Suit No.915/2007

Date Order with signature of Judge

1.For hearing on CMA No.8036/07(U/O VI Rule 17 CPC

2.For hearing on CMA No.6507/07(U/O XXXIX Rules 1 & 2 CPC)

3.For Issues.

27.05.2009

Mr. Anwar Mansoor Khan Adv. for the Plaintiff.

Mr. Shafiq Ahmed for Defendant No.1.

2. Through this application, Plaintiff seeks an order to restrain Defendant No.3 from handing over two cheques to Defendants No.1 & 2 and in case the same are handed over then their encashment be stopped.

Briefly, Defendant No.1 was taken as partner to an existing Partnership (of Plaintiff and his wife) with 50% share and such newly constituted partnership was to carry on business of family entertainment for which the land and building was to be provided by the Plaintiff whereas the machinery equipments by Defendants No.1. It appears that after sometime a dispute arose between the parties leading to filing of Suit No.609/2006 by Defendant No.1 for dissolution of Partnership and during the pendency, it was agreed that the matter be referred to Defendant No.3 in order to determine the value of the business who, ultimately, on 06.02.2006 found that the total value of the firm was Rs.70 millions which determination was accepted by the parties and the Plaintiff was to pay 50% i.e. Rs.35 millions to the Defendant No.1 in installments in terms of the schedule prepared by Defendant No.3.

It appears to be an admitted position that Plaintiff on 10.07.2006 paid a sum of Rs.10 millions by way of two cross cheques directly to Defendant No.1, and handed over five posted cheques dated 10.10.2006, 10.01.2007, 10.04.2007, 10.07.2007 and 10.10.2007 each of Rs.5 millions to Defendant No.3, to be handed over to Defendant No.1 one by one on maturity and till filing of suit Defendant No.3 handed over three out of five cheques to Defendant No.1 which have been encashed, however before the handing over of fourth cheques Plaintiff on 23.07.2007 filed the instant suit and this Court vide its order dated 25.07.2007 restrained their encashment.

Mr. Anwar Mansoor Khan has contended that the cause of filing this suit was discovery of the fact that contribution of Defendant No.1 to the Partnership viz. machinery was purchased from AAA Enterprises who imported such equipment on payment of concessionary duties and taxes under a scheme whereby an importer could not have sold the machinery/equipment at least for a period of five years from the import. Per learned counsel, since Defendant No.1, in violation of the concessionary SRO, had purchased the machinery/equipment from AAA Enterprises and this violation has been noticed by the Customs Authorities, therefore the penalty, if any, is to be recovered from the Plaintiff or by seizure of such machinery/equipment, therefore to meet such eventuality and to save the Plaintiff's interest, Defendants be restrained from encashig said cheques.

On the other hand, Mr.Shafiq Ahmed has contended that the very institution of the instant suit is mala fide and motivated to avoid payment of Rs.10.000 million. Learned counsel by referring to para-2 at page 3 of the Partnership Deed (annexure 'A" to the plait) has contended that the Plaintiff was fully aware of the fact that the machinery/equipment was imported by AAA Enterprises, a Proprietary concern of Defendant No.2 who happens to be the Managing Director of Defendant No.1, per learned counsel, there was no question of sale of machinery/equipment by AAA Enterprises to Defendant No.1 as the owner of AAA Enterprises and Managing Director of Defendant No.1 is a common man, therefore no case for restraining the encashment of cheques is made out and the application be dismissed.

I have heard the learned counsel for the respective parties and have perused the record, placed before me.

It appears that Defendant No.2 who is the Managing Director of Defendant No.1 and Proprietor of AAA Enterprises imported the machinery and equipment, in question, and contributed it towards investment of Defendant No.1 in the newly constituted Partnership Firm and this fact finds mention in para-2 of the Partnership Deed in the following words:

"THAT for the purpose of such business, the equipments imported by AAA ENTERPRISES – Proprietor Muhammad Hussain s/o (Late) Roshan Ali and who is also one of the Directors of AMAHA ENTERTAINMENT (PVT) LTD. of "AMAHA CO." vide L.C. # KHI/1001/LCB 885/98 has been agreed to be taken at a negotiated price equivalent to the investment that would be made by Humayun Group on account of construction of the proposed buildings for housing the Machineries and Equipments and other ancillary/auxiliary construction work for the purpose of public entertainment business project. It is however, mutually agreed that in case the Government imposes any custom duty etc., on such machineries and equipments at any stage in future, the Partnership Firm shall be responsible to meet such levy."

A perusal of the above reproduced clause clearly reflects that the Plaintiff was fully aware of the fact that the machine/equipment, in question, was imported by Defendant No.2 through its Proprietary concern and even it was agreed between the parties that in case Government imposes any custom duty on such machineries and equipments at any stage it shall be paid out of the funds of the Firm. The record further reflects that probably in order to avoid the payment of two cheques, subject matter of this suit, the Plaintiff just before the payment of 4^th cheques had fallen due on 30.06.2007 (P-77) addressed a letter to Federal Board of Revenue reporting that M/s AAA Enterprises has sold/transferred the machinery/equipment to Defendant No.1 in violation of terms of SRO on which it was imported giving rise to an enquiry for breach of the terms of relevant SRO (P-89) of Federal Board of Revenue and after himself opening an enquiry against Defendants No.1 & 2 filed the instant suit obtained an interim order restraining the payments of cheques.

After examining each and every document on record as well as the reproduced clause of the Partnership Deed, there is no doubt in my mind that there was no sale whatsoever between AAA Enterprises and Defendant No.1 as the sale envisages payment or promise of payment of certain money in lieu of transfer of title or possession of the property whereas in the disputed transaction the owner after lifting the veil of incorporation of Defendant No.1 and AAA Enterprises being common, therefore the story of sale between AAA Enterprises and Defendant was figment of Plaintiff's own imagination for malicious motives.

In view of what has been discussed above I am fully convinced that the apprehensions of the Plaintiff are not only misplaced but malafide. The application, consequently, is dismissed and Defendant No.3 is directed to hand over the remaining two cheques to Defendant No.2 forthwith.

Since the payment of cheques was restrained by this Court, therefore I direct Standard Chartered Bank, 26^th Street Branch on which the said two cheques were drawn that notwithstanding the date on the cheques bearing No.1670244 and 1670245, shall be accepted and honoured in case the funds are available.

Judge