Siddiqui v. Dallah Arbaraka UK Ltd, 2005 CLD 406; Bolan Bank Limited through Attorneys v. Baig Textiles Mills (Pvt.) Limited through Chief Executive and 6 others 2002 CLD 557; Khan Iftikhar Hussain Khan of Mamdot (Represented by 6 Heirs) v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550; Taxam's Company Law Digest 1913-1993 (Pages 20 to 24); Puddephat v. Leitht No.1 [191611 Ch.200; Greenwal v. Porter [190211 Ch. 530; Euro Brokers Holdings Ltd. v. Monecor (London) Ltd. 2003 EWCA Civ 105; Muhammad Suleman Kanjiani and 3 others v. Dadex Eternit Ltd. through Chief Executive and 4 others 2009 CLD 1687; Khyam Films and another v. Bank of Bahawalpur Ltd. 1982 CLC 1275; Haji Muhammad Rafiq v. Shahenshah Jehan Begum PLD 1987 (Karachi) 180; Sahibzada Anwar Hamid v. Messrs TOPWORTH Investments (MACAU) Ltd. through Chairman and 5 others 2003 YLR 2843; Messrs Pioneer Cables v. Messrs S.G. Fiberes Ltd. 2007 YLR 1981; Messrs Hotel GALAXY (Pvt.) Limited through Chief Executive and 2 others v. Days Inn Worldwide Inc. 2007 CLD 1590 and Trading Corporation of Pakistan (Pvt.) Ltd. v. Merchant Agency 2007 CLC 1811 ref.

(b) Company---

----Interference of court with affairs and management of company or decision taken by its Board of Directors---Scope stated.

Generally court does not interfere with the affairs and management of company or decision taken by Board of Directors as long Directors of the Company perform their function strictly in accordance with the Companies Ordinance, 1984, unless there is any arbitrary, capricious or whimsical act on the part of the Board of Directors of the company. Where the action of the Board of Directors is against the interest of the shareholders or based on malice for some other justifiable reasons pointed out by shareholders, only then court can interfere in the affairs and management of the company.?

Muhammad Naseem and Nadeem Akhtar for Plaintiffs.

Taha Alizai for Defendants.

Dates of hearing: 5th and 22nd May, 2010.

2010 C L D 963

[Karachi]

Before Munib Akhtar, J

Mst SAKINA KHATOON and 6 others---Plaintiffs

Versus

S.S. NAZIR AHSAN and 17 others---Defendants

Suit No.867 and C.M.A. No.5641 of 2010, decided on 7th July, 2010.

(a) Companies Ordinance (LXVII of 1984)---

----S.209---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Specific Relief Act (1 of 1877), Ss.42 & 54---Suit for declaration---Interim injunction, grant of---Necessary ingredients---Prima facie case---Scope---Assets and properties of company---Ownership---Suit property was owned by defendant company and plaintiffs claimed to be owners of the same on the ground that their predecessor­-in-interest held majority shareholding in the company---Validity---Company was separate legal entity and its assets and properties belonged to it and not to its shareholders---What deceased held and owned in company was the shareholding that stood in his name and the same did not mean that he owned assets of the company including property in question---Plaintiff could not lay claim to the shareholding of deceased in the company---Plaintiffs did not have any right or interest in any of the assets of the company including suit property---For a plaintiff to successfully maintain application for interim injunctive relief, all three ingredients necessary for such relief must be found to exist in plaintiffs favour---Plaintiff must firstly establish a prima fade case and the same must always be examined in the context of the application under consideration---Plaintiff must show that he had a prima fade case for the grant of relief that he was seeking---Property in question was the only income generating asset of the company and it was not the plaintiff but the company which might suffer irreparable loss and injury, if the application was allowed since that would in effect deprive the company of its sole source of income--Plaintiffs were not entitled to interim relief---Application was dismissed in circumstances.

Muhammad Taj v. Arshad Mehmood 2009 SCMR 114 and Jamil Akhtar and others v. Las Baba and others PLD 2003 SC 494 ref.

(b) Companies Ordinance (LXVII of 1984)---

----S.290---Civil Procedure Code (V of 1908), O.XXIX, R.10-Suit by or against company-Mismanagement--Minority shareholders, protection of rights---Procedure---If a company was in the control of majority shareholders who were abusing their position (e.g.) by defrauding the company, the minority shareholders can institute legal proceedings to bring such a situation to an end---Such action is a derivative or representative action and minority shareholders do not act in their right or on their own behalf---Suit is brought on behalf of the company (which is unable to take action because of its control by majority shareholders)---Company is and must be impleaded in such proceedings.

Mian Mushtaq Ahmed for Plaintiff.

Agha Zafar Ahmad for Defendants Nos. 1 to 14.

Ms. Samia Faiz Durrani for Defendant No.16.

2010 C L D 972

[Karachi]

Before Sh. Azmat Saeed and Sh. Ahmad Farooq, JJ

FAZAL-E-RABBI---Appellant

Versus

JUDGE BANKING COURT and 4 others---Respondents

R.F.A. No.446 of 2004, decided on 22nd March, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.12---Application for setting aside ex parte decree---Banking Court 'dismissed application of defendant on the ground of being barred by limitation---Section 12 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 provided that where the defendant was served through citation the point of limitation of 21-days for filing application under the said provision commenced from the date of knowledge---Impugned order, in the present case, showed that there was no finding as to the date of knowledge---Such order was not sustainable---High Court allowed the appeal and remanded the case to Banking Court to decide the application of defendant, afresh in accordance with law---Appeal was allowed.

Muhammad Yasin Hatif for Appellant.

Maqsood Ahmad for Respondents.

2010 CLD981

[Karachi]

Before Muhammad Afzal Soomro, C.J

NAZIMUDDIN and another---Applicants

Versus

S.M.E. LEASING LIMITED---Respondent

Civil Transfer Application No.54 of 2007 decided on 7th March, 2008.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 5 & 9---Civil Procedure Code (V of 1908), S.24---Defendant's application seeking transfer of plaintiffs suit from Banking Court to Original Banking Jurisdiction of High Court for its clubbing with defendant's suit pending against plaintiff---Validity---Trial of both such suits would be expedient in interest of justice and both parties as joint trial thereof would certainly obviate possibility of conflicting judgments--High Court accepted application in circumstances.

Malik Jehangir Khan v. Banking Tribunal No.1 Karachi 2002 CLD 1466; Messrs Shazim International (Pvt.) Ltd. v. Messrs First Women Bank Ltd. T.A. No.10 of 2006; Mybank Ltd. v. Speedway Fondmetall Pakistan Ltd. and others 2007 CLD 1547; Messrs Sialkot Dairies Ltd. v. Agricultural Development Bank of Pakistan 2003 CLD 67 and Masjid Bilal v. Wall Muhammad and others 2006 CLC 1757 ref.

Messrs First Women Bank Ltd. v. Registrar High Court of Sindh 2004 SCMR 108 fol.

Salam Salim Ansari for the Applicant.

Muhammad Rashid for Respondent.

2010 C L D 999

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Ather Saeed, JJ

HAFIZUR REHMAN and 2 others---Appellant

Versus

Messrs FRESH FARMS (PVT.) LTD. and 6 others---Respondents

First Appeal No.36 of 2005 decided on 9th February, 2007.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.19 & 22--Civil Procedure Code (V of 1908), O.XXI, R.2-Limitation Act (IX of 1908), Ss.3 & 5-Appeal against order of Banking Court recording satisfaction of money decree on application and statement of decree­-holder/Bank-Application for condonation of delay of five days in filing appeal-Appellant's plea that no limitation would run against impugned order for being a void order as Director of applicant's company had no authority to pay decretal amount to Bank-Validity-Jurisdiction of Executing Court was meant for ensuring satisfaction of decree under execution-No other extraneous dispute having no nexus to the object and satisfaction of decree could be agitated before, examined or adjudicated by Executing Court---Impugned order was legal---Applicant despite knowing well had not explained in such application delay of each and every day to satisfaction of Court---High Court dismissed such application in circumstances.

National Bank of Pakistan v. Khairpur Textiles Ltd. and others 2001 CLC 1187; Jehan Khan v. Province of Sindh and others PLD 2003 Kar.691 and Ali Muhammad v. Hussain Bakhsh and others PLD 1976 SC 37 distg.

(b) Civil Procedure Code (V of 1908)---

---O.XXI, Rr.2 & 10---Jurisdiction of Executing Court---Scope---Such jurisdiction would extend to ensure satisfaction of decree under execution---No other extraneous dispute having no nexus to the object and satisfaction of decree could be agitated before, examined or adjudicated by Executing Court.

Khawaja Shamsul Islam for Appellants.

Muhammad Rasheed Khan for Respondent No.2.

2010 C L D 1057

[Karachi]

Before Muhammad Ali Mazhar, J

MUHAMMAD TAHIR---Applicant

Versus

EMIRATES BANK INTERNATIONAL PJSC and another ---Respondents

J.M. Application No.13 of 2007 in Suit No.67 of 2004 decided on 23rd July, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 12---Civil Procedure Code (V of 1908), S.12(2)---Sindh Chief Court Rules (O.S.), Rr.140, 141, 142, 143, 144 & 145---Ex parte decree, setting aside of-Mis­representation-Incorrect address---Substituted service---Principle---Inquiry by High Court official---Defendant sought setting aside of judgment and decree passed by Banking Court on the ground that process was not served on him as his incorrect address was mentioned in plaint and also on the process---Validity---Relevant provisions for process were provided in Sindh Chief Court Rules (O.S) for the convenience and larger public interest and if the same were not followed in letter and spirit, the same would create unnecessary multiplicity of proceedings---Before declaring any person ex parte, the Court ought to ensure that all reasonable and possible efforts had been made for effective service on the parties---Neither bailiff had complied with relevant provisions nor Additional Registrar of High Court had held any inquiry as to sufficiency of service and ordered substituted service---Address of applicant was wrong throughout the proceedings and no efforts were made for personal service on him at the correct address---Judgment and decree was obtained against defendant on misrepresentation, which clearly transpired from wrong address of defendant mentioned in plaint as well as subsequent addresses provided by plaintiff-As the address of defendant was wrong and suit was decreed on the basis of wrong address defendant was never served, hence application under S.12(2), C.P.C. was maintainable on the ground of misrepresentation---Ex parte judgment and decree passed against defendant was set aside and case was remanded to Banking Court for filing of written statement by defendant---Application was allowed in circumstances.

Nouroz Khan v. Haji Qadoor 2005 SCMR 1877; Ahmed Khan v. Haji Muhammad Qassim and others 2002 SCMR 664; Atiqur Rehman v. Novell Data Systems Pakistan (Pvt.) Ltd. 2009 YLR 432; Muhammad Younis v. Additional District Judge, Jhelum 2006 MLD 963; Muhammad Ayub Patel v. Hasham 1997 MLD 1838; Yusuf A. Haroon v: Mahmood A. Haroon 1997 MLD 2246; Mst. Zubeda Begum v. Messrs Long Life Builders 1995 CLC 1290; Zulfiqar v. Muhammad Jan 2002 CLC 932; Syed Ashfaq Ali Shah v. Syed Akhtar Ali Shah 1993 MLD 889 and Haji Karamat Hussain v. Naik Khan Muhammad 1986 CLC 6 ref.

Haji Akbar and others v. Gul Baran and others 1996 SCMR 1703; Syed Muhammad Anwar v. Sheikh Abdul Haq 1985 SCMR 1228 and Nazir Ahmed v. Muhammad Sharif 2001 SCMR 46 rel.

Zia-ul-Haq Makhdoom for the Appellant.

A.H. Mirza and Ghulam Murtaza for the Respondents.

2010 C L D 1115

[Karachi]

Before Muhammad Ali Mazhar, J

ADDITIONAL REGISTRAR OF COMPANIES, KARACHI---Petitioner

Versus

TRI STAR POWER LTD.---Respondent

J.M.No.41 of 2009, decided on 11th August, 2010.

(a) Companies Ordinance (XLVII of 1984)---

----Ss.305 & 309---Winding up of a company---Essential factors requiring consideration by Court stated.

For winding upon of a company, the Court has to consider the grounds (a) that whether the substratum of the company is deemed to be gone; (b) that the object for which it was incorporated, had substantially failed; (c) that whether it is impossible to carry on the business of the company except a loss; (d) that there is no reasonable hope that the object of the trading at profit can be attained, or (e) that existing or probable assets are insufficient to meet the existing liabilities. Before final order of winding up, Court remains under legal obligation to form an opinion under clause (h) of section 305 of the Companies Ordinance, 1984, whether it is just and equitable that company should be wound up. The words `just and equitable" are words of the widest significance and do not limit the jurisdiction of the Court to any case. It is a question of fact and each case must depend on its circumstances.

(b) Companies Ordinance (XLVII of 1984)---

----Ss.209(b), 305, 309 & 320---Petition for winding up of company---Balance sheet of company showing huge losses---Audit report showing company to be dormant and not functional for last ten years---Failure of company to hold Annual General meeting for last seven years---Filing of such petition by Additional Registrar of Companies with approval of Security Exchange Commission of Pakistan granted after hearing company---Dismissal of appeal filed by company against such order of Commission---Validity---Petitioner had raised lawful grounds for winding up of respondent/company, which had not opposed the petition--High Court accepted such petition and appointed official liquidator for submitting preliminary report in terms of S.329 of Companied Ordinance, 1984.

2010 CLD 162; Additional Registrar of Companies v. Messrs Noorie Textile Mills Ltd. 2010 CLD 147 and Additional Registrar Companies v. Karim Silk Mills 2009 CLD 124 ref.

Naved ul Haque, for the Petitioner.

None for the Respondent.

2010 C L D 1243

[Karachi]

Before Muhammad Ali Mazhar, J

Messrs HABIB BANK LTD.---Plaintiff

Versus

Messrs BELA AUTOMOTIVES LTD. and 7 others.---Defendants

Suit No.B-94 of 2001 and C.M.A. No.4652 of 2009, decided on 3rd September, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--

----Ss.7 & 10---Civil Procedure Code (V of 1908), O.VI, Rr.1 & 17---Amendment of pleadings---Once the court decides that the amendment is necessary for the purpose of determining the real question, the court is required by law not only to allow an application made by the party in that behalf but is also bound to direct the amendment for the said purpose---Principles elaborated.

PLD 1985 SC 345; 1989 CLC 2125; 2005 CLD 836; PLD 1995 SC 406 and 2003 CLD 1610 rel.

Falah ul Momineen Trust v. V.P. Abdullah PLD 1970 Kar.179; Muhammad Din v. Shaukat Ali 1980 CLC 1454; Lal Muhammad v. Additional District Judge 1983 CLC 770; Bihari Sahu and others v. Mt. Sudama Kuer and others AIR 1938 Patna 209; Husain Naser v. Syed Shamim Yaqub 1989 CLC 2125; Mst. Ghulam Bibi and others v. Sarsa Khan and others PLD 1985 SC 345; Mst. Rahim Noor v. Mst. Salim Bibi and others PLD 1992 SC 30; Mst. Mumtaz Begum and others v. Province of Sindh and others 2004 CLC 697; Kuwait Flour Mills Co. v. M.V. Kashmir and another 1989 CLC 1459; Industrial Development Bank of Pakistan v. Messrs Zamco (Pvt.) Limited and others 2005 CLD 836 and Agriculture Development Bank of Pakistan v. Mubarak Dairies Limited and others PLD 2008 SC 442 ref.

Shahid Farooq Sheikh v. Allied Bank of Pakistan Limited 2005 CLD 1489; Messrs Maroof Knitwear (Pvt.) Limited v. Allied Bank of Pakistan Limited 2003 CLD 1610 and Pakistan Fisheries Ltd. and others v. United Bank Ltd. PLD 1993 SC (Sic) distinguished.

Badar Alam for the Plaintiff.

Mansoorul Arfin for the Defendants.

Dates of hearing: 28th April, 28th May, 3rd and 4th June, 2010.

2010 C L D 1337

[Karachi]

Before Ms. Rukhsana Ahmad, J

In the matter of: INTERNATIONAL INDUSTRIES LTD. and another

J.M.No.01 of 2010, decided on 12th August. 2010.

Companies Ordinance (XLVII of 1984)---

---Ss.284 & 287---Petition for scheme of arrangement of two companies under S.284(2). Companies Ordinance, 1984---Issuance of notices of filing such petition and its prayer in all major newspapers inviting objections, if any, from general public or any other person having interest therein---Non-receipt of any objection or opposition from any quarter including Security Exchange Commission of Pakistan--High Court approved proposed Scheme of Arrangement in circumstances.

Badaruddin F. Vellani for Petitioners.

Syed Imran Ali Shamsi, Law Officer for SECP.

Date of hearing: 12th August, 2010.

2010 C L D 1529

[Karachi]

Before Faisal Arab, J

KHYBER TEXTILE MILLS LTD. and others---Applicants

Versus

INVESTMENT CORPORATION OF PAKISTAN and others---Respondents

J.M.No.34 of 2008 and C.M.A. No.339 of 2009, decided on 24th February, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 9,10 & 12---Civil Procedure Code (V of 1908), S.12(2)---Ex parte decree, setting aside of-Service of process on wrong address---Defendant (Company) assailed ex parte decree on the ground that its registered office was at place "H" but notices were served and press publication was made at place "K"---Validity---Notice was not served at the registered office of defendant---Plaintiff was also corresponding with defendant at its registered office at place "H", therefore, notice should have been sent at its registered office at place "H"-Judgment and decree passed ex parte against defendant was set aside---High Court allowed 30 days time to defendant for filing application for leave to defend the suit before Banking Court---Application was allowed in circumstances.

1997 SCMR 926 ref.

Emad ul Hasan for Applicants. S. Wahid Ali for Respondents.

2010 C L D 1531

[Karachi]

Before Syed Hasan Azhar Rizvi, J

SARFARAZ QUADRI---Petitioner

Versus

Messrs LIGHT METAL AND RUBBER INDUSTRIES (PVT.) LTD. and 3 others---Respondents

Judicial Miscellaneous Petition No.30 of 2009, 'C.M.As. Nos.722, 723 and 930 of 2009, decided on 26th August, 2010.

(a) Companies Ordinance (XLVII of 1984)---

----Ss.188(1)(b), 209, 265, 305 & 309---Application for Scrutiny of accounts of company through an Auditor/Chartered Accountant,---Serious allegations of embezzlement and misappropriation of company's funds against respondents---Respondents' plea that company was not in a financial position to afford another audit as prayed for---Validity---Company being a family concern of both parties being shareholders thereof--Serious disputes regarding accounts existed between the parties---According to respondent-Director, company was not in a good financial position---Case of investigation through an Inspector was made out from material available on record--Scrutiny of accounts of company for disputed period would not be harmful in such circumstances---High Court directed Security and Exchange Commission of Pakistan to appoint a competent Chartered Accountant/Auditor as Inspector to- investigate affairs of company regarding its accounts for disputed period and submit a detailed report thereon within specified time.

PLD 1965 SC 221; PLD 1997 Kar. 376; 1988 CLC 1955; 2005 CLD 463; 1982 SCMR 494 and PLD 2006 SC 328 ref.

(b) Companies Ordinance (XLVII of 1984)---

----S.265--Investigation into affairs of company through an Inspector--Scope---Court before passing an order under S.265 of Companies Ordinance, 1984 would neither hold a full fledged inquiry in the form of a trial nor record formal evidence, but would decide such matter after following summary procedure provided under S.9 thereof---Principles.

In proceedings under section 265 of Companies Ordinance, 1984, full-fledged inquiry in the form of a trial is not required to be held nor is any formal evidence to be recorded before passing an order under section 265 of the Ordinance. The court has to only satisfy itself prima facie, of course, on the material placed before it that a case for investigation through an Inspector is called for, it is the Inspector to ascertain and determine the truth or otherwise of the allegations during the investigation to be conducted by him, whereafter he has to submit report to the concerned authority. The matter in fact rests in the discretion of the court to decide after following the summary procedure as laid down in section 9 of the Ordinance.

Brothers Steel Ltd. and others v. Mian Mirajuddin and others PLD 1995 SC 320 rel.

Badar Alam for the Petitioner.

Emadul Hasan for the Respondents.

2010 C L D 1541

[Karachi]

Before Muhammad Ali Mazhar, J

HAIDER LADHU JAFFER and another---Plaintiffs

Versus

HABIB BANK LTD. through President and 10 others---Defendants

Suit No.385 of 1996, decided on 31st August, 2010.

(a) Tort---

--Malicious prosecution---Suit for damages--Malicious prosecution was malicious institution against another of unsuccessful criminal, or bankruptcy, or liquidation proceedings, without reasonable or probable cause--In an action for malicious prosecution, the plaintiff must prove that he was prosecuted by the defendant; that the proceedings complained of terminated, in favour of the plaintiff from their nature they were capable of so terminating; that the prosecution was instituted against him without any reasonable or probable cause; that the prosecution was instituted with a malicious intention that was not with the mere intention of carrying the law into effect, but with an intention which was wrongful in point of fact; that he suffered special damage, when the proceedings were other than criminal proceedings, unless the proceedings were such as from their very nature were calculated to injure the credit of the plaintiff.

(b) Tort---

--Malicious prosecution-Law and principles of malicious prosecution explained.

II ASIL (1996)147; Fleming: Torts, 1977, Edn.5, P.597; The Halsbury's Laws of England, Vol 22(2nd Ed. By Hailsham) and Corpus Juris Secundum sets out in Sec.35 (Pages 405-06) quoted

(c) Civil Procedure Code (V of 1908)---

----O. VII, R.11---Rejection of plaint---Only the averments of the plaint were to be considered for the purpose of rejection of plaint.

(d) Tort---

---Malicious prosecution---Suit for compensation---Limitation---According to Art.23 of the Limitation Act, 1908, the limitation for filing suit for compensation for a malicious prosecution was one year; and the limitation would start to run from the date of acquittal of the plaintiff or the prosecution was otherwise terminated--Article 23 of Limitation Act, 1908 would apply when the suit for damages claiming compensation for malicious proceedings was filed---Suit for malicious prosecution must be filed within one year from the date of acquittal of plaintiff-Foundation of an action for malicious prosecution lay in the abuse of the process of the court by wrongfully setting the law into motion; and it was designed to discourage the provision of the machinery of justice for an improper purpose---Cause of action in the case was accrued to the plaintiffs on 20-7-1994, while the suit was filed on 6-8-1995---Suit filed beyond prescribed period of one year, being time-barred under Art.23 of Limitation Act,1908, was dismissed---Limitation Act (IX of 1908), Art.23 & S.3.

Nasir Raza Jafery v. Messrs Macter Pharmaceutical (Pvt.) Ltd. PLD 1998 Kar.250; Abdul Aleem Butt v. Messrs Behria Foundation PLD 2008 Kar.25; Muhammad Zuabir Qureshi v. Munir Hussain Zubair Qureshi PLD 1991 Kar.214; 19 DLR 514; Hakman and others v. Mst. Satto PLD 1958 (W.P.) Lah. 936 and Hakim Muhammad Buta and another v. Habib Ahmad and others PLD 1985 SC 153 ref.

Nemo for the Plaintiffs.

Ghulam Murtaza for the Defendants.

2010 C L D 1565

[Karachi]

Before Muhammad Ali Mazhar, J

In the matter of: Messrs PIMA FOODS LIMITED

J.M. No.17 of 2005, decided on 17th September, 2010.

Companies Ordinance (XLVII of 1984)---

----S.333---Sindh Chief Court Rules (OS), R.863, Form No.212 (Appendix-A), (Affidavit of Official Liquidator as to debts and claims)---Official liquidator---Duties and responsibilities---Claims, determination of---Reference was filed by Official Assignee before High Court without determination of claims of creditors-Validity-Held, it was responsibility of official liquidator to investigate debts or claims sent to him and prior to time appointed for adjudication, file in Court a list supported by affidavit of all debts and claims and distinguish which of the claim in his opinion justly due and proper to be allowed without further evidence and which of them in his opinion ought to be proved by creditors---After appointment of official liquidator under Companies Ordinance, 1984, certain responsibilities and obligations were conferred upon him and that was the reason to provide R.863 of Sindh Chief Court Rules (OS) along with "Form No.212 (Appendix-A), (Affidavit of Official Liquidator as to debts and claims)''-._ Official Assignee did not submit reference in accordance with R.863 of Sindh Chief Court Rules (OS) -Neither the reference had shown that any effort was made by Official Assignee to investigate the claim nor he had expressed his opinion whether amount claimed by creditors was justly due and proper to be allowed without further evidence and which of the claim in his opinion ought to be proved by creditors---Official Assignee did not comply with the necessary rule---Claims of both the parties were not adjudicated upon properly, therefore, High Court directed the Official Assignee to call both the parties and investigate the claim properly and then submit his report in accordance with R.863 of Sindh Chief Court Rules, (OS), for further orders--Reference disposed of accordingly.

United Bank Limited v. Pakistan Industrial Credit and Investment Corporation PLD 2002 SC 1100 and Knowles v. Scott (1891)1 Ch.717 at P.723 ref.

Arnir Bukhari for Messrs International Laboratories (Pvt.) Ltd.

Akhtar Ali Mehmood and Sibtain Mehmood for Pakistan Industrial Development Corporation. (PIDC)

Qadir Bux Umrani, Official Assignee.

2010 C L D 1648

[Karachi]

Present Muhammad Ather Saeed and Munib Akhtar, JJ

A.R. KHAN & SONS (PVT.) LTD. through Authorized Officer and 3 others---Petitioners

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Commerce, Islamabad and 3 others---Respondents

Miscellaneous No.8786 of 2010 in C.P.No.D-2138, decided on 23rd August, 2010.

(a) Constitution of Pakistan (1973)---

----Art.199---Civil Procedure Code (V of 1908), S.20---Constitutional petition---Territorial jurisdiction of High Court---Scope---Person or authority by whose act petitioner aggrieved, if was within territorial limits of High Court or otherwise amenable to its jurisdiction, then such petition would be maintainable---Mere actual physical commission of alleged illegalities by a person or authority at a particular place would not be a determining factor---When more than one High Court had jurisdiction in a matter, then aggrieved party could choose any court for initiating proceedings---Principles.

Trading Corporation of Pakistan (Pvt.) Ltd. v. Pakistan Agro Forestry Corporation (Pvt.) Ltd. and another 2000 SCMR 1703; Syed Muhammad Anwar Iqbal v. Bangladesh Shipping Corporation 1991 CLC 473; Ibrahim Fibers Limited v. Federation of Pakistan and others PLD 2009 Kar.154; Al-Iblagh Ltd. v. The Copyright Board, Karachi 1985 SCMR 758; Deputy Managing Director, National Bank of Pakistan v. Ataul Haq PLD 1965 SC 201; Sandalbar Enterprises (Pvt.) Ltd. v. Central Board of Revenue and others PLD 1997 SC 334; Hafiz Hamdullah v. Saifullah Khan PLD 2007 SC 52 and Nawabzada Muhammad Shahabuddin v. Chairman, Federal Land Commission 1996 CLC 539 (Lah.) ref.

(b) Constitution of Pakistan (1973)---

----Art.199---Constitutional petition challenging illegality actually occurred---Development of some relevant facts subsequent to filing of such petition---Effect---Petitioner might be aggrieved as much as by impending illegality as an illegality that had actually occurred---Such subsequent facts would not make such petition premature---Principles.

Sh. Ajaz Rasool v. Vice-Chancellor Karachi University and others 1999 CLC 1942 ref.

(c) Gwadar Port Authority Ordinance (LXXVII of 2002)---

----S.13(2)(j)---Public Procurement Regulatory Authority Ordinance (XXII of 2002), S.5---Public Procurement Rules, 2004, R.42---Constitution of Pakistan (1973), Art.199---Constitutional petition---Cargo imports by Trading Corporation of Pakistan at Gwadar Port in July, 2010---Concession agreement entered into in year, 2007 between Port of Singapore Authority and Gwadar Port Authority---Trading Corporation of Pakistan obtained stevedoring services and import handling facilities of port of Singapore Authority without open bidding---Constitutional petition challenging such act of Trading Corporation excluding petitioner from participating in providing such services at Gwadar---Trading Corporation's objection that such agreement was entered into in year 2007, thus, any challenge thereto in year, 2010 would be hit by lathes---Validity---Issue of such unlawful exclusion of petitioner from participating in providing such services arose in year, 2010 after importation of cargo by Trading Corporation in July, 2010---Constitutional petition was not hit by laches in circumstances.

Member (S&R)/Chief Settlement Commissioner and another v. Syed Ashfaque Ali and others PLD 2003 SC 132 and Jawad Mir Muhammadi and others v. Haroon Mirza and others PLD 2007 SC 472 ref.

(d) Gwadar Port Authority Ordinance (LXXVII of 2002)---

----Ss.2(j), 13(2)(j) & 21---Public Procurement Regulatory Authority Ordinance (XXII of 2002), S.5---Public Procurement Rules, 2004, Rr.3, 4, 20 & 42 (c)--Competition Commission Ordinance (XVI of 2010), Ss.2(1)(e)(k), 3 & 4---Constitution of Pakistan (1973), Arts.18 & 199---Constitutional petition---Diverting cargo imports by Trading Corporation of Pakistan to Gwadar Port---Concession agreement between Port of Singapore Authority and Gwadar Port Authority to build and develop various port facilities in concession area of Gwadar Port on BOT (Built, Operate and Transfer) basis---Trading Corporation obtained stevedoring services and impol`t handling facilities of Port of Singapore Authority without open bidding---Constitutional petition challenging such act of Trading Corporation excluding petitioner from participating in providing such services at Gwadar Port---Plea of Trading Corporation that Port of Singapore Authority was only provider of such services at Gwadar, thus, Trading Corporation had no option except to enter into a direct contract with Port of Singapore Authority in terms of R.42 of Public Procurement Rules, 2004---Validity---Concession area did not extend to whole of Gwadar Port, but was limited to a specified portion thereof, wherein Port of Singapore Authority had exclusive right to make investments, while Gwadar Port Authority' had complete liberty to develop remaining part of Gwadar Port---Facilities presently available at Gwadar Port being operated within concession area under such agreement could be provided by Port of Singapore Authority exclusively---Such agreement did not require Trading Corporation to import cargo at Gwadar, but if imported, then Trading Corporation would utilize services of Port of Singapore Authority for stevedoring purposes---Port of Singapore Authority having exclusivity rights under such agreement would not mean that all options for Trading Corporation were closed and its hands were tied---Trading Corporation of Pakistan being a public procuring agency was obliged to procure such services by means of open competitive bidding in a fair and transparent manner---Procuring agency might, but not bound to take recourse to direct contracting method of procurement in existence of any one of seven situations envisaged by R.42(c) of Public Procurement Rules, 2004 for such Rules being discretionary and not mandatory---Proviso to R.42 of Rules, 2004 was not applicable to facts of the present case---Gawadar Port Authority had power to enter into contract and grant exclusive rights to Port of Singapore Authority in respect of facilities developed or to be developed in concession area---Speaking about dominant position of Port of Singapore Authority without first determining relevant market would be meaningless, which determination could be made by Competitive Commission requiring factual investigation---Nothing on record for determining as what was relevant market in which Port of Singapore Authority could be said to have a dominant position---Factual investigation to determine "relevant market" would be beyond scope of proceedings under Art.199 of the Constitution---High Court directed Trading Corporation of Pakistan to review its options and obligations under Public Procurement Regulatory Authority Ordinance, 2002 and Rr.4 & 42 of Public Procurement Rules, 2004 before entering into agreement, and its decision must be supported by reasons.

Airport Support Services v. Airport Manager, Quaid-e-Azam International Airport and others 1998 SCMR 2268; Singage Security System (Pvt.) Ltd. v. Capital Development Authority and others 2010 CLC 567 and Shamim Khan v. Pakistan Defence Officers Housing Authority 1999 YLR 410 ref.

Deputy Managing Director, National Bank of Pakistan v. Ataul Huq PLD 1965 SC 201 rel.

(e) Public Procurement Rules, 2004---

----Rr.3, 4, 20 & 42---Procurement of goods and services by Government through a procuring agency---Method---Such procurement must be done by means of open competitive bidding in a fair and transparent manner---Not mandatory for procuring agency to take recourse to R.42 of Public Procurement Rules, 2004 even in existence of any one of seven situations envisaged in clause (c) thereof---Principles.

Rule 4 of Public Procurement Rules, 2004, in fact, merely puts in statutory form the basic principle enunciated in a number of judgments of the superior courts, namely that any procurement by a public agency must be done in a fair, open and transparent manner and that any discretion that the public agency may have in this regard cannot be exercised in an arbitrary or capricious manner, but must be carefully and properly regulated and modulated in accordance with law.

Thus, unless there is any express or specific provision to the contrary in Public Procurement Rules, 2004, all procurements of goods and service made by a procuring agency must be by means of open competitive bidding. The reason is simple. Open competitive bidding is invariably the best method for ensuring the guiding principles laid down in Rule 4 of Public Procurement Rules, 2004 are adhered to, and the objectives therein stated are achieved in practice.

The alternative method of direct contracting contained in Rule 42(c) of the said Rules is that the seven situations envisaged by it are disjunctive, i.e. if any one of the situations is found to exist, then the procuring agency may take recourse to the direct contracting method of procurement. Secondly, it is to be noted that the provisions of Rule 42 are discretionary and not mandatory inasmuch as the word used there is "may" and not "shall". Thus, even though a situation may be covered by one of the seven sub-clauses of clause (c), that does not make it incumbent on the procuring agency to take recourse to Rule 42. It has been granted discretion in this regard. The manner in which a public agency is to exercise its discretionary powers is of course well established.

Khalid Jawed Khan for Petitioners.

Mazhar Jafri for Respondent No.2.

Anwar Mansoor Khan for Respondent No.3.

Mian Khan Malik, D.A.-G.

Hasan Akber for Respondent No.4.

Date of hearing: 12th August, 2010.

2010 C L D 1737

[Karachi]

Before Syed Hasan Azhar Rizvi, J

SIRAJ KASSAM TELI and others---Petitioners

Versus

BASHIR ALI MUHAMMAD and 8 others---Respondents

J.M. No.25 and C.M.A. No.1090 of 2009, decided on 30th August, 2010.

(a) Constitution of Pakistan (1973)---

----Art. 204---Contempt Jurisdiction, exercise of---Scope stated.

Contempt jurisdiction ought to be sparingly exercised and should not be allowed to be used for settling private scores. It is of the utmost importance that a committal for contempt should not be made unless the disobedience shown is of such a serious nature as to indicate that the alleged contemner is deliberately out of flout.

C.P.No.D-42 of 1999 foil.

(b) Companies Ordinance (XLVII of 1984)---

----Ss.290, 22 & 305---Contempt of Court Act (LXIV of 1976), S.3---Constitution of Pakistan (1973), Art.204---Pendency of petition for appointment of Investigative Auditor---Interim order of court directing respondents-directors not to hold General Body Meeting without its clear order and restraining both parties and their counsel from publicizing such pending proceedings---Issuance of Annual Report by company to its share-holders and stock exchanges containing opinion of counsel of respondents-directors that company had a strong case, and that there was every likelihood that petitioner would not- be found entitled to relief prayed for---Contempt application---Plea that respondents by publishing, such report had prejudged adjudication, which amounted to interference with course of justice--Maintainability---Respondents had neither done any act with intention to obstruct administration of justice nor scandalized a Judge of High Court---Respondents had not disobeyed or disregarded or committed wilful breach of a valid undertaking given to High Court while passing such restraint order---No proceedings pending in High Court had been published---Opinion/advice of a counsel to his client could not be said to be prejudgment-:-Such opinion/advice of respondents' counsel was not certain and definite---Respondents had obtained services of very senior counsel of the country in such petition and one could expect from them to give an opinion/advice regarding a strong case or likelihood of success or defeat in any case--Main petition, wherein such restraint order was passed, had already been dismissed---Issuance of such report was requirement of S.233 of Companies Ordinance, 1984 and Listing Regulations of Stock Exchanges---High Court dismissed contempt application in circumstances.?

PLD 2007 SC 688; Attorney General v. Times Newspapers Ltd. [1974] AC 273; Malik Nazar Muhammad v. The District Council and others PLD 1992 Lah. 200; Malik Shah Abdul Waheed v. Karachi Metropolitan Corporation and others 1989 CLC 440; Dr. Abdul Ghani Siddiqui v. Government of Sindh through the Secretary, Local Bodies Housing and Town Planning and others 1990 MLD 773; 2010 SCMR 354; Judgment of House of Lords Attorney General v. British Broadcasting Corporation 1978 A. No.501 and PLD 2007 SC 688 ref.

Aziz A. Munshi and Abdullah Munshi for Petitioner No. 1.

Arshad Tayyabali and Muhammad Shahid for Petitioner No.2.

Khalid Anwar for Respondents Nos. 1 to 4.

Makhdoom Ali Khan for Respondent No.5.

Kh. Shoaib Memon for Respondent.

Ejaz Ahmed for the Respondent No.9.

2010 C L D 1762

[Karachi]

Before Khilji Arif Hussain and Ms. Soofia Saeed, JJ

IJAZ AHMAD---Appellant

Versus

HABIB BANK LIMITED, KARACHI through Head Office and 4 others---Respondents

First Appeal No.3 and C.M.As Nos.73-75, 666 of 2009, decided on 19th May, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 9, 19 & 22--Civil Procedure Code (V of 1908), S.12(2), O.VII, R.11 & O.IX, R.13---Suit for recovery of loan---Execution proceedings---Challenging judgment, decree on ground of fraud and misrepresentation---Setting aside ex parte decree, application for--- Application for setting aside ex parte decree and challenging judgment, decree on ground of fraud and misrepresentation filed by the defendant had been dismissed by the Banking Court---Validity---Since the defendant, admittedly was not served on his address, given in the memo of plaint, but on another address, notices were sent, where the defendant was not residing; and the defendant came to know about the proceedings when plaintiff Bank filed application under O.VII, R.11, C.P.C., prima facie application under S.12(2), C.P.C. was maintainable---Controversy, whether any fraud and misrepresentation had been made in the matter, could be resolved after recording the evidence---Impugned order was set aside---Banking Court was directed to frame the issues and after recording the evidence and hearing the parties, decide the same afresh.

Lal Din and another v. Muhammad Ibrahim 1993 SCMR 710, Mirza Mahmood Baig v. Mirza Ashfaq Baig 1993 MLD 640 and Ghulam Mehmood v. Hukam Khan and others 2001 MU) 366 ref.

Abdus Salam Baloch for Appellant.

M. Hassan Akbar for Respondent No.1.

2010 C L D 1792

[Karachi]

Before Faisal Arab, J

BANK OF KHYBER---Plaintiff

Versus

NAZAMUDDIN and another---Defendants

Suit No.B-39 of 2003, decided on 28th April, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---Ss. 3, 9 & 10---Suit for recovery of loan--court by consent of the parties appointed a Chartered Accountant to examine the account and submit report regarding outstanding amounts-Chartered Accountants submitted the report that principal amount and amount of mark-up were outstanding against the borrower---Borrower had not denied financial facility given to him by the bank, but all that had been said in his application for leave to defend was that request for such facility was not made by the borrower in his personal capacity, but was extended to his business concern--Borrower, in circumstances, had admitted to have availed the financial facility---In view of absence of denial of the borrower to the extent of availing said facility, oral objection with regard to non-availing of such facility at the time of arguments, was of no legal consequence---Objection of borrower, that whenever a financial facility was rolled-over, mark-up over mark-up had been charged, was a substantial objection---Charging of mark-up after roll-over, would amount to converting a mark-up based facility into interest bearing facility, which was not permissible under Law--Counsel for the Bank conceded that against all facilities provided to the borrower, Bank would not press its claim for mark-up; and sought decree only on the principal amount that had been determined by Chartered Accountant in his report---Suit was decreed accordingly.

Abdul Sattar Lakhani, Mukhtar Ahmed and Abdul Majeed Khoso holding brief for Sadaat Yar Khan.

Date of hearing: 28th April, 2008.

2010 C L D 1795

[Karachi]

Before Faisal Arab, J

Messrs MACKS ELECTRONICS INTERNATIONAL CO. through Attorney---Plaintiff

Versus

NATIONAL BANK OF PAKISTAN---Defendant

Suit No.B-196 of 1995, decided on 27th May, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 20(1)(b)---Suit for damages for shortage of pledged stock---Plaintiff/borrower claimed that defendant/Bank had misappropriated the pledged stock---Counsel for the plaints confined his argument only to the claim with regard to shortage of pledged stock worth US$ 37,750---Counsel for the defendant/Bank stated that plaintiff had based its claim on shortage of inventory; and that it was mentioned in Official Assignee's report that on account of Bank's letter though shortage was established, but that letter was never exhibited in the evidence---Validity-Where stocks pledged with the Bank were found to be missing or damaged, the liability solely would lay on the bank to compensate the borrower; however, in order to make Bank liable for any shortage, the burden was on the borrower to establish that there actually was any shortage---Borrower though had a right to seek documents in the custody of the Bank in order to establish shortage of pledged stock, but neither letter which was referred in the Official Assignee's report was produced, though it was with him, nor relevant record of the defendant/Bank was sought from the bank in order to establish any shortage in the pledged stocks---No evidence was available on record from which it could be established that there was any shortage of the inventory that was given under the care of the defendant/bank---Suit was dismissed in circumstances.

1988 CLC 1396 and 2005 CLD 1067 ref.

Mukhtar Ahmed Kubar for the Plaintiff.

Ghulam Hussain for the Defendant.

Date of hearing: 27th May, 2010.

2010 C L D 1798

[Karachi]

Before Ms. Rukhsana Ahmed, J

Shaikh YOUSUF SHAHID---Plaintiff

Versus

SHAHID NADEEM---Defendant

Suit No.1598 of 2009 and C.M.As. Nos.3283, 3284 of 2010, decided on 16th August, 2010.

Trade Marks Ordinance (XIX of 2001)---

----S.46---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1, 2---Suit against infringement of Trade Marks---Application for interim injunction---Dismissal of application for injunction--Application for restoration of---Application for interim injunction filed by the plaintiff having been dismissed for non-prosecution, plaintiff filed application for restoration of application for interim injunction---Counsel for the plaintiff in his affidavit filed with application for restoration had stated that as his name was not printed in the computer list issued by High Court Bar Association, he remained uninformed about the fixation of the case on relevant date of hearing---Contention of counsel for plaintiff that he remained unaware about the fixation of the case in the court, appeared to be of substance---Application for restoration was allowed, subject to deposit of cost in the High Court within 7 days and in case of failure on the part of counsel for the plaintiff to deposit said cost accordingly, restoration application would be deemed to be dismissed. ?

PLD 1978 Kar.210 ref.

Sultan Ahmed Shaikh for the plaintiff.

Muhammad Shafi Siddiqui for the Defendant.

2010 C L D 1819

[Karachi]

Before Muhammad Ali Mazhar, J

Messrs HABIB BANK LTD. through Attorneys and 2 others---Plaintiff

Versus

Messrs SCHON TEXTILE LTD. through Director and 8 others---Defendants

Suit No.B-17 of 2005 in C.M.As Nos.7889, 7441 and 7390 of 2005, decided on 21st September, 2010.

(a) Interpretation of statutes---

----Mandatory provision, ignoring of--Effect---If non-compliance of mandatory provision of statute is ignored, the same tantamount to transgress the express provision of law and is also against spirit of legislation---Statute is to be construed as to make it workable and any construction which defeat main scheme of law is to be avoided---Court is to interpret law as it stands and redundancy must not be attributed unnecessary to legislation.

People's Industrial Bank Limited v. Ram Chandar Shukul and others AIR 1930 Allahabad 503 and Afshan Ahmed v. H.B.L. Limited and another 2002 CLD 137 ref.

(b) Companies Ordinance (XLVII of 1984)---

----S.333--Official Liquidator--Duties and powers-Official Liquidator is official of court having definite powers conferred upon him under Companies Ordinance, 1984---Official Liquidator representing a company is in different position from anyone else against whom a stranger or third party makes a claim---Only duty of Official Liquidator is to consider and if he thinks fit as an admissible claim to admit and If he thinks it inadmissible claim to reject same-Powers of Official Liquidator are provided under S.333 of Companies Ordinance, 1984, with the sanction either of court or of committee of inspection including powers to institute or defend any suit, action, prosecution or other legal proceedings, civil or criminal in the name and on behalf of the company, to carry on business of the company so far as may be necessary of beneficial winding up thereof and to pay and classes of creditors in full.

United Bank Limited v. Pakistan Industrial Credit and Investment Corporation PLD 2002 SC 1100 and Knowles v. Scott (1981) 1 Ch. 717 at P.723 ref.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 10-Companies Ordinance (XLVII of 1984), S.316--Suit for recovery of bank loan-Maintainability-Pendency of winding up proceedings-Bank filed suit for recovery of bank loan against defendant company, during pendency of its winding up proceedings, without prior leave of court under S.316 of Companies Ordinance, 1984-Validity-Purpose of creating a concept or provision of prior leave under S:316 of Companies Ordinance, 1984 was meant for the benefit of any party who wanted to commence the suit or other legal proceedings so that company under winding-up might be represented through Official Liquidator to answer and defend the claim-Suit commenced after winding up order without prior leave, therefore, suit against defendant company under winding-up was not maintainable-Suit was dismissed in circumstances.

Director Industries Government of N.-W.F.P. v. Nowshera Engineering Company 2002 SCMR 1747 and Rafique Hazquel v. Bank Alfalah Ltd. 2005 SCMR 72 ref.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

--S.2(c)-'Customer'---Guarantor is customer in terms of S.2(c) of Financial Institutions (Recovery of Finances) Ordinance, 2001.

Mansoor Ghanghro for the Plaintiff.

Mushtaq A. Memon for the Defendants 2 to 8.

Qadir Bux Umrani, Official Assignee.

2010 C L D 1

[Lahore]

Before Syed Hamid Ali Shah, J

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Attorney---Applicant

Versus

KHALID AZIZ MALIK and 6 others---Respondents

Execution Application No.14-B of 2007 in C.O.S. No.4 of 1994 and C.M.As. Nos.29-B of 2008 and 24-B, 25-B of 2009, decided on 6th March, 2009.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.18---Qanun-e-Shahadat (10 of 1984), Arts.17(2)(a) & 79--Money decree, execution of---Sale of mortgaged house--Objector claimed to be owner of a portion of such house on basis of oral gift made by judgment-debtor, who could not mortgage same in favour of the decree-holder (Bank)---Proof--Gift Deed produced by objector was not signed by marginal witnesses; that date of its execution had been changed by overwriting; that a sentence regarding delivery of possession of gifted house had been added between the lines; that same was written on plain paper; that same contradicted applicant's assertion that gift t was made orally as donor expressed his intention of making gift through such deed; that same spoke of gift of whole house, while a portion thereof had been sold through registered sale-deed prior to execution of gift deed; that same suffered from defect of uncertainty for not specifying gamed portion of house; and that signatures of judgment­debtor/executant thereon did not resemble and tally with his signatures on plaint and other documents available on record---Objector's application was silent as to place, time, date and names of witnesses of gift---Such gift deed was inadmissible in evidence for not having been attested by two witnesses--Objector had made petition with sole object to defeat decree and deprive decree-holder to realize decretal amount and prolong litigation--High Court dismissed objector's application in circumstances.

Alflah Bank Limited v. Naima Saeed 2005 CLD 375; Shehryar Ali Tippu and 3 others v. Messrs Decora Furnisher PLD 1985 Kar. 47; Safeer Ahmad alias Muhammad Shafique v. Abdul Rashid and another 1992 CLC 1896; Abdul Ghaffar and 6 others v. Ghulam Jahan and 5 others PLD 1975 Pesh. 12; Moulvi Abdullah and others v. Abdul Aziz and others 1987. SCMR 1403; Anwar Sultana and others v. Pakistan Cooperative Housing Ltd. PLD 1964 W.P. Kar. 116; Ghulam Sakina v. Umar Bakhsh and others PLD 1964 SC 456; Irshad Bibi v. Muslim Commercial Bank through Manager and 3 others 2003 CLD 46 and Muhammad Saleem v. Allied Bank of Pakistan 2003 CLD 280 ref.

(b) Islamic Law---

----Oral gift---Proof---Easy to allege oral gift, but d cult to prove same.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--

----S.18--Decree for recovery of loan amount, execution of-Sale of mortgaged property---Objection petition by legal heirs of deceased guarantor--Validity--Objectors had unsuccessfully contested suit---Executing Court could not go behind decree---Liability of judgment-debtors was joint and several---Objectors had inherited such property from deceased guarantor, which could be attached and sold through auction for recovery of decretal amount---High Court dismissed objection petition in circumstances.

(d) Civil Procedure Code (V of 1908)---

----S.47---Execution of decree---Executing Court could not go behind decree.

Munawar-ul-Islam for Applicant (In C.M. No.29-B of 2008).

Sardar Qasim Ahmad Ali for Applicant (In C.M. No.27-B of 2008 and C.Ms. Nos.24 and 25-B of 2009).

Tariq Saleem Sheikh for Decree-holder.

2010 C L D 26

[Lahore]

Before Mian Saqib Nisar, J

ABLE DIVERSIFIED LTD. and 2 others: In the matter of

C.O. No.52 of 2009, decided on 12th October, 2009.

Companies Ordinance (XLVII of 1984)---

---Ss. 287 & 284(1)---Registration Act (XVI of 1908), S.17---Petition seeking sanction of a Scheme of Merger/Amalgamation between petitioner companies---Ratio and value of the assets of transferee company to be b}furcated between two companies had remained exactly the same as stated in the Scheme originally filed with the petition--Petitioner companies had explained that the transfer of assets and liabilities, including immovable property, from one company to another in accordance with the Scheme of Merger/Amalgamation will not require any instrument or conveyance in the event of High Court passing an order sanctioning the scheme, in particular S.17, Registration Act, 1908 requiring compulsory registration of instruments conveying title to land had no applicability in view of the provisions of S.287(2), Companies Ordinance, 1984--Petitioners further stated that an order sanctioning a scheme in terms of S.287, Companies Ordinance, 1984 made the Merger/ Amalgamation effective as of the date of transfer specified in the scheme approved by the members of the companies concerned and not as the date of the court's order--Held, provisions of the Companies Ordinance, 1984 were fully applicable to the Scheme presented for sanction by High Court-High Court ordered accordingly.

Ujala Cotton Mills Limited v. Income Tax Officer 1985 PTD 510 and Marshell Sons and Co. Ltd. v. Income Tax Officer (1997) 88 Company Cases 528 applicable.

Salman Akram Raja for Petitioners.

Malik Muhammad Nasir Ayyaz for PEMRA.

Kh. Aamer Farooq for Atlas Bank.

Ali Masood Hayat for Telenor (Creditor).

Salman Kazmi for Bestow Interiors (Creditor).

Naeem Sultan for Wateen Telecom.

Shahzad Ata Elahi for Emirates Global Islamic Bank, Silk Bank and Bank of the Punjab.

Muhammad Saqlain Arshad, Deputy Director (Legal), SECP.

Muhammad Rizwan for Bank Alfalah.

Muhammad Rizwan, Manager (Credits) and Harts Yameen Khan, Relationship Manager, Bank Alfalah.

Salwat Ahmad, Representative of Standard Chartered Modaraba.

2010 C L D 180

[Lahore]

Before Tariq Shamim, J

NATIONAL BANK OF PAKISTAN---Petitioner

Versus

MOHIB TEXTILE MILLS LTD.---Respondent

C.O. No.100 of 1998, C.M.No. 12 of 2007 and C.M.No.508-L of 2009 decided on 22nd October, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.305 & 350---Companies (Court) Rules, 1973, Rr.246, 247 & 248---Winding up and dissolution of company--Resale of assets of the company---Remand of case by Supreme Court to High Court for fresh sale of assets of the company---Company was wound up and dissolved and its assets were auctioned---In auction proceedings no wrong doing, malpractice or fraud had been attributed, either to Joint Official Liquidators or to the auction purchaser---However, on behalf of the Ex Management it was asserted that more individuals and companies were ready to offer much more price than the amount for which the assets of company had been sold---Supreme Court set aside the earlier sale in favour of auction/purchaser, with direction to re-auction of the assets of the company---On remand of case all attempts were made by fresh Joint Official Liquidators for sale of assets of the company through fresh auction, but failed--Mandate of Supreme Court to sell assets of the company through fresh auction had been carried out in letter and spirit as two unsuccessful attempts were made in that regard after fulfilling all legal requirements, including wide publicity and fixing reserved price-In the present economic crises there was hardly any possibility of any prospective buyer coming forward to purchase these assets of the company---Reserve price had already been reduced and any further reduction in the same would militate against the interest of all concerned---Solitary buyer in the field had made an offer in excess of the reserve price fixed by High Court earlier--Purchaser incurred expenditure towards price of leased assets, mark-up paid to the creditors and payment made to WAPDA for restoration of electricity---During the last three years, two attempts had been made by the Joint Official Liquidators for re-sale of assets, but had failed in attracting any impressive buyer--High Court, in circumstances, accepted the bid of earlier auction purchaser and ordered dissolution of the company and observed that necessary steps stipulated by S.305 of the Companies Ordinance, 1984 and Rr. 246 to 248 of the Companies (Court) Rules, 1997, would follow.

2005 SCMR 1237; Hudaybia Textile Mils Ltd. and others v: Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512 and United Bank Limited v. Messrs A.Z. Hashmi (Pvt.) Ltd. 2000 CLC 1438 ref.

Qamar-uz-Zaman for NBP.

Muhammad Ghani and Imtiaz Rashid Siddiqui for Messrs Hashir Textile Mills Limited.

Salman Akram Raja for Ex-Management on 5-9-2008.

Muhammad Asif Saigol, Representative of the Ex-Management.

Hamid Shabbir Azar, for BEL.

M. Shahid Shafi, Joint Official Liquidator.

Malik Muhammad Hussain Ex-Joint Official Liquidator.

Syed Ali Zafar.

2010 C L D 208

[Lahore]

Before Syed Hamid Ali Shah, J

ARIF MUKHTAR RANA---Petitioner

Versus

F.O.P---Respondent

Writ Petitions Nos.6945, 7091, 5813, 6134, 5655, 5817, 5815, 6025, 6024, 4950, 5814, 5816, 5818, and 6441 of 2009, heard on 20th April, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---S.15--Constitution of Pakistan (1973), Arts.2-A, 3, 4, 9, 18, 23 to 25, 175, 189, & 199---Constitutional petition-Sale of mortgaged property--Vireo of S.15, Financial Institutions (Recovery of Finances) Ordinance, 2001 being unconstitutional and offend the provisions of Arts.2-A, 4, 9, 18, 23, 24, 25 and 175 of the Constitution---Validity---Impugned provision was ultra vires the Constitution, offended the fundamental rights of the petitioners and action of Bank by invoking the said provision of law was not legally sustainable which was set aside by High Court and it was declared that remedy of invoking provisions of S. 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 was not available to the Bank; having been declared unconstitutional.

Muhammad Umer Rathore v. Federation of Pakistan 2009 CLD 257 and Maj. Gen.(Retd.) Mian Ghulam Jelani v. The Federal Government through the Secretary, Government of Pakistan, Interior Division, Islamabad PLD 1975 Lah. 63 ref.

Shahzada Mazher for Petitioner.

Rashdeen Nawaz Kasuari for Respondent.

Date of hearing: 20th April, 2009.

2010 C L D 254

[Lahore]

Before Ijaz-ul-Ahsan, J

UNILEVER PAKISTAN FOODS LIMITED through Company Secretary---Petitioner

Versus

CHAIRMAN, ENVIRONMENTAL TRIBUNAL, GOVERNMENT OF PAKISTAN, LAHORE---Respondent

Writ Petition No.22311 of 2009, decided on 17th November, 2009.

(a) Companies Ordinance (XLVII of 1984)---

----Ss.2(24) & 48---Civil Procedure Code (V of 1908), O.III, Rr.1, 2, 3, O.XXIX, R.1 & O.XLI, R.1---Pakistan Environmental Protection Act (XXXIV of 1997) S.22---Constitution of Pakistan (1973), Art.199---Constitutional petition--Appeal by company through its Secretary holding registered General Power of Attorney issued in his favour on basis of resolution of its Board of Directors--Order of Tribunal directing appellant to amend. title of appeal by inserting words "through its Chief Executive with full name" and mentioning present address of its factory---Validity---Appellant was a juristic person being a registered company limited by shares---Any notice or process served at registered office of appellant already given in title of appeal would be deemed in law to be duly served, notwithstanding the fact where appellant was running its business---Pleadings in legal proceedings initiated on behalf of a juristic person could be signed by any person authorized to do so under Articles of Association of company or authorized by its Board of Directors through a resolution passed in a duly convened meeting or authorized to do so through a General Power of Attorney issued under authority of Board of Directors given in a duly convened meeting---Address of registered office of appellant given in title of appeal would ordinarily be sufficient for purposes of filing of appeal--Appellant had mentioned address of its factory in body of appeal---High Court set aside impugned order and directed Tribunal to decide appeal on its merits.

(b) Civil Procedure Code (V of 1908)---

----O.VI, Rr.1, 14, O.XXIX, R.1 & O.XLI, R.1--Pleadings in legal proceedings initiated on behalf of juristic persons, signing of-Principles.

Pleadings in legal proceedings initiated on behalf of juristic persons can be signed by any person (i) authorized to do so under the Articles of Association of the Company or (ii) authorized by its Board of Directors through a resolution passed in a duly convened meeting of such Board or (iii) authorized to do so through a General Power of Attorney issued under the authority of Board of Directors given in a duly convened meeting of the Board.?

Syed Ijaz Ali Sabzwari for Petitioner.

Aamer Rehman, Deputy Attorney General for Respondent.

2010 C L D 274

[Lahore]

Before Umar Ata Bandial, J

ZESHAN JAMIL---Petitioner

Versus

JUDGE BANKING COURT, FAISALABAD and 2 others---Respondents

Writ Petition No. 8096 of 2009, decided on 9th July, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.16(3)---Constitution of Pakistan (1973) Art.199---Constitutional petition---Obtaining property through finance lease---Taking over of possession of said property by the Bank---Petitioner was the purchaser of vehicle from Bank after its possession from its defaulting financee---Defaulting financee thereafter filed a suit for declaration and permanent injunction against the auction of the vehicle and for the return of its possession to him---Petitioner who claimed to have purchased the vehicle in question, was impleaded as defendant in the said suit---Submission of petitioner was that a banking suit was maintainable by or against only the parties to a finance, namely, the creditor financial institution and its customer---Petitioner was not a customer, but a third party to whom vehicle in question had been sold by the Bank free from encumbrance---Petitioner had contended that he having no connection with the finance in question, was not liable to be impleaded as a party in the suit---Suit was still at the stage of determination of the dispute raised therein---By order passed by Banking Court, petitioner was asked to produce the vehicle in question in the court for the entrustment of its custody to the entitled person---Counsel for the petitioner had contended that said order of Banking Court had violated the mandatory jurisdictional limits---Validity---Proviso to S.16(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001 had provided compensation as an appropriate mode of relief to a disappointed lease finance rather than the return of the financed asset in question---Keeping that proviso in mind, impleading of petitioner in the suit before the Banking Court, was contrary to law-High Court declared that the impugned order fell into error in concluding that petitioner's impleadment was lawful---Said order was declared to be without lawful authority and of no legal effect.

Messrs Data Laboratories (Pvt.) Ltd. through Chief Executive and 3 others v. Judge Banking Court No.III, Lahore and 4 others 2008 CLD 1326; Procter and Gamble Pakistan (Pvt.) Ltd., Karachi Bank Al-Falah Limited Karachi and 2 others 2007 CLD 1532; Zaeem A. Malik through Attorney v. Muslim Commercial Bank Ltd. through Manager and 2 others 2006 CLD 1553; M. Manzoor Ahmad Paracha and 5 others v. Habib Bank Ltd. through President and 2 others 2007 CLD 571 and Ghulam Mustafa Khar's case PLD 1989 SC 26 ref.

Ahsan Masood for Petitioner.

Awais Anwar for Respondent No.2.

2010 C L D 293

[Lahore]

Before Mian Saqib Nisar, J

Mian MEHMOOD AHMAD---Plaintiff

Versus

HONG KONG AND SHANGHAI BANKING CORPORATION LTD. through Manager

and 6 others---Defendants

C.O.S. No.2 of 2004, heard on 7th December, 2009.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.2(a), 2(d) & 9---Banking Court---Determination of jurisdiction---Pre-conditions--For exercise of jurisdiction as Banking Court, it is fundamental, imperative, essential and sine qua non that two conditions must be met, co-exist and fulfilled---Firstly Special Court should have jurisdiction over the subject-matter, which means that cause of action propounded in plaint must be for redressal of grievance regarding enforcement of right or complaint about breach of obligation on the part of defendant but relatable to "finance" as such the same can be termed to be "subject-matter of jurisdiction"---If dispute inter se "financial institution" and "customer" or vice versa is not based upon "finance" and far failure of obligation in relation thereto, the Special Court does not have jurisdiction in the matter---Second facet of jurisdiction is over parties to his, which may be termed as "jurisdiction over the parties" and connotes that Banking Court has only jurisdiction in cases, where relationship of "financial institution" and that of "customer" exists between parties---Considering both aspects of jurisdiction, broad question of jurisdiction is that dispute should be between "customer" and "financial institution" as defined in law, in respect of failure of defendant to fulfil its/his obligations in relation to "finance", which has been specifically, lucidly and clearly mentioned in S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, which is key provision of the special law and' can be termed as jurisdictional clause of the enactment---If relationship between parties to suit is not that of "customer" and 'financial institution" and is not about 'finance" Special Court does not have jurisdiction.

Qatar Airways PLC v. ANZ Grindlays Bank 2000 CLC 1455; Messrs Shah Jewana Textile Mills Ltd. Lahore through representative v. United Bank Ltd. through Attorney PLD 2000 Lah. 162; Ahmad Murad Malik v. Presiding Officer, Banking Court 2002 CLD 577; Sheikh Nazir Ahmad v. House Building Finance Corporation through General Manager 2002 CLD 1634; Habib Bank Limited v. Messrs The English Engineering Company and 2 others 2005 CLD 292; Manzoor Ahmad and another v. Agricultural Development Bank of Pakistan through Manager Nankana Sahib Branch and 3 others 2005 CLD 653; Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245; and PASSCO v. Omer Bilal Traders (Pvt.) Limited 2007 CLD 492 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.2(b) & 5---Constitution of Pakistan (1973), Art.175(112)---Banking Court---Status---Though Banking Court has been created under special law but it is not devoid of inherent character and status of Court---Banking Court is created and exercising its powers in terms of Art.175(112) of the Constitution---Banking Court cannot be held to be and/or equated to fora of administrative nature or domestic Tribunal.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.9---Notice, issuance of--Pre-conditions---Duty of Banking Court---At the very inception, Banking Court without issuing notice under S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 should take a decision on the basis of parameters laid down for the purpose---No notice should be issued, particularly in case where Court is of the firm view about lack of jurisdiction---If Banking Court is prima facie satisfied with conditions/parameters then required notice must go leaving determination of matter in the light of defence of defendant.

Akhtar Ali Parvez v. Altafur Rehman PLD 1963 (W.P.) Lah. 390; Muhammad Ismail v. Israr Ahmad PLD 1961 (W.P.) Lah. 601; Col. Javed Iqbal Lodhi v. Lt. Col. Nadeem Ahmar and another 2007 CLC 831 and Muhammad Saleh v. The Chief Settlement Commissioner, Lahore and 2 others PLD 1972 SC 326: ref.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.9---Non-issuance of notice in terms of Form IV in Appendix B to C.P.C.---Effect---Defendants were not given notice requiring them to file leave to appear and defend and until they were specifically notified in terms of Form IV in Appendix B to C.P.C., no penal action about alleged lapse of petition for leave to appear could be taken against defendant.

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.9---Civil Procedure Code (V of 1908), O.VII, R.10---Return of plaint---Banking Court, jurisdiction of--Enforcement of right---Recovery of amount of Letter of Credit-Plaintiff was supplier of goods to defendant company, and defendant was customer of bank which issued Letter of Credit in favour of plaintiff on behalf of defendant---Plaintiff sought enforcement of his right on the basis of Letter of Credit established by bank in his favour---Validity---Real dispute of plaintiff was with defendant company, which had opened Letter of Credit in favour of plaintiff for and on behalf of defendant and if the defendant had stopped payment on the basis of Letter of Credit plaintiff at the best could sue defendant for breach of contract and also might recover Letter of Credit from advising bank if liable---Opening of such Letter of Credit in favour of plaintiff neither meant that matter fell within the purview of "finance" nor it had given rise to relationship between plaintiff and defendant as of "customer" and 'financial institution" as defined in Jaw---Claim of recovery of damages as mentioned in plaint was beyond the scope of recovery from bank of defendant even it be enforceable claim simplicter against defendant company---Case of plaintiff did not fall within the ambit of subject-matter/jurisdiction and also jurisdiction of Banking Court over the parties---Plaint was liable to be returned to plaintiff for filing it before Court of competent plenary jurisdiction---Plaint was returned in circumstances.

Haji Alvi Khan and Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362; PASSCO v. Omer Bilal Traders (Pvt.) Limited 2007 CLD 492; Zarai Tariqiati Bank Ltd. through Branch Manager v. Hassan Aftab Fatiana 2009 CLD 36; Chaudhry Mukhtar Ahmad v. National Bank of Pakistan and others 2007 CLD 501; Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394; Messrs United Distributors Pakistan Limited v. Ahmad Zarie Services and another 1997 MLD 1835; Procter and Gamble Pakistan (Pvt.) Ltd. Karachi v. Bank Al-Falah Limited Karachi and 2 others 2007 CLD 1532; Abdul Rehman Allana v. Citibank 2003 CLD 1843 and PICIC v. Frontier Cermics Ltd. and others 2000 CLC 287; Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512; Ali Muhammad and 6 others v. Secretary, Board of Revenue, Sindh, Hyderabad and 9 others PLD 1997 Kar. 747; Sherin and 4 others v. Fazal Muhammad and 4 others 1995 SCMR 584 and Messrs Elahi Cotton Mills Ltd and others v. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others PLD 1997 SC 582 ref.

Akhtar Javed for Plaintiff.

Munawar-ul-Islam for Respondents.

Date of hearing: 7th December, 2009.

2010 C L D 324

[Lahore]

Before Arshad Mahmood, J

HAQ NAWAZ---Petitioner

Versus

ABDUL KHALIQ---Defendant

Case No.C.R. No. 222 and C.M.A. No.1 of 2009, decided on 22nd April, 2009.

Negotiable Instruments Act (XXVI of 1881)---

----S.4--Civil Procedure Code (V of 1908), O.VII, R.11 & O.XXXVII, Rr.1, 2--Promissory note'--Determination--Rejection of plaint---Delay in filing of application---Recording of evidence---Suit for recovery of money on the basis of pro note was filed on 7-4-2001, and application for rejecting of plaint was filed on 15-9-2008 on the ground that document relied upon by plaintiff was not a promissory note---Validity---Litmus test to determine as to whether a particular document was a 'promissory note' or a 'bond' was the intention of parties and it must be seen whether parties intended that document should be negotiable or that it was merely to serve as evidence of debt--Plaintiff had already concluded his evidence and statement of one defence witness was also recorded---Sole object of filing application for rejecting of plaint seemed to High Court as delaying tactics---No illegality or legal infirmity; in the order passed by trial Court had been pointed out, therefore, no case for interference in exercise of revisional jurisdiction was made out---Revision was dismissed in circumstances.

Abdul Rauf v. Farooq Ahmad and another 2007 CLD 114; Sheikh Muhammad Zafar v. Dr. Jehan Ara Ahmad 2002 CLD 257; Altaf Hussain Sajid v. Muhammad Arif 2008 CLC 1489 and Muhammad Ashiq v. Rana Tariq Mahmood 2006 CLD 865 ref.

Malik Javed Akhtar Wains for Petitioner.

Mr. Shehbaz Murtaza Ansari for Respondent.

2010 C L D 335

[Lahore]

Before Umar Ata Bandial and Muhammad Ashraf Bhatti, JJ

SME BANK LIMITED through Manager and another---Appellants

Versus

RIAZ ALI---Respondents

R.F.A. No.225 of 2007, decided on 2nd June, 2009.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9(5) & 22---Suit before Banking Court---Procedure-Disposal of the suit must be preceded by notices and hearing to the defendants---Both said statutory requirements having been discarded by the impugned order, same was set aside by High Court.

Rafique Hazquel Masih v. Bank Alfalah Ltd. and others 2005 SCMR 72 rel.

Sheikh Nadeem Anwar for Appellants.

2010 C L D 338

[Lahore]

Before Mian Saqib Nisar, J

M.C. B BANK, LTD., through Authorized Representative---Petitioner

Versus

STATE BANK OF PAKISTAN through Governor and 2 others ---Respondents

Writ Petition No.14499 of 2009, heard on 15th December, 2009.

Banking Companies Ordinance (LVII of 1962)---

----S.41---Protection of Economic Reforms Act (XII of 1992), S.10---Contract Act (IX of 1872), S.23---Constitution of Pakistan (1973), Art.199(1) & (5)---Constitutional petition--Maintainability---Contractual liability---Scope---Grievance of petitioner/retired employees association was that its members were entitled to certain pensionary benefits which were being denied to them under the garb of Revised Pay Package enforced by employer bank---Validity---Alteration of contractual/financial commitment/obligation was restricted under S.10 of Protection of Economic Reforms Act, 1992, to the disadvantage of beneficiaries---No prohibition existed in S.10 of Protection of Economic Reforms Act, 1992, that alteration/novation of contract could be made with the concurrence of employees, rather from clear meaning and interpretation of S.10 of Protection of Economic Reforms Act, 1992, it was open for stakeholders to agree and substitute any agreement/ commitment notwithstanding that the agreement already entered into--Members of petitioner association during the time when they were in employment of the bank subscribed/assented to Revised Pay Package which was acted upon and they derived all benefits on account of such package, which was not shown to be the one hit by provisions of S.23 of Contract Act, 1872--Members of petitioner/retired employees association were estopped by their own conduct to challenge Revised Pay Package; besides rules of acquiescence and waiver were also attracted to discard their stance in such behalf---High Court, in exercise of constitutional jurisdiction, could not declare Revised Pay "Package to be void or voidable nor High Court could enforce agreement between the parties---Directions contemplated by S.41(2) of Banking Companies Ordinance, 1962, were with respect to activities and operations of banks and institutions for carrying out purpose of Banking Companies Ordinance, 1962, and matters ancillary thereto---Grievance of petitioner association was not covered by S.41(2) of Banking Companies Ordinance, 1962, and no direction under constitutional jurisdiction could be given to State Bank of Pakistan for further directing employer bank to perform any of the acts as were mentioned in the section---Employer bank was not "person" within the meaning of Art.199(5) of the Constitution and was not performing any functions with affairs of Province, Federation or any statutory body to which a writ could be issued---Constitution petition was dismissed in circumstances.

Dr. A. Basit, Advocate for Petitioner.

Rashid Anwer and Zhazib Masud for Respondents.

Date of hearing: 15th December, 2009.

2010 C L D 355

[Lahore]

Before Nasir Saeed Sheikh, J

Lt. Gen.(Retd.) ALI KULI KHAN KHATTAK, CHAIRMAN, GENERAL TYRE & RUBBER COMPANY OF PAKISTAN LTD. KARACHI and 4 others ---Appellants

Versus

APPELLATE BENCH No.II, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN, ISLAMABAD---Respondent

Commercial Appeal No.8 of 2009 decided on 31st December, 2009.

Companies Ordinance (XLVII of 1984)---

---S.196(4) & 208(3)--Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.34---Shares of associated company sold by directors of company (appellants) to another associated company at a lower price than market price without any special resolution of Board of Directors-Such transaction unscrambled by Board of Directors in its subsequent meeting---Imposition of penalty on appellants for their such illegal act---Validity---Appellants through such act had pocketed huge amount as profit at the cost of shareholders of company-Subsequent "unscrambling" of illegality already committed could not rectify earlier violation of law nor such rectification was recognized by provisions of Companies Ordinance, 1984---Appellants had wilfully and knowingly committed such act, for which maximum penalty as provided in S.208(3) of Companies Ordinance, 1984 had not been imposed upon them High Court dismissed appeal in limine.

Pakistan Industrial Promotors Limited v. Monopoly Control Authority 1990 CLC 1008 ref.

Jewed Hassan for the Appellants.

2010 C L D 567

[Lahore]

Before Mian Saqib Nisar, J

HIGH NOON TEXTILE LTD through Authorized Attorney and 2 others---Petitioners

Versus

SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT CO. (PVT.) LTD. through Authorized Attorney and 4 others---Defendants

Writ Petition No.24148 of 2009, decided on 11th February, 2010.

(a) Jurisdiction

----Conferring of jurisdiction-Agreement between parties-Effect-Parties can validly agree for conferment of jurisdiction upon one or two courts, which have concurrent jurisdiction to the exclusion of other-Agreement in such behalf in normal circumstances is binding upon parties thereto.

(b) Interpretation of documents---

---'Specifically negotiated' and `printed/cyclostyled agreements'-Distinction-For printed and cyclostyled agreements/documents, rules of interpretation are different from construction of documents, which are specifically negotiated containing conscious and deliberated stipulations.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---Ss.5 & 7-Civil Procedure Code (V of 1908), S.20-Constitution of Pakistan (1973), Art.199-Constitutional petition-Jurisdiction of Banking Court--Agreement between parties-Effect--Defendants assailed jurisdiction of Banking Court at place "L" on the plea that in agreements/documents prepared by financial institution it had been agreed that Banking Court at place "R" would have the exclusive jurisdiction-Validity--Exclusive jurisdiction clause was meant for benefit of financial institution rather than defendants and if financial institution had given up its choice of exclusive forum and had itself instituted suit at place "L", the defendants could not make any grievance on such account, particularly in a situation when sanction advice for restructuring was issued at place "L", supplemental agreements were executed at place "L", petitioners including principal borrower also resided at place "L", and principal borrower had not taken any objection about territorial jurisdiction of Banking Court in petition for leave to appear---Creditor was to follow the debtor and was to institute suit where the latter resided in ordinary sense and rule regarding forum of convenience was also attracted High Court in exercise of Constitutional jurisdiction declined to interfere in the jurisdiction of Banking Court at place "L" Petition was dismissed in circumstances.

Pahrianwali Sugar Mills through Deputy Chief Executive and others v. Pak-Libya Holding Company (Pvt.) Ltd. and others 2004 CLD 161; Bankers Equity Ltd. v. Iqas Weaving Mills (Pvt.) Ltd. 2001 CLC 169; State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem 1987 SCMR 393; Messrs Kadir Motors (Regd), Rawalpindi v. Messrs National Motors Ltd. Karachi 1992 SCMR 1174; Tahir Tariq Textiles Mills (Pvt.) Ltd. through Chief Executive and 2 others v. National Development Finance Corporation 2003 CLD 1546 and Tahir Tariq Textiles Mills (Pvt.) Ltd. through Chief Executive and 2 others v. N. D. F.C. through Chairman 2001 YLR 846 ref.

Imran Aziz Khan for Petitioners.

Muhammad Raza Qureshi and Zahid Nawaz Cheema for Respondents.

Date of hearing: 3rd February, 2010.

2010 C L D 571

[Lahore]

Before Ijaz-ul Ahsan, J

Sheikh JAMEEL AHMAD---Petitioner

Versus

Raja KHALID HUSSAIN---Respondent

Civil Revision No.198 of 2008, decided on 1st February, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance, 2001---

---Ss.7(4) & 23(2)-Civil Procedure Code (V of 1908), O. VII, R.11--Specific Relief Act (I of 1877), S.12-Rejection of plaint Application for-Scope-Plaintiff filed suit for specific performance of agreement to sell in respect of disputed property on the ground that disputed property had been sold in execution of a decree passed in favour of bank in the sum of Rs.5,964,000 for a sum of Rs.23,200,000-Defendant contested the suit and ,filed an application under O.VII, R.11 C.P.C. for rejection of plaint on the ground that suit was hit by the provisions of S.7(4) read with S.23(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001-Trial Court dismissed application of the defendant-Validity-After having denied the agreement, defendant could not take the position either that the agreement was void or that such agreement had fallen within the exclusive jurisdiction of the Banking Court in terms of S.7(4) and S.23 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Party could not approbate and reprobate in the same breath--Record revealed that plaintiff had fulfilled his part of bargain---Payments had been made through banking channels, the same were received by the defendant as well as the Banking Court and the property in question had neither been sold nor encumbered in violation of S.23(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Valuable rights of the parties were involved in the matter, proceedings before Trial Court thus could not be stifled at such a stage by putting the lis under the guillotine of technicalities--Defendant had failed to point out any misreading or non-reading of material available on record or any illegality or material irregularity in the impugned order of Trial Court---Petition was dismissed by High Court.?

2006 CLD 771; PLD 1995 Lah.598 and 2003 CLD 363, 2003 CLD 1843 and 2003 CLD 1026 ref.

(b) Specific Relief Act (I of 1877)---

---S. 12---Agreement to sell---Agreement to sell does not create any interest in or charge on immovable property; it only creates a right to obtain another document conferring title in respect of immovable property.?

2002 SCMR 1089 and 2008 SCMR 510 rel.

(c) Specific Relief Act (I of 1877)---

---S. 12---Co-sharer---Co-sharer can sell property to the extent of his share.?

1995 SCMR 514 rel.

(d) Administration of justice---

----Technicalities and legal provisions are meant to advance and not obstruct justice.

Waseem Rehmat for Petitioner.

M. Anwar for Respondent.

Date of hearing: 4th December, 2009.

2010 C L D 582

[Lahore]

Before Iqbal Hameed-ur-Rahman, J

Messrs CHIMERA (PVT.) Limited through Chief Executive and 4 others---Plaintiffs

Versus

HABIB BANK LIMITED---Defendant

C.O.S. No.27 of 2007, decided on 20th July, 2009.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S. 5---Specific Relief Act (I of 1877), S.42-Suit for declaration, cancellation, recovery of amount, damages and permanent injunction-Leave to defend-Application for-Subject-matter in both suits same---Scope-Plaintiff filed suit against the bank on the ground that bank had issued irrevocable letters of credit but had failed to play its role-Bank had also filed suit for recovery of Rs.71,150,745.28 against the plaintiff which related to recovery of trust receipt finances obtained in connection with the letters of credit-Plaintiff asserted that the subject-matter in both the suits was the same and leave might be granted in both the suits---Bank had controverted the contention raised by the plaintiff and stated that the petitions for leave to appeal had to be argued separately and disposed of on their own merits-Validity---Petitions for leave to appeal in both the cases had to be argued independently-High Court adjourned the case for arguments on the petitions in both the cases.

Messrs First Women Bank Limited v. Registrar, High Court of Sindh, Karachi and 4 others 2004 SCMR 108; Muhammad Khalid Butt v. United Bank Limited 2003 CLD 911; Messrs United Dairies Farms (Pvt.) Limited and 4 others v. United Bank Limited 2005 CLD 569; My Bank Ltd. v. Speedway Fondmentall Pakistan Ltd. and another 2007 CLD 1547; C.P.No.1417-L of 2008 and Zeeshan Energy Ltd. and 2 others v. Faisal Bank Ltd. 2004 CLD 1741 Ref.

Shahid Karim for the Plaintiffs.

Shams Mehinood Mirza for the Defendant.

2010 C L D 639

[Lahore]

Before Ijaz Ahmad Chaudhry, J

MAHMOOD AKHTAR KHAN---Petitioner

Versus

THE STATE 2 others---Respondents

Writ Petition No.5549 of 2010, decided on 22nd March, 2010.

Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)---

----Ss.7 (4) & 20 (4)---Penal Code (XLV of 1860), S.489-F--Constitution of Pakistan (1973), Arts. 189 & 199--Constitutional Petition---Quashing of F.I.R.---Exclusive jurisdiction of Banking Court---Scope---Accused sought quashing of F.I.R. on the ground that under S.20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provisions of S.489-F, P.P.C. were not applicable-Validity--High Court declined to quash the F.I.R. on the ground taken by accused as the dictum laid down by Supreme Court in view of Art.189 of the Constitution was binding on all subordinate authorities including High Court---Question whether accused had issued cheques in question to complainant with mala fide intention or not could be solved after conducting thorough investigation which could not be undertaken in summary proceedings under Art.199 of the Constitution---High Court directed that accused had to satisfy investigating officer of criminal case and not High Court about stated falsity of allegations levelled in F.I.R.---Petition was dismissed in circumstances.

PLD 2001 Lah. 533 ref.

Industrial Development Bank of Pakistan v. Asim Fareed 2006 SCMR 483 fol.

Qazi Misbah-ul-Hassan for Petitioner.

2010 C L D 651

[Lahore]

Before Nasir Saeed Sheikh and Ch. Muhammad Tariq, JJ

BANKERS EQUITY LIMITED and 5 others---Appellants

Versus

MESSRS BENTONITE PAKISTAN LIMITED through Chief Executive and 7 others---Respondents

Regular First Appeal Case No.579 of 2002, heard on 24th February, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)---

----Ss.9 & 10---Bankers' Books Evidence Act (XVIII of 1891), S.2(8)---Civil Procedure Code (V of 1908), O.VII, R.11---Rejection of plaint---Statement of account, non filing of---After refusal of leave to appear in suit, Banking Court rejected the plaint for not filing statement of accounts as per provisions of S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001--contention of plaintiffs was that after dismissal of petition for leave to appear by Banking Court, suit of plaintiffs should have been decreed automatically---Validity--Contention of plaintiffs was not correct and Courts of law were under legal obligation to apply their mind and correct law, notwithstanding the fact that defendant in the suit had appeared or not before the Courts during proceedings---Statement of facts narrating accounts given in plaint and reflected in documents annexed with plaint was not a statement of account as visualized by the provisions of Bankers' Books Evidence Act, 1891, therefore, plaint in the suit was not supported by statement of accounts as per provisions of S.9 (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Plaint was rightly rejected by Banking Court---High Court declined to interfere in the order passed by Single Judge--Appeal was dismissed in circumstances. ?

Bela Automotives Ltd. v. Habib Bank Ltd. 2008 CLD 778; Messrs Haseeb Waqar Sugar Mills Limited's case 2008 CLD 786; Bela Automotives Limited v. Habib Bank Limited 2005 CLD 893 and Messrs ICEPAC Limited and 2 others v. Messrs Pakistan Industrial Leasing Corporation Ltd. 2005 1186 disting.

Messrs C.M. Textiles (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587; Multiline Associate v. Ardeshir Cowasjee and others 1995 SCMR 362; Province of East Pakistan v. Dr. Azizul Islam PLD 1963 SC 296 and Sindheswar Ganguly v. Stgate of West Bengal PLD 1958 SC (Ind.) 337 ref.

(b) Civil Procedure Code (V of 1908)---

---O.VII, Rr.11 & 13---Rejection of plaint---Filing of fresh suit---Scope---Rejection of plaint under O.VII, R.11, C.P.C. does not preclude plaintiff from instituting a subsequent suit on the basis of same cause of action.

Hamid Shabbir Azar for Appellants.

Nemo for the Respondents.

Date of hearing: 24th February, 2010.

2010 C L D 670

[Lahore]

Before Mian Saqib Nisar, J

Messrs TRADE MASTERS (PVT.)LTD. through Chief Executive ---Appellant

Versus

Messrs SHELL PAKISTAN LTD. Through Chief Executive ---Respondent

F.A.O. No.48 of 2006, heard on 12th February, 2010.

(a) Contract---

----Exclusive jurisdiction clause in the agreement-Cause of action---Effect--Plaintiffs filed suit for damages on the ground of violation of agreement in the Trial Court at "L" ---Defendants contested suit by raising objection about the territorial jurisdiction of the court and filed an application under O.VII, R.10, C.P.C. for return of the plaint to the jurisdiction of the courts at "K"-Contention of the plaintiffs was that defendants had submitted to the jurisdiction of the court at "L" for the reason that an application under S.34 of the Arbitration Act, 1940 was filed by them which was withdrawn later--- Plaintiffs further contended that prior to the alleged agreement, a memorandum of understanding was entered into between the parties, in which there was no exclusive jurisdiction clause-Trial Court accepted application of the defendants and returned the plaint for its presentation to the court of competent jurisdiction---Validity---Agreement and memorandum of understanding were executed at "K"-Only reason that a part of cause of action on the basis of any violation of the agreement had been accrued to the plaintiffs apart from "K", would not entitle the plaintiffs to file suit at "L"-Plaints should be bound by the stipulation of exclusive jurisdiction clause Memorandum of understanding in the law was only an understanding and executory instrument in nature; where the parties through a deliberated subsequent agreement on the same subject substituted it by adding the exclusive jurisdiction clause; memorandum of understanding should lose its relevance-Agreement between the parties was very clear and enforceable in terms provided thereunder--Appeal was dismissed by High Court.

Tahir Tariq Textiles Mills (Pvt.) Ltd., through Chief Executive and 2 others v. National Development Finance Corporation 2003 CLD 1546; Chaudhry Mehtab Ahmad and another v. Mir Shakeel-ur-Rehman and 4 others 2004 MLD 662; Light Industries (Pvt.) Ltd. through Director v. Messrs ZSK Stickmaschinen GmbH and another 2007 YLR 2346 and Messrs Saudi Arabian Airlines through Sales Manager, Lahore and another v. Miss Hira Khan and another 2002 CLC 204 rel.

(b) Contract---

---Conferment of territorial jurisdiction in agreement---Effect--Parties could validly agree for conferment of territorial jurisdiction to one out of two or more courts, which otherwise, should have the jurisdiction, such agreements were absolutely valid and enforceable under the law.

(c) Contract---

---Memorandum of understanding----scope--Memorandum of understanding in the law was only an understanding and executory instrument in nature and where the parties through a deliberated subsequent agreement on the same subject substitute the memorandum of understanding by adding the exclusive jurisdiction clause; memorandum of understanding should lose its relevance; it was, then only the succeeding instrument which should determine the rights and obligations inter se the parties.

Dr. Hameed Ayaz for Appellant.

Muhammad Saleem Shahnazi for Respondents.

2010 C L D 716

[Lahore]

Before Umar Ata Bandial and Muhammad Khalid Mehmood Khan, JJ

ALLIED BANK OF PAKISTAN LTD.---Appellant

Versus

SHIFA LABORATORIES through Sole Proprietor and another---Respondents

R.F.A. No.525 of 1996, heard on 11th March, 2010.

Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)---

----S. 12-Appeal, limitation for determination---Appellant applied for certified copy of impugned judgment on the very next day of the judgment---Certified copy of the judgment was prepared and received by the appellant 6 days after the preparation of certified copy---Time would commence with effect from the date when the first copy of the impugned judgment was received by the appellant.

Muhammad Adeel Aqil Mirza for Appellant.

Muhammad Saleem Shehnazi for Respondent.

2010 C L D 717

[Lahore]

Before Sagheer Ahmed Qadri, J

Malik MUHAMMAD SHOAIB BHUTTA---Petitioner

Versus

ABDUL AZIZ MOHMAND and another---Respondents

Criminal Revision No.30 of 2010, decided on 19th March, 2010.

(a) Criminal Procedure Code (V of 1898)---

---Ss.198 & 439---Penal Code (XLV of 1860), Ss.499/500/501/502/502-A---Defamation---Respondent complainant being the Resident Manager of a group of Newspapers had filed a complaint against the accused petitioner alleging that the material published by him in his newspaper amounted to defamation of the Group of Newspaper Companies, their News Channel as well as its CEO---Trial Court after recording cursory evidence led by the complainant, had summoned the accused under sections 499/500/501/502/502-A, P.P.C. to face the trial-Application filed by accused under 265-K, Cr.P.C. had been dismissed by trial Court vide impugned order-Main contention of the accused was that as the complainant was not an aggrieved person as defined in S.198, Cr.P.C., the complaint was not maintainable--Section 198, Cr.P.C. had specifically provided that for prosecution of an offence of defamation the complaint must have been filed by an aggrieved person-'Person' included not only an individual but a body or association, a company and an offence of defamation could also be committed against such person, juristic person or body of persons collectively--Word "aggrieved" had not been defined in Pakistan Penal Code, but according to its literal dictionary meaning an aggrieved person is one whose legal right had been invaded by an act complained of-Facts and circumstances of the case would be looked into in order to consider if a person was aggrieved of an imputation levelled against him--Complainant in the contents of his complaint as well as in his cursory statement recorded by Trial Court, had in so many words specifically agitated that due to the defamatory material published by the accused, not only said Group of Newspapers/Companies had suffered loss to their reputation, but the complainant in his personal capacity had also been defamed--Complainant had made out a prima facie case showing him as an 'aggrieved person' as defined under S.198, Cr.P.C. entitled to initiate the complain for the commission of alleged offences of defamation against the accused-Impugned order did not call for any interference--Petition was dismissed accordingly.?

Aslam Akbar Kazi and 3 others v. Gulzar Ahmad Channa and another 2003 PCr.LJ 1892 distinguished.

Muhammad Abdullah v. The State 2000 PCr.LJ 576; Bashir Ahmad v. Zafar ul Islam and others PLD 2004 SC 298; Imdad and 3 others v. The State and 2 others 2006 PCr.LJ1243; SHEVO v. Regional Police Officer, Hyderabad Region, Hyderabad and 15 others PLD 2009 Kar.24; Municipal Board, Konch v. Ganesh Prasad Chaturvedi AIR (99) 1952 Allahabad 114; Black's Law Dictionary in its 5th Edition; Shabana Mustafa v. Dr. Muhammad Khalid and others PLD 2001 Lah.98; Hosseinbhoy Ismailji v. Emperor AIR 1934 Sindh 188 and Surajmal v. Ramnath AIR 1928 Nagpur 58 ref.

(b) Criminal Procedure Code (V of 1898)---

----S.198-Prosecution for breach of contract, defamation and offences against marriage--Aggrieved person only competent to prosecute---Nature of accusation would determine whether the person is aggrieved or not, who should have suffered directly in his own repetition.?

(c) Penal Code (XLV of 1860)---

----Ss. 499, 11 & 44---Defamation--Person aggrieved--Scope -Person includes not only an individual but a body or association, a company and a juristic person as well.

?

Municipal Board, Konch v. Ganesh Prasad Chaturvedi AIR (99)1952 Allahabad 114 ref.

(d) Penal Code (XLV of 1860)---

---Ss.499, 500, 501, 502, & 502-A---Defamation- Person aggrieved, determination of-Facts and circumstances of each case have to be looked into to determine if the complainant is aggrieved of the imputation levelled against him. ?

Black's Law Dictionary in its 5th Edition; Shabana Mustafa v. Dr. Muhammad Khalid and others PLD 2001 Lah.98; Hosseinbhoy Ismailji v. Emperior AIR 1934 Sindh 188 and Surajmal v. Ramnath AIR 1928 Nagpur 58 ref.

Muhammad Arshad Tabrez for Petitioner.

Amjad Afsar Ghakhar for respondent No.1.

2010 C L D 726

[Lahore]

Before Mian Shahid Iqbal and Nasir Saeed Sheikh, JJ

Messrs MALIK MUSHTAQ GOODS TRANSPORT COMPANY---Appellant

Versus

FEDERATION OF PAKISTAN through Secretary Railways, Ministry of Railways, Islamabad and 9 others---Respondents

I.C.As. Nos.951,991 of 2009 in Writ Petition No.11923 of 2009, decided on 5th April, 2010.

Public Procurement Regulatory Authority Ordinance (XXII of 2002)---

----Ss. 1(2) (3), 2(j) & 26 Public Procurement Rules, 2004, Rr.2(c), 3, 4, 20, 34(2), 40, 42 & 48---Auction of contract of luggage vans attached with railway trains running on specified routes---Failure of auction proceedings to procure satisfactory offers and return of call-deposits to bidders---Offer of revised bid by respondent-bidder finalized through private negotiation---Acceptance of revised bid and awarding of contract to respondent for one year through letter issued by authority without signing any formal agreement---Validity---Authority could not show any law, rule, regulation and instructions permitting Pakistan Railways to award contract without inviting bids---Authority had not undertaken fresh process of inviting bids through proper publication---Pakistan Railways being a department of Federal Government would fall within definition of "procuring agency" as given in S.2(j) of Public Procurement Regulatory Authority Ordinance, 2002---Concept of open competitive bidding introduced by Pakistan Procurement Rules, 2004 was with a view to ensure a transparent exercise of powers by a procuring agency in awarding of its contract---Awarding of contract through negotiations was specifically prohibited by R.40 of Rules, 2004---Transparent exercise of powers by public authorities in awarding contracts of valuable rights was always insisted---Emergent situation to bypass competitive bidding process as provided in R.42(v) of Rules, 2004 did not exist in the present case---No order of competent authority was available on record for adopting process of negotiation for awarding contract to respondent---Process for award of contract to respondent was not only without lawful authority, but same had been conducted in a non-transparent manner, thus, could not be sustained in eye of law---Running of contract by respondent on account of injunctive order of High Court would not justify to give protection to illegal and non-transparent method of awarding contract by authority---No complaint in the present case had been made to Committee under R.48(2) of Public Procurement Rules, 2004 nor had any order been passed thereon, thus, question of preferring of appeal under R.48(5) thereof would not arise so as to attract prohibitory clause of R.3(2), Proviso (1) thereof---High Court directed authority to invite fresh bids for auction of contract and directed Auditors of Pakistan Railways to assess loss, if any, accrued to public exchequer on account of illegal award of contract to respondent and its cancellation and submit report before Committee constituted by Authority, which if found correct, then such financial loss would be made good by respondent and officials of Pakistan Railways in equal share, who issued such letter and contributed towards awarding of such contract to respondent in addition to other action, which such Committee would direct to be taken against persons held and found responsible for loss.

?

PLD 1976 Lah. 453 ref.

Arsalla Khan v. Bashir Ahmad Blour and 3 others PLD 1976 SC 581; Malik Atta Muhammad and another v. Government of Punjab through Secretary, Local Government and Rural Development, Lahore and others 2007 SCMR 178; Mubashar Iqbal Cheema v. Cantonment Board PLD 2009 Lah.506 and Dr. Tariq Mehmood Memon v. Province of Sindh through Chief Secretary and another 2007 MLD 1225 rel.

Kh. Saeed-uz-Zafar for the Appellant in (ICA No.951 of 2009) and Muhammad Shahzad Shaukat for the Appellant in (ICA No.991 of 2009).

Umar Sharif, Legal Advisor for Respondents Nos. 1 to 5 and Salman Aslam Butt for other Respondents.

2010 C L D 741

[Lahore]

Before Sh. Azmat Saeed, J

SAUDI PAK COMMERCIAL BANK LTD.---Plaintiff

Versus

UMAR BILAL (PVT.) LTD.---Defendant

COS No.26 of 2005, CMs Nos.219-B, 419-B and 420-B of 2006 and 93 of 2009, decided on 14th January, 2010.

Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)---

----S.12--Ex parte decree-Incorrect address, plea of--Filing of two affidavits-Defendant sought setting aside of ex parte decree on the ground that process was served on incorrect addresses--Defendant filed two different affidavits to substantiate the plea of incorrect address, one affidavit contained address on which process was serve. 4 and the other was different-Effect-Defendant had filed two separate affidavits with two separate addresses without any explanation-One of the two affidavits was false and defendant had exposed himself to criminal liability in that behalf--Assertion of alleged incorrectness of address on which service was effected was an after-thought, motivated not by truth but by change of Advocate-Defendant was served on 19-5-2006, therefore, he had the knowledge of proceedings of ex parte decree on the date of service of notice under O.XXI, R.66, C.P.C. and first application under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001, was filed on 19-6-2006, well beyond the period of 21 days from the date of knowledge prescribed by the law-Application for setting aside ex parte decree was not only without merit but was also barred by limitation, therefore, High Court declined to interfere in ex parte decree passed against defendant-Application was dismissed in circumstances.

Salman Masood for the Plaintiff.

Shahid Ikram Siddiqui for Defendant.

Date of hearing: 10th December, 2009.

2010 C L D 777

[Lahore]

Before Muhammad Khalid Mehmood Khan, J

ZAHID MAHMOOD---Appellant

Versus

TAHIR AZIZ CHUGHTAI and 2 others---Respondents

R.S.A. No.32 of 2003, decided on 28th April, 2010.

(a) Civil Procedure Code (V of 1908)---

----O. XXXVII, R.2---Negotiable Instruments Act (XXVI of 1881), S.28-Money suit---Trial Court decreed the suit--Appellate Court upheld the judgment and decree of Trial Court---Defendant contended that he did not execute promissory note in his personal capacity but as an employee of the partnership firm which was the actual beneficiary of the loan---Validity---Plaintiff averred himself in plaint that he had advanced loan to the partnership firm---Plaintiff witnesses also admitted that promissory note was signed by the defendant on behalf of other defendants---Defendant was employee of the firm and was performing his duties as an employee Promissory note also bore the official rubber stamp of the firm--No doubt, defendant had admitted to putting his signatures on the promissory note and receipts but such admissions were made on behalf of principal/partnership firm---Receipts were issued to the plaintiff on the letter-head of the firm signed by the accounts officer and the defendant as manager of the firm---Plaintiffs own admissions were sufficient to disprove his claim against the defendant who did not assume/incur any personal liability by executing the promissory note---Courts below had failed to evaluate/appreciate the evidence led by the parties and decreed the suit against the defendant instead of the firm which was the real recipient and beneficiary of the loan---Impugned judgment and decree were set aside with costs in circumstances. ?

(b) Negotiable Instruments Act (XXVI of 1881)---

----S. 28---Liability of agent signing the promissory note--Scope and application of S.28 of Negotiable Instruments Act, 1881---Where the person signing the promissory note added words indicating that he did so 'for, and behalf of principal or in representative capacity", such person had not assumed any personal liability by signing the promissory note---Executant of promissory note could not absolve himself from personal liability merely on the ground that there were words added to his signature indicating that he was acting as an agent or in representative capacity but the beneficiary of the promissory note had to prove the intention of the executant in this regard---In the present case, executant was admittedly employee of a firm and further, the firm had allowed him to operate their accounts maintained , with the Bank.?

Munawar us Slam for Appellant.

Muhammad Iqbal for Respondents.

Date of healing: 31st March, 2010.

2010 C L D 784

[Lahore]

Before Mian Shahid Iqbal and Nasir Saeed Sheikh, JJ

MUHAMMAD SHARIF and another---Appellants

Versus

Hafiz MUHAMMAD ISMAIL and 10 others---Respondents

EFA No.158 of 2008, heard on 20th April, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.15(11)--Civil Procedure Code (V of 1908), O. XXI, Rr. 89 & 90-Auction of mortgaged property--objection petition---Objector claimed to be owner of property on basis of ex parte decree of specific performance of sale agreement--Non-filing of appeal against rejection of objection petition by Banking Court-Auction/sale of property by Bank without intervention of court and execution of sale-deed in favour of purchaser---Second application by objector under O.XXI, Rr.89 & 90, C.P.C., for setting aside such sale/auction---Validity---Earlier order of rejection of objection petition had attained finality---Second application could not create a fresh cause of action for objector to seek a new order on an issue decided through such earlier order--Original owner of property had created mortgage in favour of Bank---Objector could not be allowed to file such second application--Proceedings for setting aside such ex parte decree were pending before court which passed the same---In absence of registered sale-deed executed in favour of objector in pursuance of such decree, he could not claim any title in property merely on its basis---Such second application for being incompetent was dismissed in circumstances.

Mumtaz ud Din Adil and others v. Sheikh Iftikhar Adil and others PLD 2009 SC 207 and Hakim Enayat Ullah v. Khalil Ullah Khan and another AIR 1938 Allahabad 432 ref.

(b) Transfer of Property Act (IV of 1882)---

---S.54-Specific Relief Act (1 of 1877), S.12-Sale agreement-Ex parte decree passed in suit for specific performance of such agreement-Non-execution of registered sale-deed in favor of decree-holder in pursuance of such decree-Effect-Decree-holder could not claim title in suit property merely on basis of such decree.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.15(11)--Civil Procedure Code (V of 1908), O.XXI, R.89---Sale/auction of mortgaged property and execution of its sale-deed in favour of purchaser by Bank without intervention of Banking Court---Application under O.XXI, R.89, C.P.C., for setting aside such sale/auction after deposit of 5% of auction price in court by applicant---Maintainability---Without establishing some illegality in effecting of sale/auction in favour of purchaser, applicant could not claim its setting aside merely on basis of such deposit---Such application was not competent before court, as such sale/auction had not taken place in execution of decree passed by court---Such application could be entertained only by Executing Court, when sale of immovable property had taken place in execution of a decree---Such application was dismissed in circumstances.

M. Qamar-uz-Zaman for Appellants.

Sh. Nadeem Ashraf for Respondents Nos. 1 to 9.

Inam Ullah Hashmi for Respondents Nos. 11.

Date of hearing: 20th April, 2010.

2010 C L D 792

[Lahore]

Before Mian Shahid Iqbal and Nasir Saeed Sheikh, JJ

GHULAM RAZA SAJID---Appellant

Versus

STATE LIFE INSURANCE CORPORATION OF PAKISTAN and another---Respondents

R.FA. No. 16 of 2008, heard on 13th May, 2010.

(a) Insurance Ordinance (XXXIX of 2000)---

----S.121---Limitation Act (IX of 1908), Art.86---Application for enforcement of insurance policy claim---Limitation---Accidental death of policy holder on 10-10-1996---Filing of such application before Insurance Tribunal on 22-7-2006---Plea of applicant was that Insurance Ordinance, 2001 was promulgated on 19-8-2000, but cause of action to raise such claim before Insurance Tribunal arose on 20-6-2006 when the same was constituted for first time, thus, such application was within time---Plea of Insurance Company was that. right to institute suit under Art.86 of Limitation Act, 1908 had become time-barred before constitution of the Insurance Tribunal---Validity---Government had not constituted Insurance Tribunal prior to date 20-6-2006, thus, question of raising such claim before the Tribunal did not arise---Provisions of Art.86 of Limitation Act, 1908 would apply to suits instituted in civil courts under ordinary law, but not to such application before Insurance Tribunal---Insurance Ordinance, 2001 had not specifically restricted entertainment of such claim, which might have become due after its promulgation---Constitution of Insurance Tribunal under Insurance Ordinance, 2001 vide Notification dated 20-6-2006 was an intimation to policy holders to seek enforcement of their claims from said Tribunal---Limitation for moving the Insurance Tribunal for enforcement of such claim would commence from the date when same was constituted for first time on 20-6-2006---Such application was within time in circumstances.

(b) Insurance Ordinance (XXXIX of 2000)---

---S.121---Limitation Act (IX of 1908), Art.86---Qanun-e-Shahadat (10 of 1984), Art.71--Application for enforcement of insurance policy claim---Accidental death of policy holder, ground of---Plea of Insurance Company was that according to its investigation report, deceased was murdered---Production of such report in evidence in statement of company's counsel during trial---Validity---Such policy was operative till death of deceased and was not cancelled by company---Husband of deceased deposed on oath as witness, but company did not put to him any suggestion with respect to facts stated in such report---Person having conducted investigation and prepared such report had not been examined in court, thus, such report would have no legal authenticity---Claim application was accepted in circumstances.?

Liaqat Ali Butt for Appellant.

Mian Naseer Ahmed for Respondents.

Date of hearing 13th May, 2010.

2010 C L D 845

[Lahore]

Before Muhammad Khalid Mehmood Khan, J

STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Chairman and another---Petitioners

Versus

ADDITIONAL DISTRICT JUDGE-I and another---Respondents

Writ Petition 4682 of 2009, decided on 5th April, 2010.

(a) Insurance Ordinance (XXXIX of 2000)---

----Ss. 123(1) (d) & 124(2)-Civil Procedure Code (V of 1908), O.XVI, R.1--Constitution of Pakistan (1973), Art.199--Constitutional petition-Proceedings of Insurance Tribunal, applicability of C.P.C.---Scope---Petitioner filed application under O.XVI, R.1 C.P.C. for summoning of witness before the Insurance Tribunal-Insurance Tribunal dismissed the application-Contention of the petitioner was that the Insurance Tribunal was not a civil court and that the Civil Procedure Code, 1908 was not applicable in proceedings before it-Validity-Insurance Tribunal was constituted under S.124(2) of the Insurance Ordinance, 2000, which was a special law, and as such the Civil Procedure Code, 1908 was not strictly applicable to the proceedings pending before it--In the present case, witness required to be summoned, was not included in the list of witnesses---Insurance Tribunal had to consider the sufficient cause for non-inclusion of name of the said witness---Petitioner had based his claim on the allegation of fraud-For the success of petitioner's claim, the record and statement of Doctor from the Hospital where deceased was treated was necessary-High Court allowed the constitutional petition and set aside the order of Insurance Tribunal and directed the said Tribunal to summon the witness.

(b) Administration of justice---

----All disputes between the parties should be decided on merits.?

Mian Naseer Ahmad for the Petitioners.

Liaqat Ali Butt for Respondent No.2.

2010 C L D 870

[Lahore]

Before Iqbal Hameed-ur-Rahman, J

Mst. NUSRAT MALIK SALEEM---Appellant

Versus

STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Chairman

and another---Respondents

R.F.A. No.2 of 2008, heard on 20th May, 2010.

Insurance Ordinance (XXXIX of 2000)---

----Ss.118 & 124(2)---Insurance. claim---Liquidated damages, payment of---Principle--Recovery of access amount--Insurance Corporation paid an amount of Rs.13,91,349 although it was alleged that the same was not according to calculation---Subsequent to payment of amount to appellant, the Insurance Corporation issued notice for recovery of excess amount paid to her who assailed the notice before Insurance Tribunal but the same was without any avail--Validity---Employees of Insurance Corporation were responsible for not making payment to appellant within specified period of ninety days and the same led to delay in payment---Corporation could not justify such delay to be beyond the control of Corporation---Calculation of liquidated damages were to be made from 22-6-2000, the date of death of insurer to 29-11-2006, along with rate of interest in accordance with law---Corporation had not placed before Insurance Tribunal nor before High Court any basis of their making disputed calculation-Corporation was not able to substantiate its stance through any supporting material or law---Even otherwise payment had been made to appellant, therefore, Insurance Corporation could not make any recovery from her---Judgment passed by Insurance Tribunal was set aside and recovery memo issued by the Corporation was declared null and void, without lawful authority and having no legal effect on appellant--High Court restrained the Corporation from making any recovery from the appellant---Appeal was allowed accordingly.

Mst. Nusrat Malik Saleem v. Federation of Pakistan 2006 CLD 874; PLD 1984 SC 403; 2001 CLC 1743; 2001 YLR 731; 2001 MLD 1169; Controlling Authority, N.-W.F.P. Board of Technical Education, Peshawar and another v. Abdul Salam Secretary, N.-W.F.P. Board of Technical Education PLD 1993 SC 200; Muhammad Shakir and others v. Administrator, District Council, Rajanpur and another 2002 PLC (C.S.) 302 and The Engineer in Chief Branch through Ministry of Defence, Rawalpindi and another v. Jalaluddin PLD 1992 SC 207 rel.

Liaqat Ali Butt for the Appellant.

Ibrar Ahmad and Kashif Kharal for the Respondents.

Date of hearing: 20th May, 2010.

2010 C L D 888

[Lahore]

Before Muhammad Qasim Khan, J

MUHAMMAD AKMAL---Petitioner

Versus

TRUST LEASING INVESTMENT BANK through General Manager and 4 others---Respondents

Writ Petition No.2369 of 2006, decided on 9th June, 2010.

(a) Transfer of Property Act (IV of 1882)---

----S.12---Agreement to sell---Validity---Such agreement would not create any title in favour of vendee.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.17---Transfer of Property Act (IV of 1882), S.12---Constitution of Pakistan (1973), Art.199---Constitutional petition--Non-payment of instalments of vehicle by original purchaser to Bank---Seizure of vehicle and its sale by Bank without intervention of court---Petitioner claimed to have purchased vehicle from original purchaser through agreement to sell and paid instalment to Bank, thus, Bank was bound to consider him as its owner instead of original purchaser and deliver him its possession---Validity---Such agreement would not create any title in favour of petitioner---Bank was not party to such agreement---Nothing on record to show that original purchaser could sell out vehicle to any other person without permission of Bank---High Court dismissed constitutional petition as petitioner had no locus standi to file the same.

Raja Muhammad Sohail Iftikhar for Petitioner.

Muhammad Saleem Iqbal for Respondents Nos. 1 and 2.

2010 C L D 988

[Lahore]

Before Asad Munir, J

DEWAN PETROLEUM (PVT.) and others---Petitioners

Versus

GOVERNMENT OF PAKISTAN and others---Respondents

Writ Petition No.3708 of 2009, decided on 14th July, 2010.

(a) Constitution of Pakistan (1973)---

---Art.199---Rules of Business, (Federal) 1973, R.14(213)---Constitutional jurisdiction---Scope---Contractual matter---Promissory estoppel---Applicability, principles--Petitioner entered into a Petroleum Concession Agreement with the respondent/Government of Pakistan---After discovery of gas by the petitioner, respondent executed a development and commercial lease in favour of the petitioner and nominated Sui Northern Gas Pipelines Limited as purchaser of gas from petitioner/company---Dispute arose over fixation of well-head price resulting from different interpretations of the relevant Article of the Petroleum Concession Agreement---Parties, by mutual consent, referred the issue to the Attorney-General for Pakistan who supported the version of petitioner/company---Petitioner contended that the controversy was resolved by the opinion of the Attorney-General which was binding on the Government/respondent which refused to fix the price of gas---Petitioner further contended that the reference having been proposed by respondent (Government) itself, opinion of the Attorney-General was binding on the government/respondent on account of promissory estoppel---Respondent contended that constitutional petition was not maintainable as numerous remedies were available to the petitioner viz. arbitration, suit for specific performance that petitioner was not an 'aggrieved party'; writ of mandamus could not be issued in the absence of any lapse on the part of any public functionary and that opinion of the Attorney-General was not binding on the Government as the same was not the opinion of an expert of petroleum industry---Validity--Rules 4(213) of the Federal Rules of Business, 1973 attached primacy to the Attorney General's opinion which could only be overruled by the Prime Minister or the Cabinet---Record showed that the Prime Minister had not overruled the opinion of the Attorney General---Dispute of gas price was, admittedly, referred to the Attorney General by the Prime Minister with promise and understanding given to the petitioner company that the opinion/advice of the Attorney-General would be binding on both the parties which agreed to seek the opinion of Attorney General as a mode or means to settle the dispute---Opinion of the Attorney General given in pursuance of mutual agreement, therefore, qualified to be regarded as an amicable settlement in the Petroleum Concession Agreement which did not prescribe any specific means to settle the disputes---Attorney General's opinion was binding on the Government on account of promissory estoppel---Whenever a person had acted on representation on promise made by the Government, he could not resile from such promise---Remedies of arbitration and suit for specific performance could be sought by the petitioner if the dispute pertained to the interpretation of the relevant articles of the Petroleum Concession Agreement---Dispute/ grievance, in fact, arose out of Federal Government's refusal to abide by the opinion of the Attorney General---Grievance though pertained to contractual matter, yet the same arose out of Federal Government's failure to follow the opinion of the Attorney General---Dispute did not involve determination of questions of fact of a contractual matter, therefore, constitutional jurisdiction could be exercised even in contractual matters where no controversial questions of fact required detailed inquiry were involved---Opinion of the Attorney General was held to be binding on the Government which was directed to fix the well-head price of gas in the light of Attorney General's opinion which amounted to settlement contemplated under the Petroleum Concession Agreement---Constitutional petition was allowed.?

Messrs Airport Support Services v. the Airport Manager Quaid-e-Azam International Airport Karachi and others 1998 SCMR 2268 and Hazara (Hill Tract) Improvement Trust through Chairman and others v. Mst. Qaisra Elahi and others 2005 SCMR 678 fol.

(b) Rules of Business (Federal), 1973---

---R.14(213)---Rules of Business, 1973 attached primacy to the opinion of Attorney General which could only be overruled by the Prime Minister or the Cabinet.?

(c) Constitution of Pakistan (1973)---

----Art.199---Constitutional jurisdiction-Scope-Contractual matter---Constitutional jurisdiction could be exercised where no controversial questions of fact required detailed inquiry.?

Messrs Airport Support Services v. Airport Manager Quaid-e-Azam International Airport Karachi and others 1998 SCMR 2268 ref.

Waseem Sajjad, Sami Zafar and Malik Qamar Afzal for Petitioner.

Yousaf Khosa for Respodnents Nos. 1 and 2.

Tariq Aziz for Respondent No.3.

Date of hearing: 4th May, 2010.

2010 C L D 1014

[Lahore]

Before Nasir Saeed Sheikh and Mian Shahid Iqbal, JJ

NASCO PACKAGING (PVT.) LTD. and others---Appellant

Versus

Sheikh INAM-UL-HAQ and another---Respondents

Regular First Appeal No.154 of 2007, heard on 25th June, 2010.

(a) Civil Procedure Code (V of 1908)---

---O.IX, Rr.6, 13 & O.XXXVII, Rr.2, 3---Qanun-e-Shahadat (10 of 1984), Art.133---Suit for recovery of money on basis of cheque---Report of Process Server showing service of summons upon a person alleged to be Incharge of defendant's factory---Initiation of ex parte proceedings against defendant on basis of such report---Application for setting aside order of ex parte proceedings on ground that said person was neither employee of defendant nor was he authorized to receive summons, thus, service upon defendant could not be deemed to have been lawfully effected---Rejection of such application and passing of decree by Trial Court after recording plaintiffs evidence without allowing defendant to cross-examine plaintiffs witnesses---Validity---Defendant had right to be treated in accordance with law and could avail opportunity to defend suit instituted against him---Nothing was available on record to show as to how such person was believed to be Incharge of defendant company---Report of Process Server did not show parentage or Identity Card number of such person---Defendant had specifically denied his connection with such person, thus, Trial Court was duty bound to frame issue on such point and allow him to lead evidence thereon---Order of ex parte proceedings was not legally sustainable---Defendant despite having been proceeded ex parte could still join proceedings of pending suit and cross-examine witnesses produced by plaintiff in ex parte evidence-Denial of opportunity to defendant to cross-examine plaintiffs witnesses was illegal, which had resulted into miscarriage of justice---High Court set aside impugned judgment/decree while directing Trial Court to frame issue on such application and decide same after recording evidence.

Ch. Mazhar Ali v. Deputy Commissioner Islamabad and another 1992 MLD 116; Messrs Landhi Industrial Trading Estates Ltd., Karachi v. Government of West Pakistan through Excise and Taxation Officer, "N" Division, Karachi 1970 SCMR 251; Mst. Bilgees Begum v. Syed Ali Turab and others 1980 CLC 930; Aziz Ullah Khan and 4 others v. Arshad Hussain and 2 others PLD 1975 Lah.879; Habib Ismail Bajwa v. Khawaja Ghulam Mohy-Ud-Din PLD 1970 Lah.428 and Snagram Singh v. Election Tribunal, Kotah and another AIR 1955 SC 425 rel.

(b) Civil Procedure Code (V of 1908)---

----O.IX, R.6---9anun-e-Shahadat (10 of 1984), Art.133---Order of ex parte proceedings against defendant---Effect---Defendant could join proceedings of pending suit and cross-examine witnesses produced by plaintiff in ex parte evidence---Denial of opportunity to defendant to cross-examine plaintiffs witnesses would be illegal resulting into miscarriage of justice.

Ch. Mazhar Ali v. Deputy Commissioner Islamabad and another 1992 MLD 116; Messrs Landhi Industrial Trading Estates Ltd., Karachi v. Government of West Pakistan through Excise and Taxation Officer, "N" Division, Karachi 1970 SCMR 251; Mst. Bilqees Begum v. Syed Ali Turab and others 1980 CLC 930; Aziz Ullah Khan and 4 others v. Arshad Hussain and 2 others PLD 1975 Lah.879; Habib Ismail Bajwa v. Khawaja Ghulam Mohy-Ud-Din PLD 1970 Lah. 428 and Snagram Singh v. Election Tribunal, Kotah and another AIR 1955 SC 425 rel.

Jahangir A. Jhojha for Appellant.

Sh. Zulfiqar Haider Mankee for Respondents.

2010 C L D 1123

[Lahore]

Before Nasir Saeed Sheikh and Mian Shahid Iqbal, JJ

Mst. RIFFAT ASGHAR---Appellant

Versus

STATE LIFE INSURANCE CORPORATION OF PAKISTAN and others---Respondents

R.F.A. No.443 of 2007 , heard on 7th July, 2010.

(a) Insurance Ordinance (XXXIX of 2000)---

----Ss. 79 & 123---Widow of insured person filed an application before Insurance Tribunal for recovery of insurance money alongwith liquidated damages---Insurance Company contested application on the ground that insurance policy was procured by concealment of facts and that investigation was conducted by a duly authorized person under S.79 of the Insurance Ordinance, 2000 which had been exhibited as a proof---Insurance Tribunal dismissed application for insurance claim---Validity---Report exhibited had not been declared as per se admissible by the provisions of Insurance Ordinance, 2000---Contention that the officer who prepared report had retired and had not been produced for the said reason, was not made out from the record---Statement of facts made by the officer who prepared report, without producing such officer for cross-examination, could not make report admissible in the eye of law---Contention that the insurance policy obtained by the late husband of the applicant was through material suppression of facts and by making fraudulent declaration was not established by the company, during trial--Insurance Company itself undertook investigation through its own doctor and there was nothing found by the said doctor which could disentitle issuing of policy in favour of late husband of the applicant---No show-cause notice was issued before passing the impugned order---High Court accepted appeal and set aside the impugned judgment and directed Insurance Company to make payment of claim amount to applicant in accordance with insurance policy.

R.F.A. No.16 of 2008 rel.

(b) Insurance Ordinance (XXXIX of 2000)---

----S. 123---Qanun-e-Shahadat (10 of 1984), Art.132---Examination-in-chief---Statement of facts made by the officer who prepared report which was exhibited, without producing such officer for cross-examination, could not make the report exhibited admissible in the eye of law.

(c) Insurance Ordinance (XXXIX of 2000)---

----S. 124(2)---Insurance claim---Application for---Plea of application being time-barred by Insurance Company--Insurance Tribunal dismissed application for recovery of insurance claim---Validity---Plea of the applicant that Insurance Tribunal was constituted on 20-6-2006 and upon constitution of the said Tribunal, application was moved and the same could not be treated as barred by time---Findings of Insurance Tribunal, with respect to application moved by applicant, to be barred by time was not legally correct, in circumstances.

Liaqat Ali Butt for the Appellant.

Abrar Ahmad for the Respondents.

Date of hearing: 7th July, 2010.

2010 C L D 1171

[Lahore]

Before Nasir Saeed Sheikh and Mian Shahid Iqbal, JJ

Mst. FATIMA BEGUM ---Appellant

Versus

STATE LIFE INSURANCE CORPORATION OF PAKISTAN and others---Respondents

Regular First Appeal No.440 of 2007, heard on 7th July, 2010.

(a) Insurance Ordinance (XXXIX of 2000)---

----S. 123-Widow of insured person filed application before Insurance Tribunal urging that her husband was policy holder for a sum of Rs.100,000 on non-medical grounds which Insurance Company had issued in his favour without medical examination--Insurance company contested application on the ground that insurance policy was obtained by misrepresentation and by suppression of facts by the policy holder---Insurance Tribunal dismissed application of the widow-Validity---Contention that insurance policy of deceased husband of the applicant was repudiated, was not supported by lawful repudiation order as no such order had been produced during trial of the application Insurance Company's witness did not produce any written report of his investigation and stated in the examination-in-chief that deceased remained under treatment in the hospital-In absence of any written report or of any record of the hospital, Insurance Company could not establish the' alleged fraudulent conduct or concealment of some facts prior to purchasing of insurance policy by the deceased-Company's witness did not even allege any misrepresentation having been made by policy-holder before purchasing insurance policy--High Court accepted the appeal and set aside impugned judgment and directed the Insurance Company to make payment under insurance policy to the applicant.

(b) Insurance Ordinance (XXXIX of 2000)---

----S. 123---Insurance claim---Application for---Plea of Insurance company that application was time-barred--Insurance Tribunal dismissed application for recovery of insurance claim---Validity---Contention that such appli­cation was time-barred was repelled as only upon the constitution of the Insurance Tribunal under the Insurance Ordinance, 2000, the right to keep remedy, by invoking the powers of the Tribunal, could be availed.

R.F.A. No.16 of 2008 rel.

Liaqat Ali Butt for Appellant.

Abrar Ahmad for Respondents.

Date of hearing: 7th July, 2007.

2010 C L D 1175

[Lahore]

Before Nasir Saeed Sheikh and Mian Shahid Iqbal, JJ

Rao DIL JAN KHAN---Appellant

Versus

DR. MUHAMMAD YOUNIS and another---Respondents

Regular First Appeal No.180 of 2008, heard on 26th May, 2010.

(a) Defamation Ordinance (LVI of 2002)---

----Ss.3, 4, 5 & 9-Defamatory suit---Plaintiff claimed Rs.20,00,000 as damages alleging that the defendant had published false news items in the newspaper damaging his reputation and professional performance-Trial Court decreed the suit awarding Rs.500,000 as damages directing the defendant to publish apology for and contradiction of the false news within fifteen days, failing which plaint would be entitled to remaining Rs.15,00,000 of the amount claimed-Defendant contended that publication of the apology had dissolved his liability to pay Rs.500,000 as damages awarded by the Trial Court-Validity-Defendant's contention that the publication of apology had entitled him to the defence provided by S.5(e) of the Defamation Ordinance, 2002 was not maintainable because the defendant published apology only after the judgment had been passed by the Trial Court, so the same could not be regarded as a proper apology offered to be tendered and published voluntarily---Defendant published apology to save him from payment of the hefty amount of Rs.1500,000 awarded as portion of damages---Apology tendered in pursuance of judgment of the court to avoid payment of alternative damages could not be termed a proper apology as envisaged in S.5(e) of the Defamation Ordinance, 2002---Plaintiffs case for damages was proved beyond shadow of doubt---Defendant could not produce any evidence to prove the veracity of allegations levelled against the plaintiff in the news items--Publication of news items constituted defamation, appeal therefore, was dismissed.

(b) Defamation Ordinance (LVI of 2002)---

----S. 5(e)--'Proper apology'---Validity---In order to set up the defence of proper apology under S.5(e) of the Defamation Ordinance, 2002, offer to tender and publish apology must be voluntary---Apology tendered and published under court order / judgment in order to avoid payment of damages could not be termed a proper apology as envisaged in S.5(e) of the Defamation Ordinance, 2002.

Ch. Anwaar ul Haq Pannun for Appellant.

Sultan Mahmood Dar for Respondents.

Date of hearing 26th May, 2010.

2010 C L D 1198

[Lahore]

Before Iqbal Hameed-ur-Rehman, J

HARRIS STEEL INDUSTRIES (PVT.) LTD. through Chief Executive and another---Plaintiff

Versus

BANK OF PUNJAB through Manager---Defendant

Suit No.37 and C.M.No.357 of 2010, decided on 29th June, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 16---Special Relief Act (1 of 1877), Ss.42 & 54---Civil Procedure Code (V of 1908), O.XXIII, R.1---Withdrawal of suit---Permission to file fresh suit---Fraud with bank---Effect---Plaintiffs filed suit for declaration and rendition of accounts against bank and sought direction for filing of statement of accounts---Plea raised by bank was that plaintiffs committed fraud with bank at the time of getting finance facility---Plaintiffs sought withdrawal of suit with permission to file fresh---Validity---Plaintiffs could not be allowed to withdraw the suit simpliciter when fraud had been alleged to have been committed by plaintiffs---Suit of plaintiffs could not proceed, therefore, High Court declined to grant permission to withdraw that same---Suit was dismissed in circumstances.

Haji Muhammad Boota and others v. Member (Revenue), Board of Revenue Punjab and others PLD 2003 SC 979 and Mst. Zahida Sattar and others v. Federation of Pakistan and others PLD 2002 SC 408 fol.

Pakistan Lawyers Forum v. General Pervaiz Musharaf and others 2000 SCMR 897; Tariq Mohsin Siddiqui and 2 others v. The State through National Accountability Bureau 2005 MLD 1827 and Kulsoom and another v. Trustees of Port of Karachi through Chairman K.P.T. Karachi and 2 others 2002 SCMR 718 ref.

Munawar-ul-Islam, for the Applicants/Plaintiffs.

Khawaja Haris for the Defendant.

2010 C L D 1550

[Lahore]

Before Ijaz ul Ahsan, J

HAMEED KHAN & CO. (CHARTERED ACCOUNTANTS) through Partner---Petitioner

Versus

INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN through Regional Director North and another---Respondents

Writ Petition No.17037 of 2009, heard on 6th July, 2010.

Chartered Accountants Ordinance (X of 1961)---

----S.15---Constitution of Pakistan (1973), Art.199---Constitutional petition---Quality Control Review---Quality Assurance Board, decision of---Quality Assurance Board decided to carry out Quality Control Review of petitioner company after one year from the date of last Quality Control Review, instead of two and a half years---Validity---Chartered Accountants Institute was a professional body constituting members and office-bearers elected by their peers---Steps taken by Institute were for collective benefit, for interest of general public and to increase professional standards and competency---Periodical reviews conducted under the supervision and control of Institute of Chartered Accountants of Pakistan were meant to ensure that international standards of audit were maintained by local firms---If Board of experts and professionals had thought it appropriate to undertake Quality Control Review of a Chartered Accountant after one year, High Court declined to override such decision unless malice, ill-will or mala fides were apparent on the face of the record--If the Chartered Accountants met and followed requisite standards, it should not be shy of getting its work scrutinized by a professional body experts charged with responsibility to ensure maintenance of high professional standards---Such was in public interest and necessary to maintain credibility of the Institute---No malice or mala fide had been alleged in petition nor any mala fides or malice was apparent from the record---Notice issued by Institute was neither violative of principles of natural justice nor contrary to the policy or rules of the Institute---High Court in exercise of extraordinary Constitutional jurisdiction, declined to interfere in the matter---Petition was dismissed in circumstances.

Mian Muhammad Waheed Akhtar for Appellant.

Anwar Kamal for Respondents.

Date of hearing: 6th July, 2010.

2010 C L D 1563

[Lahore]

Before Ch. Muhammad Tariq, J

Messrs SARA FASHION GARMENTS (PVT) LTD.---Petitioner

Versus

AL-BARAKA ISLAMIC BANK and others---Respondents

Writ Petition No.2390 of 2004, decided on 12th August, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.10---Constitution of Pakistan (1973), Art.199---Constitutional petition---Conditional leave to defend--Bank filed recovery suit against petitioner and Banking Court granted leave to defend the suit with the condition to deposit surety---Validity--Banking Court was fully empowered under section 10(9) of Financial Institutions (Recovery of Finances) Ordinance, 2001, to grant leave to defend the suit keeping in view the circumstances of each case---Discretionary powers were delegated upon Banking Court that leave to defend could be granted unconditionally or by imposing condition as to deposit of cash or furnishing of a surety-Order passed by Banking Court was passed on the strength of S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001--Banking Court had rightly directed the petitioner to furnish surety bond and there was no illegality or infirmity in the order called for interference by High Court-Petition was dismissed in circumstances.

Khawaja Muhammad Farooq for the Petitioner.

Muhammad Aslam Arain for Respondent No.1.

Abdul Qayyum Khan for Respondents Nos.4 and 5.

2010 C L D 1572

[Lahore]

Before Asad Munir J

MUHAMMAD IQBAL KHATTAK---Appellant

Versus

FEDERATION OF PAKISTAN---Respondent

Writ Petition No.2947 of 2009, decided on 27th August, 2010.

(a) State Bank of Pakistan Act (XXXIII of 1956)---

---S. 37---Banks (Nationalization) Act (XIX of 1974), S.3(I)(b)---Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance (LX of 2002), S.5(1) & (2)---Zarai Taraqiati Bank Limited (ZTBL)---Status--Control of State Bank---Scope---Zarai Taraqiati Bank Limited has been declared as a scheduled bank by State Bank of Pakistan under S.37 of State Bank of Pakistan Act, 1956---Zarai Taraqiati Bank Limited is subject to control and supervision by State Bank of Pakistan pursuant to the provisions of State Bank of Pakistan Act, 1956--Zarai Taraqiati Bank Limited is successor-in-interest of Agricultural Development Bank of Pakistan, as it has come into being on 14-12-2002 following restructuring and conversion of Agricultural Development Bank of Pakistan, which was expressly stated to be a bank by section 3(1)(b) of Banks (Nationalization) Act, 1974---There is no provision in Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance, 2002, as would suggest that after its conversion from Agricultural Development Bank, Zarai Taraqiati Bank ceased to be a bank and became free from being subject to the provisions of Banking Companies Ordinance, 1962, Banks (Nationalization) Act, 1974, or State Bank of Pakistan Act, 1956---Transitional provisions of section 5 (I) and (2) of Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance, 2002, not only allowed Zarai Taraqiati Bank to continue banking business of Agricultural Development Bank but also to use word "bank" as part of its name.

(b) Banks (Nationalization) Act (XIX of 1974)---

----S.11 (31a)---Appointment of President of bank---Approval of State Bank---Scope---President or a Chief Executive Officer of a bank cannot be appointed without approval of State Bank of Pakistan---Such requirement is in harmony and consistent with section 11(3Xa) of Banks (Nationalization) Act, 1974.

(c) Banks (Nationalization) Act (XIX of 1974)---

----Ss.3(1)(b) & 11(3)(a)---Banking Companies Ordinance (LVII of 1962), S.41---State Bank's Prudential Regulations for Corporate/Commercial Banking---Constitution of Pakistan 1973, Art.199(1)(bXii)---Constitutional petition---Writ of Quo Warranto---President of Bank---Appointment and qualification---Petitioner assailed appointment of respondent as president Zarai Taraqiati Bank on the ground that he did not have required qualification for the post---Validity---Respondent had no experience in banking and he never held any position of a banker in any capacity---Experience of respondent was confined to sugar industry where he was regarded as an expert analyst and an authority on the subject and had also been office bearer of an association---Respondent did not have any degree in banking, finance, economics or business administration, and did not meet the Fit and Proper Test in terms of qualification and experience laid down by State Bank of Pakistan which also explained refusal of State Bank of Pakistan to clear or approve his appointment as President Zarai Taraqiati Bank---Appointment of respondent as President Zarai Taraqiati Bank was unlawful for having been made in violation of provisions of section 41 of Banking Companies Ordinance, 1962, State Bank's Prudential Regulations for Corporate/Commercial Banking and section 11(3)(a) of Banks (Nationalization) Act, 1974, as neither the approval or clearance was given by State Bank of Pakistan nor he otherwise qualified to be appointed as President Zarai Taraqiati Bank , as he was sans any banking experience---High Court declared that appointment of respondent to the. post of President Zarai Taraqiati Bank was made unlawfully and could not be sustained---Respondent failed to show any authority of law to High Court, under which he was holding the post of President Zarai Taraqiati Bank---Notification of appointment of respondent as President Zarai Taraqiati Bank was without lawful authority and of no legal effect---Petition was allowed in circumstances.

Hotel Metropole Ltd. v. Government of Sindh PLD 1982 Kar.810; Maqbool Elahi v. Khan Abdul Rehman PLD 1960 SC 266; Salahuddin v. Frontier Sugar Mills PLD 1975 SC 244; Muhammad Rafique and 2 others v. Muhammad Pervaiz and 2 others 2005 SCMR 1829; Azizur Rahman Chowdhary v. M. Nasiruddin and others PLD 1965 SC 236; Dr. Kamal Hussain and 7 others v. Muhammad Sirajul Islam and others PLD 1969 SC 42; Dr. Azim ur Rehman Khan Meo v. Government of Sindh and another 2004 PLC (C.S.)1142; Muhammad Liaquat Munir Rao v. Shams ud Din and others 2004 PLC (C.S.)1328 and Pakistan Tobacco Board and another v. Tahir Raza and others 2007 SCMR 97 rel.

(d) Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance (LX of 2002)---

----S. 5(1) & (2)---National Accountability Ordinance (XVIII of 1999), S.5 (m) (iv)---Constitution of Pakistan (1973), Art.199 (1)(b)(ii)---Constitutional Petition-Maintainability--Holder of public office-Scope-Contention of respondent was that Zarai Taraqiati Bank (ZTBL) was not a public office and its President was not holder of public office---Validity---Zarai Taraqiati Bank inherited all assets of erstwhile Agricultural Development Bank, a statutory corporation, which was restructured and converted into Zarai Taraqiati Bank , which was also owned, funded and controlled by Government of Pakistan and whose assets, according to its website, were worth 84 billion Rupees as on 31-12-2005---Respondent who held the top management position in a company owned, funded and controlled by government, could only be described as the holder of public office---Writ of quo warranto was maintainable against respondent as all conditions mentioned in Art.199 (1)(b)(i) of the Constitution appeared to be present---Petition was maintainable in circumstances.

(e) Constitution of Pakistan 1973---

----Art.199 (1)(b)(ii)---Writ of quo warranto---Scope---Writ of quo warranto is in the nature of a public interest litigation, where undoing of a wrong or vindication of a right is sought by an individual not for himself but pro bono publico.

Hafiz Hammadullah v. Saif Ullah Khan and others PLD 2007 SC 52 rel.

Qazi Ahmad Naeem Qureshi for Appellant. Ashtar Ausaf Ali for Z.T.B.L.

K. Saeed-u-Zafar for State Bank of Pakistan.

Ch. Imtiaz Ahmad for Applicant.

Date of hearing: 28th May, 2010.

2010 C L D 1675

[Lahore]

Before Ijaz ul Ahsan, J

NATIONAL INVESTMENT TRUST LTD. and another---Petitioners

Versus

CRESCENT TEXTILES MILLS LTD.---Respondent

Civil Original No.41 of 2009, decided on 25th August, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss.2(1) (21), 148 & 28-Notification S.R.O.865(I)/2000, dated 6-12-2000-Extraordinary General Meeting--Declaring proceedings invalid---Beneficial shareholder--Locus standi--Petitioner was a trust and alleged that the proceedings of Extraordinary General Meeting were illegal and of no legal effect---Plea raised by respondent company was that the petitioners were not members and had no locus standi to seek such declaration---Validity---petitioner was a trust and not a shareholder/member of respondent company---Although as business practice beneficial owner was treated as shareholder yet the beneficial shareholders were technically not the shareholders insofar as their names could not appear in the records of the company either as members or shareholders---Petitioner was a trust and in terms of section 148 of Companies Ordinance, 1984, its name could not be entered in the Register of Members---In view of terms of section 160(a) read with section 2(1) (21) of Companies Ordinance, 1984, the petition was not filed by a member---Benchmark for maintaining a petition under section 160(a) of Companies Ordinance, 1984, which required that petition must be filed by members having not less than 1% of voting power in company was not met---Declaration sought by petitioner could only be granted if there was "material defect" in the notice under section 28 of Companies Ordinance, 1984, or in the meeting held in consequence of the notice---Just any defect did not furnish basis for exercise of jurisdiction under section 160 of Companies Ordinance, 1984---Petitioner was required to demonstrate that in the first place there was defect in the notice or in proceedings of meeting held in consequence thereof and in second place such defect was material, therefore, petitioner did not succeed in crossing such threshold---There was no effort on the part of respondent company to conceal or withhold any material information and information provided in statement under section 160(1) (b) of Companies Ordinance, 1984, met requirements of section 160 of Companies Ordinance, 1984 and Notification S.R.O. No.865(I)/2000, dated 6-12-2000--As petitioner was not a member of respondent company and could not maintain petition before court and there was no material defect or withholding of any material information either in notice under section 208 of Companies Ordinance, 1984, or in meetings held in consequence thereof, therefore, High Court declined to interfere in the proceedings of Extraordinary General Meeting---Petition was dismissed in circumstances.

Salman Akram Raja for Petitioners.

Imtiaz Rasheed Siddique and Barrister Qadir Baldish for Respondent.

Date of hearing: 19th August, 2010.

2010 C L D 1765

[Lahore]

Present Muhammad Khalid Mehmood Khan and Umar Ata Bandial, JJ

AF INDUSTRIES through Proprietor and 2 others---Appellants

Versus

FEDERATION OF PAKISTAN through Secretary Law and 7 others---Respondents

I.C.A. No.795 in.W.P.No.8346 of 2009, decided on 26th May, 2010.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 15---Constitution of Pakistan (1973) Arts.23, 24 & 199(1)(c)---Sale of mortgaged property---Constitutional jurisdiction of High Court---Scope---Bank in order to recover over-dues, without obtaining a decree of the court, had sold two charged properties of the appellants in exercise of power under S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Appellants assailed said private sale by Bank in constitutional petition being illegal and void---Single Judge of High Court had dismissed constitutional petition being not maintainable against a private Bank---Validity---Action of Financial Institution to sell charged properties was unconstitutional--High Court declared the impugned sale unconstitutional and void as same was made without lawful authority and was of no legal effect--Objection regarding maintainability of constitutional petition against a private Bank, had no bearing in the case because the challenge in the Constitutional petition was to the existence and exercise of a statutory power by private Bank and not to any contractual or private action taken by it---Impugned action upon the property right of the appellants, could not be denuded except in accordance with law---Bank had violated the fundament rights of the appellants to hold and enjoy property under Arts.23 & 24 of the Constitution---Under Art.199(1)(c) of the Constitution, fundament rights could be enforced by the appellants against adverse action taken by any person including a private Bank---For avoiding the consequences, of the arbitrary, pretended and false exercise of a statutory power, constitutional petition filed by the appellants was maintainable.

Muhammad Umar Rathore v. Federation of Pakistan 2009 CLD 257; Human Rights Commission of Pakistan v. Government of Pakistan PLD 2009 SC 507; Benazir Bhutto v. Federation of Pakistan PLD 1989 SC 66 and Peoples Union for Democratic Rights v. Union of India AIR 1982 SC 1473 rel.

Sajid Mehmood Sheikh and Khalid Mehmood Shad for the Appellants.

Imran Aziz for Respondent Bank.

Miss Shaista Qaiser, Deputy Attorney General.

2010 C L D 1802

[Lahore]

Before Ijaz ul Ahsan, J

Messrs OMER IQBAL SOLVENT (PVT.) LTD. and another: In the matter of

C.O. No.58 of 2009, decided on 6th September, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 92, 97, 284 & 287---Petition for sanction of scheme of amalgamation of two companies---Such Scheme approved unanimously by members in General Meeting of both companies---Issuance of no objection certificate by creditor bank of both companies and Competition Commission of Pakistan regarding sanctioning of such scheme---Objection of Securities and Exchange Commission of Pakistan that without following procedure laid down in Ss. 92 & 94 of Companies Ordinance, 1984, merger of authorized capital of merging companies was beyond scope of Ss.284 & 287 thereof---Validity---Section 287 of the Ordinance being a complete code provided one-window operation regarding matters pertaining to merger and amalgamation--Terms "property" and "liabilities" defined in very wide terms in S.287(4) of the Ordinance would include rights and powers of every description---By virtue of order of sanction made by High Court after amalgamation, rights, property and liabilities of transferor company would become rights and property of transferee company---Transferor company in the present case had paid entire statutory fee payable on its authorized capital---der merger, authorized share capital of transferor company would be aggregate of authorized share capital of transferor and transferee companies, on which required fees had already been paid by both companies---Requisite statutory compliance required by law had already been made by both companies---After sanctioning of such scheme, transferor company could not be directed to pay additional fee calculated on basis of enhanced authorized capital or to go through procedure provided in S.92 of the Ordinance-Sanctioning of scheme of merger by High Court would automatically result in merger of authorized capitals of merging companies without need for an enhancement of authorized capital of surviving company in terms of S.92 of the Ordinance-High Court overruled the objection and sanctioned the scheme for not being prejudicial to shareholders, creditors or members of both companies.

Areva T and D Ltd.'s Case [20071138 Comp Cas (Cal)); You Telecom India P. Ltd.'s Case [2008] 141 Comp Cas 43 .(Born); Vascant Investment Corporation Ltd. v. Official Liquidator, Calaba Land and Mill Co. Ltd. [1981]51 Comp Cas 20; PMP Auto Industries Ltd.'s Cas [1994]80 Comp Cas 289 (Born); Hotline HI Celdings P. Ltd.'s Case [2005]127 Camp Cas 165; Jaypee Cement Ltd.'s Case [2004]122 Camp Cas 854; [2004]62 CLA 329; Magnaquest Solutions P. Ltd.'s Case [2008]141 Camp Cas 728 (AP); Telesound India Ltd.'s Case [1983]53 Comp Cas 926; Regional Director and another v. Cavin Plastics and Chemicals P. Ltd. [2008] 141 Camp Cas 475 (Mad); and Saboo Leasing P. Ltd., In re [2003]117 Comp Cas 728 ref.

Mahmood Power Generation Ltd. v. Mahmood Textile Mills 2006 CLD 1364 and Nishat Apparel Ltd.'s Case 2009 CLD 1172 rel.

Syed Moazzam Ali Shah for Petitioners.

Salman Akram Raja along with Muhammad Saqlain Arshad, Deputy Director SECP.

Date of hearing: 2nd July, 2010.

2010 C L D 1827

[Lahore]

Before Umar Ata Bandial, J

PAKISTAN MUTUAL INSURANCE COMPANY---Appellant

Versus

APPELLATE TRIBUNAL SECP and another ---Respondents

Com. Appeal No.2 of 2008, decided on 21st May, 2009.

Security and Exchange Commission of Pakistan Act (XLII of 1997)---

----S.33---Insurance Ordinance (XXXIX of 2000), Ss.29(2)(3) & 36--Mutual Insurance Company---Financial criteria---Lack of paid-up capital---Appellant was directed to deposit an amount of Rs.10 million as a liquidity reserve pursuant to requirement of S.29(2) of Insurance Ordinance, 2000---Validity---Required minimum amount of deposit under S.29(2)(a) of Insurance Ordinance, 2000, was to be the higher of Rs.10 million or 10% of the insurer's paid-up capital---Lack of paid-up capital of a mutual insurance company meant that it had to deposit Rs.10 million---Meaning attributed to expression "mutual insurance company" in definition section of Insurance Ordinance, 2000, could not control the substantive provisions of the Ordinance---For non-life insurers and for all insurers across the board imposed specific qualifying financial criteria that was meant to establish their financial and business credibility---Such provisions created clear and definite obligations that could not to be avoided by resort to statutory interpretation---Statutory requirement for a cash deposit by Insurance Company with State Bank of Pakistan was binding and must be complied by the company--High Court declined to interfere in the demand raised against the company---Appeal was dismissed in circumstances.

Rao Qasim Mustafa for the Appellant.

Salman Akram Raja for the Respondents.

2010 C L D 1829

[Lahore]

Before Muhammad Khalid Mehmood Khan, J

MUNIR AHMAD BHATTI---Petitioner

Versus

GOVERNMENT OF PAKISTAN, MINISTRY OF INTERIOR through Secretary and others---Respondents

Writ Petitions Nos.6003 and 6004 of 2010, decided on 29th July, 2010.

(a) Banker and Customer---

---Disputes between the customer and the Bank, settlement of---Statutory law covering all the disputes between the customer and the Bank, both Civil and Criminal, surveyed.

(b) Exit from Pakistan (Control) Ordinance (XLVI of 1981)---

---S.2---Power to prohibit exit from Pakistan-"Public interest"---True spirit of the words "public interest" used in S.2 of the Exit from Pakistan (Control) Ordinance, 1981, expounded.

(c) Exit from Pakistan (Control) Ordinance (XLVI of 1981)---

----S. 2---State Bank of Pakistan Circular No.BSD(RU-51)/47/ECL/17913/2001, dated 7-12-2001---State Bank of Pakistan Circular No.BSD(RU-51)ECL/47/20162/2000, dated 5-12-2000---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Respondent-Bank through State Bank of Pakistan had succeeded to place the name of the petitioner in Exit Control List---Validity---Direction of State Bank of Pakistan to Banks, one of the parties to contract, to declare the customer defaulter and put his name on ECL was discriminatory---On a simple request of the lending Bank, not backed by any Court order, State Bank of Pakistan had no authority to forward the said request to the Federal Government for placing the name of the Customer on ECL---Likewise, Federal Government had also to apply its own mind before taking any action against the customer of the Bank---Guidelines and circulars issued by State Bank of Pakistan, specially Circular Nos.BSD (RU-51)/47/ECL/ 17913/2001, dated „7-12-2001 and BSD(RU-51)ECL/47/20162/2000, dated 5-12-2000, were subject to the orders of the competent Court of law---Perusal of the said two Notifications showed that State Bank of Pakistan had wrongly authorized the Banks to themselves decide that the Customer was a defaulter without hearing him--Intention of the framer of the instructions/circulars that in 'his assessment the agreement between the customer and the Bank had no legal value and that the Bank was always right, was not the intention of any law and he had not realized that Pakistan was a democratic country where the Constitution was supreme and every one had to act in accordance with law---Framer of the said Notifications had failed to consider that Bank could also commit illegality---For redressing the grievance of customer against the Bank of more than Rs.100 Million, State Bank of Pakistan had not framed any law, nor had issued any circular for placing the names of Bank share-holders, Directors or Chief Executive on ECL---State Bank could not treat the customer as a defaulter unless the matter was decided by the competent Court---Even the Parliament could not frame any law against the fundamental rights of the citizen of Pakistan---Circulars and Notifications issued by the State Bank of Pakistan referred to above or any circular with reference to declaration as defaulter of customer of Bank without any adjudication by a competent Court of law, was a colourful legislation and was bad in law---Federal Government before passing any adverse order against a customer of Bank was also duty bound under the law to apply its independent mind assess the material and that too in the 'public interest' before placing his name on ECL---Parawise comments of Federation had shown that they had simply acted on the instructions of State Bank of Pakistan---If the lender Bank or the State Bank had considered it necessary that the Customer should be restrained from travelling abroad, they had to approach the court where the matter was pending disposal, for obtaining appropriate orders---Lender Bank or State Bank of Pakistan had no authority to send the name of any customer against whom the Bank had any allegation of fraud without adjudication by the Court, to Federal Government to place his name on ECL---Impugned order had been passed on the letter of State Bank of Pakistan and the lender Bank without any application of mind by the Federal Government, the remedy of review, therefore, was illusory and not the proper remedy---Circulars referred to above and the impugned order were against the fundamental rights of the petitioner and the same were declared without lawful authority and of no legal effect in circumstances---Constitutional petition was accepted accordingly.

Shahid Ikram Siddiqui for Petitioner.

Rehan Nawaz for Respondent No.2.

Ahmad Nadeem Kashmiri, Dy. Attorney-General.

Nadeem Saeed for Respondent No.3.

2010 C L D 226

[Peshawar]

Before Ejaz Afzal Khan, C.J. and Mazhar Alam Khan, J

CHERAT CEMENT COMPANY LIMITED---Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary, Industries and Production, Ministry of Industries and Production Islamabad and 2 others---Respondents

Writ Petitions Nos.1643, 1633 of 1997, 49, 1540 of 1999, 481 of 2001 and 765 of 2003, decided on 24th December, 2009.

(a) Pakistan Standards and Quality Control Authority Act (VI of 1996)---

----Ss.2(i)(s), 4, 8, 14, 22 & 37-Constitution of Pakistan (1973), Arts.142 & 199---Powers of the Parliament to Legislate laws---Constitutional petition---Vires of Pakistan Standards and Quality Control Authority Act, 1996-Petitioner had contended that the Parliament had no doubt power to legislate laws in respect of the matter entered in the Federal or the Concurrent Legislative List, but it had no power to legislate in respect of the matters which had not been entered in either of the Lists---Validity--Quality control did not find mention with particularity in the Fourth Schedule of the Federal or Concurrent Legislative List, but it was not an end of the matter---Parliament in view of diverse socio-economic dynamics could legislate in attending the changes around and in the International World-Since law was an instrument for bringing about healthy and wholesome changes in the society, Parliament could legislate in accordance with the day to day requirements Parliament being alive and responsive to the growing needs and other socio-economic dynamics, could not remain static and stationary in its struggle to be at par with other countries in the world, the Parliament of Pakistan had to act and interact with the world at large and legislate accordingly-Pakistan Standards and Quality Control Authority Act, 1996 was not ultra vires.

Nishat Tek Limited v. The Federation of Pakistan and others PLD 1994 Lah.347; Messrs Nafees Dry Cleaners, Wahadat Road, Lahore v. The Government of Punjab through Secretary Law and Parliamentary Affairs Department, Lahore and another 2001 PTD 2018; Collector of Customs and others v. Sheikh Spinning Mills 1999 SCMR 1402 and Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others PLD 1997 SC 582 ref.

(b) Interpretation of statutes---

----While interpreting statute, provision could not be read in isolation and wrest meaning according to one's whim and caprice--While doing so it must be consciously sought to mould the law to serve the need of the time-While interpreting one must not act like a mechanic or a working mason having brick on brick without thought to the overall scheme--Approach or outlook should be akin to that of an architect who thought of the structure as a whole.

Isaac Ali Qazi along with Arif Raza for Petitioner.

Iqbal Mahmood, D.A.-G. for Respondents Nos. 1 and 2.

Abdul Latif Afridi for Respondent No.3.

Date of hearing: 23rd December, 2009.

2010 C L D 798

[Peshawar]

Before Attaullah Khan, J

CHAIRMAN STATE LIFE INSURANCE CORPORATION OF PAKISTAN and 7 others---Petitioners

Versus

UMAR ZAD SHAH BUKHARI---Respondent

C.R. No. 304 of 2004, decided on 26th April, 2010.

Insurance Ordinance (XXXIX of 2000)---

---Ss. 72, 122 & 123---Specific Relief Act (I of 1877), S.12---Suit for specific performance of contract in respect of Insurance Policy--Jurisdiction of Insurance Tribunal---Suit filed by the plaintiff having concurrently been decreed by the Trial Court and Appellate Court, defendants (Insurance Company) had filed revision petition---Contention of the Insurance Company was that civil court had no jurisdiction to entertain and decide the suit because under Ss.122 & 123 of the Insurance Ordinance, 2000 only the insurance Tribunal had the exclusive jurisdiction and that legal heirs of deceased had not been impleaded--Validity---Insurance Tribunal, no doubt, was vested with exclusive jurisdiction under S.122(3) of Insurance Ordinance, 2000, but record had revealed that at the relevant time the Tribunal was not constituted---In absence of such Tribunal, subsection (3) of S.122 of the Insurance Ordinance, 2000, could not be pressed into service-Civil Court, in circumstances, had jurisdiction to entertain and adjudicate upon the matter in dispute--As to non-impleading of legal heirs of deceased, reference could be made to S.72 of Insurance Ordinance, 2000, according to which before the Policy was matured for payment, person nominated in the Policy, would be paid in the event of his death--Plaintiff had been mentioned as nominee in the policy and record had further revealed that partnership deed between deceased and the plaintiff also existed and during the course of joint business, they had secured a joint Insurance Policy and same was sanctioned after completion of required codal formalities---No independent evidence was available in support of the claim of the Insurance Company that deceased, at the time of obtaining policy, was seriously ill and that fact was concealed---No other ground had been proved to justify interference in the impugned concurrent findings of the courts below---Revision petition of Insurance Company was dismissed.

Abdur Rahim and another v. Mst Janatay Bibi and others 2000 SCMR 146; Haji Muhammad Din v. Malik Muhammad Abdullah PLD 1994 SC 291 and Muhammad Rashid Ahmad v. Muhammad Siddique PLD 2002 SC 293 ref.

Muhammad Kamran for S.L.I.C. Respondent in person.

Date of hearing: 26th April, 2010.

2010 C L D 823

[Peshawar]

Before Ejaz Afzal Khan C.J. and Mazhar Alam Khan, Miankhel, J

EXECUTIVE VICE-PRESIDENT and another---Appellants

Versus

Brig. (R) MIAN HAMEED-UD-DIN---Respondent

F.A.B. No.7 of 2007, decided on 25th March, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.2, 9 & 22---Suit for claiming profit on certificate of investment--Suit decreed by Banking Court---Validity---Banking Court had no jurisdiction to entertain such suit for not being a suit between a customer and Financial Institution---Plaintiff had been treated like a shuttlecock by Civil Court, Banking Court and then by High Court---Judgment of the Banking Court though having no jurisdiction in circumstances could be treated a decision as if given by a competent court of law having jurisdiction in such matter.

Nawab Syed Raunaq Ali and others v. Chief Settlement Commissioner and others PLD 973 SC 236 and Abdul Majid and others v. The State Transport Appellate Authority, Bihar and others AIR 1960 at Patna 333 rel.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---S.9---Suit for claiming profit @ 14% per annum on certificate of investment---Plaintiffs plea was that subsequent variation in such promised rate of profit by Bank was unjustified---Validity---Plaintiff before purchasing such certificate had signed Application Form by accepting all its terms and conditions appearing thereon---Plaintiff had agreed to abide by all rules and regulations relating to such certificate---Amount of profit on such certificate was calculable on monthly basis under PLS system and rate of profit thereon was to be announced by Bank subject to change without notice---Reduced rate of discount announced by State Bank had compelled Bank to revise rate of profit subsequently, intimation of which had been given to plaintiff---Plaintiff had an option either to continue with revised schedule of profit or encash his certificate without payment of any charges---Plaintiff could not claim rate of profit at 14%, but was entitled to receive at revised rate intimated by Bank---Suit was dismissed in circumstances.

Shumail Ahmad Butt for Appellants.

Mian Fazal Wahab for Respondent.

Date of hearing: 25th March, 2010.

2010 C L D 975

[Peshawar]

Before Ejaz Afzal Khan, C.J. and Mazhar Alam Khan, J

Messrs BANK ALFALAH LIMITED through Authorized Officer---Petitioner

Versus

EXCISE AND TAXATION OFFICER and 3 others---Respondents

Writ Petitions Nos. 1982 of 2006, 742, 1107 of 2007,950 of 2008 and 188 of 2009 decided on 10th June, 2010.

Banking Companies Ordinance (LVII of 1962)---

---S.5(c)---Cantonments Act (II of 1924), S.60---Constitution of Pakistan (1973), Arts.163, 199 & Fourth Sched. Part-I, Entry 48---Constitutional petition---Levy of professional tax by Provincial Government on banking Company housed in Cantonment area---Plea of Bank that its Head Offices located in other Provinces had paid such tax according to their paid up capital, thus, its Branch could not be subjected to such levy; that such levy was illegal as its Branch Office located in Cantonment area would not fall within domain of Provincial Government; and that such levy covered by Entry 48 of Fourth Sched. of the Constitution would not fall within competence of Provincial Government---Validity---Such tax could be levied on limited company, Mudariba, Mutual Fund and other corporate bodies having prescribed paid up capital or reserves in preceding years---Payment of such tax in one Province could not diminish or dilute its liability once Bank decided to expand its activity by entering into another Province---Powers of Cantonment Board to impose tax within scope of S.6O of Cantonments Act, 1924 would not take any such business, trade, calling or employment carried in Cantonment area out side scope of Province or its Assembly---Such tax was not imposed on Cantonment, but on business carried therein by petitioner---In absence of any provision whether express or implied in any law for the time being in force, powers of Provincial Government to levy such tax on business carried in Cantonment area could not be restricted---Petitioner being a limited company, could not escape liability of such levy irrespective of fact whether its Head Offices were within or outside Province---Bank/Banking Companies could not be termed as "corporation" used in Entry 48 of Fourth Sched. of the Constitution---Impugned levy was legal---High Court dismissed constitutional petition in circumstances.

Province of Punjab and others v. Sargodha Textile Mills Ltd. and others PLD 2005 SC 988 and Fist Leasing Corporation Ltd. v. Government of N.-W.F.P. and others rendered in Writ Petition No.1965 of 1998 decided on 28-1-2009 rel.

Ahmad Butt for Petitioners.

Farman Ullah Khattak and Waqar Ali DA-G for Respondents.

Date of hearing: 10th June, 2010.

2010 C L D 1182

[Peshawar]

Before Mazhar Alam Khan and Yahya Afridi, JJ

AFZAL MOTORS (PVT.) LTD. through Managing Director---Petitioner

Versus

HIGHER EDUCATION ARCHIVES AND LIBRARIES DEPARTMENT through Secretary and 7 others---Respondents

Writ Petition No.679 of 2010, decided on 8th April, 2010.

(a) Constitution of Pakistan (1973)---

---Art.199---Constitutional petition relating to contractual matters-Maintainability-Pre-conditions stated.

Issue relating to contracts can be agitated in constitutional jurisdiction. However, the condition precedent for such a judicial review, is where the impugned order or an action or in-action is based on mala fide, against the principles of transparency and it does not have any contentious contested question of fact determinable from the record of the case.

(b) North-West Frontier Province Procurement of Goods, Works and Services Rules, 2003---

---R.29-Constitution of Pakistan (1973), 199-Constitutional petition-Maintainability-Tendering, evaluation of tenders or award of contract in violation of North-West Frontier Province Procurement of Goods, Works and Services Rules, 2003-Such violation could be validly agitated in constitutional jurisdiction.

(c) Constitution of Pakistan (1973)---

---Art.199---Constitutional petition-Maintainability-Consti­tutional petition containing allegation of mala fide Proof-Mala fide must be alleged against a named person and shown from record without recording of evidence, otherwise such petition would become non-maintainable-Principles.

In regard to alleged mala fide, the petitioner has to firstly allege the mala fide against an individual, who has to be clearly named in the petition. Secondly, he has to, from the record, show clearly without there being any need to record evidence that the individual has committed the alleged mala fide. Alleging mala fide is a double edged weapon. It can very easily throw the petition out of the realm of maintainability, as proving mala fide is difficult. In case the mala fide cannot be proved from the record, then the need for recording of evidence comes in and in such eventuality the petition cannot proceed in constitutional jurisdiction. The matter would then have to be resolved and adjudicated by an ordinary civil court of competent jurisdiction.

(d) North-West Frontier Province Procurement of Goods, Works and Services Rules, 2003---

---R.29---Constitution of Pakistan (1973), Art.199--Constitutional petition--Bids invited for supply of buses---Committee constituted to assess market price and after sale service of bidders---Technical evaluation of engine of buses offered by bidders through Engineering University---Rejection of petitioner's lowest bid by Tender Accepting Authority on basis of reports submitted by such Committee and Engineering University and awarding contract to respondent for supply of buses---Petitioner's plea that reasons in writing for rejection of his bid had not been conveyed to him---Validity---Authority after reviewing such reports had given valid reasons for rejecting lowest bid of petitioner and accepting bid of respondent---Authority had complied with principles of natural justice---Petitioner had not filed counter-affidavit rebutting reports of technical experts, thus, could not dispute correctness thereof--Petitioner, if wanted to challenge such reports, would be required to produce evidence--High Court dismissed constitutional petition in limine.

Ittehad Cargo Service's case PLD 2001 SC 116; Airport Service's case 1998 SCMR 2268; Pak Steel Mill's case 2007 SCMR 190; Mian Fazal Din's case PLD 1969 SC 223; Preston Products's case CLC 2001 1412 and Arshad's case 2000 SCMR 1557 ref.

(e) North-West Frontier Province Procurement of Goods, Works and Services Rules, 2003---

--Rs.29(2) --Requirement of giving reasons in writing while rejecting lowest bid---Scope---Such requirement postulated assertions of principles of natural justice, which must be duly complied with.

Qazi Jawed Ihsanullah for Appellant.

Ishaq Ali Qazi and Fazal ur Rehman A.A.G. for Respondent.

Date of hearing: 8th April, 2010.

2010 C L D 34

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

KOHINOOR INDUSTRIES LIMITED: In the matter of

Show-Cause Notice No. EMD/233/262/2002-2534, dated 30th March, 2009, decided on 2nd July, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.244, 245 & 476---Improper issuance, circulation or publication of balance-sheet or profit and loss account--Imposition of penalty---Company failed to annex with its annual audited account for the relevant year certain reports and statements---Company had also failed to annex Directors' Report with quarterly accounts filed with the Commission under the provisions of S.245 of the Companies Ordinance, 1984 as required under S.244 of said Ordinance-Chief Executive of the company, in response to show-cause notice, had submitted that the default was just an act of oversight on the part of office staff who forgot to append the annexures comprising said reports/statements---Deficient information, however was provided to the Commission---Chief Executive further stated that default was inadvertent and not knowingly and wilfully and without any intention to violate the law and prayed for condonation of default---Regret by the representative of the company and assurance to exercise due care in future was appreciated---Despite the fact that the default was established and same had also been admitted, lenient view was taken of said default and instead of imposing maximum penalty of Rs.5,000 on the Chief Executive of the company, Chief Executive was warned to observe the compliance of law in letter and spirit.

M. Omer Farooq, Director and Abdul Rehman, Assistant Director on behalf of Chief Executive of Messrs Kohinoor Industries Limited.

2010 C L D 36

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

Messrs FATEH TEXTILE MILLS LTD.: In the matter of

Show-Cause Notice No. EMD/233/250/2002-63-69, dated 9th July, 2008, decided on 2nd July, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.208 & 476---Unauthorized investment in the associated companies and undertaking---Imposition of penalty--While examining the annual audited accounts of the company for the relevant year it was observed by the Commission that the company had trade debts which were due from its associated companies--Said balances receivable from the company's associated companies did not fall in the nature of normal trade credit which was in violation of S.208 of the Companies Ordinance, 1984--Chief Executive and Directors of the company had breached their fiduciary duty by failing to exercise due diligence while providing open ended trade credits to Its associated companies and not recovering long outstanding trade receivables from the said associated companies and advancing loan to its associated companies under the disguise of trade receivables without authority of the shareholders, which was in violation of the provisions of S.208 of the Companies Ordinance, 1984---Company had violated the provisions of S.208 of the Companies Ordinance, 1984 by providing loan in the form of trade debts to its associated companies without the approval of shareholders and without charging interest on such loan---Submissions made by the representative of the company, were non cogent due to the fact that long standing trade debts were not in the nature of normal trade credit and that the associated companies were being advanced loans in the form of direct payments and bearing of expenses on behalf of them---Said transactions were not brought to the attention of the shareholders for the purpose of obtaining the mandatory approval thereof, which resulted in violation of S.208 of the Companies Ordinance, 1984---Company's representative finally admitted to said default and undertook to furnish specific information/documents with regard to said default---Chief Executive and the Directors had violated the provisions of S.208 of the Companies Ordinance, 1984 and had not exercised due care while extending the said credit to the associated companies---Directors of the company had admitted the default and were in a process of rectifying the default by recovering the balance of trade debts due from its associated companies--Representatives having also assured that company would ensure strict compliance of the provisions of Companies Ordinance, 1984, instead of imposing maximum penalty of ten million rupees as prescribed by subsection (3) of 5.208 of the Companies Ordinance, 1984 taking lenient view of the default, fine of Rs.5,00;000 was imposed on each Director of the company.

Muhammad Saleem (Director), on behalf of all the Directors and Chief Executive of Messrs Fateh Textile Mills Ltd. Present.

2010 C L D 49

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

MIAN TEXTILE INDUSTRIES LTD.: In the matter of

Show-Cause Notice No.EMD/233/269/2002-3091, dated 7th May, 2009, decided on 26th June, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.235 & 476--Transferring incremental depreciation from surplus on revaluation of fixed assets account to un-­appropriated profit--Imposition of penalty---Company had been transferring the incremental depreciation from surplus on revaluation of fixed assets account to un-­appropriated profit/accumulated loss through profit and loss account in contravention of S.235 of the Companies Ordinance, 1984---Explanation furnished on part of the company was not found satisfactory and case was fixed for hearing and on date of hearing Chief Executive appeared and he referred to the written submissions and stated that in his opinion the treatment adopted by the company did not affect the true and fair view of the state of affairs of the company---Chief Executive further argued that proper disclosure had been .made in the accounts; and the company had not tried to conceal any thing from the shareholders, he however admitted non-compliance with the requirements of S.235 of the Companies Ordinance, 1984 and assured to rectify the default in financial statements of the company---Default was established, however, in view of assurance given by the Chief Executive for future compliance, taking lenient view, instead of imposing a maximum penalty of Rs.20,000 on each Director, imposed a fine of Rs.10,000 on the Chief Executive of the company only for the said default---Other Directors were strictly warned to be careful in future.

Mian Muhammad Jehangir, Chairman/Chief Executive Present.

2010 C L D 53

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

Messrs S.G. POWER LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-II/18/2008, dated 8th August, 2008, decided on 15th June, 2009.

Companies Ordinance (XLVII of 1984)---

---S.245---Failure to prepare and transmit quarterly account Imposition of penalty--In terms of the provisions of S.245 of the Companies Ordinance, 1984 company was required to prepare and transmit to the members, Registrar and the Commission its quarterly accounts within prescribed period, but company had failed to file said quarterly account-Authorized Representative who appeared on behalf of all the Directors, admitted the default, he, however, contended that the company had suffered heavy losses which had forced the management to suspend its operations and lay off factory and head office staff---Closure of factory of the company was not a cogent reason for ;non-submission of quarterly accounts to the shareholders; in such circumstances it became more important for the shareholders that they receive timely information about the affairs of the company---Directors were duty bound to ensure compliance with all the statutory requirements and were responsible for timely preparation and circulation of quarterly accounts to its members, Registrar and Commission---In the present case directors who had failed to do so, had deprived the shareholders of the statutory right to receive the quarterly accounts in time---Default though was established, but keeping in view the fact that the company had filed said quarterly accounts though with delay, lenient view was taken in the matter and instead of imposing maximum fine of Rs.100,000 on every Director, fine of Rs.100,000 was imposed on Chief Executive of the company under subsection (3) of S.245 of the Companies Ordinance, 1984-Other Directors were strictly warned to be careful in future.

M. Javed Panni/Authorized Representative) Present.

2010 C L D 56

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

KOHINOOR POWER COMPANY LTD.: In the matter of

Show-Cause Notice No. EMD/233/404/2002-2494-2500, dated 26th March, 2009, decided on 6th July, 2009.

Companies Ordinance (XLVII of 1984)---

---S.208--Making investment in associated companies or associated undertakings unauthorizedly---Imposition of penalty--Company had given abnormal trade credit to its associate without the authority of a special resolution and without any return, which was in contravention to the provisions of S.208 of the Companies Ordinance, 1984-Provisions of S.208 of the Companies Ordinance, 1984 having been violated, the Directors of the company were liable for the penalty as defined in subsection (3) of S.208 of the Ordinance--However, keeping in view the fact that the debt had been recovered by the company, lenient view had been taken and instead of imposing a maximum fine of Rs. ten million on each Director, fine of Rs.100,000 was imposed on each Director.

M. Omer Farooq, Director, Present.

2010 C L D 60

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

DANDOT CEMENT COMPANY LTD.: In the matter of

Show-Cause Notice No. EMD/233/373/2002-3094, dated 8th May, 2009, decided on 13th August, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss. 227, 229, 476 & 495---Failure to transfer provident fund contribution to provident fund trust---Imposition of penalty---Company, in terms of the provisions of S.227 of the Companies Ordinance, 1984, was required to pay the provident fund contributions to provident fund trust within 15 days of collection---Company was also required under order of the Commission to repay its past liabilities towards provident fund trust; but had failed to do so-Chief Financial Officer, who was Authorized Representative of the company appeared and stated that default was not intentional; but an outcome of poor financial position of the company; he however assured that the management of the company was very serious about payment of company's liabilities towards the provident fund trust; he requested that time should be allowed to the company---Amounts collected from employees as contributions to a provident fund constituted by the company were in the nature of trust money in the hands of a company and same must be paid to the trustees within stipulated time---Provisions of S.227 of the Companies Ordinance, 1984 were meant to protect the funds of the employees by obligating company/trustees to deposit contributions in the safe/secured modes of investment/deposits permitted thereunder---Compliance with the said provisions of Companies Ordinance, 1984 also became important due to the fact that such amounts were unsecured and in case a company would go insolvent the employees would be the worst victims---Companies, in circumstances could not be allowed to withhold such money on any pretext whatsoever and any default in that regard could not be ignored---Directors of the company had failed to comply with the requirements of S.227 of the Companies Ordinance, 1984 by failing to pay the provident fund contribution in the manner prescribed thereunder---Directors of the Company had also failed to ensure compliance with the order of the Commission---Directors, in circumstances, had made themselves liable for action under S.229 and S.495(1) of the Companies Ordinance, 1984--Nevertheless, considering company's financial condition as well as commitment for future compliance, lenient view was taken and instead of imposing maximum fine, less penalties were imposed accordingly on the Directors.

Dawood Ahmad, CFO and Abdul Khabir, Company Secretary, Present.

2010 C L D 66

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

HAMID TEXTILE MILLS LTD.: In the matter of

Show-Cause Notice No.EMD/233/255/2002-1364, dated 1st December, 2008, decided on 17th August, 2009.

Companies Ordinance (XLVII of 1984)---

---Ss.492, 476 & 158---False statement, penalty for---Company incorporated as public limited company made an application to the Commission in the month of October, 2008 signed by a person for extension in time for holding Annual General Meeting under S.158 of the Companies Ordinance, 1984---Said person in his letter dated November 27, 2008 to the Commission informed that he had resigned from the company since April, 30, 2008; and that he had not signed any document after April 30, 2008---In view of said information provided by said person who allegedly had signed application, company had prima facie made false statements regarding Company Secretary in the application, furthermore signatures of said person were also forged---Chief Executive who appeared on behalf of all the Directors of the company, admitted the default and asked for a lenient view---Company by making false statement regarding Company Secretary in the application, had contravened the provisions of S.492 of the Companies Ordinance, 1984-Default Was established, however, taking a lenient view in the matter, instead of imposing maximum fine of Rs.500,000 on every Director, penalty of Rs.200,000 was imposed only on Chief Executive of the company, while other Directors were strictly warned to be careful in future.

Khawar Almas Khawaja, Chief Executive Present.

2010 C L D 69

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

HAMID TEXTILE MILLS LIMITED: In the matter of

Show-Cause Notice No. EMD/233/255/2002-2378, dated 13th March, 2009, decided on 17th August, 2009.

Companies Ordinance (XLVII of 1984)--

----S.158---Failure to hold Annual General Meeting within prescribed period---Imposition of penalty---In terms of the provisions of subsection (1) of S.158 of the Companies Ordinance, 1984, company was required to hold Annual General Meeting for the relevant period within prescribed Period, but the company had failed to comply with said mandatory requirement of law---Protection of the investors/shareholders, was one of the primary objectives of the Companies Ordinance, 1984---It were investors who Provide seed for capital formation-If the interest of the investors was protected, they would save and invest more and their interest would be protected by transmission of timely, adequate and meaningful information to them---It was the annual and interim accounts, which provide information to the investors about the affairs of the company---Annual General Meeting was a forum where the investors could freely discuss, speak and vote on important matters' concerning approval of accounts, appointment of auditors, election of Directors, etc.---Default of the company was established, however, keeping in view the past track record of the company and the fact that the company had held Annual General Meeting, though with delay, lenient view was taken in the matter and instead of imposing maximum fine of Rs.500,000 on every Director and further fine of Rs.2,000 per day for continuous default for each quarter, fine of Rs.100,000 was imposed on Chief Executive of the company only under subsection (4) of S.158 of the Companies Ordinance, 1984 and Directors were strictly warned to be careful in future.

Khawar Almas Khawaja, Chief Executive, present.

2010 C L D 72

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

HAMID TEXTILE MILLS LTD.: In the matter of

Show-Cause Notice No.EMD/End II/255/2004-2379, dated 13th March, 2009, EMD/Enf-II/255/2004-3500, dated 9th June, 2009, decided on 17th August, 2009.

Companies Ordinance (XLVII of 1984)---

----S.245---Failure to prepare and transmit quarterly accounts---Imposition of penalty---Company in terms of provisions of S.245 of the Companies Ordinance, 1984 was required ,to prepare and transmit to members and simultaneously file with the Registrar and Commission its quarterly accounts, had failed to do so---Chief Executive who admitted the default had contended that due to change of management and delay of annual audit, the company was not able to prepare quarterly accounts in time and requested for taking a lenient view of the default-Delay in audit and change of management was not a cogent reason for non-submission of quarterly accounts to the shareholders; in such circumstances, it had become more important for the shareholders that they receive timely information about the affairs of the company-Directors were duly bound to ensure compliance with all the statutory requirements---Directors of the company were responsible for timely preparation and circulation/ submission of quarterly accounts to its members, Registrar and the Commission and Directors who failed to do so had deprived the shareholders of their statutory right to receive the quarterly accounts in time---Record had established that company and its Directors and the Chief Executive had wilfully and deliberately committed the default in preparation, circulation and filing of quarterly accounts---However, keeping in view assurance by Chief Executive to submit quarterly accounts as soon as possible, taking lenient view of the matter, instead of imposing maximum fine of Rs.100,000 on every Director and future fine of Rs.1,000 per day for continuous default for each quarter, a fine of Rs.100,000 was imposed upon Chief Executive of the company only under S.245(3) of the Companies Ordinance, 1984 and other Directors were strictly warned to be careful in future.

Khawar Almas Khawaja, Chief Executive, present.

2010 C L D 75

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

ASIM TEXTILE MILLS LTD.: In the matter of

Show-Cause Notice No.EMD/233/446/2006-3800, dated 25th June; 2009, decided on 24th August, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.208 & 476---Unauthorized investments in associated company--Imposition of penalty---Examination of the annual audited accounts of the company for the relevant years had revealed that company had provided advances to the associated undertaking which were outstanding Said advance given to the associated company could not be termed as normal trade credit and fell under the ambit of 5.208 of the Companies Ordinance,, 1984---Advance in question, was without a prior approval from the shareholders through a special resolution and without any return on such credit given which was in violation of the requirements of S.208 of the Companies Ordinance, 1984---Chief Executive and the Directors of the company had not exercised due care while extending said credit to the associated company--Default had been admitted and the relevant amount had already been recovered---Representatives of the company had also assured that company would ensure strict compliance of the provisions of Companies Ordinance, 1984 in future--Instead of imposing maximum penalty of Rs.10,000,000 as prescribed by S.208(3) of the Companies Ordinance, 1984, taking lenient view of the default, token fine of Rs.200,000 was imposed on Chief Executive of the company.

Allah Datta, CFO, present.

Ajmal Shahab, Attorney, present.

2010 C L D 79

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

ANNOOR TEXTILE MILLS LTD.: In the matter of

Show-Cause Notice No.EMD/233/84/2002-534, dated 11th September, 2008, decided on 18th August, 2009.

Companies Ordinance (XLVII of 1984)---

---Ss.204-A & 498--Failure to appoint Company Secretary---Imposition of penalty--Annual report of the company had revealed that company had not appointed any person as Company Secretary---Company, in circumstances acted, in contravention of provisions of S.204-A of the Companies Ordinance, 1984--Objective of S.204-A of the Companies Ordinance, 1984 was to improve corporate culture and bring good corporate governance by ensuring quality secretarial services for the corporate sector-Law required that a listed company would have a whole time Company Secretary---In the present case Board of Directors had yet to appoint a company Secretary, failure of which was in violation of the provisions of S.204-A of the Companies Ordinance, 1984---Chief Executive of the company had not acted in accordance with the provisions of law and was responsible for the non-compliance of provisions of S.204-A of the Companies Ordinance, 1984, which had attracted provisions of S.498 of the Ordinance---Fine of Rs.15,000, was imposed on Chief Executive of the company.

Jahangir Adam, Advisor Finance and Accounts with Farhan Siddiqui, Consultant, Present.

2010 C L D 83

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SMD)

FOUNDATION SECURITIES (PVT.) LTD.: In the matter of

Show-Cause Notice No.1(06)PM/KSE/MSW/SMD/2009, dated 19th June, 2009, decided on 3rd August, 2009.

Securities and Exchange Ordinance (XVII of 1969)---

----S.22---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Third Sched.--Failure to abide by Brokers Rules---Imposition of penalty---Company's clients had been engaged in extensive buying and selling in the scrip of other companies---Transaction in question executed through the company's brokerage house had not resulted in any change in beneficial ownership, artificially inflated share price and generated artificial volumes in the scrip of said other companies and in circumstances had created false market---Such attempt to generate artificial turnover and price movement led to inducing unsuspecting innocent investor to trade in that scrip---Such was harmful to the interest of small investors as well as development of a fair and transparent market---Rule 12 of Brokers and Agents Registration Rules, 2001, required that company should abide by Code of Conduct set forth under the Brokers Rules, which had made it mandatory on the company to execute its business with due care and skill; and to put in place proper system and controls to ensure that its business was conducted according to the application of said Rules and Regulations and abstain from interfering in smooth and fair functioning of market---Company which was one of the reputable brokerage house was expected to be conversant and fully complied with the Code of Conduct-Obligation to fully comply with the regulatory requirements was further amplified by the fact that company belonged to one of the largest and prominent corporate groups of Pakistan---Trade in question had disrupted smooth and efficient functioning of the market and inability of the company to monitor such trades, had indicated that the company had failed to conduct its business with due diligence, care and had interfered in smooth and fair functioning of the market---Company was supposed to ensure that all the employees adhered to the Rules and regulations of Stock Exchange---Company was bound to maintain high standard of integrity, promptitude and fairness in the conduct of its business and refrain from indulging in acts, which led to false market and were detrimental to the investor's interest---Company had failed to abide by R.12 of the Brokers and Agents Registration Rules, 2001 by violating clauses A1, A2 and A4 of the Code of Conduct, which was a serious matter which had entitled the Commission to suspend the membership of the company, but the Commission had not elected to exercise such power, however, in exercise of the powers under S.22 of the Securities and Exchange Ordinance, 1969 penalty of Rs.400,000 was imposed on the company with direction to the company to ensure full compliance of Rules and Regulations.

Syed Ahmed Zaidi, General Manager, Operations, and Muhammad Ali Lashari, Advocate present.

Muhammad Atif Hameed, Deputy Director and Tayyaba Nisar, Assistant Director present.

2010 C L D 91

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Executive Director (SMD)

RECOVERY OF TENDERABLE GAIN.: In the matter of

Show-Cause Notice No.S.M.(B.O.)C.O.222/13(365)2005, dated 25th May, 2009, decided on 18th July, 2009.

Companies Ordinance (XLVII of 1984)---

----S.224-Companies (General Provisions and Forms) Rules, 1985, R.16---Trading by Directors, Officers and Principal shareholders--Failure to recover gain-Director of the company made purchase and sale transaction as Director of the Issuer company within the period of less than six months-On account: of the said transaction, the Director made gain of Rs.15,584,690 computed in the manner prescribed in R.16 of the Companies (General Provisions and Forms) Rules, 1985---Director who made gain by said transaction was required to make a report and tender the amount of such gain to the company and simultaneously send an intimation to that effect to the Registrar of Companies and the Commission---Section 224 of the Companies Ordinance, 1984 also required that if the Director would fail or neglect to tender or the company would fail to recover such gain, such gain would vest in the Commission and unless such gain was deposited in the prescribed account, the Commission could direct recovery of the same. as an arrear of Land Revenue-Since neither the matter of accrual of gain was reported by the Director in Part-D of the prescribed returns of beneficial ownership filed by him with the Commission, nor its tendering or recovery was divulged to the Commission as provided in S.224(2) of the Companies Ordinance, 1984, the Director was intimated that said amount of gain vested in the Commission--Director in his written statement had stated that Director was entitled to retain the sale proceeds of bonus shares and the same should be excluded from his other purchase and sale or sale and purchase transaction which purportedly come within the ambit of S.224 of the Companies Ordinance, 1984---Director further claimed that he be allowed to tender the tenderable gain of Rs.12,537,730 to the Issuer company---Arguments presented by the Counsel of the Director of the company did not have any merits and substance---Request of the Counsel of the Director to exclude the sale transaction from the ambit of the S.224 of the Companies Ordinance, 1984 and allow the Director to tender the gain to the Issuer Company was rejected---Director was directed to tender Rs.15,584,690 to the Securities and Exchange Commission of Pakistan as provided in S.224(2) of the Companies Ordinance, 1984, through a demand draft in favour, of the Commission within stipulated period.

M. Javed Panni, Chief Executive, M. Ayub Qureshi, Director, MJ Panni and Associates, present.

Imran Inayat Butt, Director (SMD), Muhammad Farooq, Joint Director (SMD) and Nazim Ali, Assistant Director (SMD), present.

2010 C L D 103

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SMD)

UNITED BANK LTD.: In the matter of

Show-Cause Notice No.1(4)/INV/MSW/SMD/2009/05, dated 19th June, 2009, decided on 31st July, 2009.

Securities and Exchange Ordinance (XVII off 1969)---

----Ss.18 & 22---Listing Regulations of Karachi Stock Exchange, Regulation 16--Contravention or failure to comply with the provisions of Securities and Exchange Ordinance, 1969---Imposition of penalty Meeting of the Board of Directors of the company was being held abroad to consider the financial results for the relevant period-While the meeting was still in progress the Karachi Stock Exchange received verbal representations from its members regarding placement of financial results on the company's website and their subsequent removal--Explanation was sought by the Commission vide letter in that respect and company in its reply admitted that the financial results were placed inadvertently by its Information Technology Department while the meeting was in progress-It was established that financial results were placed by the company on the website for a duration of two hours and thirty-one minutes prior to their dissemination to the Karachi Stock Exchange while the meeting was in progress---Company was one of the most prominent and reputable institutions in the financial and Corporate sector of Pakistan which was the most regulated sector and the company being one of the largest and most prestigious financial market institutions, was expected to be conversant and fully complied with the regulatory requirements---Obligation to strictly comply with the provisions of Listing Regulations was further amplified by the fact that company was also listed on an international stock exchange---It was expected from any institution of company's repute that any disclosure of price sensitive information would be equitable and not in a manner that compromised the investor's confidence or the fairness and transparency of the market---It was the prime responsibility of the company to ensure that appropriate checks and balances ensuring strict compliance to the provisions of Listing Regulations---Company was supposed to maintain high standards of integrity, promptitude and fairness in the conduct of its business, and not to Indulge in any act detrimental to the investor's interest--Company had failed to comply with the provisions of the Listing Regulations by not exercising due care, skill and diligence in conduct of its business and contravened the provisions of Regulation 16 of the Listing Regulations of Karachi Stock Exchange and requirements stated in the correspondence manual of said exchange, made pursuant also to the Listing Regulations-Company misrepresented the facts to the Commission violating the provisions of S.18 of Securities and Exchange Ordinance, 1969-Penalty of Rs.2,000,000 (two million) was imposed on the company and company was advised to take immediate measures and put in place proper checks and procedures to eliminate the occurrence of such instances in future.

Aqeel Ahmed Nasir, Company Secretary and Chief Legal Counsel, Faisal Anwar, Head, IT Strategic Planning and Operations and Abdul Sattar Vaid, Senior Vice-President, present.

Nadia Rasheed, Deputy Director and Muhammad Atif Hameed, Deputy Director, present.

2010 C L D 109

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Executive Director (SM)

RECOVERY OF TENDERABLE GAIN: In the matter of

Show-Cause Notice No.S.M.(B.O.)C.O.222/11(34)81, dated 9th July, 2009, decided on 1st September, 2009

Companies Ordinance (XLVII of 1984)---

----S.224---Companies (General Provisions and Forms) Rules, 1985, R.16---Trading Directors, Officers and Principal shareholders of the company---Recovery of tenderable gain--company purchased shares of issuer and made such transaction within the period of less than six months and made gain on account of said transaction---Company, however neither reported said gain in Form-D of the prescribed returns of beneficial ownership filed by it with the Commission for said transactions nor its tendering or recovery was reported to the Commission as provided in S.224(2) of the Companies Ordinance, 1984---Section 224 of the Companies Ordinance, 1984 did not prohibit the beneficial owner from making purchase and sale or sale and purchase transactions within the period of less than six months, but it had simply provided that the beneficial owner was not entitled to retain the amount of profit, if made on account of such .transaction---Plea of the representatives of the company that the transaction in question did not attract provisions of S.224 of the Companies Ordinance, 1984 as adopting first-in, first-out method, sale was made out of previous purchase, did not have any merits---Request of representatives to withdraw notice was rejected and company was directed to tender amount of gain to the Securities and Exchange Commission of Pakistan as provided in S. 224(2) of the Companies Ordinance, 1984 through a demand draft in favour of the Commission within specified period.

Rehmat Ullah Bardaie and Ahmed Hayat Lak for Respondent.

Imran Inayat Butt, Director (SMD), Muhammad Farooq, Joint Director (SMD) and Nazim Ali, Assistant Director (SMD) Present.

2010 C L D 116

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

S.G. POWER LTD.: In the matter of

Show-Cause Notice No.EMD/233/410/2002-4018-24, dated 19th May, 2008, decided on 3rd July, 2009.

Companies Ordinance (XLVII of 1984)---

----S.492-False statement Penalty for-Enforcement Department of Securities and Exchange Commission of Pakistan, conducted examination of the annual audited accounts of the company for the relevant period, which had revealed that auditors in their audit report on the accounts had issued disclaimer of opinion In view of information furnished by the auditors it was observed that the Directors of the company had misrepresented the facts in their report to the members-Directors of the company in their written representation through their authorized representatives had " failed to just}fy most of the statements made in the Directors' report-Directors of the company had misrepresented facts" to the shareholders in their report and had contravened the provisions of S.492 of the Companies Ordinance, 1984-Default had been established, however taking a lenient view in the matter, instead of imposing maximum fine of Rs.800,000 on every Director, fine of Rs.30O,000 was imposed on the Chief Executive of the company only under S.492 of the Companies Ordinance, 1984-Other directors were strictly warned to be careful in future.

M. Javed Panni (Authorized Representative) Present.

2010 C L D 125

[Securities and Exchange Commission of Pakistan]

Before Mateenullah Khan, Joint Director (SMD)

GHANI OSMAN SECURITIES (PVT.) LTD.: In the matter of

Show-Cause Notice No.SMD-SOUTH /OSS-01/(1216)/2009, dated 3rd April, 2009, decided on 1st July, 2009.

Securities and Exchange Ordinance (XVII of 1969)---

----S.22---Brokers and Agents Registration Rules, 2001, R.8---Karachi Stock Exchange Regulations---Blank selling of shares--Imposition of penalty---Record available with the Commission showed that clients of the company made blank selling of shares in different scrips and made profit--Upon analysis of the information provided by the company, the Commission noted that at the time of sale, the clients of the company did not have any pre-existing interest in the respective shares--Company had indulged in selling the shares without pre-existing interest, because evidences were not provided by the company to support its claim that pledged shares were of its clients and also failed to provide the proof of pre-existing interests of its client-Company had indulged in activities that were in violation of the Karachi Stock Exchange Regulations--By violating the provisions of the Regulations, the company had contravened S.22 of the Securities and Exchange Ordinance, 1969--In the terms of S.22(1) (c) of Securities and Exchange Ordinance, 1969, if a person would contravene or otherwise failed to comply with the provisions of any Regulations made under said Ordinance, Commission could impose a penalty not exceeding Rupees Fifty Million, however, instead of imposing the maximum penalty, taking lenient view of the matter fine of Rs.150,000 was imposed on the company with the direction to the company to ensure that full compliance would, be made of all the rules and regulations in future.

Capt. (R) Asim Malik, Director and Faisal Yakoob, Director for Respondent.

Adnan Ahmad, Assistant Director, and Ahsan Aslam, Assistant Director Present.

2010 C L D 131

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman and S. Tariq A. Hussain, Commissioner (LD)

ALI AKBAR JAMANI---Appellant

Verses

JOINT DIRECTOR (SMD)---Respondent

Appeal No.2 of 2008, decided on 27th August, 2008.

Securities and Exchange Ordinance (XVII of 1969)---

----S.18-A---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33--Offering shares to general public-Invitation of applications--Submission of more than one application-Penalty for-Appeal against--Ordinary shares of Pakistan Petroleum were offered to general public by Privatization Commission and applications were invited by the offerer in that respect-Appellant submitted two applications through two accounts in two different Banks-Both applications were submitted under the same N.I.C. number and father's name with different addresses and signatures in violation of S.18-A of Securities and Exchange Ordinance, 1969-Both the applications being fictitious, the subscription money of both the applications were confiscated under subsection (2) of S.18-A of the Securities and Exchange Ordinance, 1969--Appellant had admitted that one of the applications was made by his brother in his name and his brother had accepted that position--Application money in the impugned order had been confiscated on the ground that said application was fictitious-Order of confiscation could not be interfered with---Other application had been made through the account of the appellant which was bearing the signature of the appellant---No reason was available to believe that the signatures made on said application were not genuine--View taken in the impugned order that said application was fictitious, could not be agreed to-Impugned order was modified to the extent that the shares against said second application be handed over to the appellant.

Ali Akbar Jamani for Appellant.

Zulfiqar Ali Jamani (Brother of the Appellant).

Amir Khan Afridi, Director (C.I) for Respondent.

2010 C L D 147

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh, Chairman and S. Tariq A. Hussain, Commissioner (LD), AZEE SECURITIES (PVT.) LTD.---Appellant

Verses

DIRECTOR (SMD)---Respondent

Appeal No.17 of 2009, decided on 12th November, 2009.

Securities and Exchange Ordinance (XVII of 1969)---

----S.22---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Sched.-Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to register. agent with the Commission and violation of Code of Conduct---Imposition of penalty---Appeal against---Clients of the appellant company bought and sold shares in ten different scrips in such a way that orders for buy and sell matched with each other and did not result in any change in its beneficial ownership of the shares---Appellant in response to letter of the Commission had stated that its clients were completely unaware of the rules and regulations---Appellant, assured the Commission that it had taken strong notice of the violation and would not be committed in future---Representative of the appellant admitted its mistake in not monitoring the activities of the agent and prayed that lenient view could be taken in the case---Director of the Commission imposed fine of Rs.3,00,000 on the appellant under S.22 of Securities and Exchange Ordinance, 1969---Commission was bound to protect the interest of the investors and in doing so it had been empowered to deal with elements which affected the smooth and fair functioning of the Stock Exchange---Appellant by creating the false transaction could have induced other investors into buying the shares and could have indirectly caused loss to many other investors-Director of the Commission could have suspended the licence of the appellant under R.8(iv) of Brokers and Agents Registration Rules, 2001, however, a lenient view had already been taken by imposing penalty instead.

Syed Qasim Raza for Appellant.

Muhammad Atif Hameed, Deputy Director and Muhammad Ali, Deputy Director for Respondent.

2010 C L D 152

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman Khan, Chairman and S. Tariq A. Hussain, Commissioner (LD)

Ms. SURRIYA RAFIQ---Appellant

Verses

DIRECTOR (S.M.D.), SECP ---Respondent

Appeal No.19 of 2008, decided on 27th August, 2008

Securities and Exchange Ordinance (XVII of 1969)---

----S.18-A---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Submission of more than one application for shares of companies offered to the public---Imposition of penalty---Appeal against---Ordinary shares of Habib Bank were offered to general public by Privatization Commission---Appellant submitted more than one application for subscription of said shares in violation of S.18-A of Securities and Exchange Ordinance, 1969---Appellant had admitted submission of multiple applications stating the reason of unawareness of the relevant provisions of law---Appellant also requested that her mistake be condoned and subscription money be refunded or shares be allotted to her---Validity---Section 18-A of Securities and Exchange Ordinance, 1969 was prone to two interpretations---First one was that money received against all applications could be confiscated, where there was more than one application while the other interpretation was that application money in excess of one application ought to be confiscated---In cases of multiple applications the application money for one application or the share (if the application was successful) should not be confiscated---Where an investor proved/established that he/she had acted in bona fide manner or that the contravention was not committed knowingly and wilfully, the subscription money for all applications ought to be returned or the person be given the shares for one application, if he/she was successful and returned the application money for the rest---In the present case appellant did not act in bona fide manner and the contravention was committed knowingly and wilfully as the instruction in that respect was clearly laid down on the form and had been extensively advertised in newspapers--Moreover, the appellant made more than one application through two accounts maintained at two different Banks---Making of two applications from two different accounts, when appellant could have submitted the application from one account, had shown that the act was done knowingly and wilfully and was attempted to defeat the provisions of law---Impugned order, however, was modified with direction that the shares against one application should be given to the appellant and second application money should be confiscated.

Suriyya Rafiq, Appellant in Person.

Amir M. Khan, Director (SMD) for Respondent.

2010 C L D 157

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq A. Hussain, Commissioner (LD)

DOMINION STOCK FUND LIMITED---Appellant

Verses

DIRECTOR (NBFC DEPARTMENT.), SECP---Respondent

Appeal No.84 of 2006, decided on 20th July, 2009

Companies Ordinance (XLVII of 1984)---

----S.265---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Investigation of company's affairs-Appointment of inspectors---Appeal to the Appellate Bench of the Commission---Company having been found committing certain acts of misconduct, an Inspector was appointed to investigate into the affairs of the company and company had filed appeal against appointment of the Inspector---Validity---Commission was entrusted with the powers to appoint an Inspector under S.265 of the Companies Ordinance, 1984, if it was satisfied that any conditions set out in sub-clauses (i) to (vii) of S.265(b) of the Companies Ordinance, 1984 were met---Appellant in response to the show-cause notice, failed to deny factual allegation against it---Appellant in fact responded to the show-cause notice by raising irrelevant and immaterial arguments---Commission, as a regulator was obliged to look into the affairs of the entities it regulated, to ensure that those were not being managed in a manner which would deprive its members of a reasonable return on their investments; that the affairs of the company were managed in accordance with sound business principles and prudent commercial practices etc.---Provisions of S.265 of the Companies Ordinance, 1984 had clearly given the Commission the powers it had sought to exercise in the case---No cogent grounds were available to stop the investigation ordered by the Director of the Commission---Impugned order, however, was modified to the extent that investigation would be conducted by a team comprising authorized officers of the Commission to be appointed by the Director.

Shafiq Ahmed for Appellant.

Rashid Paracha, Director (NBFC), Syed Asad Haider, Joint Director (NBFC) and Vinod Sitani, Joint Director (NBFC) for Respondents.

2010 C L D 162

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Hussain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

TRI STAR POWER LTD.---Appellant

Verses

EXECUTIVE DIRECTOR (C.L) and another -Respondents

Appeal No.15of 2005, decided on 8th September, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.305 & 309---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Winding-up of company-Appeal before Appellate Bench---Additional Registrar of Companies sought sanction. of the Commission under Clause (b) of S.309 of Companies Ordinance, 1984 to present petition for winding-up of the company---Sanction was sought on the basis that appellant-company had suspended its business since the year 2001, which was violation of clause (c) of S.305 of the Companies Ordinance, 1984---Executive Director in exercise of his powers conferred under clause (b) of S.309 of the Companies Ordinance, 1984, authorized Registrar to file winding up petition in the High Court and appellant had filed appeal against said order---Annual accounts filed by the appellant company had established that business of the appellant company had remained suspended since the year 2000--Contention of counsel for the appellant that the company was operational and it had never suspended the business, was against the stated position in the audited accounts of the appellant for the year ending 30-6-2007---Audited accounts for the year 2001 already available with the department had clearly shown that business of the appellant company had remained suspended since the year 2000---Appellant was a listed-company and it was incumbent on the management to comply with statutory requirements laid down in the Companies Ordinance, 1984--Appellant in complete disregard of the requirements had consistently failed to file the requisite accounts and had failed to hold Annual General Meetings---Such kind of conduct could not be tolerated from a listed-company---No ground having been made out to interfere with the impugned order, same was upheld.

Umer Lakhani for Appellant.

Ali Azeem Ikram, Director and Haris Bin Tipoo, Deputy Director for Respondents.

2010 C L D 169

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Hussain, Commissioner (LD) and Muhammad Sohail Dayala, Commission (SMD)

RAZI KULI KHAN KHATTAK and 4 others---Appellants

Verses

EXECUTIVE DIRECTOR (ENFORCEMENT)---Respondent

Appeals Nos.10, 11, 12, 13, 14 of 2008, decided on 30th October, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.1.96 & 208---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Investment in associated companies and undertakings illegally-Imposition of penalty---Appeal against--Management of appellant-company had subscribed right shares of one of its associated companies and paid consideration thereof, without passing special resolution in accordance with the requirements of S.208 of the Companies Ordinance, 1984---After subscribing the right of said associated company, appellant-company disposed of the shares to another associated company---Shares of first associated company were sold by the company to other company at a lower price than the market price at that time---Director of the Commission after taking into the account the reply to show-cause notice issued to it, arguments of the appellant and additional documents filed by the appellants, passed impugned order imposing collective penalty of Rs.500,000 on directors of appellant-company for violation of S.196 of the Companies Ordinance, 1984; and collective penalty of Rs.1,000,000 on Directors for violation of S.208 of the Companies Ordinance, 1984---Appellants had failed to show _that the collection period allowed to associated companies, was not considerably higher than that of other customers as stated in the impugned order---Director of the Commission rightly proceeded against appellants by imposing the fine under S.196(4) of the Companies Ordinance, 1984---Preferential treatment given to the associated companies was not a case of normal trade credit and that fell under the definition of investment in the Explanation of S.208(1) of the Companies Ordinance, 1984--Director of the Commission had already taken a lenient view of imposing fine for violation of S.208 of the Companies Ordinance, 1984, when the maximum fine could have been Rs.10 million on each Director of the company---Impugned order could not be interfered with in appeal.

Mushtaq Ahmed Khan, Muhammad Afzal Muniff, Farrukh Junaidy and Moin Khan for Appellants.

Abid Hussain, Director (Enforcement) and Alshah Ali Raza, Deputy Directory (Enforcement) for Respondent.

2010CLD 176

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman Khan, Chairman and S. Tariq Asaf Hussain, Commissioner (LD)

EASTERN CAPITAL LTD.---Appellant

Versus

DIRECTOR (SMD)---Respondent

Appeal No.5 of 2006, decided on 31st December, 2008

Securities and Exchange Ordinance (XVII of 1969)---

----Ss.5-A, 20 & 22--Members, Agents and Traders (Eligibility Standards) Rules, 2001, R.2-A---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure of company to get registered heads of branches as agents with Securities and Exchange Commission of Pakistan---Imposition of penalty---Appeal against---Appellant/company had been running its branch offices without registration of its branch heads as an agent with Securities and Exchange Commission of Pakistan as required under S.5-A of Securities and Exchange Ordinance, 1969---Appellant admitted its violation and undertook to register the heads of branches as agents up to specified date---Appellant had further contended that Karachi Stock Exchange, being the frontline regulator had allowed appellant vide letter to operate the branches and provide internal trading services without registration and that in circumstances appellant had acted in good faith---Appellant by collecting money through its various branches without getting their heads of branches registered with the Commission, had breached the provisions of Securities and Exchange Ordinance, 1969 and Rules---Alleged letter seeking permission of Karachi Stock Exchange had not been provided by appellant---Even otherwise any instruction or advice given by the Karachi Stock Exchange which was inconsistent with the laws administered by the Commission, was not acceptable and could not be a ground for defence---Appellant, however, had failed to register the heads of all the branches by date which was undertaken by the appellant---Appellant having failed to get the heads of branches registered despite clear directive by the Commission, penalty was rightly imposed on appellant---Order imposing penalty could not be interfered with in appeal.

Iqbal Ahmed for Appellant.

Najia Ubaid, Assistant Director for Respondent.

2010 C L D 193

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman, Chairman and S. Tariq Asaf Hussain, Commissioner (LD)

NOOR A. QADIR and others---Appellants

Versus

EXECUTIVE DIRECTOR (CLD)---Respondent

Appeal No.59 of 2006, decided on 31st December, 2008

Companies Ordinance (XLVII of 1984)---

----Ss.158 & 476---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to hold Annual General Meetings---Imposition of penalty---Appeal against---Appellant-company had failed to hold Annual General Meetings within the prescribed time/period---Plea of the appellant-company was that Annual General Meeting could not be held due to non-finalization of annual accounts and that the management of the company was involved in litigation with Banks for settlement of loan and the business of the company remained suspended---Overall management of the company and responsibility for its affairs rested with the Board of Directors---Fact that the Chief Executive was behind the bars, would not absolve other Directors from performing their fiduciary duties---Holding of Annual General Meeting, was for the protection of investors/shareholders---Transmission of timely, adequate and meaningful information was essential and non-holding of Annual General Meeting would deprive the investor/shareholders from participating in matters, such as approval of accounts, appointment of auditors and election of Directors---Default was proved to be wilful---Director of the Commission had already taken an extremely lenient view by imposing a penalty of merely rupees twenty thousand on each appellant, as the penalty amount could have been up to rupees fifty thousand on each appellant---Impugned order could not be interfered with, in circumstances.

AIR 1938 Mad. 640 ref.

Shafiq Ahmed for Appellants.

Haris Bin Tipu (Departmental Representative), Deputy Director for Respondent.

2010 C L D 205

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Hussain, Commissioner and Muhammad Sohail Dayala, Commissioner (S.M.D) (LD)

Messrs EXCEL FINANCIAL SERVICES (PVT.) LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (REGISTRATION)---Respondent

Appeal No.43 of 2009, decided on 2nd October, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.305 & 309--Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33-Winding-up of company--Petition for-Appeal to Appellate Bench of the Commission-Executive Director (Registration) through impugned order granted sanction and authorized the Registrar to present petition before the High Court for winding up of the appellant-company in terms of S.305 of the Companies Ordinance, 1984-Appellant had filed appeal against said order, maintainability of which had been questioned by the authorities--contention of the appellant was that appeal had been preferred against a quasi judicial decision and not an administrative decision which was valid to the extent that administrative orders were not appealable, which had spec4fically been provided by Proviso (a) to S.33 of Securities and Exchange Commission of Pakistan Act, 1997-Contention of the appellant that as opposed to administrative orders all quasi judicial orders were appealable, could not be agreed to because provisos (b) (c) & (d) of S.33(1) of Securities and Exchange Commission of Pakistan Act, 1997 had provided situation as where quasi judicial orders passed by the Commission or its authorized officers were not appealable---In the present case proviso (c) of S.33(1) of Securities and Exchange Commission of Pakistan Act, 1997 was fully attracted as the impugned order granted sanction to the Registrar, to file winding-up of the appellant-company, which was not appealable order.

Umer Akram Chaudhry for Appellant.

Munawar Bhatti, Joint Registrar for Respondent.

2010 C L D 211

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Hussain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

RAFIQUE DAWOOD and others---Appellants

Versus

COMMISSIONER (SPECIALIZED COMPANIES DIVISION)---Respondent

Appeals Nos. 22, 23, 24 and 25 of 2008, decided on 31st August, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.282-B, 282-D, 282-I, 282-J, 282-M & 196(2)(e)---Non-Banking Finance Companies Rules, 2003, R.7(2)(h)---Prudential Regulations, Regln. 6(1)(e)---General Clauses Act (X of 1897), Ss.6(c) & 13(2)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss.10 & 33---Making investments in unquoted shares in violation of law--Imposition of penalty--Appeal to Appellate Bench of the Commission---On site inspection into the affairs of the appellant's Company to determine its financial health, Inspectors concluded in the inspection report that company had made equity investment in unquoted shares of four companies without seeking approval of the Commission in contravention of Rules and Regulations--Show-cause notice was issued to the appellant-Company and Directors of the Company who gave reply to said notice---Commission being not satisfied with the reply, passed impugned order imposing penalty of rupees one million on the Chief Executive Officer and each Director serving on the Board of Directors under S.282-J of the Companies Ordinance, 1984 for violation of Rules and Regulations-Powers, exercised by the Commission and Officers of the Commission, were delegated under S.10 of Securities and Exchange Commission of Pakistan Act, 1997--Inspection report was shared with the appellants which was done presumably to ensure that nothing incorrect had crept into the inspection report---Even otherwise the counsel for the appellants had failed to point out any provision of the Companies Ordinance, 1984 which mandated sharing of final Inspection Report with the appellant---Appellants had admitted the default in the show-cause proceedings and had sought 'ex post facto' approval for investment in unquoted shares three years after making said investments and upon issuance of show-cause notice by the Commission--Rule 7(2) (h)-of Non-Banking Finance Companies Rules, 2003 had clearly provided for approval from the Commission before making investment in unquoted shares of any company, whereas S.196(2) (e) of the Companies Ordinance, 1984 had authorized Directors to invest funds of the company by means of a resolution passed in the Board's meeting--Rules specified a procedure which set down the requirement of prior approval from the Commission before investment was made in unquoted shares to protect the interest of shareholders--commission, in exercise of its power under S.282-D of Companies Ordinance, 1984, had rightly issued the Prudential Regulations as Directives and said Directives could not be declared. invalid on the ground that those had been termed Regulations--Proviso to S.282-J of the Companies Ordinance, 1984 had provided that every Director, Manager or other officer or person responsible for the conduct of its affairs, would be deemed to be guilty of the offence--Moreover, the penalty of rupees one million imposed on each Director was far lesser than the maximum penalty of rupees five million on each Director---Order imposing penalty was upheld, however as two Directors were not on the Board of Directors at the time of investment in question their penalty was reduced to Rs.0.8 million and Rs.0.2 million respectively.?

2005 SCMR 1785; 2003 SCMR 1017; 2003 PLC (C.S.) 424; PLD 1969 SC 187; PLD 1969 SC 599 and PLD 1959 Kar. 94 ref.

Babar Sattar and Ehsan Ali Qazi for Appellants.

Umar Hayat Khan, Director (NBFC), Asad Haider, Joint Director (NBFC) and Zia-ul-Haq, Deputy Director (NBFC) for Respondent.

2010 C L D 232

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Hussain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

MUHAMMAD A. JAMAL and 2 others---Appellants

Versus

RIZWAN ALI SHERALI---Respondent

Appeal No. 27 of 2008, decided on 21st October, 2009.

Companies Ordinance (XLVII of 1984)---

---Ss.263 & 152-Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33--Investigation of affairs of the company---Application for--Appeal to Appellate Bench of the Commission---Applicants/appellants in their application filed under S.263 of the Companies Ordinance, 1984, had alleged that the shares of the company had been transferred from appellants to the respondent fraudulently and in contravention of the Articles of Association and requested that investigation should be ordered by the Commission---Executive Director, Registration, dismissed application through impugned order on two grounds; firstly, that appellants were not holding 10% shares in the company and that in terms of S.263 of the Companies Ordinance, 1984 a member holding less than one-tenth of the total voting power was not entitled for making application for investigation of the affairs of the company; secondly that dispute between the parties related to shareholding and that applicants could seek the relief under S.152 of the Companies Ordinance, 1984---Appellant had stated that applicants were holding more than 10% shares---Reliance was placed on authority letter filed by the said appellant along with amended complaint authorizing him to take action against the respondent, but that authority letter was not taken into consideration---Said , authority letter should have been taken into account---Executive Director, Registration, in circumstances, was not justified to hold that applicants did not have sufficient shareholding for making an application for investigation---Contravention of Articles of Association had made the agreement for transfer of shares void especially in the light of objections by over 27% shareholders-However, dispute between the parties related to shareholding as according to respondent applicants were not holding 10% shares, whereas claim of the applicants was that they had 27% shares-Applicants/appellants, in circumstances, should seek the relief provided under S.152 of the Companies Ordinance, 1984---Appellants had contended that names were fraudulently omitted from the register of members-In terms of S.152(1) of Companies Ordinance, 1984, when the names of any person was fraudulently or without sufficient cause entered in or omitted from the register of members, the aggrieved person could approach the court of competent jurisdiction for relief.

Muhammad A. Jamal, Yasien A Jamal and Mustafa Pyarali, Appellants in person.

Syed Irshad-ur-Rehman for Respondents.

2010 C L D 239

[Security and Exchange Commission of Pakistan]

Before Salman Ali Shaikh, Chairman and S. Tariq Asaf Hussain, Commissioner (LD)

CREDIT INSURANCE COMPANY---Appellant

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 2 of 2009, decided on 8th June, 2009.

(a) Insurance Ordinance (XXXIX of 2000)---

----Ss-11 & 63---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to comply with conditions imposed on registered insurers---Effect---Appeal to the Appellate Bench of the Securities and Exchange Commission---Chairman, Securities Exchange Commission of Pakistan in exercise of its powers under S.63(1) of Insurance Ordinance, 2000 called upon the appellant/Insurance Company through impugned Directive to comply with the requirements of S.11(1) of said Ordinance within specified period, failing which the appellant was directed to cease entering into new contract of insurance---Impugned Directive was issued on the basis that appellant had failed to maintain proper reinsurance treaty arrangements for the year 2008 in violation of S.41(1) and clause (d) of S.11(1) of Insurance Ordinance, 2000; had failed to meet the criteria for sound and prudent management as required under S.12 of Insurance Ordinance, 2000; had failed to maintain the prescribed level of statutory deposit with the State Bank of Pakistan for and on behalf of the Federal Government as per clause (a) of S.29(2) of Insurance Ordinance, 2000; had failed to meet the minimum solvency requirements for the years 2006-2007 as set forth under clause (c) of S.11(1) and S.36 of Insurance Ordinance, 2000; had failed to comply with the minimum paid up capital requirement as prescribed under S.28 of Insurance Ordinance, 2000--Section 63(1) of Insurance Ordinance, 2000 dealt with situation where the conditions for registration as stipulated in S.11 of Insurance Ordinance, 2000 were not met-In such a situation the Commission had been entrusted with the power to direct the insurance company to cease entering into new contract of insurance---Principles of natural justice were fully met in the case as the appellant was given one month to comply with the requirement of registration and only on failure to comply with that requirement the appellant was debarred from entering into new contract of insurance---Appellant, merely had to provide the Commission with relevant document to illustrate its compliance---In view of the express provisions of law, opportunity of hearing, where action was taken under S.63(1) of Insurance Ordinance, 2000, was not to be given as the scheme of the law excluded the opportunity of hearing in instances where the requirements of registration were not complied; it would negate the ends of justice, if the appellant was allowed to carry on business without meeting the requirements of law---Where issue pertained to maintaining proper reinsurance treaties, proper opportunity of hearing must be provided---Appellant having failed to maintain the required statutory deposit and having solvency levels, violated S.63(1) of Insurance Ordinance, 2000---Appellant was directed, to comply with the said requirements within specified period and would not enter into new contracts of insurance until it was fully complied with failing which the concerned department must proceed against the appellant in accordance with law. ?

PLD 2004 SC 441; PLD 1982 Lah. 1; PLD 1976 SC 6; 1996 CLC 293; 1994 CLC 2041 and PLD 1970 SC 453 ref.

(b) Insurance Ordinance (XXXIX of 2000)---

----S.63---Power of Securities and Exchange Commission to issue direction to cease entering into new contract of insurance-Scope---Legislature while drafting S.63 of Insurance Ordinance, 2000, appeared to have been cognizant of the need to have personal hearing in cases where the contraventions were other than one relating to the requirement of legislation set out in S.11 of Insurance Ordinance, 2000---Opportunity had been given for personal hearing under S.63(2) (d) of Insurance Ordinance, 2000---Legislature was fully conscious of the principles of natural justice had wisely crafted the section by expressly mentioning the right of hearing in Proviso of S.63(2) (d) of Insurance Ordinance, 2000, thereby excluding the right of hearing in S.63(1) of Ordinance---Commission could, where it would view any matter needing hearing, always called upon in a given circumstances, the party against whom action was proposed, to explain the position prior to passing an order.?

PLD 1991 SC 1029 and AIR 1987 SC 593 ref.

Munawar Salam for Appellant.

Ali Azeem, Director and Iftikhar Hussain, Assistant Director for Respondent.

2010 C L D 259

[Security and Exchange Commission of Pakistan]

Before S. Tariq Asaf Hussain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

TPL DIRECT INSURANCE LTD.----Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE)---Respondent

Appeal No.51 of 2009, decided on 17th November, 2009.

Insurance Ordinance (XXXIX of 2000)---

----Ss.29, 36, 63, 156 & 157---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to maintain statutory deposit---Imposition of penalty---Appeal to Appellate Bench of the Commission-Appellant/Insurance Company which was required to deposit and keep depositing with the State Bank, statutory deposit of Rs.31 million in terms of S.29(2) (a) of the Insurance Ordinance, 2000 had failed to maintain the same-Counsel for the appellant had stated that the appellant met the solvency level requirement as laid down in S.36 of Insurance Ordinance, 2000 and was entitled to exemption of said statutory deposit in terms of proviso to S.29 of Insurance Ordinance, 2000---Penalty of Rs.3.4 million was imposed on the appellant for having failed to meet the statutory requirement in terms of S.156 of the Insurance Ordinance, 2000---Appellant was also called upon to make good short fall of Rs.26 million within specified period---Appellant had filed appeal against impugned order---Appellate Bench would have taken lenient view; had the appellant submitted the statutory deposit before the date of hearing of the present appeal, but appellant had failed to do so---Requirement of law ought to have been met, if the appellant was to continue carrying on business of Insurance---Representative of appellant asserted that a further amount of 3.3 million had been deposited to make up the shortfall of the statutory deposit; and remaining Rs.22.7 million would be deposited by the specified date and sought time to submit written. undertaking to that effect--Appellant had submitted a written undertaking to comply with the requirement of statutory deposit---In view of said undertaking, time was extended for submission of statutory deposit by specified date, failing which appellant would cease from entering into new contract of insurance in terms of S.63(2) (d) of Insurance Ordinance, 2000-Director ought to have imposed the penalty under S.157(1) of the Insurance Ordinance, 2000, instead of S.156 of said Ordinance--Section 157(1) of Insurance Ordinance, 2000 was a specific provision which provides penalty for contravention of S.29 of said Ordinance---Impugned order, in circumstances was modified to the extent that instead of penalty of Rs.3.4 million imposed under S.156 of Insurance Ordinance, 2000 appellant was directed to deposit penalty amount of Rs.2 million within specified time.

Bilal Shaukat and Saad Nisar, Chief Executive, TPL Direct Insurance Ltd. and Syed Kazim Hasan, Chief Operating Officer, TPL Direct Insurance Ltd. for Appellant.

Ms. Nasreen Rashid, Executive Director (Insurance) and Iftikhar Hussain, Assistant Director (Insurance) for Respondent.

2010 C L D 262

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh, Chairman and S. Tariq Asaf Hussain, Commissioner L.D/C.L.D)

Syed YAWAR ALI and others---Appellants

Versus

COMMISSIONER, SECURITIES MARKET DIVISION, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN----Respondent

Appeal No. 5 of 2007, decided on 15th April, 2009.

Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----Ss.4, 5, 7, 9, 13, 25 & 26(1)(3)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33-Purchasing or acquiring shares of company beyond limitation and in violation of requirements of law---Imposition of penalty---Appeal to Appellate Bench of the Commission---Appellants purchased 40% equity shares of target Company, whereas in terms of S.5(4) of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 a person could not acquire more than 25% share of a company, either directly or indirectly, unless such person would make a public announcement of the offer to acquire shares in accordance with Listed Companies Takeover Act, 2002---Appellant under S.7(1) of Listed Companies Takeover Act, 2002 was required to appoint a Bank, financial institution or a Member of Stock Exchange as Manager to the offer before making public announcement---Appellant under S.9(3) of the Takeover Ordinance, was required to submit to the Commissioner a copy of the public announcement through the manager; and he was required to send a copy of the proposed offer letter within two working days of the announcement to the target Company at its registered office address, all the Stock Exchanges where the voting shares of the company were listed and the Commission according to S.13(1) of the Takeovers Ordinance---Under S.13(8) of the Takeovers Ordinance, appellant was also required to create a security on or before the issue of public announcement, but appellant had not fulfilled all said requirements of law---Commissioner after hearing the parties passed impugned order holding that appellants had failed to comply with various provisions of Takeovers Ordinance and had violated the law---Commissioner, however, taking lenient view imposed a meagre penalty of Rs.200,000 on the appellants under S.26(3) of the Takeovers Ordinance---Provisions of said Ordinance were to provide for a fair and equal treatment to all the investors as well as a transparent and efficient system for substantial acquisition of voting shares and takeover of listed companies---Preamble, read with the provisions of Takeovers Ordinance, had provided that Ordinance was promulgated to develop a transparent system, where substantial acquisition of voting rights or control of Listed Companies was about to take place---Section 4 of Takeovers Ordinance, 2002 was attracted to the cases where the acquirer crossed the threshold of 10% and was required to disclose the aggregate of his shareholding to the target Company and the relevant Stock Exchange, but appellants had failed to do that---Appellants also violated clause (a) of S.5(1) of Takeovers Ordinance---Appellants could not be allowed to take plea that they were acting in their individual capacity while acquiring shares as father and sons and should not be treated as a family while in the same breath they had said that they were already in control, when none of them in individual capacity or together as father and sons were in control of the target Company--Impugned order passed by the Commission, was upheld.?

?

Jalaluddin F.C.A. v. Commissioner SEC 2005 CLD 333 ref.

Iqbal Haider for Appellants.

Rashid Paracha, Sajid Imran and Sumaira Siddique for Respondent.

2010 C L D 277

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman Khan, Chairman, SECP and Rashid I. Malik, Commissioner (CLD)

MEHMOOD AHMED, EX-CHIEF EXECUTIVE OFFICER, CRESCENT STANDARD BUSINESS MANAGEMENT (PVT.) LTD. and 2 others---Appellants

Versus

ARIF MIAN---Respondent

Appeals Nos.61, 62 and 63 cf. 2006, decided on 7th March, 2008.

Securities and Exchange Commission of Pakistan Act (XLII of 1997)---

----S.33---Securities and Exchange Ordinance (XVII of 1969), Ss.15-A & 15-B (3)---Unauthorized insider trading---Effect---Appeal to Appellate Bench of Commission---Company had sold shares of its associated company---Before the execution of the transaction, books of accounts of the associated company were inspected and Directors of the associated company were Wormed regarding mismanagement of the books of accounts, unauthorized trading and overall poor financial credits of associated company-Appellants who were Directors and Chief Executive Officers of the companies were issued show-cause notice which was duly replied---In the impugned order Executive Director, directed the company to pay amount to the vendee--Objection was raised on part of the company that being a legal entity it had never been issued a show-cause notice, impugned order was passed without providing an opportunity of hearing to it, which was against the principles of natural justice---Record had shown that appellants who were Directors and Chief Executive Officers of the company, were sent notices of show-cause in their capacity as Directors of the company, it could safely be said that company being a corporate body/artificial person, was duly represented in the proceedings through its Directors---Since both the Directors constituted the entire Board of Directors, notice sent to the Directors was sufficient notice to the company---However, during the pendency of sow-cause notice, the term of offices of both the Directors of the company, expired and they no more represented the company---Both said persons continued appearing in their personal capacity to defend themselves against the show-cause notice, which had only been issued to them and not the company---Company, in circumstances was not being represented by any one in any capacity and impugned order was passed against the company ex parte---it would be appropriate to remand the case to the department, which was directed to issue a show-cause notice to the company and provide with an opportunity of hearing at the earliest.

Dewan Salman Fibre Limited and others v. Government of N.-W.F.P PLD 2004 SC 441 and Abdul Hafeez Abbasi v. Management Director (PIA) 2002 SCMR 1034 ref.

Ahmed Bilal Kahlon for Appellants.

Imran Hayat Butt, Director, SECP for Respondent.

2010 C L D 286

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Hussain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

RAZI KULI KHAN KHATTAK and 4 others---Appellants

Versus

EXECUTIVE DIRECTOR (ENFORCEMEN)--Respondent

Appeals Nos. 10, 11,12,13 and 14 of 2008, decided on 30th October, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.196(4) & 208---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Investment in associated company and undertakings in violation of law--Imposition of penalty---Appeal to Appellate Bench of Commission-Management of the appellant-company subscribed 302,100 right shares of one of its associated company and paid consideration thereof--On perusal of the company's record, it was observed that no special resolution was passed in accordance with requirements of S.208 of the Companies Ordinance, 1984---After subscribing the rights of associated company, appellant/company disposed, of the shares to another associated company---It was observed that the shares of associated company were sold by the appellant's company at a lower price than the market price at that time---Executive Director (Enforcement) vide impugned order imposed a collective penalty of Rs.5,00,000 on Directors for violation of S.196 of the Companies Ordinance, 1984 and collective penalty of Rs.1,000,000 on Directors for violation of S.208 of the Ordinance---Directors of the appellant's company who had fiduciary relationship with the company, should have acted in the best interest of the company, but instead they acted collusively in their personal interest and sold the shares of the company at minimum price and earned profit of Rs.5.520 million at the cost of the shareholders of the company---Appellants had failed to show that the collection period allowed to associated companies was not considerably higher than that of other customers as stated in the impugned order--Preferential treatment to the associated companies was not a case of normal trade credit---Executive Director (Enforcement), in circumstances, had rightly proceeded against the appellants by imposing fine and directing the appellants to make good the loss of Rs.5.520 millions---Executive Director had already taken a lenient view by imposing fine of Rs.200,000 for violation of S.208 of the Companies Ordinance, 1984 when the maximum fine could have been Rs.10 million on each director---Impugned order could not be interfered with in appeal.

Mushtaq Ahmed Khan, Muhammad Afzal Muniff, Farrukh Junaidy and Moin Khan for Appellants.

Abid Hussain, Director (Enforcement) and Alshah Ali Raza, Deputy Director (Enforcement) for Respondent.

2010 C L D 375

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh, Chairman and S. Tariq Asaf Hussain, Commissioner (ID)

UNITED BANK LTD.---Appellant

Versus

DIRECTOR (SKID)---Respondent

Appeal No.47 of 2009, decided on 24th December, 2009.

Securities and Exchange Ordinance (XVII of 1969)--

---Ss. 18 & 22---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Giving false statement and refusal or failure to furnish document etc.---Imposition of penalty--Meeting of the Board of Directors was conducted to consider the financial results of the appellant/Bank for relevant period---Appellant-Bank in its written response admitted that its financial results were placed inadvertently by its Information Technology Department, while the meeting of the Board of Directors was in progress, for a duration of approximately ten minutes; and did not contain the information pertaining to dividend and bonus shares---Appellant in its response informed that the financial results were available on the website for duration of two hours and thirty one minutes; and that the financial results were communicated to Karachi Stock Exchange after the conclusions of the Board's Meeting---Observations of Authority that representation on two occasions made by the appellant regarding the time of placement and removal of price sensitive information on the website before its dissemination to the Karachi Stock Exchange, were incongruent--Financial results were price sensitive information and were to be dealt with extreme care---In the present case, the financial results caused volatility in the market and had misled the investors---Authority had already taken a lenient view by imposing fine of merely Rs. Two Million for violation of S.18 of the Securities and Exchange Ordinance, 1969, when the maximum fine could have been Rs. Fifty Million---In absence of any ground to interfere with the impugned order, appeal was dismissed.

Aqeel Ahmed Nasir; Muhammad Ejazuddin, Kumail Dehradunwala and Abdul Sattar Vaid for Appellant.

Imran Inayat Butt in Demon and Muhammad Atif Hameed for Respondents.

2010 C L D 379

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Hussain, Commissioner (ID)

UNITED BANK LIMITED INSURERS LTD. KARACHI---Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE)---Respondent

Appeal No.50 of 2009, decided on 23rd December, 2009.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 11(1) (c), 36, 63 & 156---Securities and Exchange Commission of Pakistan Act, (XLII of 1997), S.33---Failure to meet minimum solvency requirement---Imposition of Penalty---Appeal---During the examination of the regulatory returns filed by the appellant/company for the relevant year, it transpired that the appellant had not met its minimum solvency requirement as required by S.36 of Insurance Ordinance, 2000---Representative of the appellant had contended that appellant was insolvent during the period till the time of issuance of right shares---Authority dissatisfied with the explanation of the appellant's representative passed the impugned order wherein penalty of Rs. 2.2 million was imposed on the appellant under S.156 of the Insurance Ordinance, 2000 and appellant filed appeal against impugned order before Appellate Bench--Non-compliance of the minimum solvency requirements according to the appellant was primarily attributed to the unforeseen and unprecedented political situation---Stock market crises also had a serious impact on the investment activities of the appellant-Profit and loss account of the appellant for the relevant year revealed that the loss before tax, was Rs.129 million, which had been attributed to events leading to the assassination of a political leader---Appellant had annexed with the appellant the losses incurred on account of impairment of stock, which had been stated as Rs.45 million for the year in question---Appellant took the remedial measure to enhance the paid-up capital and injected Rs.134.528 million, as a result the solvency was achieved by the time hearing of show-cause notice was conducted---Authority should have taken into view that appellant was forthcoming in complying with the direction in respect of meeting the solvency requirement---Appellant, in circumstances, should not have been imposed penalty of Rs.2.2 million---Appellant, however, was strictly warned to be careful in future and maintain the solvency level at all times---Penalty imposed in the impugned order was waived.

Shariq Abdullah, Muhammad Ehtisham Ullah and Najib Nasir Syed for Appellant.

Kashif Siddiqui and Obaid-ur-Rehman for Departmental Representative.

2010 C L D 383

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Hussain, Commissioner (LD)

ASIA CARE HEALTH AND LIFE INSURANCE COMPANY---Appellant

Versus

DIRECTOR (INSURANCE)---Respondent

Appeal No.58 of 2009, decided on 23rd December, 2009.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 6(10) & 157(1)--Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Providing false information and transacting insurance business in contravention of provisions of law---Imposition of penalty---Appeal against---Appellant at the time of registration submitted profile of parent company, stating that same was incorporated in 'New York' and the paid-up, capital of same was US $ 10 million---Certificate of incorporation of said parent company, however revealed that same was corporated in 'Cayman' and the condensed balance sheet of said company had shown that the investors' paid-up capital was US $ 8.5 million---Show­-cause notice was issued to the appellant under S.6(10) of Insurance Ordinance, 2000 for providing false information pertaining to the place of incorporation and paid up capital of the parent company---Authority being not satisfied with the reply given by the appellant in response to show-cause notice issued to him and the averment made before him, passed impugned order and imposed penalty of Rs. fifty thousand on the appellant under S.157(1) of the Insurance Ordinance, 2000 for violation of S.6(10) of said Ordinance---Appellant had filed appeal against impugned order before Appellate Bench---Authority despite having observed that it was satisfied with the various issues raised in the hearing, still went on to. impose penalty on the appellant---Clarification regarding the paid up capital and place of business, should have been sought at the time of incorporation; and penal provision should not have been invoked---Powers under S.157(1) of Insurance Ordinance, 2000 had been delegated to the Executive Director (Insurance), however, in the present case the powers had been exercised by the Director. (Insurance), which were without jurisdiction---Insurance Division must ensure that powers were exercised by the officers to whom powers were delegated-Case, in circumstances, was remanded to the Executive Director (Insurance) who would obtain the necessary information and. rectify the record of the appellant.

Ijaz Ahmad for the Appellant.

Kashif Siddiqui Joint Director and Obaid-ur-Rehman, Deputy Director for Departmental Representative.

2010 C L D 386

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Hussain, Commissioner (LD)

MUHAMMAD ZAHEERUDDIN and 2 others---Appellants

Versus

DIRECTOR (NBFC DEPARTMENT) and another---Respondents

Appeals Nos.76 and 77 of 2006, decided on 23rd December, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss. 158 & 245---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to hold Annual General Meeting and to file quarterly profit and loss accounts and balance sheet--Imposition of penalty--Appeal against---Appellant/company which had failed to hold its Annual General Meeting for the relevant period within stipulated time; Directors of the company, were given an opportunity of hearing to explain the reasons of said failure--Counsel for the appellant/company had stated that the office of the company remained closed for some time on account of resignation of secretarial staff and in circumstances account could not, be prepared in time causing delay in holding Annual General Meeting---Authority being dissatisfied with the response of the company, imposed fine of Rs.20,000 on three Directors each for not holding Annual General Meeting within stipulated time---Company also failed to prepare and transmit to its members and the relevant Stock Exchanges and the Commission, its quarterly profit and loss accounts and balance sheet for the relevant period within stipulated period---Directors of the company appeared in person and had stated that quarterly account could not be filed as the auditors of the company resigned and appointment of new auditor could not be made---Authority dissatisfied with the explanation passed the second impugned order imposing a fine of Rs.10,000 each on three Directors of the company---Appellants/Directors filed appeal against order imposing fine beyond the limitation period---Appellants contended that they could not file appeal as one of the Directors was arrested---Said contention was repelled as said Director was not aggrieved from the impugned order as penalty was not imposed on him---Delay should not be condoned due to the non-availability of funds with the company for filing the appeal---Plea that company Bank account was frozen and therefore the finances were not available to file the appeal was without merit-Penalties having been imposed on the Directors in their personal capacity, they were required to pay the penalties from their own resources---No ground for condonation having been made out, appeal was liable to be dismissed on the point of limitation.

1999 SCMR 1326; 2008 SCMR 54 AND 2009 YLR 580 ref.

Shafiq Ahmed for the Appellants.

Asad Haider, Joint Director for the Respondent Department.

2010 C L D 390

[Securities and Exchange Commission of Pakistan]

Before Shaukat Hussain, Director (ICW)

In the matter of: SHOW-CAUSE NOTICE NO.LSE/SMD/84/2008, DATED APRIL 28, 2009

Show-Cause Notice No.LSE/SMD/84/2008 dated April 28, 2009 decided on 11th December, 2009.

Brokers and Agents Registration Rules, 2001---

----Rr. 8 & 12--Selling holdings/shares fraudulently and without permission of sharer---Complainant had alleged that his holdings/shares worth Rs.617,275 had been sold by the company fraudulently and without his permission---Commission through a letter asked the company to clarify up to specified date as to whether holdings of the complainant had been sold on its instruction or otherwise, but no response was provided on behalf of the company and company had failed to provide written reply to the show-cause notice despite various reminders---Failure of the company to ensure attendance in three opportunities of hearing provided to the company by the Commission had established that the company had nothing to say in its defence--Failure of the company to send written reply to show-cause notice, its failure to comply direction of the Commission conveyed and subsequent letter, thereon, was a clear violation of Rr.8 & 12 of Brokers and Agents Registration Rules, 2001--In the public interest, for the protection of investors, to preserve capital market integrity and taking into consideration that the company had neither verbally nor through any written submission, membership of the company was suspended till the time investor's complaint was resolved.

Authorized Representative of the respondent. No one appeared.

Tahir Mahmood Kiani Deputy Director assisting the Director (ICW).

2010 C L D 393

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SMD), In the matter of: SHOW-CAUSE NOTICE NO.1 (07)BS/KSE/MSW/SMD/2009/62

dated November 19, 2009

Show-Cause Notice No. 1(07)BS/KSE/MSW/SMD/2009/62 dated November 19, 2009, decided on 31st December, 2009.

Securities and Exchange Ordinance (XVII of 1969)---

---S. 22---Brokers and Agents Registration Rules, 2001, R.8-Blank sales executed by the company on behalf of its clients---Imposition of penalty---On perusal of trading data for the relevant period it was noted that the clients of the Company had been engaged in first selling and then Squaring up their position in different scrips--company had executed said trades without having pre-existing interest---It was established that operators of the company placed the sale in client's account without having pre-existing interest---Company was responsible to monitor all trading activities being carried out through its brokerage house in order to track and prevent any transaction being made in violation of any applicable rules and regulations--Company should have immediately informed the Karachi Stock Exchange about the error made by the operators-Company by executing sales in the client's account without pre-existing interest, had violated the Regulations which in turn was violations of Code of Conduct set forth under the Third Schedule of Brokers and Agents Registration Rules, 2001 which had made it mandatory on the company to execute its business with due care and skill---Company was responsible for each and every order placed or trade executed through its trading terminal---It was also the responsibility of the company to keep its operators updated with the applicable rules and regulations to avoid any violation of the same---Company, in circumstances, had violated clauses A2 and A5 of the Code of Conduct of Brokers and Agents Registration Rules, 2001, which violation was a serious matter entitling the Commission to even suspend the membership of the company, but Commission had elected not to exercise that power--However, in exercise of powers under R.8(b) of Brokers and Agents Registration Rules, 2001, penalty of Rs.100,000 was imposed on the company--It was also directed to ensure full compliance of all rules, regulations and directives of the Commission in future for avoiding any punitive action under the law.

Naeem Rafi Chief, Executive Officer representing the Respondent.

Muhammad Ali, Deputy Director assisting the Director (SMD).

2010 C L D 399

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SMD), In the matter of: SHOW-CAUSE NOTICE NO.1(4)/INV/ MSW/SMD/2009/05 DATED SEPTEMBER 25, 2009

Show-Cause Notice No.1(4)/INV/MSW/SMD/2009/05 dated September 25, 2009, decided on 9th December, 2009.

Securities and Exchange Ordinance (XVII of 1969)----

----S. 15(A)(E)--Indulgence of person associated with the company in inside trading Imposition of penalty---On perusal of trading data of the Karachi Stock Exchange for the period under review, it transpired that personal trading activity of the person associated with the company, concentrated in the same shares in which funds had traded with other companies-Trading by said person was executed in a manner whereby said person bought the shares of said companies at a lower rate prior to initiation of buying activity of the funds and sold his holdings in the said shares once the price appreciated resulting from the purchases made by the funds---No prior approval to transact in said securities was obtained by said person as required by the Employee Hand Book-Ethics and Code of Conduct---Said person had failed to comply with the provisions of S.15(A) of Securities and Exchange Ordinance, 1969 and had indulged in insider trading based on the information available to him by virtue of his official capacity--Contention made by said person that the investment made by him was purely based on his own judgment; and that the matching of his sale transaction with that of buy transaction of the funds was mere coincidence, was not true---Said person had fiduciary responsibilities towards the funds and the unit holders by virtue of his privileged position, being privy to the inside information---Law forbade such persons from gaining undue advantage in their favour by making inordinate transactions of short-term gains---In exercise of powers under S.15(E) of Securities and Exchange Ordinance, 1969, penalty of Rs.357,592 was imposed on said person being an amount equivalent to the gain made, based on inside information---Said person was also directed to ensure that full compliance will be made of all rules, regulations and directives of the Commission in future for avoiding any punitive action under the law.

Salman Ali Hussain for Fund Manager, Equity Portfolio, Alfalah CHP Investment Management Limited.

Nadia Rasheed, Deputy Director and Ms. Tayyaba Nisar, Assistant Director assisting the Director (SMD).

2010 C L D 408

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Hussain, Commissioner (LD).

JAHANGIR ELAHI and 4 others---Appellants

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT)---Respondent

Appeal No. 28 of 2007, decided on 12th November, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss. 188, 189, 193, 208, 214, 215, 216 & 217---Securities and Exchange Commission of Pakistan Act, (XLII of 1997), S.33---Investments in associated companies and undertakings--Disclosure of interest by Directors of company---Declaring a Director to be lacking fiduciary behavior---Imposition of penalty---Appeal to the Appellate Bench of the Commission---Examination of annual accounts of the company of which appellants were Directors showed that short term borrowings including bank credit facilities had been transferred by Associated Companies to the company of the Directors---Said associated company suffered a severe set back with respect to its business venture, which caused severe liquidity crunch and said associated company and Directors of the appellant/Company were unable to pay back their loans to various banks---Two companies had entered into a conveyance through which the loan liability was transferred from associated company to the company for consideration, including quota for exports of textile products, margin of trading business transfer and good-will etc.---Commission issued show-cause notice to six Directors of the company under provisions of Ss.193(1), 214, 215(1), 216 & 217 of the Companies Ordinance, 1984, to which reply was submitted---Authorities decided to proceed on the basis of the record since, appellants/Director's counsel failed to appeal before the authority despite numerous opportunities having been afforded to him---Authority passed impugned order imposing penalties on appellants/Directors of the company---Contravention of the appellants came to light on examination of annual accounts of their company and the Commission took the action in the best interest of the shareholders and the creditors of the company---Commission was duty bound to protect the interest of the investors and in the present case rightly issued show-cause notice without any complaint from the shareholders or the creditors---Appellants holding common directorship on the Board of Directors of the company, had acted in their personal interest and transferred the liability of bank loan from associated company to the company, which was a public limited company to the detriment of the shareholders of the company without adequate and reliable consideration---Appellants had acted in violation of Ss.193, 214 & 216 of the Companies Ordinance, 1984---Impugned order could not be interfered with, in circumstances.

2008 PTD 1744; 2009 PTD (Trib.) 902 and 2004 CLC 1860 ref.

Muhammad Shoaib for the Appellants.

Mrs. Maheen Fatima, Joint Director and Muhammad Anwar Hashmi, Deputy Director for the Respondent.

2010 C L D 415

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Hussain, Commissioner (LD)

JAHANGIR ELAHI, and 8 others---Appellants

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT)---Respondent

Appeal No.27 of 2007, decided on 12th November, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss. 208, 473 & 476---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Investment in associated companies and undertakings without approval of shareholders---Imposition of penalty---Appeal to the Appellate Bench of the Commission---On examination of annual accounts of the company of which appellants were Directors, it was observed that short term borrowings including bank credit facilities had been transferred by associate company to the company of appellants---Contentions that the conveyance in respect of said transaction was a sale transaction between the two parties, was not tenable for a valid sale transaction there must be identified buyer and seller who agree to transact at an identified price---In the present case, the transaction of loans and mark-up thereon by the company on behalf of the associate company had been made against assets, the value of which could not be reliably identified---Appellants were given ample opportunities to explain their conduct in the show-cause proceedings---Opportunities for hearings were again provided, but the appellants or their counsel failed to appeal before Authority--Conveyance was mode of investment and fell within S.208 of Companies Ordinance, 1984, which section required the approval of the shareholders by way of a special resolution prior to making the investment in its associated concern; and any meeting held by the appellants after the investment was made without notice would not suffice---Annual account of the company for the relevant year had indicated that the conveyance was discussed by the shareholders of the company after the investment had already been made, which had shown that the requirements of S.208 of the Companies Ordinance, 1984 had not been fulfilled and it could be concluded that the default of the Directors of the Company was deliberate and wilful---Directors, in circumstances, were rightly penalised---Commission was empowered under S.473 of the Companies Ordinance, 1984 to give a direction to make good the default of any provision of Companies Ordinance, 1984--Appellants' counsel had failed to point out any provision of the Companies Ordinance, 1984 which had specifically prohibited the Commission to pass a direction to reverse conveyance---In absence of any ground to interfere with the impugned order, appeal was dismissed.

2008 PTD (Trib.) 679; 1992 SCMR 1755; 1984 CLC 2456 and PLD 1966 Lah. 822 ref.

Muhammad Shoaib for the Appellants.

Mrs. Maheen Fatima, Joint Director and Muhammad Anwar Hashmi, Deputy Director for the Respondent.

2010 C L D 426

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh, Chairman and S. Tariq Asaf Hussain, Commissioner (LD/CLD)

PAKISTAN ELECTRON LIMITED and 2 others---Appellants

Versus

ARIF MIAN, ED (SMD) SECP---Respondent

Appeals Nos.39, 40 and 45 of 2006, decided on 4th March, 2009.

Companies Ordinance (XLVII of 1984)---

----S. 86---Companies Share Capital (Variation in the Rights and Privileges) Rules, 2000, R.5(1)---Listing Regulations of the Lahore Stock Exchange, Reglns.3 & 8---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Issuance of preference shares without rights issue and listing of preference shares with Stock Exchange in violation of the Regulations---Imposition of penalty---Appeal against---Appellant/companies sought the approval of Commission for issuance of their preference shares to certain financial institutional investors without rights issue, which approval was granted by the Commission---Both the companies sought permission for listing of the preferential shares from Lahore Stock Exchange, which permission was granted and said shares were listed on the Lahore Stock Exchange---Authority issued show-cause notices to the companies on the ground that they acted in violation of Reglns. 3(2) & 8(3) of Listing Regulations of the Lahore Stock Exchange---Authority also "issued show-cause notice to Lahore Stock Exchange for having listed. the companies in violation of the regulations---Appellant's response to the show-cause notices were not found satisfactory and Authorities after hearing the parties passed the impugned orders, whereby preference shares of the companies were delisted from the Lahore Stock Exchange and fine of Rs.100,000 on Managing Director of Lahore Stock Exchange was imposed---Validity---Contention of the appellants that the Commission by giving its approval of issuance of securities, had in fact allowed listing of securities with the Lahore Stock Exchange, had no substance, because it was clear from the contents of the letter that the approval was given only for the issuance of preference shares and did not allow listing the securities with the Lahore Stock Exchange---In any case the power to list companies and securities was not with the Commission and vested with Lahore Stock Exchange in terms of its Regln.3 of the Listing Regulations of the Lahore Stock Exchange---In granting the permission for the listing of the Security the Stock Exchange was bound to see whether or not there was public interest involved in its listing, whereas in the present case there could be no public interest involved---Lahore Stock Exchange should not have allowed the listing of preference shares of the appellants---Lahore Stock Exchange was directed to delist the preference shares of the appellant/ companies---However, for having failed to scrutinize the application of the appellants in accordance with the Rules, it was Lahore Stock Exchange, which needed to be penalized and not the Managing Director---Impugned order was modified to the extent that the penalty of Rs.100,000 would be paid by Lahore Stock Exchange.?

Shaukat Baig v. Shahid Jamil PLD 2005 SC 530; Pakistan Paper Corporation Limited v. Secretary, Federal Minister of Finance 1984 CLC 2456 and Jalaluddin F.C.A. v. Commissioner SEC, 2005 CLD 333 ref.

Dr. Parvez Hassan and Asif ur Rehman for Appellants.

Imran Inayat Butt, Director (SMD) for the Respondent Department.

2010 C L D 433

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Hussain, Commissioner (LD) and Salman Ali Shaikh, Commissioner (SCD)

ASIAN MUTUAL INSURANCE COMPANY (GUARANTEE) LIMITED---Appellant

Versus

CHAIRMAN (INSURANCE DIVISION) SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 17 of 2008, decided on 12th November, 2008.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 6, 11, 29, 36 & 63---Securities and Exchange Commission of Pakistan (Insurance) Rules 2002, R.9---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33--Failure of company to maintain statutory deposit and to meet the minimum solvency required etc.---Appeal against Directives of the Commission---Appellant-Company which failed to maintain statutory deposit as provided in S.11(1)(b) of Insurance Ordinance, 2000; failed to meet the minimum solvency requirement as set forth in S.11(1)(c) and S.36 of Insurance Ordinance, 2000; failed to pay to the Securities and Exchange Commission Rs.200,000 on account of annual supervision fee for the years 2005 and 2006 as provided under S.11(3) of Insurance Ordinance, 2000 and failed to deposit with the Government amount of Rs.27,697 as levy of 1% Federal Insurance fee was issued Directives to comply with said provisions of law---Validity---Record had shown that appellant-Company had not submitted annual supervision fee of Rs.200,000 up to the year 2006 and had failed to submit- it for the year, 2007 and 2008 effectively and an amount of Rs.400,000 was due from the appellant---Statutory deposit of five million rupees at the time when the impugned Directive was passed and which later on stood at ten million rupees had not been deposited by the appellant with the State Bank of Pakistan---Finally the appellant had also failed to meet the minimum solvency requirement of fifty million rupees---Total admissible assets of the appellant, as per the record available with Insurance Department of the Commission was five million two hundred and sixty eight thousand rupees for the year ending 2007 which was far less than the required level of fifty million rupees---Appellant's own record showed that it did not meet the solvency level as prescribed by the law---Insurance Ordinance, 2000 did not distinguish between an insurance company with a paid-up capital and one which did not have a paid-up capital---Contention of the appellant that it being a mutual insurance company was not required to comply with the requirements of S.29 of the Insurance Ordinance, 2000, was repelled---Appeal filed by the appellant was not maintainable---Appellant which had sufficient time to comply with the requirements of law, had failed to do--Appellant was directed to comply with the impugned Directives or the appellant would cease to carry out any kind of insurance business.

Asjad Saeed and Rashid Mirza, Chief Executive for the Appellant.

Ali Azeem Ikran and Uzma Farogh for the Respondent.

2010 C L D 477

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD)

NAJEEB ULLAH GHAURI and another---Petitioners

Versus

EXECUTIVE DIRECTOR (SMD)---Respondent

Revision Application filed under section 484 of the Companies Ordinance, 1984 decided on 25th November, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss. 224 & 484-Companies (General Provisions and Forms) Rules, 1985, R.16---Trading by Director of the company with gain--Direction to tender amount of gain to the Commission---Director of the company made certain purchases and sales in the shares of the petitioner as its Director---Said transactions resulted in a gain computed in the manner prescribed in R.6 of the Companies (General Provisions and Forms) Rules, 1985--Executive Director of the Commission directed petitioners to tender amount of gain in favour of the Commission---Validity---No legal flaw had been pointed out by the representatives for the petitioners---Petitioners had accepted the findings of the Executive Director of the Commission on the issue of bonus shares, however, petitioners had requested to allow one petitioner to tender the amount of gain in favour of the other (issuer) instead of the Commission---Executive Director of the Commission had rightly inferred in the impugned order that after lapse of time limit stipulated in S.224 of the Companies Ordinance, 1984, the beneficial owner could not be allowed to tender the amount of gain to the issuer instead of the Commission; and even the Commission did not have any power under the Companies Ordinance, 1984 to waive off that legal restriction and requirement---Petitioners had neither raised in their revision petition any jurisdictional issue nor their representatives had requested for conversion of revision into appeal---Petitioner had accepted that he had made tenderable gain, which-had not been tendered to the issuer within stipulated period---Issuer had accepted that it had failed to recover the amount of the gain within the period as stipulated in S.224(2) of the Companies Ordinance, 1984 Impugned order was upheld and revision petition against said order was dismissed.

PLD 2000 Quetta 66 ref.

M. Javed Panni and Boo-Ali Siddiqui, for Petitioners.

Imran Inayat Butt and Muhammad Farooq for the Respondent.

2010 C L D 484

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (ENF)

In the matter of: Messrs PAKISTAN PAPER PRODUCTS LIMITED: In the matter of

Show-Cause No.EMD/233/528/2002, dated 9th October, 2009.

Companies, Ordinance (XLVII of 1984)---

----S. 492-Making false statement---Imposition of penalty---On examination of annual audited account for the relevant year it was found that in the Directors' report it had been stated that the numbers of shares held by two spouses of Director were in contradiction to the actual number of shares held by them-Show-cause notice was issued to the company and in response to said show-cause notice Chief Executive who appeared as Counsel on behalf of all the Directors of the company admitted violation of S.492 of the Companies Ordinance, 1984 by giving the false information---Said Chief Executive requested that they be exonerated as a very special case, as it was not done intentionally and assured that same would not occur in future-Default was established and admitted, however in view of the fact that the company had corrected the pattern of shareholding in the Directors' annual report and had given assurance that the requirements of law would be complied with in future, taking lenient view of the default, instead of imposing a maximum penalty as stated in S.492 of the Companies Ordinance, 1984, a penalty of Rs.100,000 was imposed only on the Director of the company.

Abid Sayyed, Chief Executive Present.

2010 C L D 487

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SDI)

PLUS SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.1(13)BS/LSE/MSW/SMD/2009/09, dated August 28, 2009, decided on 26th November, 2009.

Securities and Exchange Ordinance (XVII of 1969)--

----S. 22---Brokers and Agents Registration Rules, 2001, R.8 & Sched.---Illegal sale transaction of shares---Violation of Code of Conduct---Imposition of penalty---Computer Operator of the company had placed the sale orders, in the client's account without having pre-existing interest---Company was obliged to control all trading activities being carried out through its brokerage house in order to track any transaction being made with a view to create any misleading impression or fraudulent intention---Company should have immediately informed the concerned. Stock-Exchange about the error made by the Computer Operator---Company by executing sales in the client's account had violated the Regulations which in turn was violation of Code of Conduct set forth under the Third Schedule of Brokers Rules that had made it mandatory on the company to execute its business with due care and skill---Company was responsible for each and every order placed or trade executed through its terminal-Company was also responsible to keep its Computer Operators updated with the application of Rules and Regulations to avoid any violation of the same---Company, in circumstances, had violated Code of Conduct of the Brokers Rules-Violation of Rules and Regulations was a serious matter which entitled the Commission. to even suspend the membership of the company---Commission, however, in exercise of powers under R.8(b) of Brokers Rules had imposed on the company a penalty of Rs.50,000 with direction to the company to ensure that full compliance be made of all rules, regulations and directives of the Commission in the future for avoiding any punitive action under the law.

Shahid Pervez Sheikh, Director and Abdul Majeed, Financial Consultant.

Muhammad Ali, Deputy Director assisting the Director (SMD).

2010 C L D 491

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Executive Director (SM), D.S. INDUSTRIES LTD.: In the matter of

Show-Cause Notice No. SM/BO/Co.22/ 1(88)2008, dated 17th July, 2009, decided on ???

Companies Ordinance (XLVII of 1984)---

----S. 224---Companies (General Provisions and Forms) Rules, 1985, R.16---Trading by Directors in violation of law---Company made purchase and sale transactions more than ten per cent shareholders of the issuer Company within the period of less than six months----On account of said transaction, company made gain of Rs.3,136,980 and said amount of gain had been computed in the manner prescribed in R.16 of the Companies (General Provisions and Forms) Rules, 1985---Provisions of S.224 of the Companies Ordinance, 1984 had provided that where more than ten per cent shareholders of listed equity securities would make any gain by purchase and sale of any such security within a period of less than six months, such person was required to make report and tender the amount of such gain to the company; and simultaneously send an intimation to that effect to the Registrar of Companies and the Commission---Section 224 further provided that where such person would not comply with the provisions of said section, gain derived in the transaction, would vest in the Commission---Since in the present case neither the matter of accrual of gain nor its tender or recovery was reported to the Commission, notice under S.224(2) of the Companies Ordinance, 1984 was served upon the company---Response given by the company to said notice being not satisfactory, request of the representatives to withdraw notice was rejected and company was directed to tender amount of gain RS.3,136,980 to the Securities and Exchange Commission as provided under S.224(2) of the Companies Ordinance, 1984 through demand draft.

Salman Farooq representing the Respondent.

Imran Inayat, Director (SMD) and Muhammad Farooq, Joint Director (SMD) assisting the Executive Director (SMD).

2010 C L D 540

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SMD)

SHOW-CAUSE NOTICE ISSUED TO ACE SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No. 1(07)BS/KSE/MSW/SMD/2009/18, dated July 8, 2009 decided on 5th November, 2009.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22--Brokers and' Agents Registration Rules, 2001, R.8 & Third Sched. --Blank sales by company on behalf of its clients in violation of Code of Conduct---Imposition of penalty--company had executed trades without having pre-existing interest--Commission vide its letters sought clarification regarding the blank sales by the company on' behalf of its clients and show-cause notice was issued to the company under S.22 of the Securities and Exchange Ordinance, 1969 and the Brokers Rules stating that the company had prima fade contravened clauses A(12), A(5) of-the Code of Conduct set forth under the Third Schedule of the Brokers Rules-Placement of the sale orders without having pre-existing interest, had interfered in the fair and smooth functioning of the market and created misleading impression for the other investors-Company by executing blank sales on behalf of its clients had violated the Regulations, which in turn was violation of Code of Conduct which was mandatory on the company to execute its business with due care and skill and to put in place proper systems and controls to ensure that its business was conducted according to the applicable Rules and Regulations---Placing of sale orders and then squaring same without having pre-existing interest had clearly shown that the company had failed to conduct its business with diligence, care and had interfered in smooth and fair functioning of the market--Violation of the Rules and Regulations, was a serious matter which would entitle the Commission" to even suspend the membership of the company--Commission, however, in exercise of the powers under S.22 of the Securities and Exchange Ordinance, 1969, imposed on the company a penalty of Rs.600,000.

Haider Waheed representing the ACE Securities (Pvt.) Limited.

Muhammad Ali, Deputy Director assisting the Director (SMD).

2010 C L D 588

[Securities and Exchange Commission of Pakistan]

Before Nasreen Rashid, Member

Messrs MANGLA VIEW RESORT (PVT.) LTD. ---Appellant

Versus

Messrs UNITED INSURANCE COMPANY LIMITED---Respondent

Appeal No.7 of 2009 decided on 19th January, 2010.

Insurance Ordinance (XXXIX of 2000)---

---Ss. 122, 127 & 130-Appeal against order passed by Insurance Ombudsman before the Security Exchange Commission Matter in dispute was sub judice at the time of filing the complaint with the Ombudsman---question as to whether a suit was maintainable or not could only be decided by the court before which it was pending---Security Exchange Commission was not the forum which could determine as to whether the object of S.127(1) (b) of the Insurance Ordinance, 2000 was served in the case.

Muhammad Waqar Rana for the Appellant.

Muhammad Zeeshan Abdullah for the Respondent.

2010 C L D 983

[Securities and Exchange Commission of Pakistan]

Before Javed Hussain, Registrar of Companies

VERIZON TRADEMARK SERVICES LLC, through authorized signatory: In the matter of

Notice No.CLD/RD/CO 484(1)2009, decided on 11th November, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss.37, 38 & 484---Rectification of name of company--Company filed an application to the Registrar of Companies for issuance of direction under S.38 of the Companies Ordinance, 1984 to respondent company to change its name as the name of applicant/company also contained the very name of respondent company--Said application had been rejected---Validity---Name of respondent/company was deceptive and identical to or so nearly resembled the name of applicant which had a worldwide reputation and goodwill extending to Pakistan---Name of respondent company, on that score, was liable to be rectified under S.38 of the Companies Ordinance, 1984 which was clear, explicit and had prohibited the Securities Exchange Commission not to allow the name of a company, which was deceptive or inappropriate---Application for the purpose of giving direction to respondent/company, was made within prescribed limit of three years---Papers/documents supplied by the representative of the applicant/company had clearly suggested that if the respondent company would carry on its business with its name, the reputation of applicant/company would be damaged---Impugned order of Assistant Registrar of Companies was set aside---Joint Registrar Incharge Company Registration Office was directed to initiate necessary action under S.38 of Companies Ordinance, 1984 for change of name of respon­dent/company and complete the proceedings in accordance with the provisions of law.

Messrs ADT Services AG and another v. Messrs ADT Pakistan (Pvt.) Ltd and 4 others 2005 CLD 1546 ref.

Khurram Shahzad Chughtai for Appellants.

2010 C L D 1020

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Executive Director (SM)

In the matter of: RECOVERY OF TENDERABLE GAIN UNDER SECTION 224(2) OF THE COMPANIES ORDINANCE, 1984

Companies Ordinance (XLVII of 1984)---

----S. 224(2)---Trading by Director of the company---Recovery of tenderable gain---Company had informed the Commission that as a matter of gesture and good-will it would like to voluntarily close the matter without further insisting on view points or contesting the issue and would like to tender capital gain amount in favour of the Commission---Company had deposited amount in Commission's account---Company having discharged its liability accrued under S.224(2) of the Companies Ordinance, 1984 by tendering the amount of gain to the Commission, further proceedings in the matter, were dropped and the matter stood closed.

Arif Habib, Director of Arif Habib Bank Ltd.

2010 C L D 1021

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SM)

In the matter of: SHOW-CAUSE NOTICE ISSUED TO AZEE SECURITIES (PVT.) LTD.

Show-Cause-Notice No.1(07)BS/KSE/MSW/SMD/2009 dated 9th December, 2009 decided on 19th March, 2010.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22---Brokers and Agents Registration Rules, 2001, R.8, Third Sched.---Blank sale---Imposition of penalty---Trading data of Stock Exchange for relevant period had shown that the different clients of the company, first sold and then squared up their positions in different scrips---Company admitted that few transactions were mistakenly executed by Automotive Trading System Operators of the company which were intimated to the Stock Exchange---Company made assurances that appropriate measures had been taken to avoid such blank selling in future and expressed its commitment to root out the minor non­-compliances---Company had executed said trades without having pre-existing interest, which interfered in the fair and smooth functioning of the market and created misleading impression for the other investors-Company by executing such blank sales in its clients accounts had violated the Regulations which in turn was a violation of Code of Conduct set-forth under Brokers and Agents Registration Rules, 2001, which had made it mandatory on the company to execute its business with due care and skill---Company was responsible for each and every order placed or trade executed through its terminal---Company was responsible to monitor all trading activities being carried out through its terminal, in order to track any transaction which might violate applicable Rules and Regulations---Company, had violated clauses A.2 and A.5 of Code of Conduct of Brokers Rules, 2001 which in turn was a violation of said Rules---Unfair practice of the company was detrimental for the growth and development of the market and undermined market integrity and transparency---Commission, in exercise of the powers under S.22 of the Securities and Exchange Ordinance, 1969 imposed on the company a penalty of Rs.1,000,000.

Ghazi Naseem, Director.

Waqar Ahmad Siddiqui, Joint Director.

Kapeel Dev, Assistant Director.

2010 C L D 1035

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

In the matter of: SHAFFI CHEMICAL INDUSTRIES LTD.

Show-Cause-Notice No.EMD/233/90/02, dated 18th February, 2010 decided on 8th March, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 244 & 476---Improper issue, circulation or publication of balance-sheet or profit and loss account by company---Annual financial statements of the relevant year had revealed that account provided/circulated by the company did not contain; (a) the disclosure related to Fixed Assets in contravention of Part II the Fourth Schedule to the Companies Ordinance; (b) Note 7 to the accounts, as the balance-sheet, reflected that the company had trade and other payables and its detail was available at Note-7 to the account, but the said Note-7 to the accounts was not reflected anywhere in the account---Authorized representative of the company had admitted the default and expressed the regret and assured to be careful in future and requested to condone the said default and omission of information in the pointed accounts as it was a printing error committed neither knowingly nor wilfully and was unintended---Representative submitted that the default had been rectified---Published Annual Financial Accounts were required to provide complete information about the state of affairs of the entity, the explanations and interpretations of the financial statements any other matters which could be material for the stake-holder's attention---Said accounts normally include information about the principal activities of the entity, review of business during the year and that of the previous year to have a comparison---Accounts were intended to have been prepared in accordance with law and with International Financial Reporting Standards---Commission appreciated regret of authorized representative of the company for the default and assurance to exercise exclusive care in future---In view of assurance to observe the compliance of the law in future, Chief Executive, Secretary and Financial Controller of the company, were strictly warned to be careful in future and comply with the provisions of law in letter and spirit.

Zahoor Ahmad, Manager Corporate on behalf of Chief Executive, Company Secretary and Financial Controller of Shaffi Chemical Industries Limited.

2010 C L D 1039

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SMD)

In the matter of: SHOW-CAUSE NOTICE ISSUED TO DARSON SECURITIES (PVT.) LIMITED.

Show-Cause-Notice No.1(07)BS / KSE / MSW / SMD / 2009 / 63 dated 7th December, 2009 decided on 11th March, 2010.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Third Sched.---Sale of shares in violation of Rules and Regulations---Imposition of penalty---Trading data of Automated Trading System of Stock Exchange showed that the clients of the company had been engaged in first selling and then squaring up their position in different scrips---Commission vide its letter sought clarification from the company regarding said sales---Automated Trading System of the company placed the sale orders in the client's account without having pre-existing interest and the company did not intimate to Stock Exchange regarding mistakes made by Automated Trading System resulting in non-compliance of Stock Exchange Notice---Company was responsible to monitor all trading activities being carried out through its brokerage house in order to track and prevent any transaction being made in violation of any applicable rules and regulations---Company by executing sales in the client's account without pre-existing interest had violated the Regulations which in turn was violation of Code of Conduct set forth under the Third Schedule of Brokers and Agents Registration Rules, 2001 which had made it mandatory on the company to execute its business with due care and skill---Company had violated clauses A.2 and A.5 of the Code of Conduct of the Brokers and Agents Registration Rules, 2001 -which was a serious matter, entitling the Commission to even suspend the company's membership---Commission in exercise the powers under R.8(b) of Brokers and Agents Registration Rules, 2001 imposed on the company a penalty of Rs.75,000.

Dilawayz Ahmed, Finance Manager.

Waqar Ahmad Siddiqui, Joint Director.

Adnan Ahmed, Deputy Director.

2010 C L D 1044

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

In the matter of: MESSRS BUXLY PAINTS LIMITED

EMD/233/484/2002-832 dated 11-12-2009, decided on 25th February, 2010.

Companies Ordinance (XLVII of 1984)---

---S. 158--Failure to hold Annual General Meeting---Effect ---Company which was required to hold its Annual General Meeting for the year ended June 30, 2009 on or before October 31, 2009 had failed to hold such meeting even in extended period---Company in response to show-cause notice referred the massive fire accident in the main production area of the factory causing a major damage to the entire production area including plant and machinery and other material---Company expressed its inability to comply with the requirement of S.158 of Companies Ordinance, 1984---Protection of the investors/share-holders was one of the primary objectives of Companies Ordinance, 1984 and investors/share-holders provide seed for capital formation; and their interest was protected by transmission of timely, adequate and meaningful information to them, especially in the circumstances when some accident had happened to their company/factory----Annual and interim accounts, provide information to the investors about the affairs of the company---Annual General Meeting was a forum where the investors could freely discuss, speak and vote on important matters concerning approval of accounts, appointment of auditors, election of Directors, etc.---Directors of the company failed to observe requirements of law; however, considering the constraints faced by the company in collection and retrieval of relevant information/record and the fact that the company had held Annual General Meeting with a delay, lenient view was taken and instead of imposing fine under S.158(4) of the Company Ordinance, 1984, company and its Directors were strictly warned to be careful in statutory compliance, in future.

Shamshad Ali for Present.

2010 C L D 1047

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SMD)

In the matter of: SHOW-CAUSE NOTICE ISSUED TO MRA SECURITIES (PVT.) LIMITED

Show-Cause Notice No.1(07)BS /KSE/MSW/ SMD/ 2009 / 66 dated 9th December, 2009 decided on 5th March, 2010.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Third Shed.---Sale of shares by company in its Proprietary Accounts without any reasonable justification and in violation of Code of Conduct---Imposition of penalty---Company, which was member of Stock Exchange sold in its Proprietary Accounts shares of associated companies--When Commission sought clarification from the company regarding said sale, company stated that said trades were executed on behalf of its clients in its Proprietary Accounts---No evidence was available to prove pre-existing interest in the shares before sale nor did it provide any reasonable justification for execution of clients' orders by the company in its Proprietary Accounts; it was clear, in circumstances, that company had executed sales in its Proprietary Accounts without having pre-existing interest to the extent of said shares---Conduct of the company to place its clients' orders into Automatic Trading System with Proprietary Codes, did not show that company acted with due care, skill and promptitude and that practice could also jeopardize its client's interest---Company by executing sales in Proprietary Accounts without having pre-existing interest by submitting a false information to the commission and by aggregating its clients' orders in Proprietary Accounts, had violated the provisions of Companies Ordinance, 1984 and also the Stock Exchange which in turn was violation of Code of Conduct setforth under the Third Schedule of Brokers and Agents Registration Rules, 2001---Company had failed to maintain high standards of integrity, promptitude and fairness in conduct of its business and adopted a practice which had potential risk for the company itself, its clients and the market---Unfair trade practices were detrimental for the growth and development of the market and could undermine market integrity---Violation of the Rules and Regulations was a serious matter which entitled the Commission to even suspend the company's membership---Commission, however, in exercise of its power under S.22 of Securities and Exchange Ordinance, 1969, imposed penalty of Rs. Two Million Five Hundred Thousand on the company.

Ms. Farhan, Chief Operating Officer.

M. Kamran, Settlement Manager.

Muhammad Ali, Deputy Director.

2010 C L D 1071

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

In the matter of: AZAM TEXTILE MILLS LTD.

Show-Cause-Notice No.EMD/233/90/2002 dated 27-5-2009 decided on 21st May, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 208 & 476---Unauthorized investments in associated companies and undertakings---Imposition of penalty---Company was proceeded against for making unauthorized investments in shape of loans and advances in its associated companies in violation of the provisions of S.208 of the Companies Ordinance, 1984---Extending advances to the associated companies and charging mark-up to that effect was found in contravention of the provisions of S.208 of the Companies Ordinance, 1984---Amount of advance and the credit facility extended to the associated companies, could not be termed as a normal trade credit and fell under the ambit of S.208 of the Companies Ordinance, 1984 and was extended without seeking prior approval of the share-holders through a special resolution in violation of requirements of S.208 of the Companies Ordinance, 1984 and without charging any return on such credit---Chief Executive and Directors had breached their fiduciary duty by failing to exercise due diligence at the time of entering into agreement for purchasing machinery from associated companies, making advance payment for the purpose---Chief Executive and the Directors had violated provision of S.208 of the Companies Ordinance, 1984 and had not exercised due care while extending the said credit to the associated concern---Directors of the company, however were in a process of rectifying the default by recovering the balance amount due from its associated companies---Penalty of Rs.500,000 was imposed on Chief Executive and Rs.50,000 on each of the Directors in consequence of an investment which was made without complying with the requirements of S.208 of the Companies Ordinance, 1984.

Muhammad Shamil, General Manager Finance and Admin on behalf of all the Directors and Chief Executive of Azam Textile Mills Limited.

2010 C L D 1083

[Securities and Exchange Commission of Pakistan]

Before Musarat Jabeen, Director (SMD)

In the matter of: SHOW-CAUSE NOTICE ISSUED TO ISLAMABAD STOCK EXCHANGE (GUARANTEE) LTD.

Show-Cause Notice No.SMD/SE/2(77)/2003 dated 4th March, 2010 decided on 27th April, 2010

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 22 & 34---Listing Regulations of Islamabad Stock Exchange (Guarantee) Limited, Reglns.17(516) & 32(1)---Amendments in Regulations---Respondent/Islamabad Stock Exchange (Guarantee), vide letter, had proposed amendments in sub-regulation 17(5) and 17(6) of the Listing Regulations of the Stock Exchange, whereby certain exemption beyond the scope of the Companies Ordinance, 1984, such as relaxation from furnishing of periodic financial statements were suggested to be allowed to the companies "to whom an offer had been made for listing of Islamabad Stock Exchange for trade facilities purpose"-Mere fact that amendments were proposed through insertion of a separate clause in Islamabad Stock Exchange Listing Regulations, rather than through amendments in Listing Regulation 32, was sufficient to contradict the stance of the Stock Exchange that those amendments were independent of its proposal regarding compulsory listing of Securities trade facilitation purposes---Proposed amendments were envisaged to make listing at the Islamabad Stock Exchange more attractive in continuation of the earlier proposal submitted by the Stock Exchange by letter for all companies that were listed at Lahore Stock Exchange, but not listed at Islamabad Stock Exchange---Said information was sufficient to believe that both proposals were not co-related, but independent---Further submission of a proposal for amendments in the Regulations, would not in any way absolve the Stock Exchange from ensuring compliance of the existing regulatory framework---Proceedings of the provisional listing of the company while granting relaxation to the initial listing fee applicable in terms of Regulation 32(1) of Listing Regulations, without any legal provisions/regulatory cover, could not be justified---Stock Exchange had not fulfilled the requirements of Regulation 32(1) of the Listing Regulations; however, some extenuating circumstances had emerged from the Stock Exchange's practice of allowing listings which persuaded it to believe that it had discharged its obligations under the Listed Regulations---Violation committed by the Stock Exchange was a negligence that could have been avoided through a more conscientious and responsible approach---Taking lenient view, the Stock Exchange was directed to be careful in future and ensure strict compliance with the Listing Regulations.

2010 C L D 1088

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SM)

In the matter of: SHOW CAUSE NOTICE ISSUED TO UNITED CAPITAL SECURITIES (PVT.) LTD.

Show-Cause-Notice bearing No. 1(07)BS/KSE /MSW / SMD/2009 /64, dated 7th December, 2009 decided on 31st March, 2010.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22---Brokers and Agents Registration Rules, 2001, Rr.8, 12, Third Sched.---Blank sales by the company on behalf of its clients in violation of Rules and Regulations--Imposition of penalty---Trading data of Automated Trading System of Stock Exchange for the relevant period showed that clients of the company had been engaged in selling and then squaring up their positions in different scrips---Company's clients sold shares without having pre-existing interest---Company was responsible for each and every order placed or trade executed through its trading terminal--Merely acknowledging and regretting a mistake and sustaining loss due to excess selling would not absolve the company from its responsibilities and the adverse consequences of the subject violation---Company was supposed to monitor all trading activities being carried out through its brokerage house in order to track and prevent any transaction being made in violation of any applicable Rules and Regulations---Placement of the sale orders without having pre-existing interest, interfered with the fair and smooth functioning of the market and created misleading impression for the other investors---Company by executing sales in the client's account without pre-existing interest had violated the Regulations which in turn was violation of Code of Conduct set forth under the Third Schedule of the Brokers and Agents Registration Rules, 2001---Company had violated clause A.2 and A.5 of the Code of Conduct of the Brokers Rules, 2001 which was a serious matter which entitled the Commission to suspend the membership of the company; however, in exercise of the powers under S.22 of the Securities and Exchange Ordinance, 1969, penalty of Rs.200,000 was imposed on the company by the Commission.

Kamran Abbas, Chief Executive Officer.

Haroon Younus, Head of Operations.

Waqar Ahmed Siddiqui, Joint Director.

Farhan Yacoob, Assistant Director.

2010 C L D 1096

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

In the matter of: DADABHOY CEMENT INDUSTRIES LTD.

Show-Cause Notice No. EMD233/371/2002/1054-60 dated 29th December, 2009 decided on 26th March, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 208 & 476--Making investment in associated companies and undertakings unauthorizedly---Imposition of penalty---Examination of annual audited accounts of the company for relevant year had revealed certain transactions made by the company with associated company for which shareholders' approval in terms of S.208 of the Companies Ordinance, 1984 was not obtained---Circumstances had shown that the company was acting as a financer of Associated Company at the cost of its shareholders and had deprived them of the return that could have been earned by investing those amount in any other mode---Directors of the company, in circumstances, had violated the provisions of S.208 of the Companies Ordinance, 1984 and were liable for penalties as prescribed under section 208---Default under S.208 of the Companies Ordinance, 1984 though was established, however, considering the circumstances of the company and significance of the associated company, lenient view was taken and instead of imposing maximum penalty of Rs.10 million on each Director, fine 'of Rs.100,000 was imposed on each of the seven directors.

Syed Haroon Aziz, Authorized Representative Present.

2010 C L D 1103

[Securities and Exchange Commission of Pakistan]

Before Nasreen Rashid, Executive Director (Insurance)

GOVERNMENT OF BALOCHISTAN (GOB)---Appellant

Versus

UNITED INSURANCE COMPANY OF PAKISTAN LTD.---Respondent

Appeal No.1 of 2010 decided on 19th May, 2010.

(a) Insurance Ordinance (XXXIX of 2000)---

----Ss. 127, 129 & 130---Securities and Exchange Commission (Insurance) Rules, 2002, R.35---Appeal against order passed by the Federal Ombudsman---Appellant entered into an agreement with a company and invested amount---Said company as per contract furnished a Performance Guarantee from respondent/Insurance Company---Company was required to pay the appellant sum limited to the liability on a claim made within the validity period without any objection---Insurance company having defaulted to pay the agreed amount to the appellant, appellant terminated the contract---As the Guarantee period covered one year, notices were served on the Insurance Company, but Insurance Company turned down the claim of the appellant summarily---Finance Department of Provincial Government (appellant) lodged a complaint with Ombudsman against the Insurance Company, but without following the mandatory procedure of filing the complaint under S.129 of Insurance Ordinance, 2000---Ombudsman recorded that complaint filed by the appellant/Provincial Government was incomplete---Appellant lodged another complaint, which attracted the bar contained under S.127(1)(b) of Insurance Ordinance, 2000 which ousted the jurisdiction of the Ombudsman relating to the sub judice matters---Ombudsman closed the file without undertaking the proceedings on the points complained against---Aggrieved by the order of the Ombudsman, appellant/Provincial Government had filed present appeal before the Commission---Commission had observed that Public money had been mishandled; that Guarantee obtained was not a performance guarantee, but a financial guarantee for which appellant did not have the reinsurance arrangement; that point raised by the Insurance Company that Government was like other litigants, was correct, however, non-receipt of premium, was not a valid justification for avoiding liability under a contract of insurance, according to R.35 of the Securities and Exchange Commission (Insurance) Rules, 2002; that performance guarantee would not hold conditional provisos; that the courier receipt confirmed that the complaint was not in compliance with the requirements of S.129 of Insurance Ordinance, 2000; that second complaint was filed under S.129 of Insurance Ordinance, 2000, when the matter had already become sub judice, placing a bar on the Ombudsman's jurisdiction as given in S.127(1)(b) of Insurance Ordinance, 2000---Commission, in circumstances, upheld the order passed by the Insurance Ombudsman in that regard and appeal before Commission stood dismissed.

(b) Words and Phrases---

----Word 'shall'---Connotation---Where a requirement was placed with the word "shall" the required procedure must be followed.

Mst. Riffat Yasmeen v. S. Hanif 2003 YLR 565.; Ghulam Rabbani v. A. Qayyum 1990 MLD 1871; Wali Muhammad v. Zainab as reported in 1996 MLD 869; H. Mansha v. The State 2007 YLR 2933; Atique-ur-Rehman v. Mst. Sadia 2010 MLD 470 and DM Rahimoon v. AR Rahimoon 2009 CLC 795 ref.

(cb) Administration of justice---

----Government was like any other litigant in the eyes of law.

Ramzan Ali v. Chairman Zakat 2003 YLR 2632 and Income Tax Appellate Tribunal Pakistan's case 2008 PTD (Trib.) 1942 ref.

Ghulam Nabi, Deputy Secretary, Finance Department, Government of Balochistan and Muhammad Hassan, Assistant Fund Manager, Finance Department, Government of Balochistan for Appellant.

Zeeshan Abdullah for Respondent.

2010 C L D 1110

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

In the matter of: DADABHOY CEMENT INDUSTRIES LTD.

Show-Cause Notice No. EMD233/371/2002/1061-67 dated 29th December, 2009 decided on 20th May, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 492 & 476---Companies (Issue of Capital) Rules, 1996, R.5---Non-disclosure of contingent liabilities and misstatement in projected financial statements---Imposition of penalty---Company did not disclose contingent liabilities relating to its Bank liabilities in its annual audited accounts for the relevant year---Directors of the company also misstated in projected financial statements submitted to the Commission in connection with right issue announced in 2007 regarding injection of fund by way of Director's loan---However the Director's loan as disclosed in projected financial statements was never injected---Justification given by the company for non-disclosure of contingent liabilities in the documents of the company, was not acceptable at all---Directors having admitted non-disclosure and had assured to make required disclosure in future, that issue did not require further deliberation---Submissions made by Directors and their Authorized Representatives regarding the issue of misstated projected financial statements, were not very convincing---Projected financial statements submitted by the company were based on injection of funds through equity and Director's loan---No other sources of financing were envisaged for operation of the company during the projected period---Directors failed to provide the planned funds to the company and the company could not pay its long term liabilities and also failed to achieve projected results---Said circumstances had shown that the projected financial statements of the company submitted to the Commission in the year 2007 were misstated to present an optimistic picture of company's affairs---Default under S.492 of the Companies Ordinance, 1984, though was established, however considering the fact that the company had disclosed contingent liabilities in half yearly accounts for period ended December 11, 2009, taking lenient view, instead of imposing maximum penalty of Rs.500,000 on each Director, token penalty of Rs.200,000 was imposed on Chief Executive of the company only.

Syed Haroon Aziz Authorized Reprehensive Present.

2010 C L D 1160

[Securities and Exchange Commission of Pakistan]

Before Amir M. Khan Afridi, Director (SMD)

In the matter of: SHOW-CAUSE NOTICES ISSUED TO THE 94 APPLICANTS UNDER SECTION 18A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969, decided on 30th June, 2010.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 18-A---Submission of fictitious and multiple applications for subscription of shares-Confiscation of applications' money---Privatization Commission offered shares to the general public for subscription through the offer for Sale Document, wherein it was clearly stated that fictitious and multiple applications (more than one application by a single applicant) were prohibited; and such applications' money would be liable to confiscation under S.18-A of Securities and Exchange Ordinance, 1969---Preliminary examination of applications submitted in that respect raised the suspicion that most of the applications submitted through the Bank were made in violation of S.18-A of Securities and Exchange Ordinance, 1969; it was observed that 94 applications were made from one single address and most of said applications contained such Bank account numbers which were mentioned in other applications as well---Applicants' signatures affixed on most of the applications varied from those affixed on their respective CNICs---Representative of applicants, admitted that submission of applications for subscription of shares with false particulars like false Bank account number was a mistake, but it was due to unawareness of law; it was, in circumstances fully established that submission of said applications was fraudulent, collusive and in pre-arranged scheme, made and implemented with the help of some employees of the Bank in violation of S.18-A of Securities and Exchange Ordinance, 1969---Said applications being fictitious, subscription of the same was confiscated under S. 18-A(2) of Securities and Exchange Ordinance, 1969.

One Applicant in person.

Yaseen claimed representing all 94 Applicants.

Tariq Naseem, Deputy Director (SMD), SECP.

2010 C L D 1190

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Husain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

PLATINUM INSURANCE COMPANY LTD.---Appellant

Versus

DIRECTOR (INSURANCE)---Respondent

Appeal No.10 of 2010, decided on 18th March, 2010.

Companies Ordinance (XLVII of 1984)---

----S. 218---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Non-disclosing the change in terms and conditions affecting the remuneration of the Chief Executive Officer---Imposition of penalty---Appeal against---Appellant-company had not disclosed the change in terms and conditions which had affected the remuneration of the Chief Executive Officer in the Directors' report---Remuneration of the Chief Executive Officer was increased, but the nature and the terms and conditions were not reported in the Directors report as required under S.218(1) of the Companies Ordinance, 1984---Penalty of Rs.5000 having been imposed on the company under S.218(1) of the Ordinance, company had filed appeal---Where there was any variation in the contract of appointment of Chief Executive Officer, an abstract of said variation would be attached to the Directors' report together with a memorandum clearly specifying the variation---Company was required to send an abstract of the variation in the terms to every member of the company within twenty one days from the variation in the contract---Annual Report of the relevant year transpired that the company had failed to specify the variation in the contract of Chief Executive Officer as required under S.218(1) of the Companies Ordinance, 1984--Mere mention of the remuneration in the Directors' report, would not fulfil the requirement of S.218 of the Companies Ordinance, 1984---Impugned order whereby penalty was imposed on the company, could not be interfered with---Appeal was dismissed.

Atir Aqeel Ansari for the Appellant.

Tariq Hussain, Director for the Respondent.

Ms. Nasreen Rashid, Executive Director and Muhammad Kashif Siddique, Joint Director for Respondent.

2010 C L D 1194

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Husain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

GHULAM MUHAMMAD MALKANI---Appellant

Versus

EXECUTIVE DIRECTOR (SMD)---Respondent

Appeal No.18 of 2010, decided on 30th April, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 222 & 224---Companies (General Provisions and Forms) Rules, 1985, R.16---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Trading by Directors of a listed company---Failure to make report and tender the amount of gain to the company---Direction to deposit amount of gain with Commission---Appeal to Appellate Bench---Appellant/Chief Executive Officer of the listed company made transaction in the shares of the company, which transaction resulted in gain---Appellant, in accordance with the requirement of S.224 of the Companies Ordinance, 1984, failed to make a report and tender the amount of gain to the company and also failed to inform the Registrar and the Commission---Executive Director of the Commission, dissatisfied with the response of the appellant, passed the impugned order and directed the appellant to deposit the amount of gain with the Commission---Rule 16 of the Companies (General Provisions and Forms) Rules, 1985, carried out purpose of S.224 of the Companies Ordinance, 1984 by providing the manner in which the amount of the gain/loss was to be calculated---Purpose of S.224 of the Companies Ordinance, 1984 was to discourage profit making by trading in the Securities of the company with whom the person had a fiduciary relationship or of which he was beneficial owner---Section 224 of the Companies Ordinance, 1984 required that the gain made by such person should be deposited with the company; and where the company did not recover the amount from such person or the person did not tender the amount to the company, the gain so made vested with the Commission---Rule 16 of Companies (General Provisions and Forms) Rules, 1985 had been framed within the four corners of S.224 of the Companies Ordinance, 1984 and there was no illegality in the framing of the S.224 as urged by the appellant---Rule was consistent with the statute and neither contradicted nor repealed the express provisions of the statute from which it derived authority---Appeal was dismissed.

Appellant in Person.

Imran Inayat Butt, Director (SMD) for the Respondent Department.

2010 C L D 1207

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Hussain, Commissioner (LD)

PLATINUM INSURANCE COMPANY LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE)---Respondent

Appeal No.8 of 2010, decided on 30th April, 2010.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 39 & 156---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Transferring assets by Insurance Company in violation of law---Imposition of penalty---Appeal against---During inspection of the books of accounts of the insurance company, it transpired that it had invested amounts in acquiring assets---Company did not provide the title documents. of any of the said assets to the inspection team, which created a doubt about the assets, whether those were in the name of the Company---Show-cause notice was issued to the Company and Director being not satisfied with the response of the Company, imposed penalty of Rs.2 million on the Company and Company had filed appeal against order of the Director---Validity---Section 39 of the Insurance Ordinance, 2000 had clearly stated that assets of the insurer would be kept in the corporate name under the direct control of the insurer---Argument of the appellant that since the assets were publicly treated as property of the Company, the formality of transferring the assets in corporate name as required under S.39 of the Insurance Ordinance, 2000, was not necessary---Appeal was dismissed.

Atir Aqeel Ansari for Appellant.

Nasreen Rashid, Executive Director for Respondent.

Tariq Hussain, Director and Muhammad Kashif Siddique, Joint Director for the Respondent/Department.

2010 C L D 1210

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Hussain, Commissioner (LD)

MUHAMMAD OMAR AMIN BAWANY and 5 others---Appellants

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT)---Respondent

Appeal No.2 of 2010, decided on 30th April, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 208, 196 & 476---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Making investments in associated company and undertaking without special resolution---Imposition of penalties---Appeal to the Appellate Bench---Company in terms of S.208(1) of Companies Ordinance, 1984 was required to pass a special resolution before making investment in an associated company, but in the present case no such resolution was passed by the company---For the purposes of S.208 of the Companies Ordinance, 1984, the term 'investment' included 'loans', 'advances', 'equity' by whatever name called, or any amount, which was not in the nature of normal trade credit---Trade credit granted by the company to associated company could not be termed as "normal trade credit"---Company had admitted that it had given a credit period of up to 95 days to associated company---Abnormal trade credit given to associated company caused loss to the company as it could have sold the by-product in open market on advance basis---Company having failed to pass a special resolution in terms of S.208(1) of the Companies Ordinance, 1984 before making investment in the associated company, penalty was rightly imposed on the company.

Societe Generale De Surveillance S. A. v. Pakistan 2002 SCMR 1694 ref.

Khalid Mehmood Siddiqui for the Appellant.

Amina Aziz, Joint Director for the Respondent/ Department.

2010 C L D 1214

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh, Chairman and S. Tariq Asaf Husain, Commissioner (LD)

SERVICE FABRICS LIMITED and 7 others---Appellants

Versus

DIRECTOR (ENFORCEMENT)---Respondent

Appeals Nos.60-E, 60-F and 60-G of 2006, decided on 13th August, 2010.

Companies Ordinance (XLVII of 1984)---

----S. 158---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to hold Annual General Meetings---Imposition of penalties---Appeal to the Appellate Bench of the Commission---Company which under the provisions of S.158(1) of the Companies Ordinance, 1984, was required to hold its Annual General Meetings within specified period, having failed to hold such meetings, penalties were imposed on Chief Executive and Directors of the company in terms of S.158(4) of the Companies Ordinance, 1984---Representative of the company admitted the default for non-holding of Annual General Meetings and pleaded before Appellate Bench that lenient view could be taken by reducing the penalties---Representative informed the Appellate Bench that the company had ceased its operation and was in the process of voluntarily winding-up and that the company had no assets and that in such circumstances it could not pay the penalties to the Commission---Failure of the company to hold Annual General Meeting, had deprived the shareholders of their statutory right to receive the Annual audited account of the company---Transmission of timely, adequate and meaningful information to the investors/shareholders, was essential for conducting the affairs of the company; and non-holding of the Meetings had deprived the investors/shareholders from participating in matters such as approval of accounts, appointment of auditors and election of Directors---Company made repetitive default which had shown that the act of not holding the Annual General Meetings, was wilful---Commissioner had already taken a lenient view by not imposing the maximum penalty on the Directors of the company---Penalties had been imposed on the Chief Executive and Directors in their personal capacity and they were directed to deposit the penalties from their own resources and not from the coffers of the company---Penalty to the extent of deceased Director was set aside and other Directors were directed to deposit the fine within 15 days.

Muhammad Pervaiz Tahir for Appellants.

Sumaira Siddique, Joint Director Departmental Representative.

2010 C L D 1218

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh, Chairman and S. Tariq Asaf Husain, Commissioner (LD)

FAROOQ HAMEED, CHIEF EXECUTIVE and 6 others---Appellants

Versus

EXECUTIVE DIRECTOR (CLD)---Respondent

Appeals Nos.60-A, 60-B, 60-C, 60-D and 70 of 2006 , decided on 13th August, 2010.

Companies Ordinance (XLVII of 1984)--

----S. 245---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to prepare and transmit quarterly accounts---Imposition of penalty---Appeal to the Appellate Bench of the Commission---Company, in terms of the provisions of S.245(1) of the Companies Ordinance, 1984 was required to prepare and transmit its quarterly accounts, respectively to the shareholders Stock Exchange, Registrar and the Commission within prescribed period had failed to so---Commissioner taking lenient view and instead of imposing maximum penalty of Rs.100,000 on each Director of the company, imposed Rs.60,000 on each Director and Rs.100,000 on the Chief Executive---Validity---Representative of the Directors, admitted default, but had pleaded that lenient view could be taken by reducing the penalties---Representative informed the Appellate Bench that the company ceased its operations and was in the process of voluntarily winding-up and that the company had no assets and that under the present circumstances, could not pay the penalties to the Commission---Held, Directors of the company were responsible for preparation and circulation of the quarterly accounts in order to provide timely information to all stakeholders and they could not be let off scot free for having failed to provide necessary information within prescribed time---Recurrence of default had shown that Directors of the company did not make serious efforts to comply with the provisions of the Companies Ordinance, 1984---Penalties had been imposed on the Chief Executive and Directors in their personal capacity and they were directed to deposit the penalties from their own resources and not from the coffers of the company---Penalty to the extent of deceased Director was set aside and other Directors and Chief Executive, were directed to deposit the fine within 15 days.

Muhammad Pervaiz Tahir for Appellants.

Sumaira Siddiqui, Joint Director for Departmental Representative.

2010 C L D 1228

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Husain, Commissioner (LD)

TAKAFUL PAKISTAN LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE)---Respondent

Appeal No.63 of 2009, decided on 30th April, 2010.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 76, 59-A & 63-Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33-Adopting misleading and deceptive market conduct to sell the package--Imposition of penalty-Appeal to Appellate Bench of the Commission Inspection of Company under S.59-A of the Insurance Ordinance, 2000, had revealed that Company had failed to meet the requirements of the Ordinance and had completely disregarded the interest of the Policy holders-Company adopted misleading and deceptive market conduct to sell the package and had failed to make the necessary disclosures to the Policy holders---Company had gone at length to explain the Package, however, it seemed to have ignored the interest of the Policy holders-Company had clearly violated S.76 of Insurance Ordinance, 2000 by engaging in misleading and deceptive marketing of the Package and could not be absolved from its responsibility and ought to have ensured that the Package was fully disclosed to passengers/Policy-holders--Company during the period of contravention, misled the Policy holders and gained a substantial amount and could not be let scot free-Impugned order was upheld on merits of the case and Company was directed to re-calculate the fine on the threshold of S.76(5) of the Insurance Ordinance, 2000.

Ashraf Ali Siddiqui, Muhammad Umer and Sameer Uddin Ali Khan for Appellant.

Nasreen Rashid, Executive Director for Respondent.

Tariq Hussain, Director and Muhammad Kaashif Siddique, Joint Director Departmental Representatives.

2010 C L D 1234

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Husain, Commissioner (LD)

Mrs. BUSHRA EHSAN and another---Appellants

Versus

REGISTRAR OF COMPANIES and 2 others---Respondents

Appeal No.1 of 2009, decided on 18th March, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 79, 198, 261 & 468-Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33-Transfer of shares of deceased Chief Executive of company illegally-Complaint against---Appeal to Appellate Bench of the Commission---Complainant, who was daughter of deceased Chief Executive of the company had contended that her deceased father had shares of the company at time of his death and that she was a minor at the time of her father's death--Daughter alleged that her mother in the connivance with her sons/appellants, maliciously managed to transfer the shares of complainant's father in their own names; and that she was deprived of her right in inheritance and she was wrongfully kept out of the affairs of the company---In response to show-cause notice, appellants failed to provide the requisite information-Complainant had contended that appellants had made forged share transfer deeds and Iqrarnama after death of complainant's father in order to deprive the complainant of her share in inheritance---Appellants were benefiting from the company to the exclusion of other legal heirs and were denying the complainant her legal right in the property--complainant had been harassed and pressurized by the appellants to leave her share in the property---Registrar of Companies by its order de-registered Form A and Form 29--Impugned order passed by the Registrar was upheld to the extent of de-registering of Forms---Parties, however could approach the civil court for declaration as to the correctness or otherwise of the transfer deeds and the Iqrarnama-Order accordingly.

2002 SCMR 1821 ref.

Malik Imtinan Elahi present.

Muhammad Ejaz for the Appellant. Humera Ehsan for the Respondents.

Muhammad Musharraf Khan, Additional Registrar Departmental Representative.

2010 C L D 1237

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Husain, Commissioner (ID)

KHALID SURAJ BAJWA and 6 others---Appellants

Versus

EXECUTIVE DIRECTOR (CLD)---Respondent

Appeal No.19 of 2005, decided on 15th March, 2010.

Companies Ordinance (XLVII of 1984)---

---Ss. 245 & 476---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to submit quarterly account---Imposition of penalty---Appeal against---Company which under the provisions of S.245 of the Companies Ordinance, 1984 was required to prepare and transmit its quarterly accounts for relevant period having failed to transmit same within prescribed period, penalty of Rs.10,000 was imposed on each Director of the company for each default---Appellants/Directors were provided opportunity for hearing, but they failed to appear and the Executive Director of the Commission, proceeded to decide the case on merits and passed impugned order imposing penalty---Appellants failed to appear for the hearing even before Appellate Bench and their conduct was habitual---Contention of the appellants that they failed to comply with S.245 of the Companies Ordinance, 1984 on account of poor financial health of the company, was not tenable--Held, compliance with S.245 of the Companies Ordinance, 1984 was an obligation of the Directors of the company---Continuous default of S.245 of the Companies Ordinance, showed that default was wilful and deliberate---Executive Director of the Commission, in circumstances had rightly penalized the Directors who would pay the penalties from their own resources and not from the coffers of the company.

Nemo for the Appellants.

Sumera Siddiqui, Joint Director and Muhammad Akram, Deputy Director Departmental Representatives.

2010 C L D 1240

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Husain, Commissioner (LD)

ZEAL PAK CEMENT FACTORY LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT)-Respondent

Appeal No.37 of 2008, decided on 15th March, 2010.

Companies Ordinance (XLVII of 1984)---

----S. 231---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Inspection of books of accounts---Appeal against---Appeal had been filed against order of Executive Director of the Commission passed for inspection of books of account of the company---Maintainability---Impugned order was not issued to ascertain the swap ratio alone but had stated other grounds for carrying out inspection---Inspection under S.231(1) of Companies Ordinance, 1984 was merely a fact finding process and essentially an administrative order---No prejudice had been caused to the appellant as a consequence of the impugned order and the appeal was not maintainable in terms of S.33(1) of the Securities and Exchange Commission of Pakistan Act, 1997.

Shafiq Ahmad for the Appellant.

Ms. Amina Aziz, Joint Director (Enforcement) and Ms. Zohra Sarwar, Deputy Director (Enforcement) Departmental Representatives.

2010 C L D 1265

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Hussain, Commissioner (LD)

PLATINUM INSURANCE COMPANY LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE)-Respondent

Appeal No.11 of 2010, decided on 18th March, 2010.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 41 & 158---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Maintenance of reinsurance treaty arrangement with fake Insurance Corporation by the Insurance Company---Imposition of Penalty--Appeal against---During the inspection of the books of accounts and other record of the Insurance Company, it transpired that Company had maintained its reinsurance treaty arrangements with an Insurance Corporation of which no office existed--Appellant Company was proceeded against and vide impugned order penalty of Rs. one million was imposed upon the appellant-Validity---Appellant had failed to provide evidence of existence of said Insurance Corporation; and also failed to provide any documentation in support of its relationship with said Corporation---Appellant had also made false re-insurance documents in violation of S.158 of Insurance Ordinance, 2000---Appellant, in circumstances, was rightly imposed the maximum penalty---Re-insurance arrangements were one of the basic requirements of the registration of an insurance company and in absence of such an arrangement, no Insurance Company would be allowed to operate.

Atir Aqeel Ansari for the Appellant.

Ms. Nasreen Rashid, Executive Director for Respondent.

Tariq Hussain, Director and Muhammad Kashif Siddiqee, Joint Director for the Respondent Department.

2010 C L D 1268

[Securities and Exchange Commission of Pakistan]

Before Muhammad Sohail Dayala, Commissioner (SMD) and S. Tariq Asaf Husain, Commissioner (LD)

SHEHRYAR SAEED, CHAIRMAN/CEO and 6 others---Appellants

Versus

DIRECTOR (ENFORCEMENT) SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No.9 of 2006, decided on 14th January, 2010.

Companies Ordinance (XLVII of 1984)---

----S. 158---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to hold Annual General Meeting-Imposition of penalty---Appeal against-7., Appellant company which under S.158(1) of the Companies Ordinance, 1984 was required to hold its Annual General Meeting within specified period, having failed to hold said meeting, penalty of Rs.30,000 was imposed on each Director of the company---Contentions of the company were that non-holding of the meeting was due to non: finalization of the accounts for the relevant year by the auditors, which act was beyond the control of the company and its Directors; that the default if any being not wilful, the penalty could not have been imposed upon it-Validity---Law had provided four months from the close of financial year to hold Annual General Meeting which period was sufficient for that purpose---Directors of the company had failed to take necessary action against he auditors for failing to conduct audit for relevant year--Directors being responsible for the non-holding of Annual General Meeting within the stipulated period, penalty was rightly imposed---Company had previously failed to hold the meeting, for two consecutive years for which penalty was imposed on it.

Furkan Ali for the Appellant.

Tariq Bakhtawar, Director (Enforcement) for Respondent.

Shahzad Afzal Khan, Deputy Director (Enforcement) Departmental Representative.

2010 C L D 1519

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SMD)

In the matter of: KASB SECURITIES (PVT.) LTD.

Show-Cause-Notice No.1(01)KSE /MSW/SMD-South/2009 /07, dated 6th August, 2009 decided on 24th February, 2010.

Securities and Exchange Ordinance (XVII of 1969)---

---S. 22--Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Third Sched.-Buying and selling shares to generate commission income-Violation of Rules and Code of Conduct--Imposition of penalty-Company had bought 6,000,000 shares and sold the same on the very next day at the same rate-Company submitted clarification stating that trades in question were principally executed for the purposes of generating brokerage commission-Contention of the company was that shares in question were sold by the decision of Investment Committee-Company could not provide minutes of the meeting of the Committee and it was stated that all the decisions were made verbally-In absence of any documentary evidence from the company, which would have proved that the sale of the shares in question was made only on the basis to disinvest the shares and not to generate commission income-Contention of the company could not be accepted as a valid reason-By executing the trade in question with the prime objective of generating commission income, the company had violated Code of Conduct, set forth under Brokers and Agents Registration Rules, 2001 which had clearly prohibited the Members of Stock Exchanges to execute trades only for generating commission income-Company had influenced the opinion of the investors and had misled them Moreover, the trade in question interfered in the smooth and fair functioning of the stock market-Such was a failure on the part of the company to act with due care, skill and diligence in the conduct of its business violating the Code of Conduct as enshrined in the Brokers Rules-Company having violated S.22 of the Securities and Exchange Ordinance, 1969 and R.8 of Brokers and Agents Registration Rules, 2001, penalty of Rs.600,000 was imposed on the company with direction to the company to ensure that full compliance be made of all rules, regulations and directives of the Commission in future for avoiding any punitive action under the law.

Farrukh H. Sabzwari, Chief Executive Officer, Kamran Ansari, CFO and Company Secretary and Iqbal L. Bawaney, Legal Counsel Representing the KSAB Securities Limited.

Muhammad Atif Hameed, Deputy Director (SMD) Assisting the Director (SMD).

2010 C L D 1690

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Husain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

MUHAMMAD M. ISMAIL, CHAIRMAN and 7 others---Appellants

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT) ---Respondent

Appeal No.4 of 2010, decided on 30th April, 2010.

Companies Ordinance (XLVII of 1984)---

----S. 208---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33 Making investment in associated company and undertaking without special resolution-Imposition of fine---Appeal to Appellate Bench--company made an equity investment in its associated undertaking without approval of shareholders--Section 208 of the Companies Ordinance, 1984 required companies to make investments in associated companies only under the authority of a special resolution---Appellant could not be allowed to disregard the requirements of S.208 of the Companies Ordinance, 1984 on the plea that Board of Directors' resolution could substitute the special resolution---Management of the company had deprived the shareholders to exercise their legitimate right to make a decision to invest in its associated undertaking---Penalty, in circumstances, was rightly imposed on the company for not seeking prior approval in terms of S.208(1) of Companies Ordinance, 1984---Neither- the Board of Directors' approval nor the unanimous resolution passed in an Extraordinary General Meeting, could substitute the requirement of a special resolution prior to making the investment under S.208 of Companies Ordinance, 1984.

Shahbazuddin Chaudhry and others v. Service Industries Textiles Ltd. PLD 1988 Lah. 1 and Gharibwal Cement Ltd. v. SECP 2003 CLD 131 ref.

Asad Ali Shah and Ghulam Farooq for Appellants.

Amina Aziz Joint Director, Enforcement for Respondent.

2010 C L D 1716

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Husain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

M.A. JAMEEL, CHIEF EXECUTIVE ---Appellant

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT) ---Respondent

Appeal No.44 of 2007, decided on 18th March, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 226, 229, 473, 476 & 495---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33--Receiving or utilizing money received as security or deposit-Non-deposit of said amount in separate. account with Scheduled Bank---Imposition of penalty-Appeal against---On examination of the annual accounts for the relevant year of the company, it was found that the company acted in contravention of S.226 of the Companies Ordinance, 1984 as the security or the deposit of the stockist of its goods, was not kept in separate account with a Scheduled Bank---Directions issued under S.473 of the Companies Ordinance, 1984 thus were not complied with by the company---Executive Director of the Commission dissatisfied with the' response of the Chief Executive of the Company, vide impugned order imposed a fine of Rs.10,000 on him under S.495 of Companies Ordinance, 1984---Chief Executive of the Company was also directed to verify the outstanding balance of security deposits from the statutory auditors of the company and deposit the same in a separate account with a Scheduled Bank---Validity---Company was under an obligation to return the security deposits as and when demanded by the stockists of its goods-Company had failed to provide any evidence or its effort to find details of the security deposits inherited and had shown complete disregard of the requirements of the Companies Ordinance, 1984---In the present case, whether there was a contract in writing or not, all money received as security or deposit should have been kept in a special account with a Scheduled Bank--Appellant should have been penalized under S.229 of the Companies Ordinance, 1984, which was a special provision for violation of S.226 of said Ordinance as opposed to S.495 of the Ordinance, which was a general provision-Impugned order was modeled, in circumstances, to the extent of penalty imposed and maximum penalty of Rs.5000 was imposed under S.229 of the Companies Ordinance, 1984, accordingly.

Shafiq Ahmad for Appellant.

Ms. Amina Aziz, Joint Director and Ms. Zohra Sarwar, Deputy Director (Enforcement) for Respondents.

2010 C L D 1722

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Husain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

ALTAF HUSSAIN and 6 others---Appellants

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT)-Respondent

Appeal No.30 of 2008, decided on 14th January, 2010.

Companies Ordinance (XLVII of 1984)---

----S. 245---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to prepare and transmit quarterly accounts---Imposition of penalty---Appeal against---Company which under S.245(1) of Companies Ordinance was required to prepare and transmit its quarterly accounts for relevant period, having failed to submit said accounts with the Commission within prescribed time, penalty of Rs.5,000 on each Director of the company was imposed under S.245(3) of Ordinance---Representative of the company admitted the default, but had contended that default was consequence of delay in the finalization of annual accounts of the company---Validity---Section 245 of the Companies Ordinance, 1984 had clearly stated that every listed company would transmit its quarterly accounts, whether same were audited or not---Delay in submitting account could not be condoned due to the delay in finalization of annual account---Plea that the matter could not be heard and decided by the Appellate Bench as Liquidator had been appointed by the High Court, was not tenable as penalties were imposed on the Directors of the company and not on the company; and S.316 of the Companies Ordinance, 1984 did not bar proceedings against Directors who were acting as Chief Executive/Directors of the company---Directors would pay the penalties from their own resources and not from the coffers of the company---Order accordingly.

Nisar Ahmed and Abdul Hamad for the Appellants.

Ali Azeem Ikram, Director (Enforcement) and Haris Bin Tipu, Deputy Director, (Enforcement) for Departmental Representative.

2010 C L D 1725

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Husain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

SHEHRYAR SAEED, CHAIRMAN/CEO and 6 others---Appellants

Versus

DIRECTOR (ENFORCEMENT)---Respondent

Appeal No.8 of 2006, decided on 14th January, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 227, 229 & 476---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33-Failure to deposit amount of provident fund---Imposition of penalty---Appeal against---Examination of annual accounts of the company had shown that amount was payable to provident fund by the company which was not deposited by the company in accordance with law-Company and its Directors admitted the default, but had contended that as the company had been paying interest on the loan taken from the amount of provident fund value of the provident fund had not diminished in any manner--Director imposed penalty of Rs.5,000 on the company and each of the Directors thereof due to breach of mandatory requirements of S.227 of the Companies Ordinance, 1984-Validity---Objective of S.227 of the Companies Ordinance, 1984 was to secure the provident fund of the employees and to ensure that same was not depleted due to any exigency of the company--Directors of the company were under a duty to protect the provident fund---Violation of S.227 of the Companies Ordinance, 1984, should not have been left scot free merely on the ground that company was willing to pay the outstanding liability towards the provident fund---In the present case, loan had been disbursed to the company from the provident fund, which was blatant violation of S.227 of the Companies Ordinance, 1984---Penal provisions of S.229 of the Companies Ordinance, 1984, were rightly invoked by the Director, in circumstances.

2008 CLD 731, 2007 CLD 1667 and 2006 CLD 454 ref.

Furkan Ali for the Appellants.

Tariq Bakhtawar, Director (Enforcement) for Respondent.

Shahzad Afzal Khan, Deputy Director (Enforcement) Departmental Representative.

2010 CLD 1729

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Husain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

TAHIR A. KHAN---Appellant

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT)-Respondent

Appeal No.45 of 2007 , decided on 14th January, 2010.

Companies Ordinance (XLVII of 1984)---

---Ss. 208, 476 & 492---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Investment in associated company and undertaking without special resolution---Imposition of penalty---Appeal against---On examination of annual accounts for the relevant year of the company, it transpired that the company had made a total investment of Rs.24.1 million in its associated company---Said investment included equity investment of Rs.14.996 million - and advance against equity of Rs.9.103 million---Notes to the said accounts had revealed that shareholders of the company had approved investment of Rs.20 million---Executive Director, dissatisfied with the response of the company to show-cause notice penalty of Rs.75,000 each on the company and its Directors under S.208(3) of the Companies Ordinance, 1984---Validity----Section 208 of the Companies Ordinance, 1984 required that a special resolution be passed by the company before making investment in its associated company, which requirement of law was unequivocal and could not be avoided---In the present case the investment in associated company had been made in the form of equity and advance for equity, both of which fell within the definition of "investment"---Notification required all listed companies to disclose investment in associated companies while issuing notice for the general meeting---Approval for investment sought by the company was in respect of equity investment amounting to Rs.20 million---Investment made in the form of advance for equity amounting to Rs.9.103 million was not approved through special resolution as required by S.208 of the Companies Ordinance, 1984---Post facto approval of investment in associated company through a special resolution being not envisaged by Companies Ordinance, 1984, penalty was rightly imposed on the company.

Nisar Ahmad and Abdul Hamad for Appellant.

Ali Azeem Ikram, Director (Enforcement) and Haris Bin Tipu, Director (Enforcement) Departmental Representatives.

2010 C L D 1733

[Securities and Exchange Commission of Pakistan]

Before S. Tariq Asaf Husain, Commissioner (LD) and Muhammad Sohail Dayala, Commissioner (SMD)

PLATINUM INSURANCE COMPANY LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE) ---Respondent

Appeal No.9 of 2010, decided on 18th March, 2010.

Companies Ordinance (XLVII of 1984)---

---Ss. 231 & 492---Securities and Exchange Commission of Pakistan Act (X LIZ of 1997), S.33-Inspection of books of account--Misstatements and omissions in account--Imposition of penalty-Appeal against--On examination of Annual Audited Accounts of the appellant company, certain misstatements and omissions having been observed, appellant was proceeded against-and penalty was imposed on appellant--Validity--Appellant had presented falsely audited accounts to the Commission and had falsely stated that the accounts were audited, while same had not been audited-Appellant had indulged in fraudulent activity and was defrauding its stakeholders--Said violations constituted significant non-compliance of the law and same could not be considered mere oversight---Said misstatements and omissions were not just typographical errors, but intentional and in clear violation of the duties of the management of the appellant---Penalty imposed on appellant being insufficient, was enhanced and appellant should pay the maximum penalty of Rs.500,000 instead of Rs.100,000---Impugned order was modified accordingly.

Atir Aqeel Ansari for the Appellant.

Ms. Nasreen Rashid, Executive Director for the Respondent.

Tariq Hussain, Director and Muhammad Kashif Siddiqee, Joint Director for the Respondent Department.

2010 C L D 1757

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

BAWANYAIR PRODUCTS LIMITED.: In the matter of:

No.EMD/233/480/2002, dated 22nd February, 2010, decided on 22nd February, 2010.

Companies Ordinance (XLIX of 2001)---

----Ss. 246 & 476---Failure to submit additional statements of accounts and reports---Imposition of penalty---Examination of record of the Company showed that the company had failed to comply with the requirements of circular which required that the listed company would transmit to the Commission five copies of their published annual reports and accounts, of which one copy should be duly signed by the auditors as well as by the Chief Executive and a Director of the company---Company being a listed company had also failed to comply with the legal requirement of submission of copies each of English and Urdu newspapers in which the notice of Annual General Meeting was published within the stipulated time---In response to show-cause notice served upon the company, default was accepted by the company and it was assured that due care would be exercised in future---Default of the company had been established from the record and same was admitted, however, keeping in view the assurance of the company to observe the compliance of law in future, token penalty of Rs.5,000 each on the Chief Executive and the company Secretary/Financial Controller, was imposed.

2010 C L D 1770

[Securities and Exchange Commission of Pakistan]

Before Shaukat Hussain, Director (SMD)

In the matter of: SHOW-CAUSE NOTICES issued to Messrs DARSON SECURITIES (PVT.) LTD.

Show-Cause Notice No. SM / LSE-C / 38 / 2009, dated 29th April, 2010, decided on 8th September, 2010.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 5-A & 22(c)--Acting as agent of a company without registration---Complaint against---Securities and Exchange Commission of Pakistan, received complaint that respondent was dealing in securities as an agent under the corn party and was providing service to the public for purchase and sale of securities at Stock Exchange---Commission took notice of violation of S.5-A of Securities and Exchange Ordinance, 1969 and issued show-cause notices to the respondent and the company---Company, in reply to show-cause notice explained that it had never authorized any person to operate any branch office under its name and style---Respondent also denied allegations levelled against him in show-cause notice and he had stated that he was an Individual person not working as agent of any company and not indulged in any dealing of securities on behalf of investors/clients---On checking available record, it was found that accounts of the respondent with the Company were separate being on line client of the company---No other complaint had been filed by any investor and other persons against the respondent or company---Respondent, however, was warned and prohibited to effect dealings in any securities on behalf of investors/clients without having formal registration of Agentship with the Commission--company was also directed to observe strictly all rules and regulations and discharge its responsibilities with due care, skill and diligence.

Babar Mushtaq Khan for Respondent No.1.

Sajid Mahmood Naz for Respondent No.2.

Tahir Mahmood Kiani, Deputy Director and Asima Wajid, Deputy Director assisting the Director (ICW)

2010 C L D 1775

[Securities and Exchange Commission of Pakistan]

Before Asif Jalal Bhatti, Director (NBFCD)

In the matter of: NATOVER LEASE AND REFINANCE LTD., Show-Cause Notice No. SC/NBFC-1 / NLRL / 2009, dated 13th April, 2009, decided on 19th May, 2009.

Companies Ordinance (XLVII of 1984)---

----Ss. 282-I & 282-J---Financial irregularities, violations of prevailing regulatory framework and misappropriation of public funds by the company---Imposition of penalty---Security and Exchange Commission of Pakistan conducted site inspection of a Non-Banking Finance Company---Inspection report had revealed serious financial irregularities, violations of prevailing regulatory framework and misappropriation of public funds, committed by Chief Executive Officer of the company with connivance of the Board of Directors which had severely deteriorated the company's financial position---Show-cause notice was issued to the company to which its Administrator responded---Commission had observed that company did not apply for renewal of its leasing licence; that financial position of the company was extremely bleak; that company failed to maintain such books of account and other records as would depict true and fair picture of its state of affairs; that cash Inflows of the company were not sufficient to meet its monthly operating expenses and the company was unable to pay its liabilities of depositors/creditors, despite their repeated demands; and that all the efforts to rehabilitate the company had been infructuous and there was no prospect for revival of the company---All said facts were admitted by the Administrator of the Company---Commissioner passed order with the observation that the Board of Directors and Chief Executive Officer, had not shown any interest in the company and had not rebutted any of the allegations levelled against them in the show-cause notice--Commission in exercise of the powers under S.282-J(2) of the Companies Ordinance, 1984, cancelled licence issued to the company and as a result of cancellation of licence the operation of the company would cease and the court could be moved for winding up of the company.

2010 C L D 1856

[Securities and Exchange Commission of Pakistan]

Before Tahir Malunood, Commissioner (CLD) and S. Tariq Asaf Husain, Commissioner (LD)

ZAFAR IQBAL---Appellant

Versus

REGISTRAR OF COMPANIES, ISLAMABAD---Respondent

Appeal No.6 of 2007 decided on 19th October, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss. 15, 30 & 37---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Refusal to register proposed name of company---Appeal-Appellant applied to Companies Registration Office for availability of the name "Fraud Risk Investigation (Pvt.) Ltd." to his company-Registrar refused availability of the proposed name on the ground that said name was inappropriate and deceptive---Appeal filed against order of Registrar was dismissed by Executive Director (Registration) of the Commission holding that proposed name was inappropriate, deceptive and was in violation of S.37 of the Companies Ordinance, 1984---Validity---Proposed name clearly stated that appellant was a private company, there should be no confusion in the mind of general public, whether the investigation would be conducted by a private entity or a government agency-Mere fact that people would be misled due to lack of education or ignorance, would not mean that those who wanted to carry out legitimate activities under a particular name, should be prevented from doing so---Object of the appellant company stated in the memorandum of association was consistent with the laws of Pakistan---Departmental representative had failed to point out any provision barring private investigation in the commercial sector-Impugned order was set aside and Companies Registration Office, was directed to make available proposed name to the company and to register the memorandum and articles within 15 days.

Muhammad Habib Ullah Khan for the Appellant.

Muhammad Musharaf and Ahmad Muzammil, Additional Registrars for Respondent Department.

2010 C L D 1862

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and S. Tariq Asaf Husain, Commissioner (LD)

CAPITAL INSURANCE COMPANY LTD.---Appellant

Versus

SIALKOT INTERNATIONAL AIRPORT LTD.---Respondent

Appeal No.49 of 2009 decided on 14th October, 2010.

Insurance Ordinance (XXXIX of 2000)---

----Ss.118, 122 & 130---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Failure to perform work by contractor---Encashment of Performance Guarantee issued by Insurance company ---Complainant had moved the Federal Insurance Ombudsman against appellant/Insurance Company with the complaint that contractor who was awarded contract of external electrical work and for whom appellant Insurance Company had furnished a Performance Guarantee in favour of the complainant, had failed to perform his part of contract resulting in huge losses to complainant---Complainant in terms of performance Guarantee called upon appellant/company to encash the same for entire amount---Appellant contested the complaint on the ground that default was on the part of the complainant as it failed to make necessary arrangements for the work to start---Ombudsman directed the appellant company to encash the Performance Guarantee---Appeal filed against directions of the Ombudsman having been dismissed by Executive Director (Insurance) of the Commission through impugned judgment, appellant company had filed appeal under S.33 of Securities and Exchange Commission of Pakistan Act, 1997---Order of Ombudsman had attained finality after same was upheld in appeal before the Executive Director (Insurance) of the Commission---Legislature which promulgated the Insurance Ordinance, 2000 was fully aware of provisions of S.33 of Securities and Exchange Commission of Pakistan Act, 1997, order of the Insurance Ombudsman had attained finality, appeal filed by the appellant company was not maintainable---Appellant was directed to encash Performance Guarantee within 24 hours accordingly.

Asjad Saeed for the Appellant.

Ali Ibrahim for the Respondent.

Tariq Hussain, Director (Insurance), Departmental Representative.

2010 C L D 1866

[Security and Exchange Commission of Pakistan]

Before M. Asif Jalal Bhatti, Executive Director (SCD)

In the matter of: INNOVATIVE INVESTMENT BANK LTD.

Show-Cause Notice No.SC / NBFC-I / HBL / 2010 decided on 22nd September, 2010.

Companies Ordinance (XLVII of 1984)---

---Ss. 282-J, 282-L, 305 & 309---Amalgamation of companies-Failure to carry out business as per terms and conditions of amalgamation---Winding up of company--One of the companies was amalgamated into another and Securities and Exchange Commission after the approval of the scheme of amalgamation by majority of all the stakeholders i.e. shareholders, depositors and creditors, sanctioned the scheme of amalgamation subject to certain terms and conditions-During on-site inspection into the affairs of amalgamated company, gross financial irregularities and violation of the regulatory framework, were found which were to the effect that sponsors, Chief Executive and Board of Directors failed to comply with the main conditions of the amalgamation order and did not carry out operations of the company, which had endangered financial and commercial viability of the company which had led to the default in repayment of instalments of Rs.750 million to the depositors as per repayment schedule-Sponsors, Chief Executive and Board of Directors of the company, including the Chairman not only endangered the financial and commercial viability of the company, but also committed serious irregularities--Commission in view of such failure, in the best interest of the depositors, creditors and other stakeholders of the company, removed the Chairman and superseded the Board of Directors and appointed Administrator---Licences held by the company, were cancelled and it was directed that the operation of the company would cease; and that High Court would be moved for winding up of the company.

2010 C L D 15

[Supreme Court of Pakistan]

Present: Faqir Muhammad Khokhar, M. Jawed Buttar and Muhammad Qaim Jan Khan, JJ

PETROSIN CORPORATION LTD.---Appellant

Versus

OIL AND GAS DEVELOPMENT COMPANY LTD. through Managing Director-Respondent

Civil Appeals Nos.1241, and 1242 of 2007, decided on 24th September, 2008.

(On appeal from judgment dated 27-9-2006 of the Lahore High Court, Rawalpindi Bench, passed in Writ Petitions Nos.2055 and 2056 of 2006).

Constitution of Pakistan (1973)--

----Art.199---Constitutional petition---Maintainability---Contractual obligation---Vested right---Promissory estoppel, principle of--Applicability---Natural justice, principles of---Scope of applicability---Respondent Company invited tenders for setting up a project, appellants furnished performance guarantee equivalent to 10% of contract price but thereafter respondent called for fresh tenders---Plea raised by appellants was that intent to award a contract by itself was a complete contract enforceable at law and that the same operated as promissory estoppel against respondent Company---Validity---Final contract had not come into existence although certain steps towards the same had been taken by respondent Company---Principle of promissory estoppel or legitimate expectancy were not attracted in facts and circumstances of such cases--Mere letters of intent to award contract would not constitute a concluded contract---There might be cases in which a contract might involve number of documents including exchange of correspondence between parties in process of finalization of award of contract---Principle of natural justice was not attracted in absence of infringement of any vested rights of appellants---Bids of appellants had not been confirmed finally, therefore, contract could not be said to have been completed---Even the lowest bid would not confer an absolute title for award of a contract---In mega projects host of other considerations become relevant to avoid any unnecessary risk---General letter of intent merely implied an intention to enter into a contract and authority to contractor to start work before completion of contract in anticipation of signing of contract with a right to contractor for compensation of work, if any, he had already done---Letter of intent could not be treated to be synonymous to a completed contract---Bid of no other bidder had been accepted and respondent Company had decided quite justifiably to re-advertise tenders---Judgment passed by High Court in exercise of constitutional jurisdiction under Art.199 of the Constitution was correct to which no exception could be taken---Appeal was dismissed.

Ramna Engineering Pipelines v. Sui Gas Pipelines Limited 2004 SCMR 1274; British Steel Corporation v. Cleveland (1984) 1 A11.E.R. 504; Pakistan Industrial Development Corporation v. Aziz Qureshi PLD 1965 Kar.202; Maj (R) Ahmed Khan Bhatti v. Mst. Masooda Fatima PLD 1981 Kar.398; AIR 1933 P.V.29, Michael Richards Properties Ltd. v. Corporation of Wardens of St. Saviour's Parish (1975)3 All. E.R. 416, Messrs Hotel Summer Retreat, Nathiagali v. Government of N.-W.F.P. 1999 MLD 2418; Messrs Dadabhoy Investments (Pvt.) Limited, Karachi through Abdul Dadabhoy v. Federation of Pakistan through Secretary, Ministry of Finance PLD 1995 Kar:33; Messrs Poddar Steel Corporation v. Messrs Ganesh Engineering Works AIR 1991 SC 1579; British Steel Corp. v. Cleveland Bridge and Engineering Co. Ltd. (1984) 1 All E.R.504; Dresser Rand S.A. v. Messrs Bindal Agro Chem Ltd. AIR 2006 SC 871; Messrs Bagh Construction Company v. Federation of Pakistan 2001 YLR 2791; City Schools (Pvt.) Ltd. v. Privatization Commission, Government of Pakistan and others 2002 SCMR 1150; Lahore Cantonment Co-operative Housing Society Limited, Lahore Cantt. v. Dr. Nusrat Ullah Chaudhry PLD 2002 SC 1068; The Chandpur Mills Ltd. v. The District Magistrate, Tippera PLD 1958 SC 267; Messrs Momin Motor Company v. The Regional Transport Authority, Dacca PLD 1962 SC 1081 Messrs Padmavathi Constructions v. The A.P. Industrial Infrastructure Corporation Ltd. AIR 1997 A.P. 1; The Bihar Eastern Gangetic Fishermen Co-operative Society Ltd. v. Sipahi Singh and others AIR 1977 SC 2146; State of Gujarat v. Meghji Pethraj Shah (1994)3 S.C.C. 552; Moulvi Iqbal Haider v. Capital Development Authority PLD 2006 SC 394; Ittehad Cargo Services v. Syed Tasleem Hussain Nagvi PLD 2001 SC 116; Union of India v. Bhimsen Walaiti Ram AIR 1971 SC 2295 and Babu Parvez v. Settlement Commissioner 1974 SCMR 337 ref.

Abdul Hafeez Pirzada, Sr. Advocate Supreme Court, Mian Gul Hassan Aurangzeb, Advocate Supreme Court and Mehr Khan Malik, Advocate-on-Record for Appellant (in both cases).

Waseem Sajjad, Sr. Advocate Supreme Court and Ch. Akhter Ali, Advocate-on-Record for Respondents (in both cases).

Dates of hearing: 9th 10th, 12th, 17th, 23rd and 24th September, 2008.

2010 C L D 196

[Supreme Court of Pakistan]

Present: Mian Shakirullah Jan and Ch. Ijaz Ahmad, JJ

STANDARD CONSTRUCTION COMPANY (PVT.) LTD.---Petitioner

Versus

PAKISTAN through Secretary, M/O Communications, and others---Respondents

Civil Petition No.1668 of 2009, decided on 22nd October, 2009

(On appeal against the order dated 1-9-2009 passed by High Court of Sindh, Karachi in Suit No.857 of 2007).

(a) Bank guarantee---

--contents of ban guarantee--Scope-Bank guarantee, generally contain in its contents whereby guarantor undertakes to agree irrevocably and unconditionally to the payment to beneficiary-Amount mentioned in bank guarantee and demand of beneficiary is deemed to. be conclusive evidence and beneficiary is considered as sole judge to do so regarding failure of principal to have not complied with or fulfilled requirements of brief/ agreement --There are certain guarantees, which in their contents without mentioning the demand as conclusive evidence or beneficiary to be the sole judge, prescribe certain eventualities on happening whereof beneficiary is entitled to demand encashment of guarantee.

(b) Arbitration Act (X of 1940)---

---Ss.20 & 41---Arbitration---Referring dispute to arbitrator ---Stay of encashing of bank guarantees---Dispute between the parties was with regard to encashing of three bank guarantees provided by appellant to respondent authorities--High Court while referring matter to arbitrator, had gone deep and discussed minutely various clauses, terms and conditions of agreement and other relevant documents and their effect for arriving at its conclusion---Appellant sought stay against encahhing of three bank guarantees--Validity---After referring dispute to arbitrator it was not appropriate and uncalled for High Court to discuss the agreement as such findings of High Court would influence proceedings before Arbitrator--Supreme Court, while disproving such observations of High Court, declined to either affirm or not affirm findings of High Court with comments on merits of the case---Without interpreting terms of agreement, definite conclusion would not be possible as to whether conditions as required for encashing of bank guarantees had been fulfilled or not and by not doing so Supreme Court left it to arbitrator to deal with question of encashment of two guarantees relating to Toll collection according to law while making an award--Supreme Court partly allowed the appeal by holding that authorities were entitled to encashment of pre-bid bank guarantee and restrained them from encashment of other two bank guarantees till the finding given by arbitrator in that respect---Appeal was allowed.

Bilal A. Khawaja, Advocate Supreme Court and Mehr Khan Malik, Advocate-on-Record for Petitioner.

Hafiz S. A. Rehman, Senior Advocate Supreme Court, Barrister Ahmed Ata-ur-Rehman, Advocate Supreme Court along with Col. Muhammad Azeem, Departmental Representative, N.H.A. for Respondents.

Date of hearing: 21st October, 2009.

2010 C L D 585

[Supreme Court of Pakistan]

Present: Jawwad S. Khawaja, Anwar Zaheer Jamali and Khilji Arif Hussain, JJ

Messrs VICTOR ELECTRONICS APPLIANCES INDUSTRIES (PVT.) LTD.-Appellant

Versus

HABIB BANK LIMITED and others---Respondents

Civil Appeal No.1478 of 2007 decided on 4th February, 2010.

[On appeal from the judgment dated 20-12-2006 of the High Court of Sindh, Karachi passed in HCA No.115 of 2005].

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---S.9.--Civil Procedure Code (V of 1908), S.10--Suit for recovery of money by customer against Bank on basis of Letter of Credit---Filing of such suit under ordinary law and passing of decree in favour of plaint},ff by civil Court - Filing of appeal against such decree by Bank---Return of plaint to Banking Court by Appellate Court on plaintiffs statement conceding jurisdiction of Banking Court in the matter---Plea of plaintiff before Supreme Court that jurisdiction of a court could be created through a concession or an agreement between parties---Validity---Contents of plaint showed that plaintiff had availed financial facilities advanced by Bank including a facility for establishing Letters of Credit-Cause of action alleged in the plaint to have arisen to plaintiff on account of failure of Bank to establish a Letter of Credit within agreed time frame---Letter of Credit was included in definition of 'finance'' given in Financial Institutions (Recovery of Finances) Ordinance, 2001-Relationship between parties was that of customer and Banker-According to provisions of S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and such concession of plaintiff recorded in impugned judgment, only Banking Court had the jurisdiction in the case---Supreme Court repelled the plea of plaintiff and dismissed appeal filed by him.

(b) Jurisdiction---

---Jurisdiction of a court cannot be created through agreement between parties.

Saalim Saleem Ansari, Advocate Supreme Court and A.S.K. Ghori Advocate-on-Record for the Appellants.

Iqbal Haider Sr. Advocate Supreme Court and K.A. Wahab Advocate-on-Record for the Respondents.

2010 C L D 774

[Supreme Court of Pakistan]

Present Jawwad S. Khawaja and Khilji Arif Hussain, JJ

ATTOCK REFINERY Ltd.---Petitioner

Versus

EXECUTIVE DIRECTOR, ENFORCEMENT AND MONITORING DIVISION, S.E.C.P. and another---Respondent

Civil Petition No.111 of 2009, decided on 2lst April, 2010.

Companies Ordinance (XLVII of 1984)---

----Ss.265(b) & 485(1}--Constitution of Pakistan (1973), Art.185(3) --Order of Security Exchange Commission appointing a firm of Chartered Accountants to investigate affairs of Company---Appeal against such order dismissed on basis of proviso to S.485 (1) of Companies Ordinance, 1984---Plea of Company was that such appointment would affect its reputation---Validity---Investigation would remain pending till making of report by investigator---Conduct of investigation was part of case pending with Security Exchange Commission for investigating affairs of Company-Mere appointment of an investigator would not "dispose of the entire case"--Object of proviso to S.485(1) of ordinance, 1984 was to avoid fragmentary decision and ensure non-occurrence of delay to hamper regulatory role of Commission---Security Exchange Commission had passed such order after due consideration of all circumstances--Company through dilatory tactics had frustrated investigation of its affairs for past nine (9) years--Company itself should have no reluctance in joining investigation, if could explain and answer significant and well-founded question raised by the Commission---Such plea could hardly be a ground for rendering redundant provisions of S.265 of Companies Ordinance, 1984--Supreme Court declined to grant leave to appeal in circumstances.

Ali Sibtain Fazli, Advocate Supreme Court for Petitioner.

Afnan Karim Kundi, Advocate-Supreme Court for Respondents.

Date of hearing: 21st April, 2010.

2010 C L D 974

[Supreme Court]

Present: Tassaduq Hussain Jillani and Asif Saeed Khan Khosa, JJ

Messrs KOHINOOR LOOMS LTD.---Petitioner

Versus

MCB BANK LTD.---Respondent

Civil Petition No.145-L and C.M.A. 62-L of 2010, decided on 3rd March, 2010.

(On appeal against the order dated 4-1-2010 passed by Lahore High Court, Lahore in E.F.A. No.3 of 2010).

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 22(6)---Constitution of Pakistan (1973), Art. 185(3)-Counsel for the petitioner had contended that High Court was not justified in holding that order passed by Banking Judge was not appealable and that reserved price of the property as fixed by the High Court was presumptuous and not in accord with its market value---Leave to appeal was granted by Supreme Court to consider said issues and any other issue which could arise.

Pakistan Industrial Credit and Investment Corporation Limited and other v. Government of Pakistan 2002 CLD 1 ref.

Sajid Mehmood Sheikh, Advocate Supreme Court for the Petitioner.

Nemo for Respondent.