SAIFUDDIN Versus ZAINUDDIN

The plaintiff has filed this suit for setting aside the decree, dated the 14th October, 1975 in Suit No.36 of 1971. The case of the plaintiff, as set out in the plaint is that he had, by a power of attorney, dated the 8th October, 1970, appointed Jameel Ahmed, the defendant No.2, his attorney for the purpose of safeguarding and securing his ownership of the factory, Central Wire Netting and Metal Products Co. (hereinafter referred to as "the factor'), and to obtain possession thereof from Zainuddin, the defendant No.l, who was in possession thereof in the circumstances which will appear hereinbelow. By the power of attorney, the defendant No.2, was inter alia, empowered to file a suit against the defendant No.l. The defendant No.2, in exercise of the powers granted to him by the aforesaid power of attorney filed Suit No.36 of 1971 against the defendant No.l herein for declaration, permanent injunction, possession and accounts. In that suit, an application under Order 23, Rule 3, C.P.C. was filed by the defendants herein but, before that application was allowed, Saifuddin, the plaintiff herein, revoked the aforesaid power of attorney by deed of revocation, dated 3rd January, 1974. The application was, nevertheless granted by a learned Judge of this Court on the 14th October, 1975; and, according to the allegations in para. 23 of the plaint, the application was granted in the following circumstances: ‑‑

"Eventually on 14th October, 1975 the second compromise application came up for disposal before a learned Single Judge of this Hon'ble Court when Mr. Naeemuddin the then Standing Counsel for the Federal Government appeared in the suit and personally made a statement that the Custodian of Enemy Property had not taken over the Central Wire Netting & Metal Products Company, Karachi, as enemy property and that the Custodian of Enemy Property had no interest in the subject‑matter of the suit. As a result, the learned Judge proceeded to consider the application for compromise when he was. informed that the power of attorney which the present plaintiff had executed in favour of Jamil Ahmed stood revoked in the manner described earlier in this plaint and that the present plaintiff opposed the compromise application the same being unauthorised as well as collusive and against the plaintiff's interest. The concern, it was explained, had been burdened in the compromise application with, inter alia, heavy liabilities incurred by the licensees from time to time, which liabilities did not in law and in principle devolve upon the present plaintiff."

2. The grounds on which the order and the decree dated the 14th October, 1975, is being challenged are set out in paragraph 34 of the plaint, which is reproduced below: ‑‑

"The present plaintiff submits that the said order, dated 14‑10‑1975, recording the compromise and decreeing the suit in terms thereof is illegal, void and a nullity in the eye of law and is otherwise vitiated by fraud for the following among other reasons:

(a) In that the, learned Single Judge of this Hon'ble Court had no jurisdiction to record a compromise when at the time of its recording the present plaintiff had disowned the said compromise and questioned it as fraudulent, collusive and against his interest.

(b) In that the learned Judge erred in the exercise of his jurisdiction in failing to appreciate that every compromise application, before an order recording it is passed has to be referred to the parties and their reaffirmation of its contents and authenticity sought. Even assuming that the present plaintiff was physically present in Court and had also himself signed the compromise application (which admittedly was not the case in the suit in question), the present plaintiff was still at liberty to resile from the compromise at any stage before the same was accepted by the Court and as soon as such unwillingness of any party is communicated to the Court, the Court has no jurisdiction to record it as a voluntary compromise.

(c) In that the learned Single Judge of this Hon'ble Court proceeded to treat the compromise application as purely a contract between the parties and to give effect to the said contract notwithstanding the resilement of one of the parties therefrom.

(d) In that the learned Single Judge of this Hon'ble Court failed to appreciate the legal implications of the doctrine of agency with particular reference to the facts and events before him. More elaborately, it is submitted with respect that reaffirmation of the compromise and the consent of the parties to stand by it was also an action taken pursuant to the agency created and no such action could have been taken by Jamil Ahmed reaffirming the compromise when the agency itself, before that date, stood terminated.

(e) In that the learned Single Judge of this Hon'ble Court failed to take into consideration the fact that soon after the present plaintiff had gained knowledge of the compromise application having been filed and much before the said application came up for orders, he had, from Bombay written to His Lordship the Chief Justice of this Hon'ble' Court complaining against the collusive compromsie and informed his Lordship that the agency of Jamil Ahmed had been revoked by the present plaintiff. This, letter of the present plaintiff was also on the record of Suit No.36 of 1971 when the compromise was accepted.

(f) In that the order, dated 14‑10‑1975 passed by this Hon'ble Court and the decree prepared in terms thereof is otherwise a nullity in the eye of law for other reasons.

(g) In that the decree dated 14‑10‑1975 passed in the said Suit (Suit No.36 of 1971) is vitiated by fraud in that the so‑called attorney of the present plaintiff (Jamil Ahmed) colluded with the defendant in the said suit and other parties and pressed for the compromise to be recorded. It is submitted with respect that the very fact of an agent pressing for a compromise to be accepted against the specific will and the instructions of his principal is sufficient proof positive of the fraud and the collusion.

(h) In that Suit No.1347 of 1975 filed by Jamil Ahmad before the learned Civil Judge, Karachi, wherein he set up for the first time the plea that the power of attorney was for consideration, although the document itself did not so suggest, is yet further proof of the fact that Jamil Ahmed was acting as though the subject‑matter in respect of which he had been appointed plaintiff's agent was his own property.

(i) In that the learned Single Judge of this Hon'ble Court was not unaware of the consequences and the legal implications of the present plaintiff revoking the power of attorney and a suit on this question pending before the Civil Court at Karachi. It was in this knowledge that the receivership in respect of the subject‑matter of the suit was not terminated but continued. The learned Single Judge on the same considerations should have deferred the acceptance of the compromise. Even otherwise his order continuing the Receiver after the termination of the suit before him was a void order since he had become functus officio in respect of the cause before him as soon as the decree was passed.

(j) In that the learned Single Judge erred in holding that the compromise was for the benefit of the present plaintiff merely on the strength of Jamil Ahmed's counsel's statement to this effect. The learned Judge failed to appreciate that the liabilities incurred by the licensees who had run the factory and drawn the benefits were all illegally mulcted on the plaintiff and the value of these liabilities was much in excess of the value of the factory itself.

(k) In that the judgment and decree impugned herein bristles with illegalities and is otherwise vitiated by fraud and is liable to be set aside and declared so."

The defendants have, in their respective written statements, denied all allegations of fraud; and the defendant No.2 i.e. Jamil Ahmed has alleged that the power of attorney, dated the 8th October, 1970, was irrevocable as it was coupled with interest.

4. Upon the pleadings of the parties, following issues were framed by consent of the parties on the 27th May, 1978:‑‑

"(1) Whether the suit is maintainable?

(2) Whether the suit is properly valued?

(3) Whether the decree passed in Suit No.36/71 is null and void and vitiated by fraud on the grounds mentioned in para. 34 of the plaint?

(4) What should the decree be?."

5. The plaintiff examined himself and Mr. Rustam J.E. Kaikobad as his witness; Zainuddin, the defendant No.l examined Qazi Abdul Ahad (Exh.7) and himself (Exh.8); and Jamil Ahmed, the defendant No.2, examined Mazharul Haq (Exh.9), Fakhruddin (Exh.10) and himself (Exh.11).

6. Having considered the pleadings and the evidence and heard the arguments advanced by the learned counsel for the parties, my findings are as follows:‑‑‑

7. Issues Nos. 1 and 2 .‑‑No arguments were advanced on these issues' either by Mr. Shamsul Arfin or by Mr. Afzal Nabi, while Mr. SA. Majid contended that the order, dated the 9th February, 1974 (Exh.ll/33) passed on C.MA. 371/74 (Exh.ll/32) in Suit No.36 of 1971 has not been challenged and had become final and the suit is, therefore, not maintainable. By C.MA. 371/74, the plaintiff had prayed that photocopy of deed of revocation, dated the 3rd January, 1974, be kept on record and the original thereof be kept in safe custody. That application was dismissed as "having no force". It is not at all clear how that order affects the maintainability of the present suit which has been filed to impugn the decree in Suit No.36 of 1971 as having been obtained by fraud. As regards valuation of the suit, Mr. Majid submitted that the suit has been valued at Rs.26,000 only whereas according to a direction (Exh.8/11) issued by District Magistrate, Zainuddin was required to deposit the amount of Rs.6,00,000 which had been imposed as fine for not declaring that the factory in question belonged to Saifuddin. The argument is fa‑fetched and was only advanced half‑heartedly. The prayer in the suit is not for possession of the factory and, in any case, the amount of Rs.6,00,000 mentioned above is not the value of the factory. The issues have, it is quite clear, been raised frivolously. I, therefore, hold that the suit is maintainable and has been properly valued.

8. Issue No.3. ‑‑The grounds, set out in para. 34 of the plaint (reproduced above), upon which the judgment and decree are assailed, fall into two categories, namely, want of jurisdiction and fraud. The burden of the pleas in. clauses (a) to (e) is that the plaintiff having revoked the power of attorney, dated the 8th October, 1970, and having disowned the compromise agreement, dated the 15th August, 1973, as fraudulent, and having resiled therefrom, Jamil Ahmed was not entitled to affirm the compromise before the learned Judge and the latter had no jurisdiction to accept the same and to pass the decree in terms thereof; and clauses (g), (h) and 0) contain allegations of fraud. Clauses (f) and (k) are only general assertions. Mr. Shamsul Art‑in, the learned counsel for the plaintiff, argued at considerable length and almost the entire argument was devoted to showing that the impugned order and decree were passed without jurisdiction. His submission, in his own words, was, "an agreement entered into between the parties and before it is sought to be enforced in Court, it it is revoked earlier and intimation is given to Court as to its revocation, then that agreement, to all intents and purposes, is void and cannot be implemented i.e. cannot be made subject‑matter of compromise". This submission may be considered in the context of the allegations of facts contained in para. 23 of the plaint (reproduced in para. 1 above).

The above argument is premised on the alleged revocation of the power of attorney as well as of the compromise agreement. The plaintiff s contention is that by deed of revocation, dated the 3rd January, 1974, he had revoked the power of attorney, dated the 8th October, 1970. The defendant No.2, on the other hand, not only challenges the genuineness of the alleged deed of revocation but contends that it is ineffective because the power of attorney is couple with interest and, therefore, irrevocable; and the case of the defendant No.l is that, in any case, the compromise agreement was entered into, admittedly, when the power of attorney subsisted and is not affected by the subsequent revocation, if any, of the power of attorney. It may be observed that the validity of the alleged revocation of the power of attorney is the subject‑matter of separate litigation between Saifuddin and Jamil Ahmed. As far as the present litigation is concerned, it is not necessary to decide whether or not the power of attorney was revoked and the only question is whether the alleged revocation of the power of attorney, after the compromise agreement had been arrived at, ipso facto, amounted to revocation of the compromise. Mr. Afrin cited Patani Vannan and others v. Krishnaswami Konar and others AIR 1946 Mad. 9 in support of his contention that the power of attorney, in this case was revocable. That case is, however, not relevant to the present controversy and merely decided that the kind of power of attorney in question there was not irrevocable. Mr. Afzal Nabi, the learned counsel for the defendant No.l, submitted that since the power of attorney dated the 8th October, 1970, subsisted on the 15th August, 1973, when the compromise was arrived at, any subsequent cancellation of the power of attorney could not, in any manner, affect the compromise. He relied on the case of Ahmed Khan v. Settlement Commissioner 1975 SCMR 64. In that case, the petitioner had executed a power of attorney authorising the respondent No.2 to enter into an agreement of sale or partnership and to sign, execute and complete any deed of agreement. The respondent No.2, in pursuance of the power of attorney, executed a deed of relinquishment on behalf of the petitioner in favour of the respondent No.3. Subsequently, "when the bird had already flown", the petitioner cancelled the power of attorney. Then the deed of relinquishment was approved by the Deputy Settlement Commissioner. The order was challenged on the ground that it was passed ex parte and that the cancellation of the power of attorney had already been communicated to the Deputy Settlement Commissioner before the order approving the deed of relinquishment was made by him. The contentions were rejected and it was, observed: ‑‑

"The crux of the matter is that on 27‑2‑1973, when the respondent No.2, in his capacity as attorney of the petitioner, had executed the deed of relinquishment in favour of respondent No.3 he had the requisite authority to do so on the basis of the power of attorney executed by the petitioner in his favour on 27‑8‑1969 which was quite valid till its cancellation on 8‑3‑1973." and further that

"The power of attorney executed by the petitioner in. favour of respondent No.2 remained valid from 27‑8‑1969, the date of execution to 8‑3‑1973, the date of cancellation. The validity of anything done by respondent No.2 during this period on the basis of the power of attorney remains unquestionable:"

Mr. Shamsul Arfin submitted, feebly, that the present case is distinguishable from the case reported in 1975 SCMR 64 but made no attempt to point out any distinguishing features. In the present case, the power of attorney was executed on the 8th October, 1970, and the compromise agreement was arrived at on the 15th August, 1973, when the power of attorney was valid and subsisting. Therefore, the alleged subsequent cancellation of the power of attorney, did not have the effect, by itself, of rendering the compromise ineffective or void.' In support of his contention that revocation of the power of attorney amounted to revocation of the compromise agreement, Mr. Shamsul Arfm relied on the cases of Pirzada Mumtazuddin v. Farukh Sultana PLD 1960 Kar. 409, Mirza Iqrar Beg v. M.Y. Harman PLD 1979 Kar. 620, Mst. Shujarat v. Muhammad Raza AIR 1957 All. 450 and Sadajiwatlal v. Sm. Chandrani AIR 1946 Sindh 81. None of these cases support the above contention of Mr. Arfin and are, in fact, concerned with the duty of the Court to inquire whether or not a lawful agreement had been arrived at between the parties.

10. It needs to be noted that the entire argument of Mr. Shamsul Arfin, on the point of jurisdiction proceeded on the basis that the compromise agreement had been revoked by revocation of the power of attorney. No attempt was made to show that the plaintiff had ever revoked the agreement itself either expressly or, otherwise than by alleged revocation of power of attorney, impliedly. In any case, the argument that a revocation simpliciter puts an end to a contract is without any merit.

11. Perusal of the impugned judgment shows that the learned Judge made due inquiry as to whether or not a lawful agreement had been arrived at and, having duly considered the dispute between Saifuddin and Jamil Ahmed, arising out of the alleged revocation of the power of attorney, concluded that a lawful agreement had indeed been arrived at between the parties and it was H not affected by the alleged revocation of the power of attorney. He, therefore, acted within his jurisdiction. If there was any error in exercise of the undoubted jurisdiction, as alleged in the plaint, it was open to the plaintiff to prefer an appeal from the judgment but no remedy is available to him in this suit on that ground.

12. Mr. Ar6n next contended that the power of attorney in favour of Jamil Ahmed having been revoked, he had no authority to affirm the compromise before the learned Judge and, therefore, the learned Judge acted without jurisdiction in, accepting affirmation of the compromise by Jamil Ahmed. The' contention is misconceived. The learned Judge had the jurisdiction and, indeed, was under a duty, to inquire whether a lawful agreement was arrived at. Such inquiry was made and Jamil Ahmed did no more than confirm, in effect, that he had, during the subsistence of the power of attorney, entered into the compromise. Mr. Arfin referred to section 196 of the Contract Act but that section has no application to the facts of this case. 1

13. The learned counsel also contended that the compromise was void and so was the impugned order because the respondent No.2 had not obtained prior consent of the plaintiff; and sought support from a decision reported in 1987 SCMR 1009. The argument was not supported by any law or principle and the decision relied upon by Mr. Arfm does not help him. In that case, where the Court had allowed an attorney to withdraw the suit without notice to his principal, it was held that, in the circumstances of the case, the trial Court acted with material irregularity; but material irregularity in exercise of jurisdiction is not equivalent to lack of jurisdiction.

14. In the light of the above discussion, I am of the view that the plaintiff has not made out any case for setting aside the impugned judgment and decree on the ground that they were passed without jurisdiction. It now remains to be considered whether the judgment and decree were obtained by fraud.

15. The facts and events giving rise to the present suit are as follows. Saifuddin purchased the factory, known as Bharat Wire Netting & Metal Products Company (now named Central Wire Netting & Metal Products Company) by an agreement, dated the 22nd December, 1947 (Exh.8/4) for lump sum consideration of Rs.3,20,000. He was at that time a citizen of India and it was, apparently, necessary for him to conceal the purchase of the factory by him in Pakistan in view of the problems he had in India where he was being declared evacuee. In order to achieve that object, certain documents, namely, letter of authority (Exh.8/18) signed by Zainuddin authorising Saifuddin to purchase the ' factory, receipt, dated the 10th December, 1947 (Exh.8/19) signed by Saifuddin, and another receipt (Exh.ll/16) signed by Zainuddin in favour of Saifuddin were executed. The purpose of these documents was to show that Saifuddin, who was shown as a purchaser in the agreement (Exh.8/4), had purchased the factory on behalf of Zainuddin. Zainuddin was put in possession of the factory and was running the same. By letter, dated the 10th September, 1949 (Exh.8/6) Zainuddin requested Saifuddin to give an authority letter to A.N. Meghani, Advocate, who may operate his joint locker for the purpose of taking out papers therefrom regarding the transfer of the factory from Saifuddin to Zainuddin. The reason for the request, as stated in the letter, was that he, Zainuddin, could not run the factory as a Manager as was done in the past. Alongwith the request, Zainuddin also extended the assurance to Saifuddin that he would not misuse the papers and would declare himself as benami of Saifuddin when required. Such letter of authority (Exh.ll/15) was issued on the 7th October, 1949. Subsequently, on the 6th March, 1952, Zainuddin obtained an order (Exh.8/21) from the Additional Custodian Karachi confirming the sale of the factory and Saifuddin was stated to be the agent of Zainuddin. Zainuddin, thus, became ostensible owner of the factory. Zainuddin then obtained transfer of the land on which the factory was situated in his own name by order, dated the 14th December, 1963 as evidenced by RT.D. (Exh.8/22). It appears that sometime in 1960 Saifuddin brought Jamil Ahmed, the defendant No.2 into the picture in order to keep a watch on Zainuddin who was alleged to have started acting as real owner of the factory. Saifuddin then decided that it was time to inform the relevant authorities .in Pakistan that the factory belonged to him; and, by his letter, dated the 29th September, 1961 j Exh.8/7), informed the State Bank of Pakistan that he was the owner of the factory and that Zainuddin was his benami. It appears that subsequently Zainuddin was prosecuted before Summary Military Court for not declaring the evacuee property and a fine of Rs.6 lacs was imposed upon him. Saifuddin made a statement before the Martial Law Authorities in which he claimed that he was the owner of the factory and that the. documents by which Zainuddin had been shown as owner thereof, were all forged with the object of saving Saifuddin's property in India; and that, although Zainuddin was running the factory as a proprietor thereof, he was in fact the benami of Saifuddin. In that statement Saifuddin also made a request for leniency to be shown to Zainuddin because the latter, in concealing the true ownership of the property, had acted only to protect the interest of Saifuddin and for the benefit of the firm. That statement was made on 8th August, 1969 (Exh.8/23). After Saifuddin had made the statement (Exh.8/23) before the Martial Law Authorities and before Zainuddin was convicted and sentenced by Martial Law Authorities on the 4th October, 1970, Saifuddin executed a General Power of Attorney on a stamp paper bearing the date 8th September, 1969 (Exh.5/8) authorising Zainuddin to run the business of the factory, and Zainuddin, by his letter, dated the 16th August, 1969 (Exh.8/8) written to Income Tax Officer, Karachi informed him that although he had been assessed until the year 1968‑69 as proprietor of the firm, he had in fact been acting for and on behalf of Saifuddin and that the business of the factory/firm belonged to Saifuddin. It would thus appear that at least upto the 8th September, 1969, when Saifuddin executed a power of attorney (Exh.5/8)' in favour of Zainuddin, there were apparently no problems between them although both Saifuddin and Jamil Ahmed have taken the stand that Jamil Ahmed was looking after the interest of Saifuddin in relation to the factory and was trying to protect the same from Zainuddin. Be that as it may, on the 8th October, 1970, Saifuddin executed a power of attorney (Exh.5/1) in favour of Jamil Ahmed authorising him, inter alia, to revoke the benamiship, proprietorship, managership of Zainuddin in relation to the factory and to institute legal proceedings against him and to compromise the same. In pursuance of the aforesaid power of attorney, Jamil Ahmed caused a legal notice (Exh.8/13) to be served upon Zainuddin and subsequently, .in January, 1971, filed Suit No.36 of 1971 against him for declaration that the plaintiff i.e. Saifuddin has been the owner of the factory and for permanent injunction to restrain the defendant from entering into the premises of the factory; for possession of the factory; and for accounts.

16. The claim of the plaintiff in Suit No.36 of 1971 was that Zainuddin was merely a benami for the plaintiff and that the factory as well as the land belonged to the plaintiff. Zainuddin in his written statement (Exh.8/17) had taken the plea that the factory was purchased by the plaintiff and that he, the defendant, was only the ostensible owner of the factory though not of the land. His further plea was that id July, 1959, the differences which had arisen between him and Saifuddin regarding the factory were settled on the, intervention of late Sayedna Tahir Saifuddin and in terms of that settlement he, the defendant, was to continue to be shown as ostensible owner and was to be entiteld to 6 annas in a rupee in profits and assets of the factory as management agency charges. As regards the land, the plea of the defendant was that the land was not purchased by the plaintiff but was transferred to him, the defendant, as a displaced person for Rs.72,000, by the Settlement Department on the 7th January, 1964, and that, therefore, it was purchased by the defendant in his own right although the price thereof was paid by him from the accounts of the factory and that the price so paid was to be adjusted against the defendant for agency/management charges.

17. On the 17th May, 1971, a preliminary decree was passed in accordance with the compromise arrived at between the parties to the suit and Habib Bank Limited who had apparently applied to be joined as a party to the suit. The preliminary decree was in the following terms:‑‑‑

"(1) That Mr. Mahmood Hussain Khan, Advocate is appointed Commissioner for the purpose of taking accounts of the factory known as Central Wire Netting and Metal Products Co., situated at University Road, Karachi and its Head Office at 427, Princess Street, Karachi.

(1) Plot of the factory shall be Company's property subject to accounting of the price paid for it.

(2) That the fine of Rs.6 lakhs imposed by the Martial Law Authorities shall be payable by the Company and debited to the account of the plaintiff.

(3) That the agency charges of the defendant No.l for running the factory shall be determined by the Commissioner and shall be paid to the defendant No. 1.

(4) That the parties do admit the claim of Habib Bank Limited."

18. It appears that the accounts contemplated by the preliminary decree had not yet been taken when, on the 2nd December, 1971, the parties moved an application (Exh.8/30) under Order 23,-Rule 3, C.P.C. The terms upon which the parties had agreed by that application were as follows: --

"It is prayed on behalf of the parties in the above matter that this 1-lon'ble Court be pleased to record the compromise and pass the final decree in the terms as set out below: --

(1) That the possession of the factory `Central Wire Netting & Metal Products Co.' situate at University Road, Karachi, with its Head Office and godown at 427/3, Princess Street, Karachi be handed over to the plaintiff and that the plaintiff will be the sole proprietor of the factory, its business, head office and godown.

(2) That the defendant claims no right, interest, title in the said factory and its business including the Head office, godown and the said plot.

(3) That the plaintiff shall be liable to pay all the out standings and liabilities of the Company.

(4) That the plaintiff as the proprietor of the factory shall be entitled to recover all dues, debts, outstanding against any third party.

(5) That the plot of the factory (Plot No.NJ/15 on which the factory is situate) shall be the property of the Company and that the fine of Rs.6,00,000 imposed by Martial Law Authorities on the defendant shall be payable by the Company as has already been agreed in the compromise application dated 17-5-1971, and the orders passed thereon by the Court on 17-5-1971.

(6) That the machine (5 crates of Welded Wire Mesh Plant) of M,/s. Concrete Reinforcement & Engg. Co. Ltd. stored at the factory premises shall be returned to them by the plaintiff through the defendant.

(7) That the plaintiff shall hand over three Wire Drawing Machines belonging to Alburhan Steels Ltd. to them through the defendant. The Wire Drawing Machines are not planted but stored at the factory premises.

(8) That all the outstanding amounts against M/s. Al-Burhan Steels Ltd be considered paid up and that the plaintiff shall not claim any amount against M/s. Al-Burhan Steels Ltd.

(9) That the plaintiff shall hand over one Butt Welding Machine to the defendant.

(10) That the Channels stored at the factory premises and belonging to M/s. Sh. Fazal be returned to them.

(11) That all dues of M/s. Dawood Bhai, Ahmed Bhai, Tayyab Bhai and Muhammadi shall be paid by the company. Their cases will be dealt with as employer and employee.

(12) That all outstanding bills referred to and annexed with the Receiver's reference-in-reply, dated November, 1971 and marked as Annexures E and E-1 shall be paid by the plaintiff company to the creditors.

(13) That the plaintiff shall hand over to the defendant one Toyota Car No.KAF-7766 in running condition to the defendant.

(14) That the parties shall bear their own costs in the suit.

(15) That there shall be no accounting between the parties and accounts between them shall be taken as settled.

(16) That the either party shall have no claim on each other whatsoever.

(17) That receiver be discharged according to law."

19. That application, apparently, was not granted in view of the doubts on the question whether or not the plaintiff was `enemy' under the Defence of Pakistan Ordinance and Rules; and was subsequently withdrawn, apparently, for the same reason.

20. While Suit No.36 of 1971 was pending Suit No.16 of 1973 was filed against Saifuddin by Concrete Reinforcement and Engineering Co., Ltd. in which Zainuddin was apparently interested. In that suit claim was made that certain machinery lying in the premises of the factory belonged to the plaintiff therein.

On the 15th August, 1973, another application (Exh.5/7) under Order 23, Rule 3, C.P.C. was presented, duly signed by Jamil Ahmed as attorney of Saifuddin and by Unuddin as well as by their respective Advocates. The terms of that application were as follows: ‑‑

"Saifuddin the plaintiff acting through his legally constituted attorney Jamil Ahmed and Zainuddin the defendant have agreed to the following terms and conditions and have finally resolved all their disputes. The parties Saifuddin, Jamil Ahmed and Zainuddin‑jointly and severally hold and agree to hold Messrs Habib Bank harmless and indemnified from all cost, claims, demands and liabilities whatsoever arising or pertaining or relating to the property factory and business in suit‑‑

(1) Saifuddin and Zainuddin shall perform the terms covenants and conditions of agreement of compromise between them, dated 2‑12‑1971 except clauses (9) and (13) thereof which Saifuddin will not be required to perform and from which he is released and acquitted. A copy of the said agreement is annexed herewith.

(2) Saifuddin through Jamil Ahmed and Zainuddin pray that the Honourable Court authorise Messrs Habib Bank Limited the Receiver to deliver possession of 5 crates of welded wire mesh plant to Zainuddin and possession of the factory called Central Wire Netting and Metal Products Company and all its properties including plot, plant, machinery, equipment, stocks, goods, offices etc. to Jamil Ahmed on behalf of Saifuddin.

(3) Zainuddin on behalf of himself and the Concrete Reinforcement and Engineering Company Limited agrees to withdraw Suit No.16 of 1973 filed in the High Court of Sindh and Balochistan, against Messrs Habib Bank Limited and Saifuddin with no orders as to costs.

(4) The parties accept the account submitted by Habib Bank Limited and agree that the amount in credit in the account instead of being deposited in Court be paid by Messrs Habib Bank Limited to Jamil Ahmed on behalf of Saifuddin and pray to the Hon'ble Court for orders accordingly. The parties release and acquit Messrs Habib Bank Limited. from rendering any more or further account whatsoever.

(5) Parties agree that Messrs Habib Bank Limited resign from office of Receiver and pray that accounts submitted by them be accepted and they be discharged from office of Receiver.

(6) Saifuddin through Jamil Ahmed and Zainuddin release and acquit each other and one another from accounts and agree that proceedings between them before the Commissioner for taking accounts be dropped and discontinued and are withdrawn. They agree that balance of fees, if any, payable to the Commissioner for taking accounts shall be paid half by Jamil Ahmed on behalf of Saifuddin and half by Zainuddin.

(7) Saifuddin through Jamil Ahmed and Zainuddin agree and undertake to take all measures and proceedings, file applications, affidavits and to do, execute and perform all acts, deeds, matters and things as may be necessary and/or proper in matters herein.

(8) Saifuddin through Jamil Ahmed, Jamil Ahmed and Zainuddin jointly and severally agree to hold Messrs Habib Bank Limited harmless and indemnified from and against all claims, demands, liabilities and obligations whatsoever arising or pertaining or relating to property, facto 'ry and business including claims of labour and or taxes or making or giving deliveries or handing over possession or making payments provided herein or their acting as Receivers or otherwise howsoever in the premises or in relation thereto.

(9) Messrs Habib Bank Limited acknowledges that their own claim in suit is satisfied. Saifuddin through Jamil Ahmed and Zainuddin agree that Habib Bank Limited deliver the documents of title pertaining to the Central Wire Netting and Metal Products Co., pledged and mortgaged with them by Zainuddin to Saifuddin through Jamil Ahmad.

The parties pray that the Hon'ble Court will be pleased to' record the settlement and pass decree and orders in terms therewith."

22. As the status of the plaintiff was not settled, the question of his status was referred to Government of Pakistan and the consideration of the above application was deferred pending receipt of clarification from the Government. While the application was thus pending, Saifuddin purported to cancel the power of attorney (Exh.5/1) by a deed of revocation (Exh.5/2), dated the 3rd January, 1974. Notice of purported revocation was published in `Morning News' (Exh.5/4) and an application (Exh.5/3) was moved to restrain Jamil Ahmed from acting as attorney. Saifuddin also wrote a letter, dated the 9th September, 1974 (Exh.5/6) to the Chief Justice of this Court intimating that he had cancelled. the power of attorney, dated the 8th October, 1970 and that, therefore, the Vakalatnama in favour of Mr. BA. Siddiqui, Advocate, signed by Jamil Ahmad, had been automatically revoked. He had also made an application in that suit to keep the original deed of revocation and a copy thereof on the record of the suit and that application was dismissed.

23. Subsequently, statement was made in Court, on behalf of Attorney‑General for Pakistan, that the plaintiff was not an "enemy; and thereafter the application (Exh.5/7) dated the 15th August, 1973, was taken up on the 14 th October, 1975, in the presence of Jamil Ahmed, as attorney of Saifuddin, and his counsel Mr. Fatal Bhai as well as Mr. Rustam J.E. Kaikobad on behalf of the plaintiff; and Zainuddin and his counsel; and an order accepting the compromise was passed. The order is reproduced below in extenso‑‑‑

"This is a suit for declaration, permanent injunction, possession and accounts filed on behalf of plaintiff Saifuddin by the then attorney of the plaintiff one Jamil Ahmed against defendant Zainuddin under the following circumstances:

The plaintiff Saifuddin had is the year 1947, in Karachi, bought the factory known as Bharat Wire Netting and Metal Products Company from its original Hindu owner Harbans Lal Mangaram Marwah. This factory was renamed as Central Wire Netting and Metal Products Company and the management was handed over by the plaintiff to defendant Zainuddin. Thereafter the plaintiff absented himself from Pakistan and went back to Bombay while the factory was being managed by the defendant. Taking advantage of the absence of the plaintiff the defendant assumed proprietary rights and entire control over the factory. The defendant tried to get the property of the plaintiff in respect of the factory transferred in his personal name. This led to a dispute between the plaintiff who was at Bombay and the defendant who was managing the concern in Karachi. The plaintiff then filed this suit through one Jamil Ahmed by a duly constituted power of attorney.

On or about 2‑12‑1971 the plaintiff through his attorney Jamil Ahmed and the defendant Zainuddin presented a compromise document in Court for passing of the final decree. A. question, however, arose whether after the war between India and Pakistan the property of the plaintiff who was then residing in Bombay became enemy property? On this account the matter was left pending and a reference was made. to the Central Government to clarify the position with regard to the subject‑matter of the suit whether it was to be considered as enemy property. The counsel for the Attorney‑General, Mr. Naimuddin, appeared personally and made a statement that the Custodian of Enemy Property had not taken over the Central Wire Netting & Metal Products Company, Karachi as enemy property and that the Custodian of Enemy Property has no interest in the subject‑matter of this suit. The matter was then fixed for the question whether the compromise application presented earlier could be accepted.

Meanwhile 'a dispute arose between the plaintiff and his attorney Jamil Ahmed and it is said that while passing through Karachi on a boat the plaintiff met someone on board and handed over a chit to him revoking the said power of his attorney in favour of Jamil Ahmed. This led to the institution of a separate suit for declaration whether this revocation of power of attorney was valid and whether Jamil Ahmed still continued or not as the attorney of the plaintiff?

However, for the purpose of the consideration of this compromise application the question of subsequent revocation of the power, if any, has hardly any effect. When this compromise application was, presented in Court for orders there was no dispute regarding the power of attorney executed in favour of Jamil Ahmed. Mr. Fazal Bhai on behalf of the plaintiff has argued that the compromise being entirely for the benefit of the plaintiff, any dispute with regard to the subsequent revocation of the authority of the attorney could have no adverse effect so far as the interests of the plaintiff are concerned. Under this compromise the entire factory with its head office, godown etc. is declared as the sole property of the plaintiff and the plaintiff is to be handed over the possession of the entire property including the factory, business, head office, godowns etc. The question of any reservation of power for the attorney in respect of this factory does not appear in the body of the compromise. Therefore, the decision, if any, in the subsequent‑suit with regard to the attorney, can have no affect on this compromise and has no connection with the present suit.

In view of the position as discussed above, this compromise, which is admitted, by the Advocates and all concerned in presence of the parties, Jamil Ahmed and Zainuddin, who are present here, recorded and made rule of the Court. A decree be passed in terms of this compromise. .

It might, however, be added that in view of the fact that the present, authority of the said attorney being in dispute on account of the so called subsequent revocation, the possession of the subject‑matter of this suit shall continue to remain with the receiver Mr. Hamid Hussain and the income from the said property shall be deposited in Court on behalf of the plaintiff Saifuddin until such time as the subsequent suit in respect of the revocation of power of Jamil Ahmed is finally decided.

The receiver is permitted to withdraw his charges at the rate of 5% of the net monthly income from this factory or Rs.500 per month which ever is more advantageous to the receiver from the date of his first appointment. ,

Sd/‑ Musthaq Ali Kazi, J"

24. During the pendency of the suit, the factory was run by several persons, successively, as licensees appointed by the Court from time to time.

25. It is in the circumstances outlined above that the plaintiff seeks to have the impugned order and decree set aside on the ground that they were obtained by fraud. The specific allegations of fraud are contained in paras. 23 anal 34(g) & (j) of the plaint. In para.23 it is alleged, inter alia, that on 14 th October, 1975, "the plaintiff opposed the compromise application the same being unauthorised as well as collusive and against the plaintiffs interest." and, further, that it was explained to the learned Judge that the plaintiff "had been burdened in the compromise application with, inter alia, heavy liabilities incurred by the licensees from time to time, which liabilities did not in taw and in principle devolve upon the present plaintiff." Para. 34 (j) is to similar effect while in clause (a) of para. 34 the contention is that the alleged fraud was proved by the fact that the defendant No.2 pressed for acceptance of compromise. Thus, according to the pleas in the plaint, the very questions in issue in this suit were brought to the notice of the learned Judge before he passed the impugned order. He cannot, therefore, be said to have been deceived by any fraud or collusion. Similarly, the plaintiff had, avowedly, the opportunity to bring the alleged fraud to the notice of the Court before it passed the impugned order; and he did avail of the, opportunity. That being so, it does not appear to be open to the plaintiff to assail the impugned order in the present suit on the same grounds as were urged before the learned Judge on the 14th October, 1975. As for the allegation that the proof of the alleged fraud was furnished by the defendant No.2 pressing for the acceptance of the compromise, it ignores the fact that the defendant No.l as a party to the compromise was entitled to insist upon its acceptance by the Court and, in fact, did so. Even if the defendant No.2 had not pressed for acceptance of the compromise, the Court, in the circumstances, was bound to accept the same upon the parties admitting that they had signed it and upon deciding that it was a lawful compromise.

26. On the question of fraud all that the plaintiff has said in his examination‑in‑chief is that the defendant No.2, in collusion with the defendant' No.l, attempted to compromise various suits against his interest and he, therefore, revoked the power of attorney given by him to defendant No,2; and further that the compromise was adverse to his interest. He has said nothing to show how the compromise was against his interest. In cross‑examination he has admitted that he came to know of the compromise, dated the 17th May. 1971, in 1972 and of the compromise, dated the 2nd December, 1971, m 1973. He has also admitted that he did not write any letter or make any application to challenge the compromises after he came to know of them. He has further admitted that after 3rd January 1974, Mohammed Ahmed, Advocate, represented him in all cases. Finally he has admitted that he had not examined the accounts and records, filed in Suit No.36 of 1971, regarding the factory.

27. Zainuddin, the defendant No.l, has, in his evidence, denied that he committed any fraud and has also denied, in his cross‑examination, the suggestions that he purchased the shares in Al‑Burhan Steels Ltd., from the funds of the factory or that he transferred some machinery of the factory to that company.

28. Jamil Ahmed, the defendant No.2, in his affidavit by way of evidence has narrated some facts for the purpose of showing that the power of attorney granted to him by the plaintiff was irrevocable. He has further stated that the plaintiff was aware of the compromises and he, the defendant No.2, had during the period of his management of the factory as a licensee, succeeded in repaying debts created by previous management and had invested substantial funds of his own. He has admitted that he ran the factory as a licensee from February, 1972 to 15th May, 1974, and that he did so in the name of the firm (the factory) although by the terms of the licence granted to him he was required to do so in his own name or any other name except that of the factory. He has further admitted that he was not authorised by the Court to invest his own money in the factory. He also admitted that as a licensee he had to pay all electricity and gas charges and municipal taxes; but asserted that he has paid all such charges and taxes.

29. Practically the whole for the argument of Mr. Shamsul Arfin was devoted to showing that the impugned order was without jurisdiction; and it was only while replying to the arguments of Mr. Afzal Nabi and Mr. S.A. Majid‑‑‑and that too at my specific urging ‑‑‑ that Mr. Arfin advanced any argument on the question of the alleged fraud. According to him, the particulars of the fraud committed by the defendants are set out in paras. 8, 11, 16, 17, 18, 19, 23 (last part) and 34(g) and (j) of the plaint. In those paragraphs, the plaintiff has set out various proceedings which took place in Suit No.36 of 1971, viz. on the 17th May, 1971 preliminary decree was passed by consent in terms of a compromise application and Habib Bank Limited was appointed Receiver; on 2nd December, 1971 an application (C.MA. 1972/71) under Order 23, Rule 3, C.P.C. was presented; on 4th April, 1972, the order dated the 3rd December, 1971, appointing the plaintiff Receiver, was recalled and Habib Bank Limited was again appointed Receiver; on 20th December, 1972, Jamil & Co. (Sole Proprietor, Jamil Ahmed) was appointed licensee to run the factory: on 15th August, 1973, an application (C.M.A. 1974/73) under Order 23, Rule 3, C.P.C. was filed; on 3rd January, 1974, the plaintiff herein revoked the power of attorney given by him to Jamil Ahmed; and on 14th October, 1975, the, impugned order was passed although, according to the plaintiff, it was explained to the learned Judge who passed the order that the factory had been burdened, in terms of the compromise application, with liabilities incurred by the licensee from time to time which liabilities did not, in law and in principle, devolve on the plaintiff. Mr. Shamsul Arfin contended that, as alleged in clauses (g) and (j) of para 34 of the plaint, the facts that the defendant No .2 pressed for acceptance of the compromise. application and that, by the compromise application, liabilities incurred by the licensees were mulcted on the plaintiff were proof of the fraud and collusion on the part of the defendant.

30. Mr. Afzal Nabi, the learned counsel for the defendant No.l, referred to the transactions outlined above, upto the 9th January, 1971, when the defendant No.2, acting as the plaintiffs attorney, sent a notice (Exh.8/16) to the defendant; and contended that it is clear that at least upto that date there was no question of any fraud or collusion. He further contended that there was no fraud in the proceedings in the suit and no fraud on the Court has been alleged. He submitted that the compromise filed on 15th August, 1973, was more or less in the same terms as the compromise which had been filed on 2nd December, 1971, and which had been withdrawn in view of the doubts about the plaintiffs status as alien enemy; and that it has not even been alleged that the earlier compromise was fraudulent.

31. Mr. SA. Majid, the learned counsel for the defendant No.2, contended that not only there was no fraud but that the plaintiff was aware of the proceedings including the comrpomise application in Suit No.36 of 1971.

32. On analysis of the pleadings, the evidence and the arguments, it' appears that the sole ground on which the impugned order is characterised as fraudulent is that the plaintiff has been burdened, by the compromise, with the liabilities created by the licensees. However, there appears to be nothing in the compromise application whereby any liability created by a licensee (including the defendant No.2 in his capacity as a licensee) is required to be satisfied or discharged by the plaintiff; and no clause, in the compromise, to that effect was brought to my notice. In any case, as contemplated by the order dated the 24th June, 1974, passed in Suit No.36 of 1971, the receiver will have to decide the question of liability of the factory in respect of any claim arising out of liabilities created by licensees; and the factory continues to be in the possession of a receiver. The defendant No.2 has admitted that he has, without the permission of the Court, invested certain sums of money in the factory. If that be so, it will be for the receiver to determine whether, by doing so, the defendant No.2, as a licensee, can have any claim against the factory and, consequently, against the plaintiff; and it will be open to the plaintiff to contest such a claim. In this view of the matter, it is not possible to hold that the plaintiff has been burdened with any liability created by the defendant No.2 as a licensee. As for the other licensees, no liability created by them was brought to my notice. In fact, the plaintiff has admitted that he had not examined the records and accounts, filed in Suit No.36 of 1971, regarding the factory. The allegation, therefore, has been made without any basis.

33. Finally, as contended by Mr. Afzal Nabi, the compromise dated the 15th August, 1973, was in more or less the same terms as the earlier two compromises which were never challenged (and have not been challenged even in the present suit) by the plaintiff although he was admittedly aware of them. Even with respect to the last compromise, the plaintiff was aware of it by at least the early part of the year 1974 and was represented since then by Mr. Mohammed Ahmed, Advocate; yet, no action to challenge it as fraudulent was taken by him at least upto the 14th October, 1975. And even after the compromise was accepted by the Court, he waited until 1977 to file the present suit.

34. My answer to issue No.3 is, therefore, that the impugned decree is not null or void or. vitiated by fraud.

35 The suit of the plaintiff is, in the circumstances, hereby dismissed with costs.

AA./S‑796/K Suit dismissed,