Wafaqi Mohtasib awarding damages of Plaintiff

 PLJ 1999 Karachi 587

Present: RAStfEED A. RAZVI, J. SHIFAATULLAH QURESHI-Plaintiff

Versus

FEDERATION OF PAKISTAN through SECRETARY/CHAIRMAN,

'RAILWAYS, MINISTRY OF RAILWAYS (RAILWAY BOARD),

ISLAMABAD-

Defendant Suit No. 192 of 1992, decided on 20.3.1998.

 Limitation Act, 1908--

—-S. 14 Arts. 56 & 115-Limitation~Question of--Plaintiff after dismissal of his claim for recovery of amount of damage by defendant, instead of filing suit approached Wafaqai Mohtasib who accepting claim of plaintiff directed defendant to pay amount of damage to plaintiff-President of Pakistan, on appeal, set aside order of Wafaqi Mohtasib-Plaintiff filed suit for damages and permanent injunction after about 3 years and 10 months from dismissal of his claim by defendants-Plaintiff claimed that period spent in proceeding before Wafaqi Mohtasib should have been excluded-Held :~Period consumed during proceedings before Wafaqi Mohtasib or before President of Pakistan could not be excluded as provided under S. 14 of Limitation Act, 1908, because proceedings before Wafaqi Mohtasib and President of Pakistan did not constitute "civil proceedings"--In absence of any legal disability of plaintiff for not brining suit within time, suit was dismissed being barred by time.

[P. 593 & 595] A, B & C

Mr. Abdul Haleem Pirzada and Ghulam Gkous, Advocates for Plaintiff.

Mr. Akhlaq Ahmed Siddiqui, Advocate for Defendants. Dates of hearing: 10.12.1997 and 24.2.1998.

JUDGMENT                                                           

This is a suit for recovery of Rs. 8,69,000 for the work done by plaintiff for construction of Officers Flats at Karachi Cantt. Station and for damages for Rs. 38,69,000.

2.               The case of the plaintiff is that he is an approved Government contractor and registered with Pakistan Railways as an "A" class contractor; that on 14 10.1985, Defendant No. 2 invited offers for the construction of four units Officers Flats in staff quarters; that the quotations submitted by the plaintiff, being the lowest, were accepted on 2.1.1986; that the Plaintiff started construction work which was required to be completed by 2.8.1987; that due to shortage of funds with the defendants, the functionaries of Pakistan Railways directed the plaintiff to slow down the pace of construction work as they were awaiting re-appropriation of budgetary grant; that the plaintiff continued with the work but in a slow manner and submitted running bills with the Defendant No. 2; that in the early 1988, thedefendant refused to pay the bills of the plaintiff as a result of which several         J5t communications were addressed; that finally on 24.5.1988, the claim of the plaintiff was dismissed by the Defendant No. 2.

3.    It is further the case of the plaintiff that after refusal of the defendants to make the payments, he approached Wafaqi Mohtasib who, after detailed hearing, passed order, dated 31.12.1990 directing the defendant to pay Rs. 8,69,900 against which Defendant No. 2 preferred a review application, which was also dismissed vide order, dated 23.4.1991. Thereafter, an appeal was filed by the defendants under Article 32 of the Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983 (hereinafter referred as Order 1983) which was accepted by the President and the recommendation of Wafaqi Mohtasib was set aside. This fact was intimated to the plaintiff vide letter, dated 27.2.1992 by the Ministry of Law, Justice and Parliamentary. Affairs, Government of Pakistan, Islamabad. Being aggrieved with the order of the President, the plaintiff filed the instant suit praying for the following reliefs:-

"(a) Restraining the defendants, their servants, employees, attorney/ies and/or any other person or person claiming on their behalf or through them, from withdrawing the amount of Rs. 8,69,000 from the Muslim Commercial Bank, Maisam Plaza Branch, Gulshan-e-Iqbal, Block No. 3, Karachi.

(b) Directing the defendants to pay jointly/severally, an amount of Rs. 38,69,000 to the plaintiff on account of the actual claim, losses, damages sustained by the plaintiff.

(0

(d)

4. The defendants filed their joint statement denying the right of the plaintiff to claim the suit amount and other allegations of the plaint. Legal objections were also raised to the maintainability of the suit on the ground, inter alia, that the suit is barred under Article 29 of the Ombudsman Order, 1983. As a result of the above pleadings, on 27.9.1992, following issues were adopted with the consent of the parties:-

"(1) Whether the defendant by pressing urgency for completion of the subject Contract within twelve months, vide letter, dated 2.1.1P86 (at Annexure "P. 1 to the plaint) caused the plaintiff to deploy his entire resources at the site ?

(2)              Whether  the  functionaries  of the  defendants  directed  the plaintiff to slow down the pace of work for a few days on the pretext of non-availability of funds ?

(3)              Whether the plaintiff reminded the Defendant No. 2 and his sub-ordinates seeking instructions to accelerate the pace of work and whether the defendants responded ?

(4)              Whether    the    deliberate/intentional/negligent    acts    and omissions of the defendants and their functionaries caused severe mental torture/per plexities/material losses/damages/ embarassment to the plaintiff ?

(5)              Whether the defendants/their functionaries caused the plaintiff to suffer persistent/recurring payment of wages to labour employed for the subject job ?

(6)              Whether the plaintiff repeatedly required the defendants to arrange/supply funds for accomplishment of the subject job and whether the defendants failed to respond thereabout ?

(7)              Whether the Defendant No.   1  is liable for the acts and omissions of Defendant No. 2 and its employees ?

(8)       Whether the suit is not maintainable by virtue of Section 29 of the  establishment  of the  Office  of the  Wafaqi Mohtasib  (Ombudsman Order, 1983), since the plaintiff invoked the jurisdiction of Wafaqi Mohtasib ?

(9)      Whether the representation made to the President of Pakistan was accepted ?

(10)        Whether the suit of the plaintiff is frivolous and was filed with ulterior motives in order to restrain the defendants from encashing the Bank Guarantees ?

(11)        Whether the plaintiff is entitled to the relief claimed ?

(12)  What should the decree be ?"

 

5.          On 16.1.1998, when this matter came up for hearing, the parties were directed to satisfy as to how this suit is maintainable on the ground of limitation and, secondly, whether Article 36 or Article 115 to the 1^st Schedule of the Limitation Act, 1908 are attracted. In furtherance of the same, patties have filed,  in addition to their oral arguments, written arguments. Article 36 provides a period of two years for filing a suit for compensation if any malfeasance, misfeasance or non-feasance is caused, independent of the contract. Article 115 provides a period of three years for filing a suit for compensation for the breach of any contract, express or implied not in writing nor registered and not provided in the Limitation Act. Since the amount claimed in the suit are in the nature for recovery of the
work done and the remaining part is as an amount of damages for breach of contract, I am of the view that for the first amount Article 56 and for the damages Article  115 of the Limitation Act are attracted. Both these provisions provide a period of three years for filing a suit.

6.          It was contended by Mr. Abdul Haleem Pirzada that for filing of the instant suit, the date to be reckoned is not the date of refusal of defendant to pay the amount i.e. 24.5.1988 but it should be 10.3.1992 when the  plaintiff  received  letter  from  the   Ministry  of Law,   Justice  and Parliamentary Affairs through which the appeal filed by the defendants was accepted by the President. It was argued that since the matter was sub judice before the Wafaqi Mohtasib and thereafter, before the President of Pakistan, the intervening period should be excluded. Reliance was placed on the following cases:--

(i)   Jagnath Marwari v. Kalidas Raha AIR 1929 Pat. 245.

(ii)  R.M.N. Nagappa Chettiar v. Messrs Trojan and Company AIR 1948 Mad. 446,

(iii) Abdul Ghafoor v. The Thai Development Authority PLD 1958 Lah. 169,

(iv) F.A. Khan v. The Government of Pakistan PLD 1964 SC 520, and

 (v)   The Province of West Pakistan v. Muhammad Shraif PLD 1965 Lah. 513.

7.     In the first case cited above a suit was filed for recovery of compensation where defendant raised a plea that the suit is barred by Article 36 of the Limitation Act, 1908. It was held by a Division Bench of Patna High Court that in a suit for compensation governed by Article 36 arising independent of the contract, the time provided is two years and that the time will not run f'ruin the act for malfeasance or misfeasance but from the time when the injury results. In the present suit, plaintiff is claiming damages arising out of a contract and, therefore, it is Article 115 of the Limitation Act, which governs the plaintiffs case and, therefore, the case of Patna High Court is of no help to him. Likewise, the case cited at Serial No. (u) above AIR 1948 Mad. 446 is also of no help to the plaintiff as in that case a suit was filed for damages for malicious insolvency proceedings where it was held that the stalling point of limitation in such a case is the date of
order of annulment. In the case of Abdul Ghafoor (supra) the question involved was whether the suit was filed within the period of six months as
provided under Section 75(3) of the West Punjab Thai Development Act, 1949. In that case, plaintiff had filed a suit for declaration against dismissal of his services. Prior to filing the suit, he filed appeal before the competent authority and  after conclusion  of the  proceedings before the domestic tribunal, he filed the suit. It was held that the dismissal of his appeal by the superior authorities of the Thai Development gave him a fresh cause of action to maintain the suit. Reliance was placed on two Privy Council cases, namely Chandra Mani Saha and others v. Anarjan Bibi and others AIR 1934 PC 134 and Bassu Kaur and others u. Dhum Singh ILR XI (1889) All. 47.

8.   Mr. Abdul Haleem Pirzada has vigorously argued that the rule laid down by Honourable Supreme Court in the case of F.A. Khan (supra) is
fully attracted in the instant case. The question raised before the Supreme Court in that was that what is the time for a Government servant to challenge the legality of the order of his removal from service. In that case also as of Abdul Ghafoor (supra), the plaintiff before challenging his removal through a civil suit, preferred appeals and revisions before the departmental authorities.  It was  held that the starting point for limitation,  in the circumstances of that case, started from the dates of the appellate order of departmental authority which confirmed the original order of plaintiffs dismissal. Reference was made to the cases of Abdul Ghafoor (supra) and Chandra Mani Saha (supra) and the following three propositions were laid down for including the time in the cases where appeal was filed by a plaintiff:--

"(i) when an appeal is filed the matter becomes sub judice and is reheard by the Appellate Court which does not act merely as a Court of error;

 (ii) after there has been an appeal even through an Appellate Court simply affirms the order of the original Court the only decree or order in existence is the order of the Appellate Court;

(iii) the original and appellate proceedings are steps in one proceedings."

9.             The rule laid down in the case of F.A. Khan was followed by a Divisions Bench of Lahore High Court in the case of Muhammad  harif
(supra). All the cases as mentioned earlier were noted. In that case, suit for specific performance of the agreement of lease was filed by the  laintiff and in addition to the relief for damages. In that case, the grievance application of the plaintiff was dismissed by the concerned authority against which he filed review application before the Deputy Commissioner which was dismissed on 15.12.1953. It was agitated that the time will run from that day. It was held that second and fresh cause of action accrued to the plaintiff to sue the Government when his review was finally rejected and it was held that this suit falls within Article 115 of the Limitation Act. The ratio laid down in the cases as discussed hereinabove are not attracted in view of the facts of this suit as in those cases the plaintiffs were pursuing their remedy before the higher  officers  against  the  orders  of the  subordinates who  by  their subsequent orders endorsed the orders of their subordinates. These orders were passed in the same hierarchy. While in the instant case, the plaintiff approached the learned Wafaqi Mohtasib for redressal of his grievance. It was a different forum and authority invoked by the plaintiff and in no manner order of Wafaqi Mohtasib could be termed as an order of the superior Officer endorsing or setting aside his subordinate's order. This is a forum separately provided to such persons who are aggrieved with the acts or deeds of an agency. It is doubtful whether a claim in the nature of damages could be maintained before the authority of Ombudsman.

10.    Section 9 of the Limitation Act, 1908 provides that the time once commenced to run will not cease to do so for any inconvenience  r disability to sue or to be sued by reason of any subsequent event does not come within the saving of the statute. There is only one proviso to this section which provides that where letters of administration to the estate of a creditor have been granted to his debtor, the running of the time prescribed for a suit to recover the debt shall be suspended while the administration continues. Section 6 extends the period of limitation of a suit in case of legal disability. Similarly, in view of Section 18, time will run from discovery of fraud. Section 14 entitles a plaintiff for exclusion of time consumed in prosecuting  ny civil proceeding either in a Court of first instance or a Court of appeal
which was prosecuted with due diligence founded upon the same cause of action. Section 10 provides effect of acknowledgment in writing  hich
further extends time for brining any cause in a Civil Court. However, Section 23 provides that a fresh period will begin where there is a  ontinuing breach of contract and in t»se of continuing wrong independent of the contract. None of these principles are attracted for the purpose of calculating the period of limitation in filing this suit. Admittedly, the plaintiffs claim was dismissed on 24.5.1988 and the instant suit was filed on 12.3.1992. The plaintiff was required to file the suit on or before 23.5.1991. The period consumed during the proceedings before Wafaqi Mohtasib or before the President of Pakistan is not entitled to the excluded as provided under Section 14 of the Limitation Act as these do not constitute civil proceedings. The time to file suit started running from the date 24.5.1988. There was no legal disability on the part of plaintiff for not bringing the suit within time.

11.   The necessary conditions for applying provisions of Section 14 of the Limitation Act came up for consideration before a Division Bench of this Court in Kilachand Devechand & Co. (Private) Ltd. v. Messrs Sh. Mian Muhammad Allahbux PLD 1962 Kar. 510. The question in that case was as to whether the time started running from the date of the first award and whether the period spent in making the first award a rule of the Court and
thereafter, time spent in pursuing the application for the execution of the decree is to be counted. The appeal against the order of a learned Single Judge of this Court was allowed and it was held as follows :-

It will be seen, therefore, that Section 14 of the Limitation Act comes into play if the following conditions are fulfilled :—

(a)   That the plaintiff has been prosecuting another civil proceeding against the defendant;

Cb)   that he has been prosecuting it with due diligence;

(c)              that this proceeding is founded upon the same cause of action;

(d)              that it is prosecuted in good faith; and

(e)              that it does not bear fruit because the Court is unable to entertain it due to defect of jurisdiction or other cause of a like nature."

12.   In the case of Messrs Haroon Textile Mills Ltd. v. Allah Ditto PLD 1972 Kar. 57, a suit for damages was filed by the respondent, who was an employee of the appellant and who developed asthema while serving in the appellants'  Company. Earlier, the respondent initiated proceedings under the Workmen's Compensation Act, 1923, which was terminated by the judgment of this Court in Appeal No. 94 of 1964 disposed of on 9^th September, 1965, whereafter he filed the suit. Objection was raised that the suit is barred under Article 22 of the Limitation Act. It was held by a Division Bench of this Court that filing of an application with the Factory Inspector for claim in tort can be no stretch of arguments be said to be a bona fide proceedings fit for the condonation of the delay under Section 14 of the Limitation Act. The rule laid down in the case of Kilachand Devechand (supra) was followed in the case of Asmy Trading Company v. Shahadra Ltd. PLD 1975 Kar. 209 where it was held that the plaintiff was not prosecuting the suit in the lower Court with due diligence and in good faith as the said plaintiff failed to serve a prior notice on the Registrar which omission was held to be a clear case of lack of diligence. By now, it is well-settled that in order to avail of the provisions of Section 14 of the Limitation Act, the plaintiff must show that he was diligently pursuing another civil proceedings whether in the Court of first instance or in a Curt of appeal against the same party bona fidely and that the Court for defect of jurisdiction or other cause of like nature was unable to entertain the same, (see Imdad All and 4 others v. Abdul Rashid and 6 others 1983 CLC 1346).

13.   There is another way of looking at the matter. The plaintiff has based his suit on the cause of action accrued after grant of review application by the President and he is challenging the said order. It was pleaded by the learned counsel for the defendant that the suit is barred by Article 29 of the
Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983 which reads as follows :--

"29.   Bar of jurisdiction.-No Court or other authority shall have jurisdiction          

(1)              to question the validity of any action taken, or intended to b  taken, or order made, or anything done or purporting to have been taken, made or done under this Order; or

(2)              to grant an injunction or stay or to make any interim order in relation  to  any  proceedings   before,   or  anything  done  or intended to be done or purporting to have been done by, or under the order or at the instance of Mohtasib."

14.   There are several cases wherein it was held that petition under Article 199 of the Constitution, 1973, challenging a decision/order of Wafaqi
Mohtasib is not maintainable. In the case of P. LA. Corporation v. Wafaqi Mohtasib and 2 others PLD 1994 Kar. 32, a petition was filed challenging the
order through which benefits were directed to be extended to an ex- employee of P.I.A. It was held by a learned Division Bench of this Court that there is a clear bar of jurisdiction of Courts under Article 29 of the Order, 1983 to question, among others, as to validity of any action taken by Wafaqi Mohtasib. Reference was also made to the case of International Cargo Handling Co. (Pvt.) Ltd. v. Port Bin Qasim Authority PLD 1992 Kar. 65 where an application under Order XXXLX, Rules, 1 and 2, C.P.C. filed in a suit was granted by a learned Single Judge of this Court wherein it was held, inter alia, that by virtue of Article 29 of the Order, 1983 jurisdiction of Courts is barred but where the order on the face of it is repugnant to law under which it was made or suffers for want of jurisdiction the Court may invoke its inherent jurisdiction in order to prevent injustice. In another case of a Division Bench of this Court, namely, Habib Bank Ltd., Karachi v. Messrs Pakistan Industrial Promoters (Pvt.) Ltd., Karachi and 2 others PLD 1996 Kar. 218, where a Constitutional petition under Article 199 of the Coosctution was filed challenging the orders passed by Wafaqi Mohtasib as well as President, the Court dismissed the same as not maintainable with tie foGowing observations :--

'11. In case where the matter falls within the jurisdiction of Respondent No. 2 and is resolved by invoking the provisions of the Order I of 1983, no Court would have jurisdiction to disturb such findings. When action is taken under a special statute it must fulfil the conditions of that statute in order to gain validity of the action so takpn. The instant case has been dealt with within the four corners of provisions of the Order No. 1 of 1983, as such, this Court, Article 199 of the Constitution, has no jurisdiction in the 15.  As a result of the above discussion, I am of the considered view the scat is barred by virtue of Article 115 of the Limitation Act. In the instant suit, the plaintiff is impliedly challenging the order passed in appeal by the Preaiieat of Pakistan by showing the dates i.e. 14.10.1985 when for the first P™H? cause of action accrued as a result of acceptance of plaintiffs bid and lasdy on 27.2.1992 when appeal was allowed by the President, (see para., 24 of the plain i. Upon conclusion of evidence, it stands proved that the eroda! dale wtien the cause of action as provided under Article 56 or 115 accrued was 24.5. 1988 when his claim was rejected vide Annexure "P. 11" wbick reads as follows  "It is also pointed out that in terms of Clause 25 page 4 of Special Conditions of Contract any increase in rate or any other compensation or price escalation or any claim is not admissible. Further as per Clause 16, page 3 of Special Conditions of Contract the claim has to be made within one week of the point arising whereas in his case it has not been complied with. The completion period of the word has also expired on 6.8.1987 and no extension in time limit has been granted In view of the above, the claim of the Contractor preferred by him vide his application No. Nil, dated 18.1.1988 is not tenable. The Contractor may, therefore, be informed accordingly and settled up as per Contract Agreement."

16.   Admittedly, this suit was filed on 12.3.1992 after expiry of more than three years.  I  am  of the  considered view  that the  time consumed in a proceeding before Wafaqi Mohtasib is not entitled to be excluded. As a result of this discussion, suit is dismissed with no order as to
cost

(T.A-F.)                                                                                Suit dismissed.

 

Date of Institution of Case

One of the primary concerns regarding the limitation law is the date of institution of case. Date of institution of the case is the one when the file of the case goes into the institution branch. There can be objections on the file or it can be forwarded to the court in a day or two.

The date of hearing is never the date of institution of the case. Because date of hearing can be any date other than the date of filing. Generally courts in Pakistan do not hear the cases on same dates on which they are filed in the institution branches. Hence if a person approaches an institution branch on time then it is out of question that he is time barred in any case.

Even if a person approaches the institution branch and files his case on the last date and at the last minute, his case cannot be limitation barred on the ground that the same has not been heard by the court of law within the time of limitation.

For more you can consult at lawyergolra@gmail.com

Regards,
Salman Yousaf Khan (Golra)
Civil Lawyer
+92-333-5339880

Right of Second Appeal has been omitted from Civil Law

On 18th of February 2020 the Parliament has taken consent from the President of Pakistan on the Code of Civil Procedure Amendment Act 2020. The same has been published in official Gazette of Pakistan on 22nd of February 2020.

According to the Section 11 of the said Act, the sections 100, 101 and 102 have been omitted from Code of Civil Procedure. These sections deal with the second appeal which are no more part of the law.

Further at the end section 159 has been added in the Code of Civil Procedure according to which the proceedings instituted before the enactment of this Amendment Act will be dealt in accordance with the old civil law.

Now no new second appeal can  be filed in civil cases but the old cases which are proceeding in courts will be dealt in accordance with old sections of civil law.

For more you can contact lawyergolra@gmail.com

Regards,
Salman Yousaf Khan (Golra)
Civil Lawyer
+92-333-5339880

Ex-Parte Decision can be set-aside without going into appeal

An ex-parte order can be set-aside by filing an application in the same court within one month of decision. A party is not required to go into appeal or revision of same order unless such remedy is provided in law as the only remedy.

When a decree is passed against several defendants and one of them is proceeded ex-parte, such defendant can also file an application under order IX rule 13 of Code of Civil Procedure for setting aside ex-parte decree against the said defendant.

Such person can also approach the appellate forum for appeal under section 96 of the CPC. In both cases, the time for challenging the said order or decree is only 30 days from the date of decision. For more you can consult lawyergolra@gmail.com

Regards,
Salman Yousaf Khan (Golra)
Civil Lawyer
+92-333-5339880

Litigation is notice to public at large

PLJ 2017 Lahore 740[Bahawalpur Bench Bahawalpur]

Present: Tariq Iftikhar Ahmad, J.

MUHAMMAD AFZAL--Appellant

versus

FAIZ AHMED etc,--Respondents

R.S.As. No. 8 & 11 of 2011, decided on 5.4.2017.

Transfer of Property Act, 1882 (IV of 1882)--

----S. 52--Estoppel--Recording of evidence by local commission--Validity--Recording of evidence is to be in accordance with law, but it is a procedural matter, and if both parties had given their consent and obtained judgments from Courts below without agitating such ground, now in second appeal, it is not available to appellants as they had been estopped by their conduct.                                                               [P. 743] A

Caveat Emptor--

----It is settled that litigation is a notice to public-at-large and appellant cannot state that he had no knowledge in this respect--It is also settled legal position that every purchaser would be careful regarding property he is intending to purchase that it is free of any encumbrance or bar, whereas, in presence of prior in time agreement and pendency of suit, appellant cannot simply escape and contend that he has no knowledge of prior agreement or Civil Court, thus he cannot be considered as bona fide purchaser, of suit property without notice.         [P. 745] B

Mr. Muhammad Aslam Khan Dhukkur, Advocate, Mr. Farooq Haidar, Advocate and Malik Faiz Bux, Advocate for Appellant.

Mr. Muhammad Naveed Farhan, Advocate for Respondents.

Date of hearing: 21.3.2017.

Judgment

As R.S.A. No. 08 of 2011 (Muhammad Afzal vs. Faiz Ahmed etc) and R.S.A. No. 1l of 2011 (Muhammad Ahmed etc. vs. Faiz Ahmed) are directed against same judgments and decrees rendered by the Courts below, therefore, I intend to decide aforementioned appeals through this single Judgment.

2.  Tersely facts necessary for disposal of these appeals are that Faiz Ahmed plaintiff/ respondent filed a civil suit on 07.11.2006 against Muhammad Ahmed and Muhammad Younas defendants/ appellants in R.S.A. No. 11 of 2011 for specific performance of written agreement dated 18.01.2006 (Ex.P1) to purchase land, measuring 01 marlas 1/5/16 sirsahi Block-D Mandi Chishtian according to entries of Register Haqdaran for the year 2005,2006 (suit property), for total price Rs. 11,50,000/-out of which Rs. 6,50,000/- were paid as earnest money through cheques of U.B.L. Chishtian and parties agreed to alienate the suit property within six months on payment of sale price and if the respondent/plaintiff failed to perform his part of the agreement i.e. payment of balance price the earnest money which had already been paid would be forfeited by the appellants/defendants, the possession of the suit property was also delivered to the respondent/plaintiff. The balance amount Rs. 5,00,000/- was also statedly paid by the respondent to the appellants in presence of witnesses namely Irfan son of Muhammad Ahmed, Khalid son of Rafi and Rasheed son of Fazal Din and document for execution of sale was prepared on 04.09.2006, however, appellants refused to sign and execute it in the office of Sub-Registrar. It was contention of the respondent that he had already paid the entire sale price and according to the document prepared for execution of sale on 04.09.2006 showing enhanced sale price i.e. Rs. 14,00,000/- was to avoid apprehension of filing of a suit for pre-emption by somebody. Some new facts had happened when on 30.05.2015 during the pendency of the suit for specific performance Muhammad Ahmed and Muhammad Younas appellants sold the suit property to appellant in Appeal No. 08 of 2011, Muhammad Afzal through registered sale-deed dated 30.05.2008 (Ex.D1). To contest the suit filed by the respondent both the set of defendants now appellants filed their respective written statements. Muhammad Ahmed and another appellants admitted agreement dated 18.01.2006, receipt of earnest money but contended that as the respondent failed to pay the balance price within the stipulated time i.e. six months, therefore, on the strength of terms and conditions of the agreement they forfeited the earnest money and thus, would not be responsible to honour and implement the said agreement, however, also admitted that on the basis of mutual consent of the parties as they belong to same “brothery” through oral arrangement agreed to enhance the sale price from Rs. 11,50,000/- to Rs. 14,00,000/- while adjusting already paid Rs. 6,50,000/- as earnest money and they were ready to execute sale-deed which in fact was written on 09.04.2006, but when the respondent refused to pay the balance amount i.e.7,50,000/- as such were not under any liability to execute the sale-deed in his favour. Further contended that they within their own rights sold the suit property to Muhammad Afzal appellant/defendant through sale-deed dated 30.05.2008 (Ex.D1). Muhammad Afzal appellant in R.S.A. No. 08/2011 subsequent vendee filed written statement and contended that he was bona fide purchaser without notice and knowledge of earlier agreement or pendency of suit for consideration.

3.  The learned trial Court on 28.06.2008 framed the following issues:--

1.       Whether suit of plaintiff is false and friviolous? OPD

2.       Whether the plaintiff is entitled to a decree for specific performance of the agreement dated 18.01.2006? OPP

2-A.    Whether registered sale-deed in favour of Defendant No. 3 dated 30.05.2008 is against facts and law, without consideration, collusive, void and inoperative qua the rights of the plaintiff and liable to be set aside? OPP

3.       Relief.

4.  I have heard the arguments addressed by learned counsel for the parties and also perused the record.

5.  I consider appropriate to discuss first the arguments of learned counsel for the parties and then record and evidence.

6.  Learned counsel for Muhammad Afzal appellant/defendant at the very outset stated that evidence recorded by the learned trial Court was through commission, but it was neither signed by the Presiding Officer, nor any certificate was made on it, thus, no reliance can be placed on said evidence. In this respect he placed reliance on the reported judgment “Ghulam Mustafa and another vs. Abdul Malik” (PLD 2008 Lahore 4). I am not convinced with the arguments of learned counsel because against the impugned judgment of trial Court dated 14.05.2010 appeal was filed by both appellants but from the memorandum of appeal, it is evident that this plea has never been raised. Of course recording of evidence is to be in accordance with law, but it is a procedural matter and if both the parties have given their consent and obtained judgments from Courts below without agitating this ground now in second appeal, it is not available to the appellants as they have been estopped in this regard by their conduct.

7.  Next learned counsel contended that appeal is continuation of original suit and every aspect of the disputed matter stands opened. Further stated that necessary issues were not framed which also affected the proceedings and due to these defects the judgments of Courts below are not sustainable. Learned counsel placed reliance on “Muhammad Bashir vs. Muhammad Hussain and 16 others” (2009 SCMR 1256), “Mst. Sikandar Jahan vs. Mst. Ghulam Zainab and 10 others” (2013 CLC 228) (Peshawar), “Mst. Heemat Jehan and another vs. Attaullah Shah” (2012 CLC 686), “Muhammad Ashraf vs. Dilbar Khan” (2011 CLC 304) and “Khaliq Dad Khan and others vs. Mst. Zeenat Khatoon and others” (2010 SCMR 1370).

8.  Conversely, learned counsel for the respondents submitted that if an issue is not framed and both the parties were conscious of the controversy, further adduced evidence in this respect, it would not create any negative effect on the judgment of the Court below. In this respect he placed reliance on dictum of this Court reported as “Eada Khan vs. Mst. Ghanwar and others” (2004 SCMR 1524) and “Lahore Development Authority through Director General and another vs. Addl. District Judge and 2 others (2013 YLR 106).

9.  It is evident from the record that necessary issues were framed and a minute analysis of the pleadings of the parties as well as issues framed showing that no real controversy was left out from the framing of issues. It is also evident that being conscious of the dispute both the parties led evidence to prove their respective contentions. The only defect/mistake observed in the impugned judgments is that number of issues was not in order that can only be considered as clerical mistake without any consequence on the finding recorded by the learned Courts.

10.  Next contention of learned counsel for the appellants was that time was essence of the agreement dated 18.01.2006 (Ex.P1), that was six months but as respondent failed to perform his part of action, i.e payment of balance amount within stipulated period, therefore, he could not get any relief from the Courts below.

11.  Article 113 of the first schedule of the Limitation Act, 1908 provided 03 years time to file a suit for specific performance of a contract/agreement from its date of execution, however, in agreement Ex.P1 six months period from the date of its execution i.e. 18.01.2006 was provided to both the parties for its specific performance as respondent was to pay balance amount and appellants Muhammad Ahmed etc. to execute a sale-deed but from the pleadings of the parties it is manifestly clear that the time was extended by the appellants and they agreed to execute a sale-deed after lapse of six months period. In such eventuality and facts the time no more remained essence of the contract.

12.  The real controversy which required adjudication in these appeals is as to whether balance amount Rs. 5,00,000/- was paid by the respondent to appellant Muhammad Ahmed etc. At the very outset on the basis of logic and requirements of law when an agreement in writing was executed which is an admitted document between the parties, the subsequent event, that is payment of Rs. 5,00,000/-was to be documented and should not be left only on oral arrangement. It may be mentioned here that onus to prove the said payment was upon the respondent, however, the perusal of oral evidence in this respect showing that he failed to prove the alleged payment. In addition to it the respondent himself adduced in evidence draft of sale-deed dated 04.09.2006 (Ex.P5) showing that he agreed to pay price of disputed property in Rs. 14,00,000/- without mentioning therein that he had already paid earnest money Rs. 6,50,000/-plus Rs. 5,00,000/- however, in the witness-box and in the pleading he contended that enhanced price was recorded only to avoid possibility of filing of pre-emption suit by some one. This plea can hardly be believed on the yardstick for grant of equitable relief which expect that claimant should come to the Court with clean hands, however, while taking lenient view it is held that final sale price agreed between the parties was Rs. 14,00,000/-, out of which admittedly Muhammad Ahmed etc. appellants had already received Rs. 6,50,000/- and balance amount would be Rs. 7,50,000/-, on payment of which they required to execute sale-deed in favour of the appellant.

13.  Now this Court is left to determine as to whether appellant Muhammad Afzal in Appeal No. 08 of 2011 is bona fide purchaser. Agreement Ex.P1 dated 18.01.2006 was in existence and a civil suit for specific performance of agreement which was filed by the respondent on 07.11.2006 was also pending before the Civil Court, whereas the sale-deed (Ex.D1) was executed in favour of said appellant on 30.05.2008. It is settled that litigation is a notice to public-at-large and appellant cannot state that he had no knowledge in this respect. It is also settled legal position that every purchaser should be careful regarding the property he is intending to purchase that it is free of any encumbrance or bar, whereas in presence of prior in time agreement and pendency of the suit, appellant cannot simply escape and contend that he has no knowledge of prior agreement or Civil Court, thus, he cannot be considered as bona fide purchaser of the suit property without notice.

14.  Section 52 of Transfer of Property Act 1882 provided doctrine/rule of lis pendens. Section 52 is reproduced here below for ready reference:--

“52. Transfer of property pending suit relating hereto:- During the (pendency) in any Court having authority in (Pakistan) or established beyond the limits of (Pakistan) by the (Federal Government) *** of (any) suit or proceeding (which is not collusive and) in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.

(Explanation:--For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceedings in a Court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction of discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed from the execution thereof by any law for the time being enforce).”

15.  In this respect the dictum of Apex Court provided guide line in judgments “Mst. Tabassum Shaheen vs. Mst. Uzma Rahat and others” (2012 SCMR 983) and “Muhammad Ashraf Butt and others vs. Muhammad Asif Bhatti and others(PLD 2011 Supreme Court 905).

16.  In the light of above dictum of the Apex Court and the circumstances of these appeals, appellant Muhammad Afzal by any stretch of imagination cannot be held bona fide purchaser without notice. However, since the execution of sale-deed in his favour had been admitted by the other appellants Muhammad Ahmed etc. therefore, while applying judicious mind, principle of equity and natural justice, Muhammad Afzal is entitled to recover sale price as he paid to these appellants, therefore, Appeal No. 08 of 2011 is accepted to the extent of recovery of sale price of sale-deed (Ex.D1) from Muhammad Ahmed etc. appellants. In case said amount is not paid in one month, Muhammad Afzal appellant can enforce it through filing an execution petition before Court of competent jurisdiction.

17.  It is further held that Appeal No. 11/2011 is dismissed with no order as to costs with effect that appellants shall execute sale-deed in favour of respondent on receipt of balance price Rs. 7,50,000/-within one month from today, if they failed to do so, the respondent would be at liberty to file execution petition to enforce agreement dated 18.01.2006.

(Z.I.S.)            Appeal dismissed

Termination of Agency of Contract

PLJ 2007 Karachi 207

Present: Maqbool Baqar, J

Messrs TIME N VISIONS INTERNATIONAL (PVT.) LTD.--Plaintiff

versus

DUBAI ISLAMIC BANK PAKISTAN LIMITED--Defendant

Suit No. 862 of 2006, decided on 30.8.2006.

Arbitration Act, 1940 (IX of 1940)--

----S. 20--Contract Act, (IX of 1872)--S. 202--Agency Agreement--Application to file in Court arbitration agreement--Power--Scope--Question of--Whether in terms of Clause 3 of agreement agency could be terminated by serving two months advance notice--Determination--Agency could be terminated by serving two months `advance notice' only after initial two years of creation of the agency--In view of Clause (17) which provides for a dispute resolution mechanism through arbitration in respect of agreement can only be decided by arbitration.     [P. 218] C

Arbitration Act, 1940 (IX of 1940)--

----S. 20--Contract Act, (IX of 1882)--S. 202--Specific Relief Act, (I of 1877)--Ss. 12, 42 & 55--Agency agreement--Termination of agency--Premature--Arbitration clauses--Scope of--Agency in-question was not an agency coupled with interest--Agency did not attract exceptional status of irrevocability--Provisions of--Principle--Agency in-question is not an agency coupled with interest and therefore does not attract exceptional status of irrevocability as provided by Ss. 201 & 202 of Contract Act, which provides for termination of any agency by principal revoking his authority, an order restraining the defendant from revoking agency and forcing them to continue with relationship would not be justified, as even if arbitrators come to conclusion that termination of the agency would in terms of agreement be premature for want of requisite notice--Held: Plaintiffs may be duly compensated by awarding damages.      [P. 219] D

Arbitration Act, 1940 (X of 1940)--

----S. 20--Contract Act, (IX of 1872), S. 202--Agency of Agreement--Termination of agency--Premature termination--Compensated in money terms--Financial liabilities--Multifarious litigation--Misconception of agreement--Validity--Agent can tie down his principal into an eternal bond by making investments when partner contributing a major part of capital of a firm and tying down his assets cannot do so--Held: Even if there has been premature or illegal termination of contract of agency, it can be compensated in money term--If such notice was not given, at the most plaintiff firm could claim damages from defendants and that by seeking declaration and permanent injunction, the plaintiff was in fact seeking specific performance of dealership which agreement was not an agreement which could be got specifically enforced through the Court and that if at all there was unlawful termination of sales/dealership agreement, the plaintiff firm could have only asked for damages--Termination of the agency at this stage would lend them into multifarious litigation is wholly un-founded and based on misconception--In event of termination of the agency the contract already made by plaintiff with third parties on behalf of plaintiff and in respect of all contracts that are on the books on the date of such termination of an agreement parties shall perform the duties and observe the covenant to be performed and absolved by them--Termination of the agency would be bound to perform their obligations in terms of agreement provided the same have been entered into with consent of the defendant and in conformity with various provisions of agreement in-question--Petition allowed.      [P. 33-] F, G & H

Contract Act, 1872 (IX of 1872)--

----S. 202--Advertise Agency Agreement--Concept of an agency coupled with interest--Concept can be comprehended through illustration--Pre-existing interest of the agency in subject matter of agency which is sought to be protected through creation of the agency and not an interest arising therefrom--Concept can be comprehended through following illustration given in S. 202 of Contract Act.    [P. 215] A

Contract Act, 1872 (IX of 1872)--

----S. 202--Arbitration Act, (X of 1940)--S. 20--Advertising Agency Agreement--Appointment as exclusive advertising agent for brands and advertising work--Scope of--Question of--Be terminated to prejudice of interest--Validity--Such contracts can be considered irrevocable, the most common examples of such contracts are when the owner of certain goods appoints his creditor as agent to sell the goods and recover the amount advanced or where the owner of immovable property, having agreed to transfer such property appoints, before formal title is passed the vendee as his agent to manage the property or effect the final transfer of title.      [P. 217] B

Contract Act, 1882 (IX of 1882)--

----Ss. 201 & 202--Arbitration Act, (X of 1940)--S. 20--Agency agreement--Termination of agency--Notice--Damages--Validity-Where termination notice is not given as provided in the agreement, the plaintiff could only ask for damages and not for declaration and permanent injunction as such an agreement cannot be specifically enforced.  [P. 219] E

1985 CLC 1522; 1973 SCMR 555 and 1997 CLC 1903 ref.

Mr. Abdul Hafeez Pirzada, Hasaamuddin and Abdul Sattar Pirzada, Advocates for Plaintiff.

Mr. Rasheed A. Razvi and Mahmood Mandviwala, Advocates for Defendant.

Dates of hearing: 24 & 30.8.2006.

Judgment

Through this order I propose to dispose of the main petition under Section 20 of the Arbitration Act, as well as the injunction application, being C.M.A. No. 4941 of 2006 filed by the plaintiff.

The relevant facts of the case in brief are that under and in terms of an `Advertising Agency Agreement' executed between the parties on 15-10-2005, (`The agreement') the plaintiff company, who are engaged in the business of advertising, and according to them, are providing a range of advertising services to several entities, were appointed by the defendant bank, as their exclusive advertising agent in Pakistan, for their brands and other advertising work for the period from 15-10-2005 up to 14-10-2006, and agreed to pay to the plaintiff a monthly retainership fees of Rs.6,75,000 (Rupees Six hundred and Seventy Five Thousand only). In terms of Clause 3 of the agreement, the relationship was to be renewed automatically after the initial period ending on 14.10.2006, for one more year i.e. up to 14-10-2007. It was further agreed that the agreement will continue to be renewed by the parties for subsequent years and the relationship will remain in force till such time as the agreement is revoked or terminated, as envisaged by Clause 4 of the agreement, which provides that the agreement can be terminated by either party only after serving two (2) months prior/advance notice. In addition to the retainer fee, the plaintiff, in terms of the agreement, is also entitled to commissions for the various services that the plaintiff was required to provide under the agreement and as enumerated under Clauses 5 and 6 thereof. Clause 17 of the agreement, by way of dispute, resolution, mechanism, provides that every dispute, difference or question, which may anytime arise between the parties thereto, or any person claiming under them, touching or arising out of or in respect of the agreement shall be referred to the arbitrators named therein. Such arbitration to be conducted in accordance with the Arbitration Act, 1940.

It is claimed by the plaintiff that under Clause 3 of the Agency Agreement, the Agreement is valid up to 14-10-2007 (i.e. two years from the date of its execution) and that after such period of two years, the Agreement would continue to remain in force unless the same is terminated by one of the parties by serving on the other party a two months prior notice. It is further claimed that in view of the various Clauses of the Agreement, particularly, Clauses 2, 6 and 8.1, the agency is of the nature of an agency coupled with interest and cannot, therefore, in view of the bar as contemplated by Section 202 of the Contract Act, be terminated to the prejudice of such interest. It is then alleged that despite the above and without any cause or reason, the representative of the defendant has informed the plaintiff that the defendant is taking steps to terminate the Agency Agreement. It is further stated that the compensation offered by the defendant for such un-lawful breach of the Agreement, `to say the least being paltry' is, not acceptable to the plaintiff, as the proposed termination shall cause a tremendous and irreparable loss to the plaintiff. It is claimed that the plaintiff has incurred substantial expenditure and put in labour in fulfillment of its obligations under the Agreement, and in establishing a good-will for the defendant among its potential customers in Pakistan, and was allured to commit its capital on the assurances and guarantees of remuneration and fees embodied in the Agency Agreement, the defendant cannot therefore terminate the relationship at this stage. It is claimed that the plaintiff has been performing his obligations as an agent to the complete satisfaction of the defendant. Neither has the plaintiff defaulted in fulfilling any of its obligations under the Agreement, nor has there been any allegation of default on the part of the plaintiff. On the contrary, the defendant on several occasions commended the plaintiff performance. However, the defendant realizing its position of advantage, has in the most unscrupulous manner decided to engage the services of another entity and unlawfully discontinued its contractual relationship with the plaintiff.

Along with the main petition, the plaintiff have filed an application for restraining the defendant from acting in contravention of the Agency Agreement and from entering into an Agency Agreement with any other party. (C.M.A. No. 4941/2006).

Through their counter affidavit, the defendants have opposed the grant of interim relief as prayed for by the plaintiff. They have denied that the agency in question is coupled with interest. It is contended that by its very nature the relationship between the parties as created through the present agreement, does not create an agency coupled with interest. It is averred that the application is barred by Section 21 of the Specific Relief Act, as an agreement of the nature as in question is incapable of specific performance as monetary compensation is an adequate relief and also for the reason that the agreement is inherently revocable. It is pointed out that the agreement provides for termination through Clause 4, which envisages its termination by either party by serving two months prior notice. It is submitted that Section 202 of the Contract Act applies only where an agent has a pre-existing interest in the subject-matter of the agency, which is sought to be protected through the creation of the agency. It is further submitted that nature of an advertising agency and specially with the rights and obligations as created under the agreement in question can never create a proprietary interest sufficient enough to attract the provisions of Section 202 of the Contract Act. It is further submitted that admittedly the plaintiff is providing advertising services to various entities which is violative of Clause 5(iii) of the Agreement. It is claimed that the defendant is a subsidiary of the first Islamic Bank of the world, and has been recently established in Pakistan for providing and facilitating Islamic mode of financing and the interim injunction granted in this case on 26-6-2006 is effecting the entire marketing and business development of the defendant as a newly established Islamic Bank. It is claimed that the defendant has neither intended nor entered into any relationship of a permanent nature with the plaintiff. It is further claimed that in the event the interim injunction is allowed to continue the future operations and development of the defendant as a newly established Islamic Bank will suffer immensely and the defendant marketing and advertising will cease completely as marketing and advertising plays a crucial role in the development of the banking products. It is alleged that, owing to the unprofessional attitude of the plaintiff and by its attempt to forcibly continue the relationship, the defendant is suffering huge financial losses.

In their rejoinder to the defendant's counter affidavit, the plaintiff have claimed to have incurred huge expenditures, towards fulfillment of its obligations under the Agreement. It is also claimed that the plaintiff, for the benefit of the defendant, has engaged the services of several professionals with expertise in concept and creative development and client servicing for a period of two years. The plaintiff has further claimed to have executed several contracts with various parties for propagating the business of the plaintiff. It is submitted that unless the interim injunction is confirmed, the plaintiff shall be faced with multiplicity of proceedings and shall suffer irreparable losses. It is denied that the plaintiff committed any breach of any of its obligations under the Agreement. It is alleged that all the resources of the plaintiff have been diverted towards the furtherance of its contractual obligations and for the development of the defendant's business to their satisfaction.

Mr. Abdul Hafeez Pirzada, the learned counsel for the plaintiff in support of the plaintiff's plea for referring the matter to the arbitrators, submitted that in terms of Section 20 of the Arbitration Act, all that is required for such referral is that there should be an arbitration agreement between the parties and that a dispute has arisen between the parties and the Court to which application was made has jurisdiction in the matter. He submitted that the agency created under the agreement is in the nature of an agency coupled with interest, as the plaintiff in pursuance of the agreement, has incurred heavy expenditure by employing professionals to carry out their obligations in terms thereof. The learned counsel referred to Clauses 2, 6, 7 and 8.1, to show that the plaintiff is not only entitled to a monthly retainership fee but is also entitled to commissions for the various services that the plaintiff has rendered, and is obliged to render to the defendant, and submitted that in view of such financial interest also, the relationship cannot be denied its attribute of an agency coupled with interest and thus in view of the bar, as envisaged by Section 202 of the Contract Act, the agency cannot be terminated at the whims of the defendants. He submitted that in addition to the fact that the agency is coupled with interest and without prejudice to his contention that the agreement cannot be terminated to the prejudice of such interest, even in terms of the agreement itself, it cannot be terminated during the period up to 14-10-2007. He referred to Clause 3 of the agreement and submitted that after the initial one year period, ending on 14-10-2006, the agreement will automatically stand renewed for another term of one year up to 14-10-2007, and the parties may thereafter continue the relationship for subsequent years. He contended that from the language employed in Clause 3 of the agreement, it is clear that even in terms thereof the relationship is not terminable before 14-10-2007, and the termination through a two months advance notice as envisaged therein is only in respect of any further renewal of the agreement that the parties may agree to. However, the defendant in clear breach of the terms and even without any notice and/or justification, is admittedly contemplating termination of the agency. The learned counsel submitted that the plaintiff has not only employed several professionals in order to do the various jobs and provide various services to the plaintiff in terms of the agreement, but have, in pursuance of the agreement, entered into several agreements with various parties. He referred to sub-Clause (iv) of Clause 5 of the Agency Agreement which envisages outsourcing development of advertisement for the defendants, and submitted that in the event the agency is terminated prematurely, the plaintiff shall face multiple litigation and shall suffer irreparable loss. The learned counsel submitted that substantial amounts towards the various services provided by the plaintiff to the defendant are still outstanding and in the event of termination of the agency, the plaintiff shall also suffer loss of future retainership fee and commissions and requested that the matter may be referred to the arbitrators and the defendants may be restrained from terminating the agency till the making of the award. In support of his argument, Mr. Pirzada referred to the following cases:--

(1)   Ghulam Ishaq Khan Institute of Engineering, Science and Technology and another v. M/s. Hassan Construction Co. (Pvt.) Ltd. Engineer and Consultants 1998 CLC 485.

(2)   Manzoor Construction Co. Ltd. v. University of Engineering and Technology, Taxila 1984 CLC, 3342.

(3)   Muhammad Younus and 2 others v. Abdul Ghaffar and others 1998 MLD 1622.

(4)   M/s. Jamia Industries Ltd. v. M/s. Pakistan Refinary Ltd., Karachi PLD 1976 Kar. 644.

(5)   Mst. Neelam Nosheen and others v. Raja Muhammad Khaqaan and others 2002 MLD 784.

On the other hand, Mr. Rasheed A. Razvi, the learned counsel for the defendant submitted that no cause of action has accrued to the plaintiff for filing the present suit as the defendant have not terminated the Agency Agreement as yet. He further submitted that even otherwise the plaintiff, in the facts and circumstances of the case is not entitled to a declaration as they propose to seek through arbitration, as no perpetual relationship has been created between the parties under or in terms of the Agreement and the relationship between the parties does not attract the provisions of Section 202 of the Contract Act, so as to make it irrevocable. He submitted that Section 202 of the Contract Act only applies where an agent has a pre-existing interest in the subject-matter of the agency, and the agency, of the nature in question cannot, by any stretch of imagination, be deemed to be an agency coupled with interest. He submitted that the two elements as claimed by the plaintiff, namely expenses incurred by the plaintiff and the prospects of earning commissions and retainership fee are not of such nature so as to create interest as envisaged by Section 202 of the Contract Act. He submitted that the Agency Agreement itself provides for termination by serving two months advance notice as provided under Clause 4 of the agreement. Mr. Razvi relied on the following judgments:--

(i)   Unreported judgment passed in Suit No. 388 of 2002 between ACB (Pvt.) Ltd. v. UPS Worldwide;

(ii)  Pak National Construction Co. v. State Bank of Pakistan (PLD 1977 Karachi 838);

(iii) Jamia Industries v. M/s. Pak Refinery Ltd. Karachi (PLD 1967 Karachi 644);

(iv)  Progressive Engineering Associates v. Pakistan Steel Mills Corporation Limited (1997 CLC 236);

(v)   Roomi Ent. (Pvt.) Ltd. v. Stafford Miller Ltd. (2005 CLD 1805);

(vi)  Huma Enterprises v. S. Pir Ali Shah & others (1985 CLC 1522);

(vii) World Wide Trading v. Sanyo Electric Trading Co. Ltd. & another (PLD 1986 Karachi 234);

(viii)      Farooq & Co. v. Federation of Pakistan and others (1996 CLC 2030);

(ix)  Business Computing Int. v. IBM World Trade Corporation (1997 CLC 1903);

(x)   Philippine Airlines v. Paramout Aviation (Pvt.) Ltd. & others (PLD 1999 Karachi 227);

(xi)  Muhammad Yousuf v. M/s. Urooj (Pvt.) Limited & another (PLD 2003 Karachi 16).

As regards the preliminary objection raised by Mr. Rasheed A. Razvi that since the defendant agency has not been terminated by the defendants as yet, no cause of action has accrued to the plaintiff for filing the present petition. It may be noted that the defendants have not denied the fact that they are/were in the process of termination of the agency. On the contrary they have submitted that they are being forced to continue their relationship with the plaintiff, through interim injunction and thus it can be seen that the termination of the agency is clearly in the offing. The dispute/controversy between the parties as has now emerged is regarding (i) the nature of the agency, as to whether or not the agency is coupled with interest, so as to attract the bar contained in Section 202 of the Contract Act. (ii) As to whether, in terms of Clause 3 of the agreement, the agency is terminable by either party, through a two months advance notice, or as to whether such termination is permissible only after a period of two years from its commencement i.e. after 14-10-2007 only.

The plaintiffs have attempted to attribute to the agency in question, the status of an agency coupled with interest, and thus claimed a bar to its termination, as contemplated in terms of Section 202 of the Contract Act, on the grounds that (i) they have made substantial investment in order to provide to the defendant the various services they were obliged to provide under and in terms of the agreement and towards fulfilling its obligation thereunder and (ii) agreement promises to them financial rewards by way of payments of retainership fee and commissions for the various services that they are obliged to provide under the agreement. It is contended that by virtue of the above, the plaintiffs acquired interest in the subject matter of the agency agreement.

The concept of an `agency coupled with interest' is a special concept. It envisages a pre-existing interest of the agency in the subject-matter of the agency which is sought to be protected through creation of the agency and not an interest arising therefrom. The concept can be clearly comprehended through the following illustration given in Section 202 of the Contract Act:--

 (a)  A gives authority to B to sell A's land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.

(b)   A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself, out of the price, the amount of his own advances, A cannot revoke this authority, nor is it terminated by his insanity or death.

The concept has been well illustrated at page 2036 of Halsbury's Laws of England, IVth Edn., Volume-1, in the following words:--

`868. Authority coupled with interest.--Where the agency is created by deed, or for valuable consideration, and the authority is given to effectuate a security or to security or to secure the interest of the agent, the authority cannot be revoked. Thus, if an agreement is entered into on a sufficient consideration whereby an authority is given for the purpose of securing some benefit to the donee of the authority, the authority is irrevocable on the ground that it is coupled with an interest. So, an authority to sell in consideration of forbearance to sue for previous advances, an authority to apply for share to be allotted on an underwriting agreement a commission being paid for the underwriting, and an authority to receive rents until the principal and interest of a loan have been paid off or to receive money from a third party in payment of a debt, have been held to be irrevocable. On the other hand, an authority is not irrevocable merely because the agent has a special property in or a lien upon goods to which the authority relates, the authority not being given for the purpose of securing the claims of the agent'.

In the case of M/s. Business Computing International (Pvt.) Ltd. v. IBM World Trade Corporation (1997 CLC 1903), Sabihuddin Ahmed, C.J. has dilated upon the scope and applicability of the concept of an agency coupled with interest in the context of Section 202 of Contract Act in the following words:--

`9. In our legal system, this concept has been stated in Section 202 of the Contract Act which reads as under:--

`Termination of agency where agent has an interest in subject-matter.--Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot in the absence of an express contract, be terminated to the prejudice of such interest.

It may be seen that the above Section lays down an exception to the general rules. A contract of agency by its very nature is personal to the parties and revocable at their volition subject to agreed terms. It does not create eternal legal relations. Under this section in certain exceptional  circumstances, such contracts can be considered irrevocable,

the most common examples of such contracts are when the owner of certain goods appoints his creditor as agent to sell the goods and recover the amount advanced or where the owner of immovable property, having agreed to transfer such property appoints, before formal title is passed, the vendee as his agent to manage the property or effect the final transfer of title. In such cases interest in the property has already been created in favour of another who is appointed agent primarily to secure such interest. The principal is precluded from revoking the authority of such agent unless otherwise agreed, because the main interest in the property is not retained by him but passed on to the agent. This concept has been lucidly explained by Tanzil-ur-Rehman, J., in the case of World Wide Trading Company v. Sanio Trading Company PLD 1986 Kar. 234 cited above to the following effect:--

`The interest of the agent, forming subject-matter of the agency, is to be some sort of an adverse nature qua the principal. So, according to the true construction and scope of Section 202 the agency can be said to be coupled with interest where the authority of an agent is given for the purpose of effectuating a security or of securing an interest of the agent. This can be inferred from documents forming the basis of agency or from the course of dealings between the parties and from the other surrounding circumstances.'

And further that:--

`I am unable to subscribe to the view that Section 202 gets attracted merely because the agent has acquired substantial interest in the returns arising from the agency. Apart from the observations in the cases of World Wide Trading Co. (PLD 1986 Kar. 234) and Farooq and Co. (1996 CLC 2030) cited above, a comparison between Sections 202 and 206 may clarify the legal position. Under Section 206 when the contract of agency does not contain a specific stipulation as to termination, it may be terminated upon reasonable notice. In the absence of such notice the damage resulting to one party must be made good by the other. If the principal terminates the agency without notice, he must compensate the agent. It obviously follows that the agent must be having an interest which must be compensated for. Therefore it is not possible to say that whenever an agent has an interest in the continuance of an agency Section 202 gets attracted. I am, therefore, clearly of the opinion that Section 202 applies only where an agent has a special kind of interest i.e. pre-existing interest in the subject-matter of the agency which is sought to be protected through creation of the agency and not an interest arising therefrom.'

His Lordship further held that substantial investment in the business of agency would not make the agency irrevocable.

The contention that since the agent had invested colossal amount of funds in setting up of office and necessary infrastructure, the agency was irrevocable, was rejected by Mian Allah Nawaz, J in the case of M/s. Farooq and Co. v. Federation of Pakistan and 3 others (1996 CLC 2030) in the following words:--

`As regards the contention that the petitioner had invested colossal amount of funds in setting up of office and necessary infrastructure and so the agency was irrevocable, suffice it to say that setting up of office and employment of necessary staff was essential for carrying on the business of the agency. These acts were not anterior to the contract. These were not consideration to any right of petitioner. Under no circumstances they can be considered as security for any interest of the agent under the agreement of agency. On this state of affairs, it is quite clear to me that the conditions postulated in Section 202 of the Act are not attracted to the facts and circumstances of the case in hand. Reference be profitably made to Palani Vannan v. Krishnaswami Konar AIR 1946 Madras 2036.'

In view of the foregoing it is now abundantly clear that the plaintiff cannot seek perpetuity of relationship on the ground that they have made huge investment or have incurred heavy expenditure or that continuity of the agency would earn them retainer fee and commission, and moreso for the reasons that the Agreement itself provides for its termination as envisaged therein. However, the question as to whether in terms of Clause (3) of the agreement, the agency could be terminated by serving two months' advance notice, only after the initial two years of the creation of the agency i.e. after 14-10-2007, would certainly require interpretation of the agreement itself, and which question, in view of Clause (17), which provides for a dispute resolution mechanism through arbitration in respect of every dispute, difference of question which may at any time arise between the parties, touching or arising out of or in respect of the agreement, can only be decided by the arbitrations, as in the words of Zaffar Hussain Mirza, J (as he then was), the scope of the powers conferred on the Court under Section 20 of the Arbitration Act is merely limited to determination of the factum of real dispute and no more. It is not for the Court to go into the question pertaining to the dispute raised or suggest the manner of decision thereof for that would amount to usurping the jurisdiction of the domestic tribunal constituted under the arbitration agreement [Jamia Industries Limited v. Pakistan Refinery Ltd. (PLD 1976 Kar. 644)]. Similar view has been expressed in Manzoor Construction Co. Ltd. v. University of Engineering and Technology, Taxila 1984 CLC 3347. I would therefore refrain myself from dealing into the controversy as to at what point in time the parties can exercise their option to terminate the agency, which forms, a real dispute amenable to arbitration only.

However, having come to the conclusion that the agency in question is not an agency coupled with interest and therefore does not attract exceptional status of irrevocability as provided by Section 202 of the Contract Act and in view of Section 201 of the Contract Act which provides for termination of an agency by the principal revoking his authority, an order restraining the defendant from revoking the agency and forcing them to continue with the relationship would not be justified, as even if the arbitrators come to the conclusion that the termination of the agency would, in terms of the agreement, be premature for want of the requisite notice, the plaintiffs may be duly compensated by awarding damages.

I am fortified in my view by the judgments in the cases of Huma Enterprises and 3 others v. S. Pir Ali Shah and others (1985 CLC 1522), wherein it was observed that even where termination notice is not given as provided in the agreement, the plaintiff could only ask for damages and not for declaration and permanent injunction, as such an agreement cannot be specifically enforced.

A reference to the case of West Pakistan Industrial Development Corporation, Karachi v. Aziz Qureshi (1973 SCMR 555) may also be beneficial in the present context, where the Hon'ble Supreme Court held as follows:--

`Reading the three Sections (203, 205 and 206 of the Contract Act) together it seems to me evident that if the principal without sufficient cause revokes the agency before the expiration of the period mentioned in, the contract, he must make compensation to the agent. Furthermore, that unless reasonable notice is given of such revocation, the principal must make good the damage resulting to the agent.'

In the case of M/s. Business Computing International (Pvt.) Ltd. (supra), Sabihuddin Ahmed, C.J., whilst holding that making of substantial investments in the business of agency would not make the agency irrevocable, observed that, `It is difficult to see how an agent can tie down his principal into an eternal bond by making some investments when a partner contributing a major part of the capital of a firm and tying down his assets cannot do so. His Lordship further Held that even if there has been a premature or illegal termination of the contract of agency, it can be compensated in money terms. It would not be just and equitable to force a relationship upon the defendant who might have to incur further financial liabilities on account of the same, and dismissed the injunction application.

In Huma Enterprises and 3 others v. S. Pir Ali Shah and others (1985 CLC 1522), where the dealership/sales agreement was terminated by the principal purportedly acting in terms of the agreement, under which at the most three months' notice was required to be given. It was held that even if such notice was not given, at the most the plaintiff firm could claim damages from the defendants and that by seeking declaration and permanent injunction, the plaintiff was in fact seeking specific performance of the dealership/sales agreement which agreement was not an agreement which could be got specifically enforced through the Court and that if at all there was unlawful termination of the sales/dealership agreement, the plaintiff firm could have only asked for damages.

The plaintiff's apprehension that since in pursuance of the agreement they have entered into several contracts with third parties, the termination of the agency, at this stage, would lend them into multifarious litigation is wholly un-founded and based on misconception as Clause 4 of the agreement clearly stipulates that in the event of termination of the agency the contracts already made by the plaintiff with third parties on behalf of the plaintiff and in respect of all contracts that are on the books on the date of such termination of the agreement, the parties shall perform the duties and observe the covenant to be performed and absolved by them respectively, and therefore, the defendants even in the case of termination of the agency would be bound to perform their obligations in terms of such agreement provided the same have been entered into with the consent of the defendant and in conformity with the various provisions of the agreement in question.

In view of the foregoing, I allow the petition and direct the defendants to file the original arbitration agreement in Court within three days from today. The case will be put up for further orders in this behalf on 10-11-2006. The injunction application is dismissed.

(R.A.)      Order accordingly