FATEH SHAKEEL Versus ADDITIONAL DISTRICT JUDGE, RAHIM YAR KHAN

RAHEEL KAMRAN, J.--- Through this petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, the petitioner has assailed the following:-

2.The facts giving rise to the filing of instant petition are that the petitioner, through his counsel, instituted a suit for specific performance of contract on 03.09.2022 against his real father, namely Chaudhary Fazal-ud-Din (since deceased), and his legal heirs (respondents Nos. 3-i to 3-viii). It was the case of the petitioner that the suit property, comprising eleven shops and a house situated at Railway Road Auto Market, Rahim Yar Khan, was owned by his father, who had agreed to sell the same jointly to the petitioner and his brother Khalid Mahmood (respondent No. 3-i), for a total consideration of Rs.60,00,000/-. The petitioner claimed to have paid his share of Rs.30,00,000/- through another brother, namely Kashif Azeem (respondent No. 3-iii), and to have obtained possession of seven shops. A written agreement to sell dated 03.05.2019 was also relied upon. It was further averred that a dispute later arose between respondent No.3 and respondent No.3-i, whereafter respondent No.3-i instituted a suit which was ultimately decreed in his favour on the basis of a statement made by their father, to the extent of his share, however, the petitioner s share remained unperformed. After the death of the father on 24.01.2022, the petitioner approached the legal heirs for performance of the agreement but they refused, compelling him to institute the suit.

The record reveals that the defendants filed a joint conceding written statement on 21.09.2022. Subsequently, on 20.10.2022 respondents Nos. 3-ii, 3-iii, 3-iv, 3-v, 3-vii and 3-viii also recorded statements before the trial Court admitting the agreement and raising no objection to the decree in favour of the petitioner. During pendency of the suit, the petitioner executed a special power of attorney on 01.12.2022 in favour of respondent No.3-iii, who was not only his real brother but also one of the defendants and a conceding party. However, on 13.03.2023, when the case was fixed for evidence, the said special attorney, after engaging a new counsel, got recorded a statement before the trial Court to the effect that the matter had been compromised and that he did not wish to pursue the suit. On the basis of such statement, the suit was dismissed as withdrawn on the same day.

On the very same date, the petitioner, through his original counsel, moved an application seeking cancellation of the statement of the special attorney as well as revocation of the power of attorney, asserting that no instructions had been given for withdrawal of the suit and that the act of the attorney was mala fide . The said application was ultimately dismissed by the trial Court vide order dated 06.04.2023, which was upheld in appeal by the Additional District Judge through judgment dated 19.10.2023. Hence, this petition.

3.Learned counsel for the petitioner submitted that although the special power of attorney executed in favour of respondent No. 3-iii contained a clause authorizing withdrawal of the suit, yet such authority was subject to the instructions of the principal and no such instructions were ever given by the petitioner. It was contended that the special attorney acted beyond the mandate conferred upon him by unilaterally withdrawing the suit. Learned counsel further submitted that the conduct of the special attorney is inherently doubtful inasmuch as he was himself a defendant in the suit who had earlier conceded to the claim of the petitioner. It was argued that the appointment of a new counsel and subsequent withdrawal of the suit on the vague plea of compromise without disclosing any terms thereof, clearly reflects mala fide and abuse of authority. It was further argued that the petitioner acted with utmost promptitude, as his counsel, upon learning of the withdrawal statement, immediately contacted him and on his instructions moved an application before the trial Court on the same day, even before the formal order of withdrawal was passed; despite this, the trial Court proceeded to dismiss the suit as withdrawn without first adjudicating upon the petitioner s application, which reflects a material procedural irregularity.

4.Despite issuance of notices, none of the respondents has opted to contest the petition. It is noted that respondent No.3-iii namely Kashif Azeem, had earlier entered appearance through counsel but subsequently absented himself and was proceeded against ex parte . In the peculiar facts of the case, he appears to be the only contesting party, therefore, no useful purpose would be served by issuing fresh notices to the remaining respondents.

5.I have considered the submissions advanced by learned counsel for the petitioner and have also examined the record with care. The pivotal question for determination is whether the trial Court was justified in dismissing the suit as withdrawn solely on the basis of the statement made by the special attorney, without affording an opportunity of hearing to the principal, particularly when the petitioner had, with promptitude, approached the Court disputing such withdrawal.

6.At the outset, it is to be noted that although the special power of attorney executed in favour of respondent No.3-iii contained a clause authorizing withdrawal of the suit, such authority cannot be construed in isolation or as unfettered. The relationship between a principal and an agent is fiduciary in nature and is governed, inter alia, by sections 214 and 215 of the Contract Act, 1872, which obligate the agent to act strictly in accordance with the instructions of the principal and, in cases of difficulty or conflict of interest, to seek such instructions before taking any step that may prejudice the principal s rights. For ease of reference, Sections 214 and 215 of the Contract Act, 1872 are reproduced below:

215. Right of principal when agent deals on his own account in business of agency without principal s consent. If an agent deals on his own account in the business of the agency without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him.

Thus, even where an authority to withdraw a suit exists, its exercise must be bona fide , within the mandate and subject to the knowledge and consent of the principal.

7.In the instant case, the sequence of events assumes considerable significance. The statement of withdrawal was made by respondent No.3-iii on 13.03.2023 and on the very same day the petitioner through his original counsel, moved an application repudiating such statement and asserting that no instructions had been issued for withdrawal of the suit. This immediate reaction on the part of the petitioner clearly negates any inference of acquiescence and instead demonstrates that the withdrawal was prima facie without his knowledge or consent. In such circumstances, the trial Court ought to have refrained from acting upon the statement of the attorney without first adjudicating upon the objection raised by the principal. The above view finds support from the judgment of the Supreme Court of Pakistan in the case of Mst. Feroze Bano and another v. Mst. Bilqis Jehan and others (1987 SCMR 1009) , wherein, in an almost identical factual scenario, a suit was withdrawn by a person claiming to be an attorney under a subsequent power of attorney, without notice to the principal or to the attorneys under an earlier power of attorney. The Supreme Court, while setting aside the order of withdrawal, held that such an order passed without notice to the principal, suffers from material irregularity. Relevant excerpt from the above referred judgment is as under:-

It appears that the order of the trial Court was passed on the back of the appellants without their knowledge. Had they or their representative would have been present they would have brought the existence and the contents of the power of attorney to the notice of the Court; and if the Court would have noticed the first power of attorney, it would have certainly examined the various questions with regard thereto, including, the question whether it was irrevocable and whether it conferred any rights on any of the parties which could not be taken away by a subsequent power of attorney.

It is not in dispute that the suit was fixed for hearing on 19-6-1983 on which date the appellant-side would have appeared but the application for withdrawal was moved on 23-5-1983. The statement of the applicant was recorded thereon on the same day and it was dismissed as withdrawn on the same day. This haste undoubtedly was unfortunate. The learned Judge should have paid more attention to the circumstances of the case. If he would have cared to see the plaint and the NOTES thereon he, as already noted, would have certainly seen the first power of attorney and that being so, he might not have dismissed the suit as withdrawn without at least issuing notice to the plaintiff. The same not having been done, the learned court obviously, acted with material irregularity. Hence the revision petition before the High Court merited acceptance on this ground alone.

However, there is another aspect of the matter. If Tasnimuddin when seeking the withdrawal dismissal of the suit filed by his principal or otherwise acting under the second power of attorney was doing so on his own account then he was required by law to seek the consent of the principal (Mst. Feroze Bano) so as to save the repudiation of his action by the principal. Otherwise too, in a difficult situation the agent is under a duty to consult the principal. Sections 214 and 215 of the Contract Act read as follows:-

215. - - -

This Court has, recently in Fida Muhammad v. Pir Muhammad Khan (deceased) through Legal Heirs and others PLD 1985 SC 341, dealt with these provisions. Even if not directly, Tasnimuddin respondent No.6, the attorney under the second power of attorney, was indirectly but vitally interested in the dismissal of the suit because his mother, it is stated, has allegedly purchased the whole or part of the suit property. His conduct in seeking the dismissal of his principal s suit which would have benefited his mother, seen in this light, might have been held as dealing on his own account . At least it was a case of difficulty visualized by section 214. Therefore, he should have sought instructions of the principal obtained independently of controversial power of attorney.

(Emphasis supplied by this Court.)

8.It is vivid that respondent No.3-iii, though initially a conceding defendant, subsequently engaged a new counsel and made a statement for withdrawal of the suit on the vague ground of compromise, without disclosing any terms thereof. This conduct, viewed in isolation, raises eyebrows, however, when considered in conjunction with subsequent events, it assumes greater significance. It has been brought on record that shortly after withdrawal of the suit, respondent No.3-iii, along with his mother and sister, instituted a fresh suit claiming ownership of some of the shops which were the subject matter of the earlier suit and alleging the petitioner and Khalid Mahmood to be in illegal possession thereof. This subsequent conduct unmistakably indicates that respondent No.3-iii had developed an interest adverse to that of the petitioner and that the withdrawal of the suit was not a bona fide act performed in furtherance of the principal s interest. In such a situation, the case clearly falls within the ambit of dealing on his own account or, at the very least, a case of difficulty as contemplated under sections 214 and 215 of the Contract Act, 1872. The law, as explained by the Supreme Court in the afore-referred judgment, mandates that in such circumstances, the agent must obtain prior consent of the principal. The trial Court, therefore, was under a legal obligation to issue notice to the petitioner and to satisfy itself regarding the genuineness and validity of the withdrawal before passing any order.

9.Another important facet of the case is that the suit instituted by the petitioner was based upon an agreement to sell, part whereof had already been acted upon in favour of another co-vendee, namely Khalid Mahmood through a decree of a competent Court and the remaining defendants had also conceded the claim of the petitioner. In such circumstances, there was likelihood of the petitioner securing a favourable decision. The abrupt withdrawal of the suit, without disclosure of any tangible benefit accruing to the petitioner, is wholly unnatural and strengthens the allegation of mala fide .

10.Viewed cumulatively, the conduct of respondent No.3-iii-attorney, the prompt repudiation by the petitioner-principal, the absence of any disclosed compromise, the engagement of a new counsel and the subsequent institution of a suit asserting adverse title, all unmistakably point towards a lack of bona fides on the part of the attorney. In such backdrop, the trial Court failed to exercise the degree of caution and judicial scrutiny required in the circumstances and, by acting upon the statement of the attorney without notice to the principal, committed a material irregularity in the exercise of jurisdiction.

11.For the foregoing reasons, the statement made by respondent No.3-iii could not legally form the sole basis for dismissal of the suit as withdrawn and the impugned order and judgment passed by the Courts below are not sustainable in the eye of law, which are hereby set aside by allowing the petition in hand. Consequently, the application moved by the petitioner for cancellation of the statement of his special attorney shall be deemed to have been accepted and the statement made by respondent No.3-iii on 13.03.2023 shall have no legal effect. As a necessary consequence, the order whereby the suit was dismissed as withdrawn shall also stand annulled and the suit instituted by the petitioner shall be deemed to be pending before the learned trial Court.

The parties are directed to appear before the trial court on 15.04.2025, whereafter the trial Court shall proceed with the matter from the stage at which the suit was pending prior to recording of the statement dated 13.03.2023 and shall decide the same strictly in accordance with law. The trial Court shall also ensure expeditious disposal of the matter after affording due opportunity of hearing to all the concerned.

Office shall transmit a copy of this judgment to the trial court forthwith.

MQ/F-4/L Petition allowed.