2000CLC4

[Karachi]

Before Rasheed Ahmed Razvi, J

Haji SHARIF KHAN through

Legal Heirs and another‑‑‑Plaintiffs

versus

Raja ABDUR RAHMAN and 6

others‑‑‑Defendants
Suit No.318 of 1976, decided on 30th June, 1999.

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

‑‑‑‑0. XXII, R.1‑‑‑Death of a

party‑‑‑Appointment of legal representative‑‑
Object ‑‑‑Where party to a suit dies, his legal
representatives are appointed in order that the suit
may proceed and decision be given on the facts
of the case‑‑ Original party's right and disabilities
are to be considered and not of those of the legal
representatives impleaded in place of the
deceased party.

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

‑‑‑‑Ss. 42 & 56‑‑‑Civil Procedure. Code (V of

1908), [Link], R.1‑‑‑Suit for declaration and
permanent injunction‑‑‑Right to inherit
directorship of company‑‑‑Entitlement of such
right by legal representatives of the deceased
plaintiff‑‑‑Validity‑‑‑Such right could not be
granted to the legal representatives of the
deceased plaintiff.

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

‑‑‑‑0. I, R.9‑‑‑Misjoqinder or non joinder of

parties in a civil suit‑‑‑Dismissal of
suit‑‑‑Validity‑‑‑No suit shall be defeated by
reason of misjoinder or non joinder of the parties
and every suit will deal with the matter in
controversy so far as regards the rights and
interests of the parties before the Trial Court.

(d) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑0. I, R.9‑‑‑Misjoinder or non joinder of parties

in civil suit ‑‑‑Company‑‑ Directors of a
Company were arrayed as defendants but the
Company itself was not made as a party in the
civil suit‑‑‑Effect‑‑‑Where the Directors of the
Company were present in the Court, it could be
presumed that the Company was before the Court
to all intents and purposes.

(e) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss. 15 & 16‑‑‑Contract‑‑‑Elements of

coercion, undue influence and
misrepresentation‑‑‑Proof‑‑‑Where such
allegations were pleaded against a contract the
same were to be proved in the manner as that of
the allegations of fraud‑‑‑Allegations of coercion,
undue influence and misrepresentation were to be
proved through strong and independent evidence.

Shamir v. Faiz Elahi 1993 SCMR 145; Kazi Noor

Muhammad v. Pir Abdul Sattar Jan PLD 1959
(W.P.) Kar. 348; Sheikh Muhammad Obaid v.
Muhammad Rafi Qureshi PLD 1962 (W.P.) Kar.
409; Sayad Muhammad v. Fatteh Muhammad
and others ILR 22 Cal. 325; Boyse v.
Rossborough (1857) 6 HLC 1 (49) and Mst.
Hamida Begum v. Mst. Murad Begum and others
PLD 1975 SC 624 ref.

(f) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S. 11‑‑‑"Agreement executed by a minor

himself" and "an agreement entered into on
behalf of minor by his guardian/parent for his
benefit"‑‑‑Distinction‑‑ Where an agreement was
executed by a minor himself, the same was
nullity in law and did not confer any right or title
on the purchaser‑‑‑Agreement by a minor was
void as provided by S.11, Contract Act, 1872, and
that in favour of a minor was valid and binding.

Ashraf Ali v. Etim Ali and others PLD 1959

Dacca 625; Mst. Amanat v. Mahboob Hussain
PLD 1959 (W.P.) Kar. 362; Muhammad
Mursaleen v. Syed Noor Muhammad Hussaini
PLD 1968 Kar. 163; Haji Noor Muhammad
Jamote and another v. Osman and 3 others PLD
1993 Kar. 26; Abdur Rahman v. Abdul Haq and
others PLD 1960 Kar. 625; Muhammad Hussain
v. Saleem Jan and others PLD 1995 Pesh. 98;
Safdar Ali and 3 others v. Muhammad Malik and
4 others 1995 CLC 1751 and Dr. Khalida Malik
and 2 others v. Mst. Fareeda Malik and 7 others
1994 MLD 2348 ref.

(g) Specific Relief Act (I of 1877)‑‑

‑‑‑‑Ss. 42 & 56‑‑‑Contract Act (IX of 1872), Ss.

11, 14 & 15‑‑‑Suit for
declaration and permanent
injunction‑‑‑Appointment of defendants as
Directors of Company‑‑‑Execution of agreement
by defendants‑‑‑Contention raised by plaintiffs
was that the agreement was a result of coercion,
undue influence and misrepresentation and that
the defendants were minors at the time of
execution of agreement‑‑‑Validity‑‑‑Where the
plaintiffs failed to establish that the agreement in
question was obtained under duress and coercion,
the plaintiff could not challenge the appointment
of defendants as Directors or as share holders of
the company and the plaintiffs had become
strangers to the company‑‑‑Plaintiffs were not
entitled to be appointed as Directors of the
Company merely on the fact that the defendants
were minors at the relevant day‑‑‑Suit was
dismissed accordingly.

Mercantile Cooperative Bank Ltd. v. Messrs

Habib & Co. and others PLD 1967 Kar. 755;
Muhammad Aslam v. Wazir Muhammad PLD
1985 SC 46; Agricultural Development Bank of
Pakistan v. Sanaullah Khan and others PLD 1988
SC 67; A. Majid Sama v. The Asbestos Cement
Industries Ltd. and another 1996 MLD 803;
Sardar Muhammad Ali v. Pakistan PLD 1961
Kar. 88; Government of Punjab and another v.
Mst. Kamina and others 1990 CLC 404;
Muhammad Akram v. Mst. Farman Bi PLD 1990
SC 28; Syed Ghayyur Hussain Shah v. Aziz Alam
PLD 1990 Lah. 432; M.A. Naser v. Chairman,
Pakistan Eastern Railways and others PLD 1965
SC 83; Abdur Rahman Mobashir and 3 others v.
Syed Amir Ali Shah Bokhari and 4 others PLD
1978 Lah. 113; Anwar Hussain v. The
Agricultural Development Bank of Pakistan and
others 1992 SCMR 1112; Alavi Sons Ltd. v. The
Government of East Pakistan PLD 194 Rar. 222;
K.P. Ramakrishna Patter v. K.P. Narayana Patter
and others ILR 39 Mad. 80; Muhammad Yasin
Fecto and another v. Muhammad Raza Fecto and
3 others 1998 CLC 237; Messrs Chalna Fiber
Company Ltd., Khulna and others v. Abdul
Jabbar and others PLD 1968 SC 381; Fareed
Sons Ltd. v. Karachi Cotton Association PLD
1956 Kar. 315 and Parvaiz Aslam Mian Aslam v.
Synthetic Chemical Company Ltd., Karachi and
another PLD 1980 Kar. 401 ref.

(h) Companies Act (VII of 1913)‑‑‑

‑‑‑‑S. 35‑‑‑Deceased member of

Company‑‑‑Right of transfer of shares and other
interest of such member to his legal
representative‑‑‑Such right was protected by
virtue of S.35, Companies Act, 1913.

Afsar Ali Abdi for Plaintiff. Saeed A. Sheikh for

Defendants.

Dates of hearing: 27th May and 3rd June, 1999.

JUDGMENT
This is a suit for declaration and permanent
injunction in respect of a dispute pertaining to a
private limited company known as Messrs
Khwaja Autocars Ltd. Initially, the suit which
was filed on 20th April, 1976 was valued at
Rs.60,000 for declaration and at Rs.200 for
permanent injunction. Subsequently, plaintiffs
filed an application (Civil Miscellaneous
Application 1601 of 1997) seeking amendment in
the valuation of the suit, which was granted by
this Court on 26th May, 1997 whereafter
plaintiffs were permitted to file amended plaint. It
is this amended plaint which has been marked as
Exh.1,

This suit was initially filed by two plaintiffs

namely Haji Sharif Khan and Haji Abdul
Rasheed who expired during proceedings of this
suit and now they are being represented by their
legal heirs who are all plaintiffs in this suit. It is
claimed in the plaint (Exh.1) that these two
plaintiffs were appointed on 18‑9‑1974 as two
amongst five Directors of Messrs Khwaja
Autocar Ltd. The remaining directors were
defendant No.1 Muhammad Tufail Butt and
Asghar Ali. The controversy arose sometime in
the month of March, 1976 when defendant No.2,
Tariq Rehman and defendant No.4 Miss Ghazala
Rehman were appointed as directors of the said
company. It is alleged by the plaintiffs that these
persons were minors at the relevant, time; that
they were having no share in the said company:
that no extraordinary or general meeting was held
appointing them a directors. It is further case of
the plaintiffs that on 31‑3‑1976, the defendants
got an agreement executed under threat between
the plaintiffs on the one hand and defendants
Nos.2 to 7 on the other. The plaintiffs have
denied to have seen these minors at the time of
execution of the agreement. Thus, it is challenged
by the plaintiffs that the defendants Nos.2 to 7
being minors at the time of execution of the said
agreement were incompetent to execute that
agreement and, therefore, such agreement being
void ab initio is not enforceable in law. In this
background, the plaintiffs have filed this suit
seeking following relief:‑‑

"(a) declare that the alleged transfer agreement

dated 31‑3‑1976 executed between the plaintiffs
and defendants under threat, coercion and duress
is void ab initio and has no force in law.

(b) declare that the alleged agreement being void,

the plaintiffs continue to be the shareholders, the
Members 4rtd the Directors of the said Company
known as Messrs Khawaja Autocar Limited,
Karachi.

(c) declare that the alleged letters of intimation

obtained from the plaintiffs
Nos. 1 and 2 (undated) are of no legal effect.

(d) declare that the alleged letters of resignation

(undated) obtained from
the plaintiffs are null and void.

(e) declare that all the transactions carried out by

the defendant No. 1 from 31‑3‑1976 till the
passing of the decree as a single handed Director
of the said Company are illegal, null and void and
have no force in law.

(f) declare that the defendants Nos.2 and 4 being

minors are not eligible to
be appointed as or to perform the functions of the
Directors of the said Company.

(g) restrain the defendants from creating any

hindrance, raising objection or disturbing the
plaintiffs in working as the legally elected and
bona fide Directors of the said Company.

(h) allow the cost of the Suit.

(i) pass a decree allowing any other relief or

reliefs as may be deemed fit
and proper. "

3. Defendants filed their joint statement which

was brought on record as
Exh.3. In addition to raising preliminary
objections to the maintainability of
suit, it was denied that the agreement, dated 31 st
March, 1976 was void ab initio
and incapable of enforcement in law. It was
maintained that the plaintiffs have
voluntarily resigned from their directorship as a
result of such agreement. It was
further maintained that on 30th March, 1976. a
meeting of the directors
members of the company was held which
appointed defendants Nos.2 and 4 as
directors and subsequently, on 31st March, 1976,
in the meeting of the Board.
the resignations of the plaintiffs were accepted
and now have been acted upon. It
was prayed that the suit be dismissed with cost.
One of the legal objections
raised was that the plaintiff is not entitled to
declaration and the suit is barred
under section 42 of the Specific Relief Act, 1877
(hereinafter referred to as tire
Act, 1877). w=

4. As a result of the respective pleadings of the

parties, following issues
were adopted by this Court on 8th April. 1978 by
consent of the parties:‑‑ ,

(1) Whether the Agreement dated 31st March,

1976 was executed under
duress or is otherwise invalid for any reason
stated in the plaint?

(2) Whether the defendants or any of them were

minors at all material times and whether any
representations to this effect were made by the
defendant No. 1.

(3) Whether the transfer of shares/appointment of

directors was invalid by reason of the minority. of
some or all of the defendants or for contravention
of the Articles of Association/Companies Act.
[Link] of 1972 or for reason of duress?

(4) Whether the plaintiffs continue to be the

shareholders/directors of the
company?

(5) Whether all the transactions carried out by the

defendants from 31‑3‑1976 in their capacity as
shareholders/directors of the company are null
and void?
(6) Whether the shares were transferred on the
basis of process of bidding
and if so its effect?

(7) Whether the defendants paid the plaintiffs

Rs.68 lacs as consideration
for purchase of the plaintiff's shares?
(8) Whether for reasons stated in the written
statement, the plaintiffs are stopped from
questioning the transfer of shares and
appointment of directors?

(9) Whether the suit as framed is incompetent,

bad in law and not
maintainable?

(10) Whether the suit for declaration is barred by

section 42 of the Specific . Relief Act?

(11) Whether the suit is not properly valued and

proper court‑fee has not
been affixed on the plaint?

(12) Whether the suit is bad for non joinder of

necessary party?

(13) What should the relief be?"

5. On 5‑2‑1985, the process of recording of

evidence of the parties was concluded and the
parties were granted one month's time for
arguments but for one or the other reasons, the
parties were not able to start arguments. On 26th
May, 1998, the parties undertook to file a
summary of their arguments with citations and to
exchange copies of the same before the next date.
None of the parties complied with the said order.
However, Mr. Saeed A. Sheikh, Advocate for the
defendants finally filed his written arguments on
21‑11‑1998 but the plaintiffs did not file the
same. Several opportunities were extended to
them and as a result, the matter was finally kept
reserved for judgment vide order dated
15‑10‑1998. Since the Court encountered some
legal questions which could not be traced on the
case file,' the suit was again fixed for rehearing.
But even then no written arguments were filed
and on 3‑6‑1999, the matter was again kept
reserved for announcement of judgment on 30th
June, 1999. Plaintiffs were permitted to file their
written arguments before the next date but the
same have not been filed. In such background, I
have scrutinised the entire case with the
assistance of Mr. Saeed A. Sheikh.
6. At the very outset,. Mr. Saeed A. Sheikh has
raised preliminary objections to the
maintainability of this suit on the ground that
since both the original. plaintiffs had expired, this
suit has abated. He has pointed out to the prayer
clauses (b), (d) and (g). It is argued that since the
original plaintiffs have expired, they cannot be
installed as directors in the said company and that
all these reliefs being personal in nature could not
be granted in favour of the legal heirs/present
plaintiffs. He has referred to the maxim ' actio
personalis moriture cum persona' and placed
reliance on the case Mercantile Cooperative Bank
Ltd. v. Messrs. Habib & Co. and others _PLD
1967 Kar. 755. In that case, it was held by this
Court after reference to the aforesaid maxim that
the right to render account is a personal right
available against a person who is liable to
account and that such a right does not survive
against his heirs except in cases where a claim for
money is made and for which accounting is
sought. In that case, the plaintiffs had filed a suit
against a proprietorship concern but subsequently
the proprietor died and his widow, mother and a
minor son and daughter were impleaded as
defendants. In such circumstances, it was further
held by this Court, "The exception is upon the
principle that where the deceased had
appropriated money or property the cause of
action even though personal to him survives."
This maxim that the personal right of action dies
with the person properly relates only to extention
of liability, although it has sometimes been
misused in connection with the rule that death
does not give rise to liability in tort, as observed
by Herbert Broom LL.D. in his famous books, 'A
Selection of Legal Maxims' 10th Edition, Sweet
& Maxwell Limited London. While concluding
his discussion at page 622, the following general
rule was laid down:‑‑

"In conclusion the extent and limits of the

common law doctrine, actio personalis moritur
cum persona, may be summed up thus: it was a
rule of the common law that if an injury were
done either to the person or property of another
for which damages only could be recovered in
satisfaction, the action died with the person to
whom or by whom the wrong was done: but this
rule was never extended to such personal actions
as were founded upon any obligation, contract,
debt, covenant, or any other similar duty to b,~
performed: for there the action survived."

7. The above maxim was also considered in

several other judgments of the superior Courts of
Pakistan. In Muhammad Aslam v. Wazir
Muhammad PLD 1985 SC 46 at 53, it was held,
inter alia, by the Honourable Supreme Court,
personal actions connected with the individuality
of a person do not survive him.."The Honourable
Supreme Court made an exception to this rule
and held that where personal actions have
matured into a decree or become part of the
estate, the legal representative can execute such
orders. (For further reference, see the case of
Agricultural Development Bank of Pakistan v.
Sanaullah Khan and others PLD 1988 SC 67 at
72. The case of Mercantile Cooperative Bank
(supra) was followed by another Judge of this
Court, G.H. Malik, J. (as he then was) in A.
Majid Sama v. The Asbestos Cement Industries,
Ltd. and another 1996 MLD 803. In that case, a
suit was filed by the plaintiff for recovery of
Rs.51,000 by way of damages on account of
defamation. During the proceedings of the suit,
the said plaintiff died and defendant raised
objection that in the death of the plaintiff the
cause of action has not survived to his legal
representative and referred to the cases Sardar
Muhammad Ali v. Pakistan PLD 1961 Kar. 88.
Mercantile Cooperative Bank (supra) and
Government of Punjab and another v Mst.
Kamina and others 1990 CLC 404. The plaintiff
on the other hand, referred .to the cases
Muhammad Akram v. Mst. Farman Bi PLD 1990
SC 28 and Syed Ghayyur Hussain Shah v. Aziz
Alam PLD 1990 Lah. 432 and raised the plea that
the right of reputation is to be placed on equal
footing with the right of property as per Islamic
law. This Court came to the conclusion that since
the suit was filed for damages on account of
alleged defamation suffered by the plaintiff, the
cause of action has not survived upon the death
of the plaintiff and the suit was abated. A
Division Bench of this Court has also considered
the above maxim in the case of Mst. Kamina
(supra). In that case, a suit was filed for recovery
of Rs.209,000 on account of damages in view of
the death of plaintiff's son and on account of
damage and loss of business. The suit was
decreed in the sum of Rs.1.00,000 and in the
appeal the suit was dismissed and the appeal was
allowed with the following observations:‑‑

"From the above discussion, it is clear that the

meaning of this maxim is that a personal action
dies with the person, the effect is that the death
extinguishes the liability in tort. In other words
the death of the party wronged or the wrongdoer
brings an end to the cause of action and the right
to sue or be sued for gets extinguished. But this is
subject to a qualification viz, where a tortfeasor
estate is benefited by the wrong done, an action
would be against the representatives of a
wrongdoer. The essence of the maxim applies to
an action brought for damages for a personal
wrong.

In the instant case, undoubtedly the action is

brought by the respondents Nos. l and 2 on the
foot of a personal wrong of Muhammad Habib
Siddique and the present appellants. Unless it is
shown that the estate of the deceased wrongdoer
was benefited by the tortious act committed by
him, the right to sue does not survive because the
personal action is said to die with the person. "

8. In Pakistan, the above maxim is to be read

keeping in view the provisions of Order XXII,
C.P.C. particularly Rule 1 thereof which provides
that no abatement to take place in case of death of
plaintiff or defendant if the right to sue survives.
It is settled that where a party to a suit dies, his
legal representative is appointed in order that the
suit may proceed and decision be given on the
facts of the case. In fact, it is the original party's
rights and disabilities which is to be considered
and not those of the legal representatives
impleaded in place of a deceased party. Order
XXII. C.P.C. does not extent any independent
right to the legal representative higher than the
deceased party. (See Muhammad Iqbal and 2
others v. Ghulam Ali Shah PLD 1975 Lahore
1205 at 1211). Now, reverting to the relief being
claimed by the legal representatives of the
deceased plaintiffs which includes their status as
to the directorship of the said company, I am
afraid that the right of directorship to a company
is not an heritable right. The legal
representatives/heirs may be entitled to right to
inherit the shares being owned and possessed by
the deceased plaintiffs in the company but cannot
inherit right to directorship of the company, and,
therefore, such E relief to the extent of seeking
directorship on the basis of inheritance could not
be granted in the present suit. The present
plaintiffs may be entitled to the relief seeking
shares in the company upon declaration as illegal
and void the agreement impugned and
proceedings of the meeting dated 31‑3‑1976
which I propose to discuss hereinafter.

9. In this suit, some 16 persons were produced by

the parties as witnesses and more than 200
documents were exhibited on behalf of plaintiffs
and defendants in order to prove and disprove
their respective claims. Following are the details
of witnesses produced by the parties:‑‑

P.W.1 Haji Sharif Khan, plaintiff No. l (Exh.5)

documents exhibited from Exh.5/1 to Exh.5/103.

P.W.2 Haji Abdul Rashid plaintiff No.2 (Exh.6)

documents exhibited Exb.6/1 to Exh.6/23.

P.W.3 Muhammad Islam from P.A.F. (Exh.7)

documents exhibited from Exh.7/1 to Exh.7/2.

P.W.4 Ghulam Rasool Senior Clerk, Aziz Bhatti

Shaheed, Gujrat (Exh.8) Documents exhibited
Exh.8/1 to Exh.8/6.

P. W .5 Muhammad $iddique Khan, Inspector,

Central Excise, Kotri (Exh.9) Documents
exhibited (Exh.9/1).

P.W.6 Moinuddin Khan, Central Excise (Exh.10).

Witnesses on behalf of defendants

D.W.1 Viola, Director Piaggio Co. (Exh.11)
Documents exhibited Exh.l l/1 to Exh.l1/14.

D.W.2 Muhammad Shoaib Qureshi, Deputy

Controller, M.C.B. (Exh.12) Documents
exhibited Exh.12/1 to Exh.12/84.

D.W.3 Mushtaq Ahmed Vorah (Exh.13)

Documents exhibited Exh.13/1 to Exh.13/6.

D.W.4 A.K. Shamim, Advocate (Exh.14)

Documents exhibited Exh.14/1 to Exh.14/5.

D.W.5 Afzal Rasheed (Exh.15) Documents

exhibited Exh.15/1 to Exh.15/8.

D.W.6 Muhammad Saleem (Exh.16) Documents

exhibited Exh.16/1.

D.W.7 Anwar Saleem (Exh.17).

D.W.8 Muhammad Iftikhar Hussain (Exh.18)

Employee of M.C.B. Ltd.
D.W.9 Mr. Tariq Sayeed (Exh.19)

. DWAO Raja Abdul Rehtnan (defendant No.l)

(Exh.20) Documents exhibited Exh.20/1 to
Exh.20/13. '

10. First I will deal with the legal issues namely

issues Nos.9 to 12.

Issues Nos.9 and 12.

11. It was argued by Mr. Saeed A. Sheikh that the

plaintiffs are not entitled for the declaration as
prayed as these reliefs are not in respect of any
legal character or status of the deceased plaintiffs
pertaining to their right to property. It was further
argued that the reliefs (a) to (f) fall outside the
scope of section 42 the Specific Relief Act, 1877.
He has placed reliance on the cases M.A. Naser v.
Chairman, Pakistan Eastern Railways and others
PLD 1965 SC 83. Abdur Rahman Mobashir and 3
others v. Syed Amir Ali Shah Bokhari and 4
others PLD 1978 Lah. 113 and Anwar Hussain v.
The Agricultural Development Bank of Pakistan
and others 1992 SCMR 1112. In the case of M.A.
Naser (supra), the question involved before the
Honourable Supreme Court of Pakistan was a
catering contract between the appellant and the
railway administration. It was held that under the
provisions of section 42 of the Specific Relief
Act, a person entitled to any legal character or
right to property can institute a suit for a
declaratory relief in respect of his title to such
legal character or right to property and that the
said suit does not fall within the scope of section
42. In Anwar Hussain (supra), one of the
questions before the Honourable Supreme Court
was the acceptance of an employee's resignation.
It was held that the suit filed by the appellant was
not competent and was rightly dismissed by the
High Court. In the case of Abdur Rahman
Mobashir (supra), a learned Division Bench of
Lahore High Court has dealt in detail with
various aspects of a declaratory suit. While
referring to section 9, C.P.C., it was held that the
suit involving right to property or to an office is a
suit of civil nature, and thus, competent.

12. The phrase ' legal character' and 'legal status'

was elaborately discussed by a Judge of this
Court Noorul Arfin, J. (as he then was) in the
case Alavi Sons Ltd. v. The Government of East
Pakistan PLD 1968 Kar. 222. After making
reference to the 15 definitions given by Professor
Holland and after reference to the case K.P.
RamakrishnaTatter v. K.P. Narayana Patter and
others ILR 39 Mad. 80, it was held that these
expressions include "personal rights and pertain
to the exclusion of the proprietary relations,
contractual capacities and incapacities, or legal
conditions imposed upon a person by law without
his own consent as opposed to the condition
which he has acquired himself by agreement such
as position of a slave." It was further held that a
suit seeking declaration that the plaintiff has not
committed breach of the terms of a contract is a
suit neither with regard to an legal character nor
any right to or in the property. Recently, this
Court in the case of Muhammad Yasin Fecto and
another v. Muhammad Raza Fecto and 3 others
1998 CLC 237 has considered interference of a
Civil Court in the affairs of a company registered
under the Companies Ordinance, 1984 with
reference to section 42 of the Specific Relief Act
and section 9, C.P.C. Reference was made to the
several reported cases including Abdur Rehman
Mubashir (supra), Messrs Chalna Fiber Company
Ltd. Khulna and others v. Abdul Jabbar and
others PLD 1968 SC 381, Fareed Sons Ltd. v.
Karachi Cotton Association PLD 1956 Kar. 315
and Parvaiz Aslam Mian Aslam v. Synthetic
Chemical Company Ltd., Karachi and another
PLD 1980 Kar. 401. In the case of Muhammad
Yasin Fecto (supra) the Chief Executive filed a
suit seeking declaration that he my be declared to
be the Chief Executive and his removal through a
resolution passed by the defendants be declared
contrary to law, invalid and with no legal effect.
After considering the case law, it was held by this
Court as follows:=‑

"From the case‑law as discussed hereinabove, it

can be safely held that the Courts are not
competent to interfere in the day to day working
of a company on the well‑established doctrine of
indoor management. But this is not a absolute bar
and there are situations where a Director or a
shareholder can bring a case before the Court
against a company and its Directors. The Court
will be justified to interfere if the following
conditions are fulfilled:‑‑

(1) Where the majority has acted in depriving the

minority of their lawful
and legitimate rights.

(2) Where the acts, complained of, are ultra vires

of the Memorandum and
Articles of Association of the Company.

(3) Where the Directors have acted malafidely

and against the interest of
the Company.

(4) Where there is violation of a principle of

natural justice

(5) Where the act, complained of, amounts to

fraud and misrepresentation
In the instant case, allegations of the plaintiffs are
that plaintiff No. 1, for all legal and pecuniary
purposes, was 'removed' (as discussed infra) from
the assignment of Chief Executive without
adopting due course of law. It is further argued by
the learned counsel for the plaintiff that the
meeting of 7‑8‑1995 was mala fide and that the
said resolution is ultra vires of the company,
therefore, in view of such averments of the plaint,
I am of the considered view that this suit is very
much maintainable as the plaintiffs have no other
remedy available under the other provisions of
Companies Ordinance, 1984 through which they
are entitled to seek declaration as to their legal
status in the Board of Directors after passing of
the impugned resolution."

13 In view of the aforesaid discussion; I am of

the considered view that the present plaintiffs are
entitled to declaration to the extent of their rights
and entitlement in the shares left by their
predecessors as these are their properties but
subject to the condition of proving the fact that
the agreement, dated 31st March, 1976 was
executed under duress and that no consideration
was paid to the deceased plaintiffs against
purchase of their shares.

Issue No. 11.

14. Initially, this suit was filed and was valued at

Rs.60,000 for the purpose of declaration and
Rs.200 for permanent injunction. Accordingly,
court fee amounting to Rs.2,275 was tendered.
Subsequently an application was filed seeking
amendments in the valuation of the suit. The said
application was numbered as C.M.A. 1601 of
1997. On 26‑5‑1997, the said application was
granted and the suit was revalued at
Rs.6,66,665.74 and further amount of court‑fee
was paid which is now maximum ad valorem
court‑fee amounting to Rs.15,000. In the
circumstances, the defendants have half‑heartedly
argued this point and, therefore, the same is
answered in negative.

Issue No. 12.

15. It is contended by the learned counsel for the
defendants that M/s. Khawaja Autocars (Pvt.)
Ltd. was a necessary party as the directorship and
shares for which the instant suit has been' filed
pertains to the said company. Since it is a
necessary party, it is pleaded that its
non‑impleadment should result in dismissal of the
instant suit. Mr. Saeed A. Sheikh has not cited
any law on this point. However, Order I, Rule 9,
C.P.C. provides that no suit shall bel defeated by
reason of misjoinder or non joinder of the parties
and that every suit will deal with the matter in
controversy so far as regards the rights and
interest of the parties before the said Court. In the
instant case, it has not been denied that the
present defendants are the directors of M/s.
Khawaja Autocars Ltd. and, therefore, for intent
and purposes, it could be presumed that the said
company is before the Court. This issue is
accordingly answered.

Issues Nos. 1 and 6.

16. Plaintiffs are under heavy burden to prove

these two issues. According to the averments in
the plaint, the agreement dated 31‑3‑1976 was
executed under duress but no specific instances
have been mentioned in the body of plaint. Mr.
Saeed A. Sheikh has referred to Order VI, Rule 4,
C.P.C. where it is provided that a party pleading
any misrepresentation, fraud, breach of trust,
willful default or undue influence shall state the
same with dates and items in his pleadings. In
para. 7 of the plaint, it is alleged that after some
displeasure crept up between the parties, the
defendant No. l started threatening the plaintiffs
to either kill them or to put them behind the bars.
In para. 11 of the plaint, it is simply alleged that
the resignations of the plaintiffs were obtained
under coercion, threat and duress on 31‑3‑1976.
In so far as the question of misrepresentation is
concerned, it is alleged that the defendants Nos.2
to 7 were all minors at the relevant time and it
was not disclosed to the plaintiffs which led them
to signing the agreement, dated 30th March,
1976.
17. The agreement, dated 30th March, 1976 has
been produced by P. W.1 Sharif Khan as Exh.5/65
while agreement dated 31‑3‑1976 is produced
and exhibited as Exh.5/69. In support of this
issue, both the plaintiffs namely Sharif Khan and
Abdul Rasheed have appeared in witness‑box.
Sharif Khan was examined as P.W.1 (Exh.5). It
will be seen from the evidence of both the
plaintiffs as well as that of defendant No. l that it
is clearly reflected that there was
misunderstanding between the parties upto a
great extent commencing from the end of year
1975. This fact was admitted by P.W.1 in his
cross‑examination who admitted lodging
complaints with the police authorities. Certified
copies of his statement to the police were
produced and exhibited as Exh.6/2 to Exh.6/4,
respectively. Before the alleged execution of
agreement, dated 30th March, 1976 and transfer
documents on 31‑3‑1976, there was an earlier
agreement between the plaintiffs and defendant
No. l which the plaintiffs were not able to deny.
Although this fact was not disclosed either in the
pleadings or , in the examination‑in‑chief of P.
W.1, Sharif Khan was confronted with this fact in
his cross‑examination. A carbon copy of
agreement, dated 28th August, 1976 was shown
to P.W.1 Sharif Khan and through him it was
produced and marked as Exh.5/19. It was
admitted by both the plaintiffs that Exh.5/19
contains their .signatures. It was further admitted
that the factory was closed after execution of
Exh.5/I1 and all the staff was sent on leave. It
was also admitted by P.W.1 and P.W.2 that as a
result of execution of Exh.5/19, no work was
done in the factory for about next two months.
This fact was noted by their principal in Italy,
namely, Piaggio. According to this agreement
(Exh.5/19), it was agreed between the parties that
the matter is to be resolved amicably; that the
factory head office and workshop shall remain
closed till settlement and that no new employee
was to be engaged in the services; that all the
three directors shall prepare their accounts and
they will make their respective offers within one
month for purchasing the factory. That before
commencement of bidding, every director shall
disclose their financial capability; that the retiring
director shall not interfere in the affairs of
company thereafter and shall not initiate any
legal proceedings; that the retiring director shall
execute all necessary documents for his
retirement; that in case the highest bidder is not
able to pay the balance sale consideration within
the period agreed, the other party would be
entitled to purchase the company.

18. In compliance of the agreement (Exh.5/19),

several other documents were executed namely
Exh.5/20 and Exh.5/24 which establish the fact
that the workshop, factory and other outlet of the
company were closed and the process of
accounting commenced. The plaintiffs have also
challenged the fact that there was no bidding
which I will discuss in the subsequent paragraphs
but for the time being they are required to show
that the transfer agreement dated 31‑3‑1976 was
obtained under. threat, coercion and duress. In
fact, there are two agreements in field. The first is
dated 30th and the other 31st March, 1976 a copy
of which has been filed as Annexure ' C' to the
plaint Exh.5/69. These two agreements and
several other documents executed on 30th and
31st March, 1976 have been claimed by plaintiffs
to have been obtained under duress and coercion.
In evidence, the only instance of threat is
attributed towards bodyguard of defendant No. 1
who was holding pistol in his hand.

19. The case of the plaintiff No. l/P.W.1 is that on

30th March, 1976, he was called by one Mushtaq
who was chartered accountant of the company
who informed him that the matter has been
settled. He took plaintiff No. 1 to the Muslim
Commercial Bank Branch at Akbar Road,
Karachi where 8 to 10 servants of defendant No. l
were also present. Plaintiff No.2 was also called
in the bank and defendant No. l produced some
papers alongwith two pay orders of Rs.3,33,333
each and obtained their signatures on all these
documents; that on 31‑3‑1976 plaintiff No.
l/P.W.1 went to one of his friends who after
hearing all this story suggested him to take the
matter to civil Court as it was a civil dispute. In
such circumstances, the instant suit was filed. In
cross‑examination, it was admitted that no
complaint of criminal case was lodged with the
police station despite the fact that the distance of
police station was hardly one furlong from the
place of alleged incident. It is also alleged by
both the plaintiffs that no complaint was lodged
against the Bank Manager, M.C.B., and that the
other accounts have been maintained by the
plaintiffs in the same branch even thereafter.
Now, the question arises whether the acts
complained of by the plaintiffs constitute undue
influence, coercion or misrepresentation. These
acts have been defined in sections 15 and 16 of
the Contract Act, 1872. Section 14 thereof has
defined 'free consent' to be an act when it is not
caused by coercion (section 15) or, undue
influence (section 16), or fraud (section 17) or,
misrepresentation (section I S) or mistake
(sections 20 to 22). Coercion has been defined in
section 15 as "committing or threatening to
commit any act forbidden by Pakistan Penal
Code or the unlawful detaining or threatening to
detain any property to the prejudice of any person
whatever, with the intention of causing any
person to enter into an agreement." Section 18
defines misrepresentation which includes a
representation, statement or assertian made by
one party at the time of execution of any
agreement ‑or contract with the other party in
respect of some matter which is the subject of
such agreement or contract.

20. The allegations of coercion, undue influence

and/or misrepresentation is to be pleaded and to
be proved in the same manner as that of the
allegations of E fraud. It is to be proved through
strong and independent evidence as held by the
Honourable Supreme Court in the case of Shamir
v. Faiz Elahi 1993 SCMR 145. The question of
coercion was earlier considered by a Division
Bench of this Court in Kazi Noor Muhammad v.
Pir Abdul Sattar Jan PLD 1959 (W.P.) Kar. 348 at
357 where it was held that "in order to prove
coercion it must be shown that the coordinator
applied pressure upon the debtor to procure his
consent. The mere fact that agreement was
entered into in fear of criminal proceedings is not
sufficient to avoid the agreement on the ground
of coercion. " This rule was followed by another
Bench of this Court in the case of Sheikh
Muhammad Obaid v. Muhammad Rafi Qureshi
PLD 1962 (W.P.) Kar. 409 where reference was
made to the cases Sayed Muhammad v. Fatteh
Muhammad and others ILR 22 Cal. 325 and
Boyse v. Rossborough (1857) 6 HLC 1 (49). It
was held that undue influence can also be pleaded
on a party by means of coercion. It was further
held as follows:‑‑

"No doubt undue influence usually arises in

contracts made between relatives or persons in a
fiduciary position but it appears to us that it can
also arise even in cases between strangers if
certain form of coercion, oppression or
compulsion is exercised to dominate the will of
the aggrieved party. Thus, if a person is
persuaded to do something under coercion or by
threatening him in such a way that it gives him
mental distress, it will be nothing but exercise of
undue influence. In our opinion it is not
necessary that such coercion or threat may in
itself be illegal, but if it has given mental distress
to the aggrieved party resulting in the domination
of his will, it will clearly amount to undue
influence. "

21. I have minutely scrutinised the pleadings of

the parties and their respective evidence in order
to find out elements of coercion, undue influence
and misrepresentation in line with the rule laid
down by a Full Bench of Honourable Supreme
Court in the case of Mst. Hamida Begum v. Mst.
Murad Begum and others PLD 1975 SC 624. In
that case, it was held, "where undue influence is
alleged it is necessary to examine very closely all
the circumstance of the case". It is not one
document which was executed on 31st March.
1976. According to plaintiff's evidence, they
remained at the branch office of M.C.B. for more
than 4/5 hours and executed scores of documents
in support of the transfer deed. Defendants have
examined D.W.3, Mushtaq Ahmed Vohra
(Exh.13) who was the chartered accountant of the
company, D.W.4, Mr. A.K. Shamim, Advocate
(Exh.14) who was Advocate of the company and
the concerned Bank Manager. All of them have
denied use of any coercion, misrepresentation or
undue influence b), the defendant No.l. In cross
examination of Muhammad Shari, it was
admitted that the transfer deeds of shares were
also executed in the said branch. There were
certain shares belonging to the wives of the
plaintiffs Nos. l and 2 and were to possession of
their wives which were also brought . to the bank
and their transfer documents were also signed.
No, explanation was offered by the plaintiffs as to
how these shares and. the transfer letters which
were in possession of their wives were brought to
the branch at the relevant time and date and were
delivered to defendant No. 1 duly signed. If it
was a case of getting execution of only one
contract why were all these documents signed
and no objection raised by the plaintiffs during all
this period? Again, no explanation was offered as
to how the two pay orders of Rs.3,33,333 each
were credited in the accounts of the plaintiffs and
were subsequently, withdrawn. All these facts led
me to conclude that there was neither any
element of coercion or duress nor undue
influence when the agreement dated 31‑3‑1976
was executed. Accordingly, issue No. 1 is
answered in negative.

Issues Nos.2 and 3.

22. Burden was upon the plaintiffs to prove that

the defendants Nos.2 to 7 were all minors at the
time when the shares were purchased in their
names. The only evidence on this point led by the
plaintiffs is that on 31‑3‑1976 when they were
executing transfer deeds and other documents; it
was stated by D.W.a. Mr. A.K. Shamim,
Advocate that the defendants Nos.2 to 7 are
minors and that defendant No. l asked him to
keep quiet as it was none of the business of that
Advocate. It is to be seen that during
cross‑examination it was admitted that earlier a
company was formed by the wives of the
plaintiffs alongwith defendant No.2, Tariq
Rehman. In this background, it was suggested
that if the defendant No.2 was minor how was a
private limited company formed by the wives of
the plaintiffs? It is admitted position that
defendant No.4, Miss. Ghazala Rehman is elder
sister of defendant No.2. Therefore, presumption
arises that when defendant No.2 was major, she
was also major being elder to defendant No.2. It
was argued by Mr. Saeed A. Shaikh that there is
no bar in law for entering into a contract by a
father on behalf of his minor children for
purchase of the property. It was argued that since
shares of a private limited company is also
property, a father would be competent to enter
into contract on behalf of his minor children. Mr.
Saeed A. Sheikh has referred to the following
cases:‑‑

(i) Ashraf Ali v. Etim Ali and others PLD 1959

Dacca 625;

(ii) . Mst. Amanat v Mahboob Hussain PLD 1959

(W.P.) Kar. 362;

(iii) Muhammad Mursaleen v. Syed Noor

Muhammad Hussain PLD 1968
Kar. 163.

23. In the case of Ashraf Ali (cited at serial No. l

above), it was held by a learned Single Judge of
erstwhile Dacca High Court while interpreting
sections 10 and 11 of the Contract Act that it is
enacted for the benefit and protection of the
minors and cannot be made to operate against
them. In the case of Mst. Amanat (cited at serial
No. ii above), it was held by this Court that a
minor is not incapable of being a transferee in a
sale‑deed of an immovable property. This case
was followed by another Judge of this Court in
the case of Haji Noor Muhammad Jamote and
another v. Osman and 3 others PLD 1993 Kar. 26
= NLR 1996 CLJ 148. Again, section 11 of the
Contract Act was interpreted by this Court in
Muhammad Mursaleen (cited at serial [Link]
above) where it was held that a distinction is to
be drawn between contracts made by minors and
those made by their guardians oa their behalf for
their benefit. It was further held that the purchase
of property made for the benefit of a minor is not
hit by section 11 and, therefore, a suit filed for
injunction was maintainable. At the I same time a
further distinction is to be drawn between an
agreement executed by a minor himself and an
agreement entered into on his behalf by his
guardian/II partent for his benefit. If an
agreement is executed by a minor himself, it will
be a nullity in law and will not confer any right or
title on the purchaser. (If reference is needed, see
Abdur Rahman v. Abdul Haq and others PLD
1960 Kar. 625). This proposition of law was also
considered by the other High Court. It was held
by Peshawar High Court that an agreement
entered into by the father on behalf of minors as
their guardian for the benefit of such minors was
fully enforceable in the Courts of law
Muhammad Hussain v. Saleem Jan and others
NLD 1995 Pesh, 982. A learned single Judge of
Lahore High Court, Malik Muhammad Qayyum,
J. in the case of Safdar Ali and 3 others v.
Muhammad Malik and 4 others 1995 CLC 1751
considered several case law including the case of
Mst. Amanat v. Mehboob Hussain (supra) and
Ashraf Ali v. Etim Ali (supra) whereafter it was
held that an agreement by a minor is void as
provided II by section 11 of the Contract Act and
that an agreement in favour of a minor is valid
and binding. A distinction was drawn between an
executed contract and executory contract.
Following view was adopted by a Division Bench
of Balochistan High Court in the case of Dr.
Khalida Malik and 2 others v. Mst. Fareeda Malik
and 7 others 1994 MLD 2348 at 2358:‑‑

"In the circumstances it is to be seen whether

such agreement is void in view of section 11 of
the Contract Act. As stated hereinabove the main
object of this provisions appears to be to protect
interest of the minors. Parties are the legal heirs
of late Malik Karam Ellahi Khan, Advocate and
every member of the family wanted to settle the
dispute of property in an amicable manner, thus,
they thought it proper to refer the matter to
arbitrators appointed by each of the parties. We
have found no element of fraud and forgery in the
said agreement and the counsel failed to point out
any mala fides on the part of the mothers of the
minors to enter into agreement as against the
interest of the minors. Learned counsel has also
failed to point out that the minors' mothers have
ever acted against their interest. Thus, our
conscience is satisfied that the legal guardian
entered into agreement on behalf of the minors
bona fide so as to settle the dispute through
arbitration by appointing arbitrators of their
confidence. It is also not the case of the parties
that the mothers of the minors as legal guardians
have ever sold an inch of the property to anyone
else or that they acted against the interest of the
minors in any way. The object of section 11 of
the Contract Act has, thus, been fully achieved..."

In the instant case, the transfer agreement dated

31‑3‑1976 (Exh.5/69) was executed by all the
defendants. In order to resolve these two issues,
namely 2 and.3, first it is to be seen whether
defendants Nos.2 to 7 were minors on the date of
execution of Exh.5/69; secondly, whether that
agreement was for the benefit and advantage of
the minors containing any reciprocal promise;
thirdly, whether defendants Nos.2 and 3 could
have been appointed directors; and lastly, what
will be the consequences of the lapse of time. In
this connection, several documents were
produced by the parties to prove and disprove
minority of the defendants Nos.2 to 7. Exh.6/45
is the certificate issued by the Head Mistress,
Government Girls Secondary School, Jacob
Lines, Karachi which reflects the date of birth of
Ghazala Rehman as 27‑10‑1958. Exh.6/46 which
is a Certificate from the Principal of Public
School Karachi Cantt. shows the dates of birth of
Tariq Rehman as 2‑6‑1962, Habibur Rehman as
2‑4‑1967, Nighat Rehman as 2‑7‑1966 and
Shgufta Rehman as 15‑4‑1969. Another
Certificate which is a school leaving certificate of
Ghazala Rehman (Exh.6/47) shows he; date of
birth as 27‑10‑1958. According to Forms‑B,
Exh.6/48 and Exh.6/49, Ghazala Rehman was
born in 1958, Tariq Rehman in 1961, Gulnaz
Rehman in 1963, Nighat Rehman in 1966,
Habibur Rehman in 1967 and Shagufta Rehman
in 1969. On the point of age factor, the plaintiffs
have relied upon the evidence of P.W.3, namely,
Sq. Leader Muhammad Islam (Exh.7) who
brought the original services record of defendant
No. 1 who had also served in Pakistan Air Force.
He produced two documents as _Exh.7/1 and
Exh.7/2. It was admitted by defendant No‑]
during his cross‑examination that the defendants
Nos.2 to 7 were born from his second marriage
with Mst. Imtiaz Rehman and that the said
marriage took place in the year 1955. According
to the documents pertaining to the P.A.F. the date
of birth of Ghazala Rehman is 21‑f‑1958 which
in respect of Fxh.6/5 and Exh.6/47 relates to the
same year. However, month is different. If the
date of birth of Ghazala Rehman in reckoned
from the P.A.F. record, it suggests that on
31‑3‑.1976 she was 17 years, 9 months and 10
days old. By that time she was a married woman.
This being the situation, it appears that the
defendants Nos.2. to 7 were below the age of 18
years on the day when the transfer deed was
executed. According to the Age of Majority Act,
1875 read with Guardian and Wards Act, 1890,
these defendants appear to be minors at the
relevant time. Now, the consequence of entering
into the agreement by the minors is to be seen in
the surrounding circumstances of the case which
I intend to discuss in the latter part of this
judgment.

25. Plaintiffs have filed this suit against

defendants Nos.2 to 7 through defendant No. l as
guardian who is father of all the said defendants.
C.M.A. 2519 of 1976 was filed by the plaintiffs
under Order XXXII, Rule 3, C.P.C. which was
granted on 24‑5‑1976 to the extent that the
defendant No.l was appointed guardian ad litem
of defendants Nos.3 and 5 to 7. Since the
defendants disputed the age of defendant No.2
namely Tariq Rehman and defendant No.4 Miss.
Ghazala Rehman, on that date no guardian was
appointed and this matter was left for
consideration on the next date of hearing. I have
gone through the subsequent orders. Question of
suing defendants Nos.2 and 4 through guardian
ad litem was perhaps never re‑agitated before the
Court. However, on 23‑5‑1977 while hearing the
plaintiffs' application under Order XXXIX, Rules
1 and 2, C.P.C. following observations
were made by a learned single Judge of this
Court, Zafar Hussain Mirza, J. (as his lordship
then was):‑‑

"So far as the first contention on behalf of the

plaintiffs is concerned, Mr. Sharifuddin Pirzada
submitted that a transaction of transfer of shares
in favour of minors is not governed by ordinary
rules regarding the capacity of minors to contract
and referred to certain decision where such
transfer has been held to be valid in law. Even
otherwise, counsel contended, a transfer of
property in favour of minor through his guardian
has been held to be valid. In this connection he
placed reliance on Subrahmanyam v. Subba Rao
AIR 1948 PC 95 where in a case in which the
mother of the Hindu minor entered into a contract
for sale of immovable property belonging to the
minor, on his behalf and was held to be one
which it was within her competence as guardian
to enter into and that the contract was for the
benefit of the minor. In Dewansingh v Minerva
Films AIR 1959 Punjab 106 it was held that there
is no bar to a minor acquiring or holding shares in
a joint stock company and where the shares of the
minor are fully paid‑up and they are subject to no
obligation the allotment of shares to the minor
cannot be held to the void merely because of their
minority. The Dacca High Court in Ashraf Ali v.
Etim Ali PLD 1959 Dacca 625 observed that in
an executed contract where the minor's part has
been performed, such a contract is enforceable by
a minor as it is the contract for the benefit of the
minor and a dictum was laid down that such a
contract in which the minor is a party cannot be
enforced against the minor but that does not mean
that the major party who had the knowledge of
the minority of the minor contracting party, can
be allowed to repudiate it. It was accordingly
urged that no exception can be taken to the
validity of the agreement of transfer on the
ground that the beneficiary of the contract was
minor. But the submission of Mr. Khalid Anwar
was that defendants Nos.2 and 4 who are also
minors cannot be appointed as directors. On
behalf of the defendants, on the other hand, it was
submitted that there is nothing in the Companies
Act disqualifying a minor from being a director,
as the disqualifications of the directors are
expressly provided for in the Act. A great deal of
controversy was raised, on facts over the question
whether defendants Nos.2 and 4 are minor or not.
The defendants contended that the parties had a
sister‑concern known as Khawaja Autos Limited
in which the wives of the plaintiffs were the
subscribing member alongwith defendant No.2
and it was further asserted that defendant No.4 is
the elder sister of defendant No.2 Conflicting
documentary evidence was produced by the
parties However, in my view the question
whether defendants Nos.?. and 4 are minor or
not, is not very material for the present purposes.
It has been shown prima facie that there is no bar
in law for minors to acquire shares in a company.
The only relevance of the question of minority
therefore, relates to the functioning of the
aforesaid two defendants as directors. Apart from
the submission that there is no bar in the
Companies Act to appointment of minors as
directors which question also requires fuller
consideration so far as the plaintiffs are
concerned if they fail to establish their case that
they were deprived of their share holding through
duress and coercion, they will obviously have no
locus standi to question the appointment of these
two directors. This is so because once their
interest in the company is lawfully terminated
they cannot question the functioning of the
company as they would be strangers having no
right to interfere in the management thereof."
(Reported in PLD 1977 Kar. 814 at 817.)

26. I am in respectful agreement with the above

observations of Justice Zafar Hussain Mirza that
once the plaintiff fails to establish that the
agreement in question was obtained under duress
and coercion, they cannot challenge the
appointment of defendants as directors or as
shareholders as they have become strangers to the
company. Even otherwise, Exh.5/69 was jointly
signed by all the defendants. It could be treated
that the defendant No.l who is father of the
remaining defendants entered into the said
agreement on behalf of the minors. It is not the
case of the plaintiffs that the said agreement was
contrary to the rights and interest of the minors.
In fact the said minors acquired rights and
benefits in the share‑holding of the company
which was in the interest of said minors. These
issues are answered accordingly.

Issue No.4. ‑ ..
27. 1 have partly discussed this matter in paras. 6,
7 and 8 above to the extent of rights of the legal
heirs of the plaintiffs to inherit directorship of the
company. Therefore, so far as the directorship of
the deceased plaintiffs is concerned, that cannot
be inherited by their legal heirs‑ However. the
plaintiffs are entitled to the inheritance upto the
extent of the shares of the plaintiffs in the
company provided they succeed in proving that
the transfer of the shares took place under duress,
coercion and through misrepresentation which I
have already discussed hereinabove. The right of
transfer of shares and other interest of a I
deceased member of a company to his legal
representative was protected by virtue of section
35 of Companies Act, 1913. In so far as merits of
this case are concerned, it will be seen that all the
transfer deeds were executed by the plaintiffs in
the premises of the bank. They went upto the
extent of bringing shares of their wives and other
family members which were never in possession
of the defendants and also delivered the same to
the defendant No. l which were subsequently
transferred in the name of defendants. I have
already discussed the question of duress and
coercion in the above paras. and I am of the view
that it was plaintiffs' voluntary acts through
which they have executed two agreements and
also executed transfer deed. In such backdrop,
this issue must be answered in negative.

Issue No.5.

28. Answer to this issue is based on the findings

on Issues Nos. l to 4 above. Since the execution
of transfer deed was not found to be illegal and
void, it cannot be said that all the transactions
carried out by the defendants after 31‑3 1976 in
their capacity as shareholder/directors are void.
Plaintiffs have failed to discharge their burden in
order to prove this issue. Accordingly, this issue
is answered in negative.

Issue No. 7

29. In their evidence, plaintiffs have categorically

denied that they were paid anything as a result of
execution of transfer deed (Exh.5/69). At the
conclusion of his examination‑in‑chief, plaintiff
No. 1, Sharif Khan, admitted, ""Apart from the
amount of pay orders mentioned by me neither I
nor the plaintiff No.2 was paid any other
amount." Earlier, he admitted in his
examination‑in‑chief that a pay order of
Rs.3,33,333 was paid. to him and another of
Rs.3,33,334 was paid to plaintiff No.2, Haji
Abdul Rasheed. In cross‑examination, it was
admitted by P. W.1, Sharif Khan, that the said pay
order was deposited in his account by the
Manager of the bank. He has admitted that
chartered accountant, Mushtaq Ahmed Vohra and
their company's Advocate Mr. A.K. Shamim were
also present during the entire proceedings on the
evening of 30‑3‑1976 at the M.C..B. Branch. The
mode of payment of further amount as shown by
the defendants was through three short notice
deposit receipts (SNDRs) of the value of
Rs.30,67,667. As alleged by the defendants, these
three SNDRs were converted into 6 SNDRs on
the same night on the instructions of the plaintiff
No.l in the name of Messrs Dost Muhammad,
Qalandar Shah, Umer Khattab, Muhammad
Hayat, Shah Wazir and Mir Nawab. This witness
was shown a cheque, dated 30th March, 1976 for
Rs.400,000 which was produced as Exh.5/85. He
admitted that the same bears his signatures on the
reverse in token of receiving the cash. It was
stated by P.W.1 that the endorsement on the
reverse was obtained by misrepresentation.

30. P. W.2, Haji Abdul Rasheed (Exh.6).also

denied to have received his share of Rs.34 lacs
from the defendants against the execution of the
transfer deed. He has admitted to be present
during the process of examination‑in‑chief and
cross‑examination of P. W .1, Sharif Khan. This
witness has admitted the fact of maintaining
several accounts in his name and in the name of
his children at the Muslim Commercial Bank,
Rizvi Chambers Branch, Karachi. Earlier, this
witness denied to have opened an account in the
name of "A Rasheed" and the cheques confronted
during his cross‑examination. Subsequently, he
tendered his apology for making a false statement
and admitted execution, of the document
Exh.6/86 and Exh.6/87. He denied having opened
three fictitious accounts with the Muslim
Commercial Bank, Frere Road Branch. This
witness was confronted with the four SNDRs
which were made in favour of Najeeb, Tariq and
Suleman. He has denied these SNDRs were
converted into eight SNDRs at his instructions.
He was confronted with a certified account of
S.Q. Traders which he has earlier admitted to be
his company which shows entries of Rs.10 lacs
and 12 lacs on 3‑4‑1976. After confrontation, no
explanation was offered by this witness as to how
this huge amount was credited in the accounts of
S.Q. Traders which was admittedly owned by his
wife. This witness further admitted to have
deposited a sum of Rs.8,50,000 in his account in
United Bank. He was confronted with the
cheques and pay orders Exh.6/1'75 and
Exh.6/176. Again, no satisfactory reply was
offered as to from where he obtained such huge
amount and deposited in his personal account
No.865 (Exh.6/177). He admitted to have
withdrawn a sum of Rs.2,93,000 and Rs.300,340
on 8‑11‑1976. On the same day, he further
withdrew an amount or Rs.2,64,446.81 from the
accounts of S.Q. Traders but was not in a position
to show as to from where this amount was
deposited and how he earned all this amount. He
admitted that his wife was illiterate and that he
used to sign her cheques on her behalf and to
conduct her business but still he denied to offer
any explanation for such huge withdrawals on the
ground that it is for the S.Q. Traders to explain.

31. Then there is evidence of D.W.2, namely,

Muhammad Shoaib Qureshi who at the relevant
time was the Manager of the M.C.B. Rizvi
Chambers Branch, Karachi on the point of ‑the
above issue pertaining to the payments.
According to this witness, defendant No. l
directed him to prepare two pay orders in the
name of Haji Abdul Rasheed and Haji Sharif
Khan. He further stated that defendant No. l gave
him six short notice [Link]. in the name of
different persons with the direction to prepare
four [Link]. for Rs.10 lacs, one for
Rs.10,66,666 and another for Rs.10,66,667.
According to this witness these [Link]: were
handed over to Mushtaq Ahmed Vohra and A.K.
Shamim, Advocate for Haji Sharif Khan and Haji
Abdul Rasheed. He further stated that the
plaintiffs opened new accounts and deposited the
pay orders and with further application forwarded
him [Link]. for conversion of the same in the
names of their nominees. He admitted that the
entire process of preparation of [Link]., their
encashment and other documentation took place
in the bank branch during the night between 30th
and 31st March, 1976. He admitted presence of
plaintiffs, defendant No.l, Mr. A.K. Shamim,
Advocate, Mushtaq Ahmed Vohra, chartered
accountant and 4 other persons belonging to the
said company. He further admitted that the entire
staff of his branch numbering 17 to 20 was also
present during the entire process. During his
lengthy cross examination, he admitted to have
filled in several bank documents on the relevant
day. This witness was supported by D.W.8,
Muhammad Iftikhar Hussain (Exh.18) who at the
relevant time was posted in the said branch and
had witnessed the entire transactions as claimed
by the defendant No. 1. He supported the bank
Manager in respect of preparation of [Link].
He has deposed that the .said [Link]. were
encashed on the directions of the two plaintiffs
whereafter fresh [Link]. were made in
different names which were handed over to the
plaintiffs. This witness was not able to recall the
names of those persons in whose name the said
[Link]. were prepared. The practice of late
banking transactions which are done after
banking hours is to be recorded as the
transactions of the next date was also supported
by this witness.

32. Mr. A.K. Shamim, Advocate was examined as

D.W.4 (Exh.14). He claims to know both the
plaintiffs for more than 13/14 years and that he
was the legal advisor of the company. He
supported the fact that on 30‑3‑1976 bidding took
place and defendant No. l quoted the highest
offer whereafter he was required to pay an
amount of Rs.6S lacs to the plaintiffs. He also
narrated in detail the transactions conducted in
the evening of 30th March, 1976 within the
premises of M.C.B, Rizvi Chambers, Karachi. He
has also supported the fact of preparation of pay
orders and [Link]. at the branch and its
delivery to the two plaintiffs. From the entire
evidence, it is established that Mr. A.K. Shamim,
Advocate and Mr. Mushtaq Ahmed Vohra,
chartered accountant were present during the
entire transactions of bidding and execution of
agreements as well as payment of Rs.68 lacs to
the plaintiffs. It is pertinent to note that both the
plaintiffs . in their detailed examination‑in‑chief
did not allege anything against these two persons
in regard to coercion, misrepresentation and/or
duress. Nothing was brought out from the
cross‑examination in regard to their integrity and
bias towards to plaintiffs. They remained
associated with the plaintiffs and defendant No. l
throughout the process of crisis in the company
beginning from January, 1976 and ending on
31‑3‑1976. From their evidence, the transactions
of bidding, execution of transfer deed and other
documents as well as payments of Rs.68 lacs
through different [Link]. stands successfully
proved. This fact, coupled with the fact that the
defendants have subsequently encashed the said
two pay orders and withdrew a huge amount from
their private accounts for which no satisfactory
explanation was offered, further strengthens the
view that the agreed amount was paid at the
M.C.B., Rizvi Chambers Branch, Karachi on the
night in between 30‑3‑1976 and 31‑3‑1976.
Therefore, this issue is answered in affirmative.

Issue No. 8

33. If it would have been a case of coercion,

duress or misrepresentation on the part of
defendant No. l then equally the Bank Manager,
other staff members of M.C.B., Rizvi Chambers
Branch, Karachi; Mushtaq Vohra and A.K.
Shamim, Advocate were also to be held
responsible for such acts as without them the
alleged acts of coercion, duress and
misrepresentation were not possible. Why no
action was taken against the bank staff by the
plaintiffs? No attempt was made by the plaintiffs
to answer this question. Allegations of obtaining
signatures of the plaintiffs on the reverse of the
pay orders and encashment of [Link]. without
involvement of cash payment were offences fully
covered by the provisions of Pakistan Penal
Code. (In the year 1984, a special law titled
'Offences in Respect of Banks (Special Courts)
Ordinance, 1984 was enacted). Even no
complaint was made to the high officials of the
M.C.B. for the alleged role of the bank staff. Why
no complaint was lodged with the Sindh Bar
Council on the conduct of the Company's
Advocate, Mr. A.K. Shamim? Why no complaint
was made to the professional body of the
Chartered Accountants for the alleged conduct of
Mr. Mushtaq Vohra. There was no satisfactory
explanation on all these questions from the
plaintiffs' side. From the conduct of the plaintiffs.
it proves that filing of this suit was a result of an
afterthought. This observation is fully supported
by the admission of P.W.1 Haji Muhammad
Sharif who stated that after 2/3 days of the
alleged date of incident (30th March, 1976) he
conveyed all the acts of defendant No. 1 to one of
his friend who advised him to file this suit as it
was a civil matter. Only on such advice, the
plaintiff No. 1, approached one Advocate who
filed the instant suit. Till meeting with his friend
the plaintiff was not sure of the coercion, duress
or misrepresentation allegedly committed by the
defendant No. 1.

34. In view of the above discussion and for the

reason that the transaction of sale and transfer of
shares was proved to be genuine and bona fide, I
am of . the considered view that now the
plaintiffs are estopped from questioning the
same.

Issue No. 13.

35. This issue deals with the reliefs as prayed by

the plaintiffs. After going through the deposition
of witnesses which comprises of more than 400
pages and the documents brought on record
which again comprise more than 200 in number, I
am of the considered view that the plaintiffs were
not able to prove the case of duress, coercion and
misrepresentation in execution of the agreement
(Exh.5/69) as well as non‑payment of
consideration. The fact that defendants Nos.2 to 7
were minors on the relevant day would not entitle
them for grant of relief prayed for. Accordingly,
the plaintiffs are not entitled for relief prayed in
the suit which is dismissed with no order as to
costs.

Q.M.H./M.A.K./S‑246/K Suit dismissed.

;