PLJ 2008
Present: Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ.
M. KHURRAM MUGGO--Appellant
versus
PARVEEN HAMEED MUGGO and 3 others--Respondents
R.F.A. No. 392 of 2006, heard on 10.4.2007.
Civil Procedure Code, 1908 (V of 1908)—
----O. VII, R. 11--Cause of action--While considering the question--It is only the averments of plaint which should be deemed as correct and must be taken into account no data no material provided by defence should be looked into while rejecting plaint on the premise, of non-disclosure the cause of action. [P. 33] A
Cause of Action--
----It could be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. [P. 33] B
Limitation Act, 1908 (IX of 1908)—
----Art. 120--Barred by time--Agreement for transfer of shareholding admittedly was executed in the year 1992--Appellant has failed to challenge the agreement within time even if maximum period is provided to him under the residuary Art. 120 of Limitation Act, which envisages six years from the date of the accrual of the cause of action--In plaint if respondents ever accepted the appellant's right to shares and therefore, he got the cause of action from the date of denial, which falls within the requisite period--Held: On account of the suit being barred by time, the plaint is also liable to be rejected.
[P. 38] F
Pleadings--
----Parties to a lis cannot prove their case beyond the scope of their pleadings, foundation of the facts whereupon structure of proof has to be built must be laid down in the pleadings, if the necessary foundation of the facts is lacking in pleadings--Evidence is brought on the record, shall be ignored by the Court--Appeal dismissed. [P. 34] C
Rendition of Account--
----Scope of seeking--Defendant must be an accounting party and on account of their legal relationship, the defendant is obliged to render the account. [P. 37] E
Specific Relief Act, 1877 ( I of 1877)—
----S. 42--Scope of--Concept of custody--Legal character of a person--Concept of custody cannot be equated with entitlement and right to any property which is a condition for grant of declaration within the purview of S. 42 of Specific Relief Act--Such also has nothing to do with legal character of a person. [P. 37] D
PLD 1970 SC 63; 1991 SCMR 2030; PLD 1959 SC 356; 2006 SCMR 489 and AIR 1942 Privy Council 13 ref.
Mr. Ali Sibtain Fazli, Advocate for Appellant.
Mr. Zaeem-ul-Farooq Malik, Advocate for Respondents No. 1 and 2.
Mr. Agha Abu-ul-Hassan Arif, Advocate for Respondents No. 3(i) & (ii).
Mr. Salman Akram Raja and Kh. Nasir Maqsood, Advocates for Respondent No. 4.
Date of hearing: 10.4.2007.
Judgment
Mian Saqib Nisar, J.--Through the impugned order dated 2.5.2006, the plaint of the suit for the declaration and permanent injunction brought by the appellant against the respondents has been rejected by the learned trial Court, by applying the provisions of Order 7 Rule 11 CPC. Hence this appeal.
2. Briefly stated that facts of the case are that Mian Abdul Hameed Muggo, the predecessor-in-interest of the appellant and Respondents Nos. 1 to 3, and his brother Mian Hanif Muggo were, inter alia, the promoters and the first directors of M/S United Industries (Pvt.) Limited/Respondent No. 4, a company duly incorporated under the law; both had 37.5% of shareholding in the company. The present dispute is between the appellant, who is the son of Mian Abdul Hameed Muggo, and Respondent No. 2, his mother (widow of Mr. Mugoo), Respondent No. 3, his sister, while Respondent No. 3(i) & (ii) are the legal heirs of his other deceased sister.
3. The factual backdrop of the case is that in the year 1973, the aforesaid company was nationalized, and for the purposes of compensation payable to the shareholders, the value of its shares was assessed by the Government on 11.11.1976 as Rs. 23.586 per share. It may be pertinent to state here that before the above, Mian Abdul Hameed Muggo had died on 5.5.1976, therefore, the amount was paid to his L.Rs in the nature of a compensation bond for which they duly obtained a succession certificate; it is not the case of the appellant/plaintiff that out of the above, his share was not paid to or received by him.
4. In 1992, according to the policy of the Government of Pakistan, the company was denationalized and option was given to the shareholders of the company from whom it was taken over, to purchase the shares. Accordingly, a sale agreement dated 21.5.1992 was executed between Ghee Corporation of Pakistan (Pvt.) Limited through the Privatization Commission and Akbar, Muggo, the son of Mian Hanif Muggo, who acted as a representative for and on behalf of the other members of the Muggo family, who were interested to exercise the option. It is mentioned in Paragraph No. 8 of the plaintiff that "all the family members of Mian Hanif Muggo became the share holders and Director of the Company/Defendant No. 4 but quite unfortunately out of the legal heirs of deceased Abdul Hameed Muggo only his widow/Defendant No. 1 was co-opted as Director and shareholder. Thereafter the Defendant No. 2 succeeded in becoming share holder on 24.5.1992 and then a Director on 31.12.1995 to unlawful exclusion of plaintiff and Defendant No. 3." It is further stated that "being one of the legal heirs of deceased Abdul Hameed Muggo, the plaintiff was also entitled to the share holding upon the privatization of Defendant No. 4. Instead of rendering accounts and making settlement of the same the Defendant No. 1 being mother, who has not only fiduciary relationship with the plaintiff but also a dominant position as the plaintiff was unwell at the relevant time, acted as all in all and deprived the plaintiff of his due entitlement of share holding." In Paragraph No. 9, it is mentioned that "the plaintiff also approached Defendant No. 4 to consider being a lawful legal heir of deceased Abdul Hameed Muggo share holder to the extent of lawful share in Sharia as the Defendant No. 1 was just a Custodian of the interest of all the legal heirs." Furthermore, in Paragraph No. 10, it is stated "that the Defendant No. 1 was only a Custodian who could exercise rights only to the extent of her share in Sharia. She was liable to purchase the share holding in the name of all the legal heirs of deceased Abdul Hameed Muggo as per their respective share in Sharia as the share holding had started prior to nationalization and subsequently after privatization when the ex-share holders were given preference to repurchase the unit." In Paragraph No. 14, which pertains to the cause of action, it is the appellant's case that the cause of action firstly accrued to him on 9.2.1978 when his father died; secondly in the year 1992 when Defendant No. 1 was co-opted as shareholder/Director of Defendant No. 4; thirdly when Defendant No. 2 became shareholder/Director of Defendant No. 4 in the year 1995; fourthly when out of the dividends and benefits of the company, Defendants No. 1 and 2 had purchased the Property No. 46-C, DHA and some agricultural land and lastly on 5.1.2006 when the plaintiff requested Defendant No. 4 (company) not to issue any dividends and profits to Defendants No. 1 and 2 over and above their actual entitlement under the Sharia. According to the relief clause, a declaration is being sought that Defendant No. 4 (company) is under a legal obligation to take necessary steps for the issuance of 14/32 share devolved upon the appellant on account of his inheritance upon the death of his predecessor; and a decree for the rendition of account against Defendants No. 1 and 2 to render the accounts of assets mentioned in Para No. 4 to 8 left by the deceased Mian Abdul Hameed Muggo. It was further claimed that Defendants No. 1 and 2 be directed to share the ownership benefits of Property No. 46-C, DHA Lahore and the agricultural land and mesne profit of the immovable property. In the end, the appellant sought the permanent injunction restraining the company from issuing or delivering the Share Certificates, dividends or benefits to Defendants No. 1 and 2 and he also asked for a decree in his favour of Rs. 70 Million as a due share.
5. The defendants contested the matter, filed the written statement and also moved an application under Order 7 Rule 11 CPC seeking the rejection of the plaint on the ground that it does not disclose a cause of action on the basis of the facts as set out in the plaint. The said application has been accepted by the learned Civil Judge vide impugned order dated 2.5.2006 and has rejected the plaint in terms of Order 7 Rule 1 CPC. Hence this appeal.
6. Learned counsel for the appellant has argued that according to the contents of Paragraphs No. 4 to 8, it is established that the appellant was a co-sharer in the estate left by his deceased father and was accordingly seeking the enforcement of his right; when United Industries (Pvt.) Limited was denationalized, the appellant was entitled to the transfer/re-purchase of the same amount of shares in the company, which he would have inherited according to the Sharia, but he
has been deprived in this behalf; the mother of the appellant, who was the Incharge of the affairs as a custodian, had re-purchased all the shares in her favour and also in favour of Defendant No. 2 by illegally excluding the appellant; specifically referring to the contents of the plaint, which have been produced above, it is vehemently argued that the plaint does disclose a cause of action and it is settled law that while considering the above question, it is only the averments of the plaint, which should be deemed as correct and must be taken into account, and no data or material provided by the defence should be looked into, while rejecting the plaint on the premise of non-disclosure of the cause of action. Lastly, it is submitted that all the facts mentioned in the plaint were controverted by respondents in their written statement and, therefore, it is a factual discord between the parties, which can only be determined after the framing of the issues and providing them opportunity of leading their evidence.
A
7. We have heard the learned counsel for the parties. Before proceeding to examine the validity and the legality of the impugned order, we deem it expedient to briefly state as to what the term "cause of action" means and what are the broad principles which must be kept into view by the Court for the rejection of the plaint on that account. The expression "cause of action" has been compendiously defined to mean every fact, which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not compromise every piece of evidence, which is necessary to prove each fact but every fact which is necessary to be proved. It means action for which the defendant is answerable to the Court; everything which if not proved would give the defendant a right to an immediate judgments, must be part of cause of action. In support of the above, reference can be made to Muhammad Khalil Khan and others vs. Mahbub Ali Mian and others (AIR 1949 Privy Council 78). According to the judgment reported as Abdul Hakim and 2 others vs. Saadullah Khan and 2 others (PLD 1970 SC 63), the term "cause of action" refers to every fact which if traversed, it should be necessary for the plaintiff to prove in order to support his right to judgment and if not proved gives the defendant a right to judgment. In Haji Mitha Khan vs. Muhammad Younas and 2 others (1991 SCMR 2030), it is held "it means the whole of the material facts which it is necessary for the plaintiff to allege and prove in order to succeed"; as per the judgment reported as Said and others vs. Fazal Hussain and others (PLD 1959 SC 356), it means the totality of essential facts, which it is necessary for the plaintiff to prove before he can succeed. In Abdul Waheed Vs. Mst. Ramzanu and others (2006 SCMR 489), which has been cited by the appellant's counsel, it has been laid down "it is also a settled principle of law that plaint can only be rejected when the averments made therein if accepted in mode and form, do not entitle him to a relief. Provisions of Order VII, Rule 11, CPC could be
B
invoked if there was no room for any other possible approach to the case and no triable issue was made out in case or suit was clearly hit by any mandatory provisions of law justifying rejection of plaint." It has also been held "As mentioned above, for the purpose of determination whether plaint discloses a cause of action or not, Court has to presume that ever averment made in the plaint is true, therefore, power to reject the plaint under Order VII Rule 11 must be exercised only if the Court comes to the conclusion that even if all the allegations are proved, the plaintiff would not be entitled to any relief whatsoever." The above dictum substantially answers the second part of the proposition under discussion as well; however we may add that the Court may also take into account certain admitted or uncontroverted material placed on the record by the defendant, the genuineness and the veracity of which is beyond doubt and by looking whereupon, the Court comes to the conclusion that to continue with the suit shall be a futile exercise and/or the case has been filed by the plaintiff with manifest dishonestly of purpose, oblique object, to retain or claim the benefits of such gain which the plaintiff is not entitled to, and to simply cause prejudice and harassment to the defendant of the case.
8. Having settled the above criteria for the determination of the disclosure of the "cause of action" and also by reiterating the settled statement of law, (1) that the parties to a lis cannot prove their case beyond the scope of their pleadings, (2) it is essential and mandatory that the foundation of the facts whereupon the structure of proof has to be built must be laid down in the pleadings, (3) and this is specially required from the plaintiff of the case who has brought the machinery of the Court into motion to do so, (4) if the necessary foundation of the facts is lacking in the pleadings, the structure beyond it, even if attempted to be raised and the evidence in this behalf is brought on the record, it shall be ignored by the Court.
We proceed to examine the case of the appellant, which in nutshell is; (A) that the assets left by his father as his estate is the compensation bond, which was issued by the Govt. of Pakistan on account of the compulsory acquisition of his share holding in the said company (see para 4 of the plaint); (B) the legal heirs received the succession certificate of the deceased's tangible asset (see para 5 of the plaint), but it is not his case that he did not receive his share out of the compensation bond and that the property Bearing No. 60-61 FCC Gulberg Lahore, for which the appellant executed the power of attorney in his mother's favour is the estate left by his father, he in the plaint has not even raised any claim on this basis; (C) in para 7, it is mentioned that on account of the privatization policy, it was stipulated that the ex-owners, who are interested to purchase the nationalized units shall be given preference over the others, the appellant thus was entitled to participate in the purchase of the unit and the right of first refusal. Quite conspicuously in continuity of the above, it is not mentioned, if the appellant exercised the above option; he ever contributed any money for the purchase of these shares, or any money belonging to him which was available with any of the defendants has been utilized for the purchase of the shares, with the agreement or the understanding that the shareholding so acquired shall be held for and on behalf of the appellant; (D) there is another important aspect of the case, in the plaint it is averred that for the transfer of the shares an agreement dated 21.5.1992 was executed between the concerned parties, the appellant is admittedly not a party to the above, claims to have been deprived on account of this agreement, but has not challenged it at any point of time, even not through this suit; it has not been assailed on any ground whatsoever; the only grouse set out by the appellant is that he was unlawfully excluded from the above transaction (see para 8 of the plaint) and this exclusion seems to be rested on the appellant's right of inheritance under the Sharia. Obviously, he was entitled to the above right but only regarding the estate of this father, which at the relevant time was the compensation bond and it is not the case of the appellant that he did not receive his due share from the said amount. The option to purchase the share of the denationalized units was never the estate of the deceased Mr. Muggo, but a choice given to his L.Rs for buying the shares which he could have bought, had he been alive; there is not a single word in the plaint that the appellant ever exercised that option and contributed the money to the extent of the shares, which he could have been; it is also not his case that shares original acquired by the mother were "Benami" or as a trustee for the appellant. Therefore, the assertion of the plaint of unlawful exclusion is a bald and baseless allegation, without giving any rise to a cause of action in favour of the appellant.
9. In sub-para 8 of the plaint, the appellant has set forth the "basis" of his case and the cause of action i.e. though he was entitled to the share holding of the unit, but "instead of rendering accounts and making settlement of the same, the Defendant No. 1, being mother, who has not only fiduciary relationship with the plaintiff but also a dominate position as the plaintiff was unwell at the relevant time, acted as all in all and deprived the plaintiff of his due entitlement of share holding".
Therefore, it is to be examined; if the plaintiff is entitled to seek any rendition of account from the respondents when it is not his case that out of the estate left by his father, he has not received his due share, which was withheld by the respondents and thus, they are the "accounting party" which is condition "sine qua non" for the cause of action regarding the suit of such a nature.
10. In the same para i.e. No. 8, the appellant has vaguely taken up the plea that out of the proceeds of the "assets mentioned ante"; obviously by this he means the amount of the compensation bond, as according to the plaint this was the only asset left by Mr. Abdul Hameed Muggo, regarding which he does not claim that he has not received his share; his assertion that the properties such as a house Bearing No. 46-C in DHA, Lahore and agricultural land has been acquired by the respondents on account of any proceeds or the dividends, is baseless; because as mentioned above, the appellant has not established any right to the shareholding, therefore, how does he has any right in any property even if acquired through the dividends of such shares.
11. Again Para No. 9, which at the best can be said to be relevant for the purpose of determining the cause of action, the case of the appellant is that he has approached the defendants "to settle the accounts and administer the property left by the predecessor-in-interest. The plaintiff also approached Defendant No. 4 (the company) to consider being a lawful legal heir of deceased Abdul Hameed Muggo share holder to the extent of lawful share in Sharia as the Defendant No. 1 was just a custodian of the interest of all the legal heirs. "But it is not explained that on what basis, he claims right about any share in the disputed shareholding, when it has never formed part of the estate of his father and especially when in the plaint, it is not admitted/conceded that the amount of compensation bond was the only asset left by his father, which the appellant never alleged not to have received.
12. In the light of above discourse, the questions which needs answer are:--
1. Whether on account of the privatization, the appellant was entitled to the transfer of share holding of the United Gee Mills Ltd. (the company) in his favour according to his share under the Sharia and has been unlawfully excluded.
The answer is no, because the shareholding was not the estate of the deceased and the appellant never exercised his right of option as mentioned above.
2. Whether the defendant/Respondent No. 1, has held any share holding of the company as a custodian on behalf of the appellant.
The reply is in the negative for the reason that the custody of a property cannot be equated with the title and ownership thereof.
3. Whether in the facts and circumstances of the case, the appellant is entitled to seek the rendition of accounts from the respondents.
4. Whether on account of their shareholding in the company, if any profit etc. have accrued to the respondents, which they have further used in buying the immovable properties and the appellant has any entitlement and rights in such properties.
13. The answer the above Questions Nos. 1 and 2, as has been thoroughly dilated, the appellant though was entitled to opt for the purchase of the shares of the Company, but he has neither asserted in the plaint nor there is any proof on the record that he had exercised such option. The agreement regarding the transfer of the shares was made between the Privatization Commission and Akbar Muggo in the year 1992 and till the filing of the suit, the appellant has never raised any grievance; the said agreement has never been challenged. The appellant does not claim that the money used for the purchase of the shares in favour of Respondent No. 1/mother is out of his share of the compensation bond. It is also not his case that he contributed any money independently, which was paid to his mother etc. for the purposes of buying the shares. It is also not his case that Respondent No. 1 was holding the shares as `Benamidar' or Trustee for him. The concept of custody cannot be equated with the entitlement and right to any property, which is a condition for the grant of the declaration within the purview of Section 42 of the Specific Relief Act, this also has nothing to do with the legal character of a person.
D
14. As regards the Question No. 3, for the purposes of seeking the rendition of account, it is essential that the defendant must be an "accounting party" and on account of their legal relationship, the defendant is obliged to render the account. Again neither this relationship has been asserted in the plaint nor established on the record. From the entire facts mentioned in the plaint, the appellant has failed to show that the respondents were/are, in any way, accountable to him. As mentioned earlier, he has not been able to aver that any money out of the compensation bond was retained by Respondent No. 1/ mother, who had utilized this for buying the shares or that any money was paid to the mother independently which was used in that regard.
E
15. So far as Question No. 4 is concerned, when the appellant was not even the shareholder of the company and it is not established if the shares transferred in favour of the respondents are illegal and unlawful, therefore, simply asserting on the baseless grounds his right to the shareholding, the appellant cannot claim any right to the profits, dividends or any benefits, which have been gained by the defendants from the said shareholding. It is also unfounded to assert that the appellant has any entitlement to any moveable or immovable properties created by the respondents on the basis of any profits occurring from such shareholding, therefore, he again cannot seek the declaration of the ownership of any such property vaguely mentioned in the plaint.
16. Before summing up, we are also inclined to reject the plaint as being barred by time. The agreement for the transfer of shareholding, admittedly was executed in the year 1992; the appellant has failed to challenge the agreement within time even if maximum period is provided to him under the residuary Article 120 of the Limitation Act, which envisages six years from the date of the accrual of the cause of action. It is not stated in the plaint if the respondents ever accepted the appellant's right to the shares and, therefore, he got the cause of action from the date of denial, which falls within the requisite period. We are also not convinced to agree that the alleged cause of action in favour of the appellant is recurring one and has accrued to him as averred in the plaint. Therefore, on account of the suit being barred by time, the plaint is also liable to be rejected, which is hereby rejected for this reason as well. The judgment cited by the learned counsel for the appellant reported as Bhuru Mal vs. Jagannath and others (A.I.R. 1942 Privy Council 13) has no application to the facts and circumstances of this case. Article 127 of the Limitation Act, which has been considered in the aforesaid judgment, provides for a suit by a person who has been excluded from the joint family property to enforce his right to the share therein. As has been held above, the appellant has not been able to even establish on the basis of the averments of the plaint that he has any right in the shares of the company or any other assets referred to in the plaint, which could be said to be a joint family property, from which he has been excluded. Therefore, the said article has no application to this case. Besides, the period of 12 years is to be reckoned from the date when the exclusion became known to the plaintiff. In the instant case, the agreement of the transfer of the shares by the Government of Pakistan Privatization Commission was executed on 21.5.1992 and it is not the case of the appellant that he was unaware of the same, thus, the present suit brought by him on 6.2.2006 is undoubtedly beyond the time provided by the said article.
In the light of above, this appeal has no merits and is hereby dismissed.
(M.S.A.) Appeal dismissed.