KHURSHEED ANWAR Versus KAISER ARTS & CRAFTS
ORDER
The facts forming background of the suit for possession/ recovery of monies etc. filed by Shaikh Khurshid Anwar, the plaintiff, against (1) Kaiser Arts & Crafts, a partnership firm, (2) Rashid Anwar and (3) Jehangir Anwar (defendants Nos. 1, 2 and 3 respectively) are these.
2. The plaintiff and his mother Mst. Habib Begum formed a firm by the name of S. Muhammad Hussain & Company on 1‑3‑1959. On 1‑4‑1965 the partners above-named admitted four minors, namely, (1) Rashid Anwar, (2) Jehangir Anwar, (3) Naveed Anwar and (4) Kaiser Anwar, the real brothers of the plaintiff and sons of the other partners of the firm to the benefits of the partnership. Upon attaining the age of majority all the four partners on the relevant dates elected to become the partners of the firm. It was on 31‑3‑1979 that Naveed Anwar retired from the firm. Subsequently, on 2‑7‑1983 Kaiser Anwar also retired from the firm. Hence the said firm stood reconstituted with the plaintiff, Mst. Habib Begum and the defendants No. 2 and 3 herein, namely, Rashid Anwar and Jehangir Anwar. On 31‑5‑1984 the defendants Nos. 2 and 3 and Mst. Habib Begum retired from the firm of S. Muhammad Hussain & Company upon execution of a Retirement Deed executed by the parties. The plaintiff is thus the sole proprietor of S. Muhammad Hussain & Company with effect from 31‑5‑1984. The plaintiff at the same time retired from the family business of Kaiser Arts & Crafts (defendant No. 1 herein) and the defendants Nos. 2 and 3 continued as partners thereof. After about 2; years of the execution of the said Retirement Deeds the plaintiff filed a suit bearing Suit No. 35 of 1987 in this Court for declaration that the retirement deed was voidable for having been got executed by him through a fraud and misrepresentation etc. committed upon him and, alternatively, for damages of about Rs.2 crores. About three months after the filing of the said suit the plaintiff has filed this suit for the relief as stated above. He has, however, not prayed for the cancellation of the retirement deed dated 31‑5‑1984 where-under the defendants Nos. 2 and 3 and Mst. Habib Begum stood retired from the firm of S. Muhammad Hussain & Company. His case as set up in the plaint is that despite his protests the defendants Nos. 2 and 3 got a document (application for transfer of textile quota) with regard to the transfer by the firm of S. Muhammad Hussain & Comapny to the defendant No. 1 of which the defendants Nos. 2 and 3 are now the only partners. The firm S. Muhammad Hussain & Company, it may be noted, held a quota of 151067 pieces/151067 sq.yds. of textile quota for category 336 for shipment to U.S.A. during 1984 as per Quota Pass Book No. 25/336/EPB/1984. According to the plaintiff the defendants committed a fraud and misrepresentation upon him in the preparation of the accounts of the firm and in getting transferred for their own benefit to the defendant No. 1, the valuable textile quota owned by the firm. The above‑said valuable textile quota, the plaintiff contends, was got transferred "without any consideration whatsoever", which loss the plaintiff has valued at Rs.2.5 million. The plaintiff has, therefore, prayed for a relief to the effect that he is entitled to recover possession of the said quota from the defendant No. 1, by the redelivery/retransfer of the same to the plaintiff's sole proprietorship concern of S. Muhammad Hussain & Company. Alternatively, he has further prayed, inter alia, to the payment of a sum of Rs.2.5 million being the value to the plaintiff of the said quota entitlement.
3. Alongwith the plaint the plaintiff has also filed an application under Order 39, Rules 1, 2 and 7 read with Order 40, C.P.C. (C.M.A.‑2098/87) praying "that this Hon'ble Court may be pleased, pending the hearing of this suit, (1) to grant temporary injunction, prohibiting the defendant from transferring, selling, assigning or in any way parting with possession of the quota, entitlements, detailed in the Plaint and directing the Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association of 5, Amber Court, Shaheed‑e‑Millat Road, Karachi, not to register any such transfer and (2) Appoint a receiver over the firm of Kaiser Arts and Crafts (the defendant No. 1) to ascertain the profits already made by utilising the said quota entitlements and profits, which may be made in the future from such utilisation and direct such receiver to separate such profits from the profits of the firm and keep the same in his possession pending the finalisahon of the suit".
4. The plaintiff has supported this application by his affidavit dated 14‑4‑1987. He has also filed a further affidavit in support thereof deposing, inter alia, that he had come to know from reliable sources that the defendants are pre‑emptively intending to transfer surrepitiously the said valuable quota entitlements to third parties/ other company. The defendants have contested this application by filing a counter‑affidavit of Jehangir Anwar, defendant No. 3, wherein he has deposed, inter alia, that the application for transfer of quota dated 2‑6‑1984 was duly presented to the Export Promotion Bureau which has allowed the transfer of quota. Hence it is for the last about three years that the defendants have been utilising the aforesaid quota without any complaint or objection on the part of the plaintiff. The application, it is stated, suffers from laches and inordinate delay and is liable to be dismissed on this ground alone. It is further contended therein that the plaintiff is estopped by his own conduct, act and acquiscenc from filing the present suit. He has further deposed that the quota was transferred in accordance with law and the allegations that it was obtained through fraudulent means or without consideration are false and baseless. The defendants, according to the deponent of the counter‑affidavit, are utilising the quota for the last three years and are entitled to do so. They have no intention whatsoever of transferring the aforesaid quota to any third person and hence the allegation in this behalf are totally false and incorrect. The plaintiff has filed his affidavit‑in‑rejoinder refuting the various allegations made in the counter‑affidavit. He has also explained that the delay in filing the suit was on account of the intervention of the relatives and friends who were trying to resolve the differences between the parties.
5. The defendants Nos. 2 and 3 have also on 10‑5‑1987 presented an application under section 34 of the Arbitration Act, 1940, praying that the proceedings of this suit may be stayed and the dispute be referred to the arbitration of Mst. Habib Begum, the mother of the parties, who has been named as a sole Arbitrator vide Clause 12 of the Partnership Deed dated 2‑7‑1983. The dispute according to them has arisen out of the partnership business being carried on by the parties in pursuance to the Deed of Partnership dated 2‑7‑1983 and hence the suit is liable to be stayed. The plaintiff has opposed this application by filing his own counter‑affidavit wherein he has, inter alia, deposed that the disputes have eminated from the retirement deeds executed by the defendants and himself and that the claim in this suit is against the defendant No. 1 firm for the transfer to it, without consideration, the title quotas and which he has claimed and is entitled to receive back or money in lieu thereof In short his case is that the dispute in suit does not arise out of the partnership deed dated 2‑7‑1983 and hence the provisions of the Arbitration Act are not applicable. No affidavit‑in‑rejoinder has been filed by tile defendants Nos. 2 and 3.
6 I have heard the learned counsel for the parties and have, with their assistance, perused the relevant record.
7 I propose to decide both the applications by this single order as under
8. I shall first take up the plaintiff's application for appointment of Receiver etc. (C.M.A. 2098/87). Both the learned counsel for the parties raised the same contentions before me in support of their respective applications and objections as were raised during the hearing of similar applications vide CMA‑298/87 and CMA‑2888/87 in Suit No. 35 of 1987.
9. Having given my anxious consideration to the facts and circumstances of the case I am clearly of the opinion that none of the basic ingredients which justify the grant of a temporary injunction are present in the instant case. Neither the plaintiff appears to have a good prima facie case nor the balance of convenience lies in his favour. Since he (the plaintiff) has himself, alternatively, claimed the value of ‑the aforesaid quota at Rs.2.5 million, there does not arise even the question of his suffering any irreparable injury or damage if the temporary injunction prayed for is not granted. The defendants Nos. 2 and 3, who are the continuing partners of the defendant No. 1 firm, are admittedly utilising the said textile quota without any hindrance from the plaintiff ever since the date of its transfer in June/July 1984. From the documents filed by the plaintiff it appears that the application for transfer of the said quota was signed by him on 2‑6‑1984 and that the department of Export Promotion Bureau allowed it and carried out necessary entries in their records on 16‑7‑1984. The purpose to grant a temporary injunction is maintain the status quo pending the determination of the issues arising in the suit. It is too well‑established principle by authorities that it should not be used for restoring status quo ante. I am afraid if I grant the temporary injunction as prayed for it will make the case fall in the second above‑noted clause of cases.
10. I would, in all fairness to the parties, like to refrain at this stage to deal or touch upon the merits of the case of the parties as it might prejudice the case of either of them despite the legal position that tentative observations made while disposing of such applications do not carry any binding force at the regular hearing of the suit. I would, however, at the same time like to observe that the plaintiff has based his case on undue influence, coercion, fraud and misrepresentation in getting Retirement Deeds executed by him in respect of the defendant No. 1 firm and his outgoing partners in the firm of S. Muhammad Hussain and Company, (besides another firm of Kaiser Sewing Machine) yet, besides making general averments, he has failed to state all the necessary specific facts and particulars constituting coercion and fraud etc. I would, I think, also be justified; to decline the grant of temporary relief in the form of injunction or appointment of receiver on the ground of unexplained delay of over 21 years in bringing the cause to this Court
11. The application is, therefore, without merit and is dismissed.
12. Now I take up the application of the defendants Nos. 2 and 3 (CMA‑2503/87) made under section 34 of the Arbitration Act, 1940 The cause of action in respect of relief of retransfer/redelivery the textile quota entitlement in favour of defendant No. 1, as per contention of the plaintiff in the plaint, accrued on 2‑6‑1984, namely, on the day when the application for the transfer of the said quota was signed by the plaintiff. This admittedly happened subsequent t the dissolution of the partnership firm on 31‑5‑1984 and hence this dispute could not by any stretch of reasoning be said to fall within the arbitration clause contained in the partnership deed dated 2‑7‑1983. The plaintiff has, alternatively, valued and claimed the loss on this account at Rs.2.5 million. In so far as the claim for the loss of Rs.0.5 million allegedly sustained by the plaintiff on account of the bunglings by the defendants Nos. 2 and 3 in the Firm of S. Muhammad Hussain & Company is concerned it may be observed that even if it is held to be falling within the scope of the arbitration clause embodied in the said partnership deed, I would not prefer to exercise my discretion in ordering the stay of proceedings and referring the matter to the named Arbitrator as quite serious and complicated questions of law and accountancy seem to be involved in the suit. Even otherwise it would not but be, obviously, a cause of great inconvenience to the parties to allow the matter falling within the' ambit of the arbitration clause to be proceeded with before they Arbitrator and to let the remaining part of the claim in suit to be contested in the Court. Considering all the relevant aspects of they matter I do not feel inclined to order the stay of the suit. Thel application is, therefore, dismissed.
A . A . /K‑55/ K Applications dismissed.