2002 C L D 527

[Karachi]

Before Sabihuddin Ahmed, J

NATIONAL INVESTMENT TRUST LTD. Plaintiff

---

Versus

LAWRENCEPUR WOOLLEN AND TEXTILE MILLS

LTD. Defendant
---

rd
Suit No-49 of 1979, decided on 3 October 1998.
(a) Civil Procedure Code (V of 1908)
---

----S.20---Suit could be fled within the territorial

jurisdiction of a Court where the cause of action or any
part thereof arose irrespective of the question whether
the defendant Corporation had its principal or
subordinate ofce within such jurisdiction-- Question of
territorial jurisdiction, however, can only be decided on
the basis of the case made out by the plaintiff and not
the defence set up by the defendant---Explanation II to
S.20, C.P.C. was only relatable to cls.(a) & (b) and not
(c) of the said section---[Firm Shaikhan v. W.P. Industrial
Development Corporation PLD 1976 Quetta 94
overruled.

Brady & Co. (Pakistan Limited) v. Sayed Saigol

Industries Limited 1981 SCMR 494 fol.

Gharibwal Cement Ltd. v. Universal Traders, Gakhar

Mandi PLD 1977 Lah. 481 ref.

Firm Shaikhan v. W.P. Industrial Development

Corporation PLD 1976 Quetta 94 overruled.

(b) Contract
---

----Formation of contract --Territorial

jurisdiction---Contract is considered to have come
into existence upon acceptance of proposal.

(c) Contract
---

- Defendant an incorporated Corporation offering

shares to the plaintiffs---Cause of action---Territorial
jurisdiction---Plaintiffs were required to prove that they
had accepted or undertaken to purchase shares offered
by the defendant ---Offer of shares having been made at
place K, part of the cause of action, therefore, accrued at
place K.

(d) Company
---

----Sale of shares of a company---Dispute relating to

performance of contract of sale of shares of an
incorporated company not to be decided by Company
Court; such dispute could only be adjudicated by an
ordinary Civil Court of general jurisdiction.

(e) Company
---

- Sale of right shares under the consent order of the

Controller of Capital Issues---Letter of offer of sale of
such shares at a specifed price to the plaintiffs which
also mentioned the exact number of shares available for
subscription and not only in the frst letter but also in a
subsequent letter the defendants themselves used the
expression "offer" which was accepted by the
plaintiffs---Contention of the defendants that their frst
letter was not an offer but only was in the nature of a
pre-contract inquiry was repelled---Contract had been
concluded and property in the shares had passed on , to
the plaintiffs during the subsistence of the initial consent
order of the Controller of Capital Issues---Principles.

In the present case in the frst place by their letter, dated

9-10-1975 the defendants expressly stated 'we hereby
offer 130,520 shares of Rs. 10 each to you for
subscription at par. After having received the plaintiffs'
communication, dated 27-12-1975 (unaccompanied by a
demand draft), they
responded vide their letter dated 1-1-1976 stating " since
the offer made by us has been accepted by you no
formal provisional letter is necessary, in this particular
case". Secondly it was evident that if the defendants
were of the view that the plaintiffs' letter of acceptance
was not responsive to the offer they could have
conveniently apprised the plaintiffs of the same. Not
only, did they fail to do so but went on to express their
happiness over the plaintiffs' acceptance and assured
the plaintiffs to be treated as shareholders by stating that
no Provisional Allotment Letter was necessary.
Therefore, even if the plaintiffs' letter, dated 27-12-1975
was considered not to be responsive to the offer and
was merely treated as counter-offer such 'counter-offer'
was also clearly accepted vide letter dated 1-1-1976.
The fact that the defendants subsequently accepted the
sale consideration and attempted to refund the same
more than one month later only showed that it was an
afterthought.

Even property in shares had passed on to the plaintiffs.

Therefore, from whatever angle the matter was to be
looked at the conclusion was inescapable that a valid
binding contract had come into existence.

The contract had been concluded and the property in the

shares had passed on to the plaintiffs during the
subsistence of the initial consent order of the Controller
of Capital Issues i.e. up to 2-1-1976.

The only possible defence which could have been

available to the defendants and which had in fact been
raised in their several letters was that after making a
contract it became impossible for the defendants to
perform the same in view of a legal bar imposed by the
Capital Issue (Continuance of Control) Act, 1947,
whereby sale price could not be accepted after the
consent had expired. However, even if it was assumed
that the issue of capital could only be made upon receipt
of consideration and the bar created by section 3(2) of
the Act became applicable, section 6(2) conferred ample
powers upon the Government to condone violation of
section 3 and therefore, the moment consent was
extended with retrospective effect the defendant could
not even plead the existence of such legal bar.

Contracts by Fifoot, 1976 Edn., p.55 and Commissioner

of Income-tax, North Zone v. Crescent Textile Mills
Limited PLD 1973 Lah. 387 ref.

(f) Specifc Relief Act (I of 1877)

---

----S.42---Contract of sale of shares of an incorporated

corporation---Such contract was neither revocable nor in
fact was revoked, and in any event the property in the
shares having been passed on to the plaintiffs, it was not
possible to see how it could be treated as a mere claim
and not right as to specifc property-- Plaintiffs' claim as
to ownership of shares could be treated as a claim
pertaining to right as to property in terms of S.42, Specifc
Relief Act, 1877.

Nanalal Zaver and others v. Bombay Life Assurance Co.

A I R 1949 Bom. 56 and Saeed Ahmad Malik v. Naval
Estate Ofcer 1989 CLC 1056 distinguished.

Alvi Sons case PLD 1968 Kar. 222 and Commissioner of

Income-tax v. Crescent Textile Mills PLD 1973 Lah. 387
ref.

(g) Specifc Relief Act (I of 1877)

---

----S.42---Suit for declaration---Defendants, a public

limited company, were conveyed the consent of the
Controller of Capital Issues, Government of Pakistan to
issue fully paid right shares subject to specifed
conditions---Defendants, in accordance with the
requirements of the Consent Order, offered the shares to
the plaintiffs---Plaintiffs in response to the said letter
informed the defendants that they had decided to take
up the un-subscribed shares and requested the
defendants to send an allotment letter for the
same---Defendants replied to the plaintiffs that since the
offer made had been accepted, no formal Provisional
Allotment Letter was necessary and asked the plaintiffs
to send a Bank Draft for the amount involved---Plaintiffs
sent the demand draft
to the defendants which was cashed---Defendants vide
another letter addressed to the plaintiffs informed that
validity of the Consent Order had expired and therefore
they were not legally authorized to issue any securities
and therefore the amount received was being returned
through a draft---Controller of Capital Issues, had
however, extended the validity of the Consent Order anal
thereupon plaintiffs insisted that shares be issued and
returned the Bank draft despatched to them which was
retained by the defendants---Contention of the plaintiffs
was that, in circumstances, the defendants were liable to
issue the shares in question---Validity---Plaintiffs were
entitled to a declaration that they were owners of the
said shares in the defendant company with effect from
the date of the decree and plaintiffs would be entitled to
all rights and benefts, and dividends to be declared in
the forthcoming fnancial year-- Defendants, however,
were to pay an amount calculated on the basis of 1596
per annum on the amount as compensation from the
specifed date till the date of decree---Reasons recorded.

Nadeem Akhtar for Plaintiffs.

Fazal-e-Ghani Khan and Yawar Farooqi for Defendants.

rd
Date of hearing: 23 September, 1998.

JUDGMENT

On 3-1-1975 the defendant who are a public limited

company having their registered ofce at Lahore were
conveyed the Consent of the Controller of Capital
Issues, Government of Pakistan to issue 11,71,800 fully
paid right shares of the denomination of Rs. 10 subject
to the following conditions laid down in the Consent
Order:---

(a) 'Right Shares' shall be offered to all the existing

shareholders strictly in proportion to the paid-up value of
the shares held by them.
(b) If any shares are not taken up by the existing
shareholders under (a), these shares shall be offered at
par to the National Investment Trust Ltd. for subscription;
and

(c) If National Investment Trust Ltd. does not subscribe

a part or whole of the shares so offered, the Board
of .Directors may allot them in any manner they deem ft."

2. After allotment of such shares to the existing

shareholders, 130,520 shares remain un-subscribed and
in accordance with the requirements of the Consent
Order the defendant vide letter, dated 9-10-1975
addressed the plaintiffs as follows:---

"According to the provisions of the consent Order

No.R-123-CCI (III)/74, dated 3-1-1975 of the Controller
of Capital Issues, Government of Controller of Capital
Issues, Government of Pakistan, Islamabad, we hereby
offer 130,520 shares of Rs.10 each to you for
subscription at par.

If you wish to take up these shares, please favour us

with a Demand Draft for Rs. 13,05,200 (Rupees thirteen
lacs, fve thousand two hundred only) in the name of
Lawrencepur Woollen and Textile Mills Limited, at your
earliest convenience."

3. In response to the aforesaid letter the plaintiff vide

their letter, dated 27-12-1975 informed the defendant
that it had been decided to take up the 130,520 un-
subscribed shares and requested them to send an
allotment letter for the same. The defendant responded
vide letter, dated 1-1-1976 to the following effect:---

"We are happy to note that you have consented to

subscribe against the un-subscribed Right Shares
mounting to Rs. 13,05,200. Since the offer made by us
has been accepted by you, no formal Provisional
Allotment Letter is necessary in this particular case.
We should be grateful if you let us have a Bank Draft
amounting to Rs. 13,05,200 duly made out in the name
of 'Lawrencepur. Woollen and Textile Mills Limited, Civic
Centre, Islamabad', so as to enable us to send you one
Share Certifcate for 130, 520 shares in the name of
National Investment Trust Limited immediately. The
aforesaid share certifcate shall be split up into
marketable lots as and when desired."

4. Consequently a demand draft in the amount of Rs.

1,305,200, dated 14-1-1976 was dispatched to the
defendant which was cashed. However, apparently in
response to a letter from the plaintiffs, dated 4-2-1976
the defendant informed the plaintiff vide letter, dated
18-2-1976 that the validity of the consent order expired
on 2-1-1976 and thereafter they were not legally
authorised to issue any securities.

Therefore, the amount received was being returned

through a draft. However, it appears that the Controller
of Capital Issues extended the validity of the consent
order and thereupon the plaintiff insisted that shares be
issued and returned the draft dispatched to them which
was retained by the defendant.

5. The above facts are not disputed by either of the

parties. However, disputes arose with the plaintiffs'
insistence that the defendants were liable to issue the
shares in question and the defendants contending that
no such liability existed after the plaintiffs' failure to
disburse the price of the shares within the period of
validity of the frst consent Order i.e. till 2-1-1976. A great
deal of correspondence was exchanged with both parties
sticking to their respective points of view and eventually
the present suit was fled on 28-12-1978. praying for the
following reliefs:--

"The plaintiffs pray for a judgment and decree as

under:---

(a) For a declaration that the plaintiffs are shareholders

of 130, 530 right shares of the
defendant Company with effect from 27-12-1975 or
1-1-1976 and that the names of the plaintiffs be shown
as such shareholders from the said date in the register of
shareholders maintained by the defendant Company;

(b) The defendant Company do pay sum of Rs. 522,080

towards unpaid dividends and 26-104 bonus shares
declared for the year ended 31st July, 1977 and Rs.
146,182 towards interest on unpaid dividends at 14% per
annum from the date the dividends were payable till the
fling of the suit;

(c) The defendant Company further pray an interest at

14% per annum on the amount decreed from the date of
the fling of the suit till recovery;

(d) Costs of the suit, and

(e) Such other further/ additional relief(s) as this

Honourable Court may deem ft and proper in the
circumstances of this case."

6. The defendants fled written statement largely

premised upon the legal contentions, questioning, inter
alia, the maintainability of the suit, the territorial
jurisdiction of this Court, existence of a completed
contract, the liability to issue shares after the expiry of
the Consent Order and the mode of relief sought by the
plaintiffs. The following issues were settled:

"(1) Whether this Honourable Court has no jurisdiction

to try this suit and the plaint is liable to be returned
for presentation to the Court having jurisdiction:

(2) Whether the suit is barred by limitation?

(3) Whether Pakistan is a necessary and proper party

and suit is bad for non-joinder thereof?

(4) Whether the suit has been improperly valued and

improper court-fee has been paid? If so,
 whether the plaint is liable to be
returned/rejected?

(5) Whether the plaint has not been properly signed and
verifed?

(6) Whether the plaintiff No. 2 has been improperly

joined? If so, what is the effect?

(7) Whether there was no concluded contact between

the parties as alleged in para. 12 of the W.S.?

(8) Whether the Controller of Capital Issues was not

competent to extend the validity of the Consent
Order?

(9) Whether the plaintiff is not entitled to the relief

claimed?

(10) What should the decree be?"

7. Relevant documents were placed on record by

witnesses deposing on behalf of the parties and
elaborate arguments addressed by Mr. Nadeem Akhtar,
Advocate for the plaintiff and Mr. Fazal-e-Ghani Khan,
Advocate for the defendants. Upon consideration of the
same I proceed to record my issue-wise fndings as
follows:

Issue No. 1

8. Mr. Fazal-e-Ghani Khan, learned counsel for the

defendants at the outset questioned the territorial
jurisdiction of this Court. He argued that admittedly the
registered ofce of the defendant was located in Lahore
and there was no evidence to the effect that it had any
branch ofce at Karachi, therefore, according to him the
suit would have only be fled at Lahore. In view of the
requirements of section 20, C.P.C. read with Explanation
II thereof, which may be reproduced as under:--

"20 . .................................................................
(a) the defendant, or each of the defendants where there
are more than one, at the time of the commencement of
the suit, actually and voluntarily resides, or carries on
business, or personally works for gain; or

(b) any of the defendants, where there are more than

one, at the time of the commencement of the suit,
actually and voluntarily resides, or carries on business,
or personally works for gain, provided that in such case
either the leave of the Court is given, or the defendants
who do not reside, or carry on business, or personally
work for gain, as aforesaid, acquiesce in such institution;
or

(c) the cause of action, wholly or in part, arises.

Explanation I.-......................................

Explanation II.---A corporation shall be deemed to carry

on business at its sole or principal ofce in Pakistan or, in
respect of any cause of action arising at any place where
it has also a subordinate ofce, at such place."

9. Learned counsel placed reliance upon a judgment of

erstwhile High Court of Sindh and Baluchistan in
Registered Firm Sheikhan v. W.P. Industrial
Development Corporation (PLD 1976 Quetta 94) which
indeed supports his point of view. With profound
respects to the learned counsel and the audible author of
the aforesaid judgment it may be pointed out that the
view taken therein was not only dissented from, inter
alia, in Gharibwal Cement Ltd. v. Universal Traders,
Gakhar Mandi (PLD 1977 Lahore 481), but subsequently
overruled by the Honourable Supreme Court in Brady &
Co. (Pakistan Limited) v. Sayed Saigol Industries Limited
(1981 SCMR 494). In the last mentioned case it was
clearly laid down by the Honourable Supreme Court that
Explanation II in the abovementioned statutory provision
was only relatable to clauses (a) and (b) and not (c), and
a suit could be fled within the territorial jurisdiction of a
Court where the cause of action or any part thereof
arose irrespective of the
question whether the defendant Corporation had its
principal or subordinate ofce within such jurisdiction. I
am, therefore, constrained to repel this contention.
Alternatively Mr. Fazal-e-Ghani Khan contended that no
part of the cause of action had accrued within the
territorial jurisdiction of this, Court inasmuch as, even if
the existence of a duly completed contract be assumed,
the cause of action could arise only where the contract
was made or where it was alleged to have been
breached. According to the learned counsel the contract
could only be assumed to be made in Lahore, where the
plaintiffs offer to purchase share was alleged to have
accepted by the defendants and similarly there could be
no question of any breach of contract having taken place
at Karachi. Learned counsel is correct to the extent that
a contract is considered to have come into existence
upon acceptance of proposal. The question of territorial
jurisdiction, however, can only be decided on the basis
of the case made out by the plaintiff and not the defence
set up by the defendant. Mr. Nadeem Akhtar, learned
counsel for the plaintiff argued that according to the
plaintiff the defendants had made the offer vide their
letter, dated 9-10-1975 (wherein the expression "offer"
has been specifcally used) and a valid contract came
into being upon the plaintiffs' acceptance vide letter,
dated 27-12-1975. Moreover, the expression "cause of
action" has been held to mean the totality of fact which if
proved entitles the plaintiff to relief. Evidently the
plaintiffs were required to prove that they had accepted
or undertaken to purchase the shares offered by the
defendant and this happened at Karachi. I am, therefore,
clearly of the view that at least a part of the cause of
action accrued at Karachi.

10. Finally Mr. Fazal-e-Ghani Khan argued that the

matter related to issuance of shares of an incorporated
company and could be adjudicated only by the Court
having jurisdiction under the Companies Ordinance,
1984. Learned counsel referred to the defnition of the
expression `Court' contained in section 2(ii) of the
Ordinance and the provision of section 7 which stipulate
that the Court
having jurisdiction under this Ordinance, shall be the
High Court having jurisdiction where the registered ofce
of the Company is situate. It is indeed correct that the
powers conferred upon "the Court" under the Companies
Ordinance can only be exercised by the High Court
where the company's registered ofce is located.
However, learned counsel was unable to point out any
provisions of the Ordinance or any other law whereby a
dispute relating to performance of contract of sale of
shares of an incorporated company could only be
decided by the Company Court. I am, therefore, quite
clear in my mind that the present dispute could only be
adjudicated by an ordinary Civil Court of general
jurisdiction and there is no force in this contention either.
This issue, therefore; must be answered in negative.

Issues Nos. 2 to 6.

11. Issues Nos. 2 to 5 were dropped by the learned

counsel for the defendant and with respect to issue No. 6
counsel for the plaintiff conceded that he would be
satisfed if suit is decreed in favour of the plaintiff No. 1
alone as such no fnding on these issues is necessary.

Issue No. 7.

12. Mr. Fazal-e-Ghani Khan, learned counsel for the

defendants in the frst place attempt to reiterate the plea
taken in the written statement that the defendants' frst
letter, dated 9-10-1975 (Exh. 4/3) was not an offer but
only in the nature of a pre-contract inquiry. I fail to see
how this contention can be sustained in the face of the
admitted position that under the Consent Order the un-
subscribed shares were frst required to be offered to the
plaintiff at a specifed price, the letter in question
mentioned the exact number of shares available for
subscription and not only in the sale letter but also in a
subsequent letter, dated 1-1-1976 (Exh. 4/5) the
defendants themselves used the expression "offer".
Alternatively, learned counsel argued that it was only a
conditional offer, which could not be accepted
without payment of consideration in the form of Demand
Draft and by the very nature of things, was valid only till
the expiry of the Consent Order i.e. 2-1-1976. He
contended that the fact that the consent of the Controller
of Capital Issues was to expire on the rates mentioned
above was known to the plaintiff and this fact has not
been disputed. Therefore, according to the learned
counsel the Demand Draft having not been dispatched
within the given time the offer expired on 2-1-1976 and
subsequent dispatch of such draft was inconsequential.
Explaining the contents of the letter, dated 1-1-1976
(Exh. 4/5), learned counsel stated that it only indicted
that the condition of the offer had not been fulflled by the
plaintiffs. Relying upon the Fifoot on Contracts (1976
Edition, page 55), it was contended that if an offer is
valid for acceptance on or up to a particular date, later
acceptance would be ineffective.

13. Mr. Nadeem Akhtar, learned counsel for the

plaintiffs, on the other hand, contended that the
defendants' 'letter', dated 9-10-1975 (Exh. 4/3) contained
of the ingredients of a complete offer and its acceptance
by the plaintiff vide their letter, dated 27-12-1975 (Exh.
4/4) created a binding contract between the parties. He
argued that immediate payment of the sale price was not
an essential condition of the offer and nothing to the said
effect could be spelt out either from the defendants'
letter, dated 9-10-1975 or their response to the plaintiffs
communication of acceptance, dated 1-1-1976.

Learned counsel further relied upon a Division Bench

judgment of the Lahore High Court in Commissioner of
Income Tax, North Zone v. Crescent Textile Mills Limited
(PLD 1973 Lahore 387) and contented that a contract for
sale of shares was in the nature of a contract for sale of
goods to which sections 5 and 20 of the Sale of Goods
Act were fully attracted. In the aforesaid case in
somewhat different context i.e.
application of section 15-B of the Income Tax Act,
the Court had the occasion to examine the nature of
a contract for sale of shares and recorded the
following conclusions:--

(i) Under section 2(7) of the Sale of Goods Act

shares were included in the defnition of
goods and the provision of the Act would
apply to contract for sale of shares.

(ii) In view of section 5 of the Act a contract of sale

is made by an offer to buy or sell goods for a
price and the acceptance of such offer.

(iii) Under section 20 where there was an

unconditional contract for the sale of specifc
goods in deliverable state the property in the
goods possessed to the buyer when the
contract is made and it is immaterial the time
for payment of the price or the time for
delivery of goods or both is postponed.

(iv) Share certifcates was nothing more than

documentary evidence of sale of shares and
there was no requirement of law making
transfer of shares or the property therein
subject to issuance of such, certifcates.

14. I regret I fnd no force in either of the contentions

of learned counsel for the defendants. In the frst
place by their letter, dated 9-10-1975 the defendants
expressly stated we hereby offer 130,520 shares of
Rs.10 each to you for subscription at par. "After
having received the plaintiffs' communication, dated
27-12-1975 (unaccompanied by a demand draft),
they responded vide their letter dated 1-1-1976
stating. " since the offer made by us has been
accepted by you no formal provisional letter is
necessary in this particular case". Secondly it is
evident that if the defendants were of the view 'that
the plaintiffs letter of acceptance was not
responsive to the offer they could have conveniently
apprised the plaintiff of the same. Not only, did they
fail to do so but went on to express their happiness
over the plaintiffs' acceptance and assured the
plaintiff to be treated as shareholder by stating that
no provisional allotment letter was necessary.
Therefore, even if the plaintiffs' letter, dated
27-12-1975 is considered not to be responsible to
the offer and is merely treated as counter-offer `as
Mr. Fazle Ghani would like the Court to believe' such
`counter-offer' was also clearly accepted vide letter,
dated 1-1-1976. The fact that the defendants
subsequently accepted the sale consideration and
attempted to refund the same more than one
month's letter only shows that such plea was an
afterthought.

15. Finally Mr. Nadeem Akhtar appears quite right

in asserting on the basis of the Division Bench in
Crescent Textile Mill's case (PLD 1973 Lahore 387)
that even property in share had passed on to the
plaintiffs and I see no reason to take a contrary
view. .Therefore, from whatever angle the matter is
looked at the conclusion is inescapable. That a valid
binding contract had come into existence.

Issue No.8. ,

16. In view of my fnding the effect that the contract

had been concluded and the property in the shares
had passed on to the plaintiff during the subsistence
of the initial consent order the Controller of Capital
Issues i.e. up to 2-1-1976. This issue has become
inconsequential. It may, however, be observed that
the only possible defence which could have been
available to the defendant and which had in fact
been raised in their several letters (Exh.4/ 15 etc.)
was that after making a contract it becomes
impossible for the defendant to perform the same in
view of a legal bar imposed by the Capital Issue
(Continuance of Control) Act, 1947, whereby sale
'price could not be accepted after
the consent had expired. However, even we assume
that the issue of capital could only be made upon
receipt of consideration and the bar accrued by
section 3(2) of the Act became applicable, section
6(2) confers ample powers upon the Government to
condone violation of. section 3 and therefore, the
moment consent was extended with retrospective
effect the defendant could not even plead the
existence of such legal bar.

Issue No.9.

17. It may now be pertinent to consider the question

of relief. Mr. Nadeem Akhtar contended that having
made a contract having received and accepted the
entire sale consideration and having used the
money for 20 years the plaintiff were entitled to a
decree in terms prayed for i.e. a declaration .that
they are holders of 130,520 right shares in the
defendant Company and all consequential benefts
i.e. the amount of dividend declared in 1976 and
1977, 26104 bonus shares declared for the year
ending 31st July, 1977 and the interest on amounts
payable till recovery Mr. Fazle Ghani Khan. learned
counsel for the defendants, however, argued that
even if it was found that a concluded contract
between the parties had taken effect the reliefs
prayed for could not be granted, inter alia, for the
following reasons:--

(i) That the subject-matter of the suit did not pertain

to legal character or right in property and a
declaratory decree in terms of section 42 of
the Specifc Relief Act could not be granted.

(ii) That assuming the existence of a contract the

plaintiff, not having paid the sale
consideration on the relevant date and not
having been allocated shares certifcates
could not claim a declaration as to status of
being a shareholder and could, subject to
availability of such remedy under the
 law, at best seek specifc performance of
contract of sale.

(iii) That the alleged contract not being one for sale
of immovable property and monetary
compensation being possible the alleged
contract could not be specifcally enforced.

(iv) That in any event specifc performance could

only be ordered in the discretion of the Court
and the plaintiff having caused inordinate
delay in responding to the defendants' letter,
dated 9-10-1975 and having responded only
on 27-12-1975 i.e. barley six days before the
expiry of the consent Order and that too
without sending a- draft for payment
disentitled the plaintiff to such remedy.

(v) That according to settled principles of Company

Law allotment of shares was the prerogative
of the directions of the Company and
intervention by Court was not called for
unless illegality or mala fdes were
established.

(vi) That grant of the reliefs claimed and treatment

of the plaintiff as shareholder retrospectively
from a date more than twenty years ago
would be impractical, upset closed
transactions and affect the interests of
several shareholders who are not arrayed
before the Court.

17-A. In support of his frst contention Mr. Fazle

Ghani Khan relied upon the well-known judgment of
his Court in Alvi Sons' case (PLD 1968 Karachi 222)
and contended that the question of being
shareholders of a company was not a matter of legal
character in terms this expression was construed by
Noorul Arfn, J. in the foresaid judgment. I do not
think that there can be any serious cavil with this
preposition of law. However, I am not inclined to
agree that the
plaintiffs claim as to ownership of shares cannot be
treated as a claim pertaining I to right as to property
in terms of section 42 of the Specifc Relief Act.
Learned counsel indeed relied upon a judgment of
this Court in Saeed Ahmad Malik v. Naval Estate
Ofcer (1989 CLC 1056) to contend that a mere claim
against a particular property does not amount to a
right in property in respect whereof a declaratory
decree can be obtained. I do not see how this
judgment can be of much help to Mr. Fazle Ghani
Khan inasmuch as it was held by Syed Abdul
Rehman, J. that a claim to property under a
revocable licence did not fall within the terms of
section 42. As discussed above it has been found
that in the instant case, the contract of sale of
shares was neither revocable nor in fact revoked,
and in any event the property in the shares having
been passed on to the plaintiff, it is impossible to
see how it could be treated as a mere claim and not
right as to specifc property.

18. The second, third and fourth contentions of Mr.

Fazle Ghani Khan appear to be founded upon the
hypothesis that even if a contract for sale of shares
had come into being, it was required to be given
effect or enforced upon payment of price and
allotment of share certifcates. I must confess the
contention appeared plausible. Nevertheless as
explained by their Lordships in Commissioner of
Income-tax v. Crescent Textile Mills (PLD 1973
Lahore 387) the sale had been completed and even
the property in the goods (shares) had passed on to
the buyers i.e. the plaintiffs. They had acquired title
to the goods and when the defendant chose to deny
their title I see no impediment in granting the
declaration prayed for Mr. Fazle Ghani Khan was
unable to show that the view taken in the above
judgment was wrong or cite a precedent wherein a
contrary view had been taken. No question of
specifc performance arises in the circumstances and
it is idle to refer to the clogs on the power of the
Court relating to specifc enforcement of
contract. Mr. Fazle Ghani Khan, however, argued
that issue of capital and allocation of shares was a
matter which according to requirements of company
law was to be decided by the directors of the
company and did not warrant arty intervention on
the part of the Court in imposition shareholders
whom the company was not willing to be associated
with. He relied upon a Division Bench judgment of
the Bombay High Court in Nanalal Zaver and others
v. Bombay Life Assurance Co. (AIR 1949 Bombay
56), wherein it was held that if the issue of capital
was made by the Directors in the bona fde exercise
of powers under section 105-C, of Companies Act,
1913 (comparable to section 86 of the 1984
Ordinance) Courts intervention was not warranted
unless it was shown that the requirement of law was
not adhered to or the action was taken in bad faith. I
do not see how this principle can be invoked in the
present case, where the plaintiff is not questioning
the act of Director in fduciary capacity, but only
seeking adjudication of their rights under, a valid
civil contract.

19. Nevertheless despite holding that the plaintiff

are entitled to the declaration prayed for I have
given my anxious consideration to the question of
consequential relief, particularly in view of the fact
that the suit is being, decided more than twenty
years after the transaction was made. I am not
impressed by the plea that equities weigh against
the plaintiff. Evidence on record indicates that before
signifying their acceptance of the defendants' offer,
dated 9-10-1975 the plaintiff were making some
bona fde enquiries regarding the fnancial position of
the defendant Company. Moreover, having
confrmed the plaintiffs offer, dated 27-12-1975 vide
their letter, dated 1-1-1976, the defendant cannot
complain that the response was delayed. The fact
that they have utilised the price of the shares for
more than twenty years without passing any beneft
to the plaintiff cannot be overlooked. Furthermore,
the delay in disposal
of the suit cannot be attributed entirely to the plaintiff
who fled it in 1978 and it is settled law that act of a
Court should not be allowed to prejudice a party.
However, the only factor persuading me to modify
the relief claimed is that fnancial transactions that
have taken place during the last two decades cannot
be nullifed and those who have received benefts
and dividends and acquired rights on the basis of a
particular state of shareholdings cannot be required
to divest themselves of the same, then they are not
even before the Court. Moreover, there is., no
evidence before the Court as to what benefts the
plaintiff could have acquired as shareholders of the
defendants during the pendency of the suit. Keeping
in view these factors I would decree the suit in the
following terms:

(a) The plaintiff are entitled to a declaration that they

are owners of 130,520 right shares alongwith
26,104bonus shares in the defendant
Company with effect from the date of this
decree. They would be entitled to all rights,
benefts and dividends to be declared in the
forthcoming fnancial year.

(b) The defendants will pay an amount calculated

on the basis of 15% per annum on
Rs.1,305,200 compensation from 15-1-1975
till the date of decree.

(c) The plaintiff will also be entitled to costs of the

suit.

M.B.A./N-88/K Suit decreed.

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