Summary: (a) Arbitration Act, 1940 (X of 1940)---- ----S. 34---Stay of proceedings pending arbitration---Scope and applicability---Disputes relating to rectification of company register, allegations of fraud, and fraudulent misrepresentation---Whether arbitrable---Petitioners challenged the fraudulent transfer of shareholding and sought rectification of the company register under the Companies Act, 2017---Respondents invoked an arbitration clause in an agreement dated 12.04.2020 and sought a stay of proceedings under S. 34 of the Arbitration Act, 1940---Held, that arbitration agreements generally do not oust the jurisdiction of the courts, and the right to arbitrate cannot be enforced by non-signatories to the arbitration clause except under exceptional circumstances---Disputes concerning rectification of company registers, corporate fraud, and mismanagement involve the rights of third parties and, therefore, fall within the exclusive jurisdiction of company courts, making them non-arbitrable---Stay of proceedings under S. 34 of the Arbitration Act, 1940, is discretionary and not mandatory, especially where staying proceedings may cause a miscarriage of justice, delay, or increased litigation costs---Application for a stay was dismissed. Cited Cases: • M.A. Chowdhury v. Messrs Mitsui O.S.K. Lines Ltd. (PLD 1970 SC 373) • House Building Finance Corporation v. Shahinshah Humayun Cooperative House (1992 SCMR 19) • Messrs Eckhardt & Co, Marine GmbH v. Muhammad Hanif (PLD 1993 SC 42) • Karachi Dock Labour Board v. Messrs Quality Builders Ltd. (PLD 2016 SC 121) • Messrs Mastersons v. Messrs Ebrahim Enterprises (1988 CLC 1381) • Pakistan Real Estate Investment and Management Co. v. Sohail A. Khan (PLD 2018 Islamabad 115) • Eckhardt & Company v. Muhammad Hanif (PLD 1993 SC 42) • Pakistan International Airlines Corporation v. Messrs Pak Saaf Dry Cleaners (PLD 1981 SC 553) (b) Companies Act, 2017 (XIX of 2017)---- ----Ss. 126, 127, 257, 277, 278, 286, 301 & 304---Exclusive jurisdiction of company courts---Scope---Whether disputes concerning rectification of registers, oppression, mismanagement, or fraudulent transactions can be referred to arbitration---Petitioners challenged the fraudulent transfer of shares and sought an investigation into the affairs of the company, disqualification of certain directors, and prevention of further transfers---Held, that under the Companies Act, 2017, company courts are vested with exclusive jurisdiction over company-related disputes, including rectification of registers, oppression, and mismanagement---Matters concerning third-party rights, public interest, and factual controversies require court adjudication and cannot be subject to private arbitration---Company courts are empowered to frame issues, record evidence, and conduct trials, whereas arbitrators lack such jurisdiction---Petition for stay of proceedings on the basis of an arbitration clause was dismissed. Cited Cases: • Mian Javed Amir v. United Foam Industries (Pvt) Ltd (2016 SCMR 213) • Lt. Gen (Retd) Mahmud Ahmad Akhtar v. Allied Developers (Pvt) Ltd. (2022 CLD 718) (c) Contract Act, 1872 (IX of 1872)---- ----Ss. 19 & 23---Allegations of fraud and fraudulent misrepresentation---Effect on arbitration clause---Whether arbitration clause remains valid despite allegations of fraud in the main agreement---Petitioners contended that the agreement containing the arbitration clause was fraudulently executed and sought its annulment---Held, that an arbitration clause remains valid unless the contract is void ab initio under S. 23 of the Contract Act, 1872---Where allegations of fraud render a contract voidable under S. 19 of the Contract Act, 1872, the arbitration clause may still be enforced unless the court determines that the fraud allegations affect the arbitration agreement itself---However, where fraud allegations relate to corporate transactions involving statutory rights and third-party interests, such disputes are non-arbitrable and must be adjudicated by courts---Stay of proceedings was refused. Cited Cases: • Fiona Trust & Holding Corporation v. Privalov (2007 EWCA Civ 20) • Harbour Assurance Co. (UK) Ltd. v. Kansa General International Insurance Co. Ltd. [1992 1 LILR 81] • Fiona Trust & Holding Corporation v. Privalov [2008] 1 LI LR 254 Disposition: Application for stay of proceedings under S. 34 of the Arbitration Act, 1940, was dismissed as disputes involving rectification of registers, corporate fraud, and mismanagement fall under the exclusive jurisdiction of the company court and are non-arbitrable.

Summary: (a) Banking Companies (Recovery of Loans, Advances, Credits, and Finances) Act (XV of 1997) ----Ss. 9, 15, & 21---Disputed liability on loan repayment---Conclusive proof of liability---Suit for declaration and injunction---Appellant bank granted a loan facility of Rs.1,80,000 to the respondent, disbursed in two installments of Rs.90,000 each in 1989---Respondent paid Rs.2,80,000 towards the loan but was issued a notice by the bank in 1999, claiming an additional Rs.36,000 as liability---Respondent filed a suit challenging the notice, seeking a declaration that no amount was payable and requesting a permanent injunction---Bank failed to justify the additional claim, and its reliance on a general clause in the agreement was deemed insufficient as no independent evidence supported the liability---Banking Court declared the notice illegal and void, leading to the bank's appeal---Held, appellant bank failed to reconcile the statement of accounts with the agreement or establish respondent's liability for the disputed amount of Rs.36,000, particularly when the respondent had not defaulted in any installment payments---Appeal dismissed. (b) Specific Relief Act (I of 1877) ----Ss. 42 & 54---Declaration and permanent injunction---Disputed liability in loan repayments---Held, when a respondent cogently disputes liability and discrepancies are found in the statement of accounts, the burden lies on the claimant bank to justify its claims with independent evidence---In the absence of such evidence, any claim based solely on general clauses in loan agreements or cyclostyled documents cannot be deemed conclusive proof of liability---Judgment by the Banking Court upheld. Disposition: Appeal dismissed.

Summary: (a) Civil Procedure Code (V of 1908)----S. 12(2): Ex parte decree---Application for setting aside---Fraud and misrepresentation. The petitioner obtained an ex parte decree for declaration, cancellation of documents, and permanent injunction regarding the disputed property without impleading respondent No.2, the alleged rightful owner of the property by virtue of a registered sale deed. Respondent No.2 filed an application under S. 12(2), C.P.C., claiming fraud and suppression of material facts. The learned Single Judge, upon finding sufficient material supporting respondent No.2's ownership rights, set aside the ex parte decree. The High Court Division Bench upheld this decision, finding no illegality or irregularity in setting aside the decree obtained through misrepresentation. (b) Specific Relief Act (I of 1877)----Ss. 39, 42 & 54: Suit for declaration, cancellation, and injunction---Non-impleadment of necessary parties---Effect. In a suit involving cancellation of a registered sale deed and permanent injunction, non-impleadment of the actual owner of the disputed property (respondent No.2) rendered the ex parte decree invalid. The courts held that the petitioner’s failure to challenge the transaction involving respondent No.2 or to implead him as a party demonstrated misrepresentation, justifying the setting aside of the decree. (c) Constitution of Pakistan (1973)----Art. 185(3): Supreme Court’s refusal to grant leave---No substantial question of law or public importance. The Supreme Court declined to interfere with the High Court's decision to set aside the decree, noting no substantial question of law or public importance requiring its intervention. The petitioner retained the right to establish her case during the trial, which would be decided on merits. -----Disposition: Petition dismissed. Leave to appeal refused.

Summary: (a) Civil Procedure Code (V of 1908) – O. XXXIX, Rr. 1 & 2 – Specific Relief Act (I of 1877) – Ss. 21 & 56(f): Interim injunction – Contract for sale of goods – Irrevocable letter of credit – Non-payment by buyer – Effect – Plaintiff entered into a contract for purchase of 500 Metric Tons of Palm Kernel Acid Oil from defendant No. 1 on 01.02.2002, with payment to be made through a 100% confirmed irrevocable letter of credit (L/C) at sight – Plaintiff failed to make payment in terms of the L/C, leading to cancellation of the contract – Defendant No. 1 subsequently sold the consignment to defendant No. 4, who made full payment and obtained original bills of lading – Plaintiff sought an interim injunction to restrain defendants from delivering the consignment to defendant No. 4 and claimed entitlement to delivery based on the original contract – Held, plaintiff had no prima facie case as they failed to pay the contractual price and did not possess original bills of lading, which are essential documents of title – Mere filing of Into Bond Bills of Entry on the basis of photocopies did not confer ownership rights – Contract for sale of goods is not routinely capable of specific performance under S. 21 of the Specific Relief Act – Where permanent injunction is barred under S. 56(f), an interim injunction cannot be granted – Plaintiff had already quantified damages in monetary terms, making compensation an adequate remedy – Balance of convenience lay in favor of defendant No. 4, who had lawfully acquired the consignment – Application for injunction dismissed, earlier restraint order vacated. ----Cited Cases: • Oil & Gas Development Corporation v. Shujjahuddin (Pvt.) Ltd. PLD 1970 Karachi 332 • V.N. Lakhani & Co. v. Government of Pakistan PLD 1975 Karachi 781 • Sahaf Corporation (Pvt.) Ltd. v. K.P.T 1989 MLD 616 • Petro Commodities v. Rice Export Corporation of Pakistan PLD 1998 Karachi 1 • Al Farooq Shipping Company (Pvt.) Ltd. v. Vasa Shipping Ltd. 1980 CLC 1228 • Misbahul Hasan v. Director General of Supplies 1994 CLC 1129 • Dada Steel Ltd. v. Metal Exports 1985 CLC 1814 ----Disposition: Injunction application dismissed; previous restraint order vacated.

Summary: (a) Constitution of Pakistan (1973) – Art. 204: Contempt of Court—Scope and applicability—Petitioner filed a constitutional petition challenging the cancellation of his irrigation water sanction, which was disposed of by the High Court, declaring S. 5(1) of the Sindh Irrigation (Amendment) Ordinance, 1999, repugnant to Art. 25 of the Constitution—Petitioner subsequently filed a contempt application against Executive Engineer and other officials for non-compliance with the judgment—Held, no specific order or direction was issued to the respondents or alleged contemners to restore the petitioner’s direct outlet/watercourse—The High Court had merely declared the provision repugnant without explicitly annulling it—Alleged contemners had no independent authority to interpret the Court’s decision or take action—No violation of any Court order was established, rendering the contempt application misconceived—Petitioner’s reliance on O.XXXIX, R.2(3), C.P.C. was misplaced, as no injunction had been granted under that provision—Contempt application dismissed. (b) Civil Procedure Code (V of 1908) – O. XXXIX, R. 2(3): Injunction—Disobedience—Scope—Contempt application filed under Ss. 3 & 4 of Contempt of Court Act, 1976, but relief sought was of a nature provided under O.XXXIX, R.2(3), C.P.C.—Such an action could only be taken in cases of disobedience of an injunction granted under O.XXXIX, R.2, C.P.C.—As no injunction had been granted in the present case, the contempt proceedings were legally unsustainable—Application dismissed. ----Disposition: Miscellaneous application dismissed—No case for contempt of Court made out—Imposition of special costs set aside, as petitioner was unaware of legal technicalities and had acted in good faith.

Summary: (a) Transfer of Property Act (IV of 1882) – S. 54: Ownership—Registered sale deed and mutation—Evidentiary value—Scope—Plaintiffs claimed ownership of the disputed property based on a registered sale deed and mutation entry—Defendants challenged their title and ownership in the written statement—Held, a registered sale deed or mutation entry, though evidential, is not conclusive proof of ownership where the title is expressly disputed—Plaintiffs had not sought a declaratory relief regarding their ownership, which was a prerequisite for consequential reliefs such as injunction and possession—Interim injunction could not be granted in the absence of a clear declaration of ownership—Impugned order granting injunction set aside. (b) Civil Procedure Code (V of 1908) – O. XXXIX, Rr. 1 & 2: Interim injunction—Prerequisite of ownership—Scope—Plaintiffs sought injunctive relief without first seeking a declaration of ownership—Held, where ownership is expressly disputed, a suit for injunction, possession, and mesne profits cannot succeed without first establishing ownership—The Trial Court erred in granting interim injunction without determining maintainability of the suit—Impugned order set aside. (c) Civil Procedure Code (V of 1908) – O. XL, R. 1: Appointment of Receiver—Defendants’ application for appointment of Receiver was deferred pending site inspection—Trial Court was required to decide the preliminary objection regarding maintainability of the suit before granting interim relief—Failure to do so rendered the interim injunction improper—Appeal allowed. ----Disposition: Appeal allowed—Interim injunction set aside—Trial Court directed to decide maintainability of the suit before granting further relief.

Summary: (a) Civil Procedure Code (V of 1908): ----O. XXXIX, Rr. 1, 3 & 4 read with O. XLIII, R. 1(r) Appeal against injunction order---Maintainability---Scope of Rule 4, Order XXXIX, C.P.C.---District Judge issued an ad interim injunction restraining the Government from ejecting the plaintiffs and subsequently confirmed the injunction after hearing both parties---Contention raised by the respondents that an appeal was not competent as the confirmation of the injunction order was neither under Rule 1 nor under Rule 4 of Order XXXIX, C.P.C.---Held, that an order confirming an injunction after notice to the opposite party falls under Rule 1 or 2, rather than Rule 4, and is therefore appealable under Order XLIII, Rule 1(r) of the Code of Civil Procedure---Rules 1 and 3 or Rules 2 and 3 of Order XXXIX, C.P.C. are to be read together, whereby an injunction granted without notice must be confirmed or set aside after hearing the adverse party, making such confirmation an appealable order---Appeal held maintainable. ----Cited Cases: PLD 1957 Lah. 523 AIR 1929 Mad. 803 AIR 1940 Nag. 45 (b) Civil Procedure Code (V of 1908): ----Ouster of Civil Court Jurisdiction---Section 9, Azad Jammu & Kashmir Grant of Khalsa Waste Lands Act, 1966 Jurisdiction of Civil Courts---Issuance of injunction in matters concerning state land---Government contended that the jurisdiction of civil courts was ousted under Section 9 of the Azad Jammu & Kashmir Grant of Khalsa Waste Lands Act, 1966, and that no injunction could be issued by the District Court---Held, that civil courts generally have jurisdiction over all civil matters unless expressly barred by statute---Statutory provisions ousting jurisdiction must be strictly construed, especially where the Government seeks such exclusion for its own benefit---As the District Judge had left the question of jurisdiction undecided, it was appropriate for the trial court to decide the issue first before any appellate determination. (c) Civil Procedure Code (V of 1908): ----Principles governing grant of injunction---Balance of convenience Grant of injunction---Plaintiffs were in possession of the disputed land, having cultivated it and built structures upon it---Balance of convenience weighed in favor of the plaintiffs---Held, that since the plaintiffs’ possession was admitted and ejectment proceedings had been initiated after fourteen years of mutation approval, the trial court was justified in granting the injunction to prevent irreparable loss to the plaintiffs pending final adjudication---Appeal dismissed. ----Disposition: Appeal dismissed.

Summary: (a) Specific Relief Act (I of 1877) – Ss. 42 & 54 – Declaratory Suit – Agreement to Sell – Ownership Rights: Dispute over ownership of a plot in Mirpur—Appellants filed a declaratory suit and perpetual injunction, claiming their father initially owned the plot but a conditional sale agreement executed in 1971 was later revoked—Respondent No.1 obtained transfer of the plot from the Municipal Corporation in 2004 based on the allegedly revoked agreement—Appellants contended that the transfer was fraudulent and void—Held, an agreement to sell does not confer ownership rights, and a declaratory decree cannot be granted solely on its basis—However, the right of allotment can be transferred through an agreement to sell or affidavit—Since proprietary rights were never granted to the allottee or transferees, the relevant authority had the power to transfer only the allotment rights—Reliance placed on Ch. Shaukat Ali v. Muhammad Javaid (Civil Appeal No. 61 of 2002, Supreme Court, decided 21-5-2003). (b) Civil Procedure Code (V of 1908) – S. 96, O. XXXIX, Rr. 1 & 2 – Temporary Injunction – Possession of Disputed Property: Appellants sought an injunction, alleging fraud in the transfer of their father’s allotted plot—Trial Court granted interim relief but later vacated the status quo order—Respondents contended that the plot was lawfully purchased and had undergone multiple transfers—Last transferee, Respondent No.7, constructed a three-story building on the plot after obtaining approval from the relevant authority—Held, a temporary injunction cannot be granted where the disputed property is in the possession of another party with a prima facie valid claim—Court upheld the District Judge’s ruling, allowing construction to continue subject to the condition that Respondent No.7 would not claim compensation if the appellants' suit succeeded—Reliance placed on Kh. Taufique Qadir v. Qazi Khalil-ur-Rehman (2001 YLR 3263). ----Disposition: Appeal dismissed—Temporary injunction vacated, subject to Respondent No.7 furnishing an undertaking that no compensation would be claimed in case the appellants' suit succeeded—Appellants to pursue ownership claims through proper legal proceedings.

Summary: Background: In 1984, the predecessors of the respondents filed a civil suit (No.123/84) seeking a declaration of ownership and an injunction concerning 332 Kanals of Shamlat Deh (joint holding of the villagers) in Mouza Khushab, based on adverse possession. The suit was contested by the shareholders of Shamlat Deh, who asserted that the land was a joint holding. The plaint was rejected in 1992 by the Civil Judge, Khushab, under Order VII Rule 11 of the Code of Civil Procedure, following a judgment by the Federal Shariat Court declaring claims of ownership based on adverse possession as repugnant to Islamic injunctions. Subsequently, in 1992, the respondents filed another civil suit (No.56/1992) in a representative capacity, claiming ownership of the same land based on possession by their predecessors and alleging incorrect entries in the revenue records. The suit was contested by the defendants, who denied the plaintiffs' ownership and claimed the land was part of the joint holding of Shamlat Deh. ----Issues: 1) Whether the plaintiffs could claim exclusive ownership of the suit land in a joint holding (Shamlat Deh) based on their possession and the alleged statements of four shareholders made in 1938. ---2) Whether the declaratory suit for exclusive ownership of the suit land, which is part of a joint holding, was maintainable. ----Holding/Reasoning/Outcome: The Supreme Court held that the plaintiffs could not claim exclusive ownership of the suit land, which is part of a joint holding (Shamlat Deh), merely based on their possession or the vague statements of four shareholders made in 1938. The Court emphasized that the plaintiffs did not provide sufficient evidence to substantiate their claim of ownership. The Trial Court and Appellate Court had rightly dismissed the plaintiffs' suit, and the Lahore High Court erred in reversing these decisions in its revisional jurisdiction. The Supreme Court allowed the appeal, setting aside the Lahore High Court's judgment dated 13 October 2011, and reinstated the dismissal of the plaintiffs' suit. However, the Court granted the plaintiffs the liberty to approach the revenue forum for redressal of their grievance, if any, in accordance with the law. ----Citations/Precedents: Muhammad Muzaffar Khan v. Muhammad Yousaf Khan (PLD 1959 SC (Pak.) 9) Atta Muhammad v. Manzoor Ahmad (1992 SCMR 138)

Summary: Meer Gul, the appellant, filed a civil suit for specific performance and injunction concerning 129.08 acres out of 160 acres of agricultural land in Sanghar. The appellant claimed that the sale consideration was paid, but the respondents failed to execute the sale deed. The trial court dismissed the suit, but the appellant won on appeal with directions to deposit the balance sale consideration. The respondents challenged this in the High Court, which ultimately dismissed the appellant's suit. ---Issues: 1. Whether the appellant was required to deposit the balance sale consideration at the time of the suit's institution or upon the first appearance in court. 2. Whether the failure to deposit the balance sale consideration warrants dismissal of the suit for specific performance. ---Holding/Reasoning/Outcome: The Supreme Court set aside the judgment of the Sindh High Court and remanded the matter for a fresh decision, emphasizing the importance of substantial justice over procedural technicalities. The Court reasoned that the appellant's compliance with the appellate court's directions to deposit the balance sale consideration should be considered, and the dismissal of the suit solely based on procedural grounds without examining the evidence was not justified. ----Citations/Precedents: Hamood Mehmood vs. Shabana Ishaq (2017 SCMR 2022): Emphasized the mandatory requirement for plaintiffs seeking specific performance to apply for depositing the balance amount on the first appearance or at the suit's institution. Allah Ditta vs. Beshir Ahmad (1997 SCMR 181): Highlighted the importance of compliance with court orders regarding deposit of sale consideration. Messrs. Kuwait National Real Estate Company (Pvt.) Ltd. vs. Messrs. Educational Excellence Ltd. (2020 SCMR 171): Reinforced that failure to deposit the purchase price as directed by the court can lead to dismissal of the suit. Haji Abdul Hameed Khan vs. Ghulam Rabbani (2003 SCMR 953): Addressed the implications of a party's failure to comply with court orders regarding the deposit of sale amounts. Muhammad Asif Awan vs. Dawood Khan and others (2021 SCMR 1270): Clarified that non-compliance with deposit orders should be addressed with discretion and not always result in dismissal. M/s. DW Pakistan (Private) Limited vs. Begum Anisa Fazl-i-Mahmood (2023 SCMR 555): Discussed the court's discretion in extending time for compliance with deposit orders based on justifiable grounds. ----Judgment Summary: The Supreme Court emphasized that substantial justice should prevail over procedural technicalities. It was noted that the appellant had complied with the appellate court's order to deposit the balance sale consideration, and thus, the High Court's dismissal of the suit solely on procedural grounds was incorrect. The case was remanded to the High Court for a fresh decision considering all substantial questions of law and evidence presented.