HASAN MASROOR ZAIDI Versus GHAYOOR ZAIDI

ORDER

The application for injunction has been moved by the plaintiffs. In the application it is prayed that the defendants and all persons acting through or under them should be restrained from using and acting upon in accordance with the contents of all the documents including Annexures P.14 to P.17 on which the signatures of the plaintiffs were obtained forcibly with threat and undue influence. It is also prayed that the defendants should be restrained from disturbing and injuring the lawful rights of the plaintiffs as directors of the Company Intech International (PVT) Ltd." It is also prayed that the defendants should be restrained from stopping or interfering the plaintiff from sitting in the office of the Company. For the purpose of this application it is necessary to deal with the facts set out in the plaint as the allegations in the plaint are very largely relied upon in support of the prayer for injunction.

2. According to plaintiffs Messrs Intech International (PVT) Ltd., was Incorporated and registered under the Companies Ordinance, 1984 (hereinafter referred to as the said company). It seems that the Authorised Capital of the said company is Rs.15,000,000 (Rs. Fifteen Million) divided into 1,500,000 shares of Rs.10 each. There were five directors of the said company. On 21‑7‑1985 there were six directors of the said company. On 29‑12‑1985 first statutory meeting was held and the following directors were elected.

(1) Ghulam Kibrya.

(2) Syed Hassan Masroor Zaidi.

(3) Syed Hashmat Hazoor Zaidi.

(4) Syed Akhtar Zahoor Zaidi.

(5) Syed Talat Zaidi.

It is the case of the plaintiffs that the plaintiff No. 1 was holding 5,00,000 shares valued at Rs.50,00,000 against 50 acres of land in Tehsil Hubb, which was mortgaged with the N.D.F.C. for a sum of Rs.2,90,000 and an agreement of sale for 50 Acres of land was executed between the said Company and the plaintiff No.l on 14‑3‑1986. It is the further case of the plaintiffs that on 22‑4‑1986 plaintiff No. 2 was allotted shares valued at Rs.1,00,000 and subsequent the plaintiff No.2 also mortgaged 20 acres land in Tehsil Hubb with N.D.F.C. for Rs.27,00,000 and the amount was paid to the said Company. The defendant No. 1 had committed to allot shares to plaintiffs No. 2 for Rs.27,00,000. It is the further case of the plaintiffs that after resignation of Shahid Mehboob, the plaintiff No. 2 was appointed as Director in May 1986. It is the further case of the plaintiffs that the defendant No.l avoided to give proper accounts, misappropriated company's accounts and gross irregularities.

It is the further case of plaintiffs that on 25‑6‑1987 the defendants Nos. 1 alongwith defendants Nos.3, 4 and 5 came to the office of the plaintiff No.l where plaintiff was not available. All the four brothers/ directors came to plaintiff's residence, they confined him wrongfully at the point of revolver in the hands of defendant No. 3 and daggers in the hands of the defendants Nos. 4 and 5 and pressed plaintiff No.l to sign some documents.

(a) Resignation from directorship.

(b) Minutes of the meeting.

(c) Copy of Resolution.

(d) Receipt of Rs.500,000 in the name of defendant No. 3.

(e) Receipt of consideration against 50 acres of land in Tehsil Hubb.

It is the further case of the plaintiffs that public notice was published, complaint was lodged with S . S . P . South, S . H .O . Defence Society. It is the case of the plaintiffs that the acts of the defendants in obtaining signatures on various documents including P.14 to 0‑17 are fraudulent, illegal and the alleged rights created on the basis of these manufactured documents in favour of the defendant are equally illegal and the contents of those documents are not binding upon the plaintiffs.

4. Upon the allegations the plaintiffs filed the present Suit on 22‑7‑1987 seeking a declaration that the aforesaid documents P.14 to 0.17 are illegal, ultra virs and have no force of the law as having been obtained by force and undue influence and threat and for an injunction to restrain the defendants from interfering with the functioning of the plaintiffs as directors of the said company.

5. The defendants have contested the prayer for grant of temporary injunction and filed counter‑affidavit and documents in support of their objections. It is contended that the plaintiff No. 1 as a result of the money advanced by the defendant No. 1, purchased a plot of land measuring 156 acres in Tehsil Hubb. In view of that purchase, an agreement for sale was drawn between the plaintiff and the said company. According to defendant No. 1 the' plaintiff No. 1 agreed to sell 50 acres of land to the said company. It was agreed that, in lieu of the transfer of 50 acres of land, 5,00,000 ordinary shares of the company would be issued to plaintiff No.l and his nominees, as the land was already mortgaged with N.D.F.C. In terms of the agreement 5,00,000 shares were issued to the plaintiff No.l and his nominee. It was discovered that the plaintiff No.l had already sold the entire land except 50 acres mortgaged with N.D.F.C. When this fraud was discovered the plaintiff No. 1 voluntarily agreed to execute the registered gift deed in his favour. According to the defendant No. 1, the plaintiff No. 1 registered gift deed on 13‑10‑1986. Since the plaintiff No. 1 had no land, the sale agreement, dated 14‑3‑1986 was revoked and in pursuance of that revocation, the plaintiff No. 1 and his nominee surrendered 5,00,000 shares by letter dated 23‑9‑1986. According to the defendants that as a result of transfer of 50 acres of land in favour of defendant No. l the name of plaintiff as. mortgagee has been taken out from N.D.F.C. with their express consent Defendant No. 1 further alleged that the plaintiff No. 2 does not possess any share of the said company. According to the defendant No. 1 the plaintiff No. 1 surreptiously filed Form XII‑A showing plaintiff No.2 as director. According to defendant, the plaintiff No.l resigned from the directorship of the said company. The resignation was placed before the Board of Directors in their meeting held on 7‑6‑1987 and the same was accepted by way of a resolution. Form 29‑A was duly prepared under section 205 of the companies Ordinance, 1984 was submitted before the Registrar Joint Stock Companies, Karachi.

6.The contention of the learned counsel for the plaintiffs is that certain irregularities were committed in holding meeting on 7‑6‑1987. In support of this contention the learned counsel has invited my attention to Article 99 of the Articles of Association. In the case of Bentle Stevens v. Jones (1974) 2 A E R 653, an injunction was refused in spite of the fact of the existence of certain irregularities in holding of the meeting of the company. The Court cannot grant an interlocutory injunction in respect of irregularities which could be cured by going through proper process.

This brings me to the consideration of the rival version of the parties as regards the allotment of shares and events that took place on 7‑6‑1987. Elaborate arguments were addressed by the learned counsel at the bar. At this stage it is not competent for the Court to adjudicate upon issues of fact. All that is necessary for the plaintiffs to establish is a prima facie case by which is mean an arguable case or a serious question to go to trial. Unless the factual controversies are acquired into open evidence led by the true facts. As stated earlier the plaintiff No.l alleges that he was forced with free will to execute the documents P.14 to P.17 after being subjected to threat and coercion. The events described by the plaintiff No.1 in the plaint. The plaintiff annexed copy of the report lodged with the police. The plaintiff also annexed copy of letter addressed to Assistant Registrar, Joint Stock Company. At this stage, however, it is neither possible nor necessary to determine this question, on the other hand, the fact of resignation was notified to the Assistant Registrar, Joint Stock Company.

Taking into account the rival contentions of both the sides, on the whole the impression formed is that the impugned documents P.14 to P.17 does not represent the true facts. Whether it will be possible for the parties to establish the case set up by such party would depend upon the evidence adduced at the trial.

The important question is of the balance of convenience. The result of granting injunction would be to restore the plaintiffs as directors of the company and directly involve them in the management of the affairs of the said company. In Marghub Siddiqui v. Hamid Ahmed Khan 1974 S C M R 519, the Hon'ble Supreme Court has emphasised the need in a case for grant of temporary injunction of the consideration of balance of convenience or irreparable loss and observed that an injunction is not to be granted only on the basis that a prima facie case exists but it is incumbent upon the Court to take into account the other question. The dictum laid down in the above case is fully applicable to the facts of this case as stated above. I am of the view that the balance of convenience lies against the grant of temporary injunction as prayed for. However, in order to protect the interest of the plaintiffs it would be necessary to put the defendants to terms.

7. In the result while refusing to grant the injunction as prayed, I would, however, restrain the defendants from effecting any change in the Constitution of the Board of Directors and from transferring 5,00,000 shares. Additionally the defendants Nos. 1, 2, 4 and 6 shall furnish accounts of the business carried on by the said company for the period commencing from 5‑6‑1987 to 30‑11‑1987 within two months from the date hereof. The defendants shall also furnish monthly accounts of the income received and the expenditure incurred by the said company and file the same by 15th day of each succeeding month. Copy of the accounts shall be furnished by the plaintiff. The application is disposed of in terms of the above.

H.B.T./H‑62/L Order accordingly.