IN THE HIGH COURT OF SINDH AT KARACHI

IN THE HIGH COURT OF SINDH AT KARACHI

H.C.A. NO. 111 OF 2004.

Present:

Mr. Justice Muhammad Ather Saeed, and

Mr. Justice Irfan Saadat Khan.

Appellant through Mr. Naveed Ahmed Khan, advocate.

Respondent through Mr. Zafar Alam Khan, advocate.

Dates of hearing: 03.03.2011.

J U D G M E N T

IRFAN SAADAT KHAN, J: The appellant is aggrieved by the Judgment dated 4 March, 2004 passed by the learned Single Judge of this Court in Suit No.4 of 1992, filed by Colony Sarhad Textile Mills – Respondent herein, against the appellant and two others, whereby the suit was decreed against the appellant/defendant No.1 only in the sum of Rs.84,54,580.13

2. Brief facts of the case are, that the appellant joined the Respondent – public listed company having registered office at Rawalpindi and sub-office at Karachi, at a junior level and with the passage of time rose to the position of Manager of the sub-office of the Respondent. During the course of his employment with the Respondent, the Appellant was authorized to deal with financial matters. On account of certain investigation by CIA in some criminal cases the shady conduct of the appellant came to light calling for inquiry and scrutiny of the accounts of the Respondent Company. Such scrutiny revealed that the appellant embezzled substantial amounts and diverted the same to establish the business of his sons, who were arrayed as defendants No.2 and 3 in the suit. Accordingly, apart from filing criminal cases against the appellant, the Respondent company filed suit for recovery of the embezzled amount against the appellant as well as his two sons. The defendants, i.e. the appellant and his two sons, filed joint written statement in the suit wherein the appellant did not deny withdrawal of the amounts but denied that the same was misappropriated to establish business for the benefit of his sons. The appellant maintained that the amounts withdrawn by him from the account of the Respondent Company were for payment on account of the Respondent Company.

3. On the basis of the pleadings of the parties, the following issues were framed by the learned Single Judge:

1. Whether the plaint is liable to be rejected for want of cause of action against defendants?

2. Whether the Defendant No.1 withdrew a sum of Rs.84,54,580.13 from the `accounts of the plaintiff against the cheques shown in paras 6 & 7 of the plaint?

3. Whether the Defendant No.1 misappropriated the said amount of Rs.84,54,580.13 for investing in the business of his sons, Defendants No.2 & 3?

4. To what relief the plaintiffs are entitled to including compensation for negligence?

4. The Respondent examined an officer of the National Bank of Pakistan, namely, Shakeel Ahmed who produced 23 cheques and statement of Respondent’s bank account. The Respondent also examined its President, Mr. Sohail Farooq Shaikh, who produced a large number of documents. The appellant also examined himself as witness. He also made an application for producing other witnesses which was allowed but despite lapse of considerable period were not produced by him.

5. The learned Single Judge, after hearing the parties, and going through the evidence on record decreed the suit against the appellant. It is against the said order that the present High Court Appeal has been filed by the appellant. The learned Judge however dismissed the suit against the two sons of the appellant, namely, defendants No.2 and 3 in the suit.

6. Mr. Naved Ahmed Khan, learned counsel appeared on behalf of the appellant and submitted that the learned Single Judge was not justified in not only not appreciating the evidences produced before him but also ignoring the contentions raised by the appellant before him. He submitted that the learned Single Judge was not justified in not considering the issue that the respondent had initially made a claim of Rs. 58,500,000/-, which was a hypothetic figure and which the appellant himself subsequently reduced to Rs. 8,454,580/-, which amply proves that the claim lodged by the Respondent against the appellant was incorrect and baseless. He further submitted that the learned Single Judge had decreed the suit in favour of the Respondent in absence of substantial evidences as no proof was submitted by the Respondent to prove embezzlement on the part of the appellant and to show that the Respondent Company had suffered huge losses on account of misappropriation made by the appellant. He submitted that Mr. Azam Jameel, son in law of the Chairman of the Respondent Company, who used to work for the company and look after its Karachi office, has neither been questioned nor examined by the learned Single Judge, which is against the norms of law. According to the learned counsel, it was the Azam Jameel who was responsible for all the misappropriations and embezzlements but inspite of implicating Azam Jameel the appellant was made the victim. He further submitted the bank official, who appeared as a witness in this case and who produced the alleged cheques which have been misappropriated by the appellant, would also show that all these cheques were Payee Account cheques which were paid in respect of purchase of cloths etc and these cheques were duly issued by the appellant on the specific instructions of the Head Office. He also invited our attention to Section 230 of the Companies Ordinance 1984 and submitted that the appellant had wrongly been inducted in misappropriation and embezzlement and no action whatsoever has been taken against Azam Jameel on the pretext that he was son in law of the Chairman of the Respondent company and the appellant had been victimized in the said misappropriation without any legal and lawful justification. The learned Counsel also relied on Article 122 and 129 of the Qanoon-e-Shahadat Ordinance 1984. In support of his above contentions the learned Counsel placed reliance on the following decisions.

Muhammad Younus V/s Akhtar Hussain and others [1981 SCMR 1049]

2008 PLC 304 (SIC)

Muhammad Bashir V/s Abbas Ali Shah [2007 SCMR 1105]

Qazi Muhammad Saqib Khan V/s Ghulam Abbas and others [2003 MLD 131]

7. Mr. Zafar Alam Khan, Advocate appeared on behalf of the respondent company and at the very outset submitted that the appellant had changed his pleadings which is not permissible under the law and the company had enough material against the appellant for misappropriating the funds of the company. He further submitted that the learned Single Judge has passed an elaborate and exhaustive order and all the issues raised by the appellant had already been taken due care of by the learned Single Judge. Hence according to the learned Counsel the order of the learned Single Judge does not suffer from any legal infirmity. He further submitted that the learned Single Judge has passed the order after considering the entire record and the material placed before him and has reached to the conclusion that the issues raised by the Respondent, who was the appellant before the learned Single Judge, had remained uncontroverted. The learned Counsel further submitted that it is an admitted position that the said cheques were withdrawn and embezzled and as the appellant was the in-charge person at that time, he alone was responsible for the said misappropriation and embezzlement. He further submitted that the appellant had no where denied that he had not withdrawn the amounts which prove beyond any doubt his involvement in the said misappropriation. In the end the learned Counsel prayed that the order passed by the learned Single Judge, being legal and proper, may be affirmed. In support of his above contentions the learned Counsel has relied upon:-

T. Motandas V/s Ali Ahmed [PLD 1987 Karachi 159]

Hakim Ali V/s Muhammad Salim [1992 SCMR 46]

Dr. Aftab Ahmed Khan V/s Muhamamd Iqbal and others [1984 CLC 3157]

8. We have heard both the learned Counsel at some length and have perused the record and the decisions relied upon by them.

9. In our view the only controversy involved in the present case is whether the appellant had misappropriated the amounts entrusted upon him by the company or not? It is an admitted position that the appellant started his career with the Respondent Company in 1966 as clerk and rose to the position of Manager. During his tenure in service he gained the confidence of the Directors of the Company, who assigned him the responsibility to deal with financial matters of the company. Subsequently on account of certain investigations by the CIA, the appellant was found to be guilty of embezzlement and misappropriation of funds of the company.

10. The learned Single Judge while examining the case in detail observed that the appellant neither gave any plausible explanation about the amounts withdrawn by him nor produced any cogent material or evidence that the said amounts withdrawn by him were given to other traders on the instructions of the company. The learned Single Judge also came to the conclusion that in the light of the admitted position that the amounts were withdrawn by the appellant the case is proved against him to the extent of Rs. 8,454,580/- and decreed the suit accordingly with mark up @ 14% per annum from the date of the suit till its realization.

11. Before us also Mr. Naveed Ahmed Khan the learned counsel has reiterated his pervious submissions that the appellant is neither involved in misappropriation nor embezzlement of any amount of the company rather since the last couple of years he had been performing his duties diligently and faithfully. It is seen from the record that the officer of the National Bank Mr. Shakeel Ahmed Khan was examined who produced 23 cheques issued by the appellant on behalf of the company before the court, which purportedly had been encashed by the appellant himself. It is also seen from the record that the appellant had categorically admitted in his examination-in-chief that at the back of a number of cheques his signatures were appearing and on a number of cheques signatures of Sohail Aslam were appearing, who happens to be the son of the present appellant. It is also an admitted position that these cheques were issued by the appellant himself.

12. The appellant had also admitted in his examination-in-chief that the statements he had been sending to the Head Office bore his signatures and also that these statements do not reflect the correct state of affairs of accounts of the company. It is also seen from the record that the appellant had not disputed the withdrawal of the amounts but only stated that the said amounts withdrawn by him were for business purposes of the company.

13. It is trite a proposition of law that the onus lies on the person who assert it, as it was the appellant who had claimed that he had taken all the money from the bank of the company for business purposes, it was for him to prove with cogent material and evidence that the said amounts withdrawn by him were infact utilized and spent for business purposes of the company. The appellant ought to have produced some material documents or evidence to prove his averments which onus surely was not properly discharged. The learned Single Judge has through his erudite order thrashed out the entire facts of the case and through his exhaustive order has not only laid thread bare the issue but he has also come to the right conclusion that the appellant was involved in misappropriation and embezzlement of the amounts of the company. It is also an admitted position that the appellant had given wrong account statements to the company, in his own handwriting, which record is available in the Evidence file as Ex. P2/13 to P2/17. Though it was claimed by the appellant that certain amounts withdrawn from the bank were for the purchase of textile quota for the company which payment was being made by him in cash and under the table, however no substantial material was placed either before us or before the learned Single Judge to substantiate this claim.

14. Mr. Naveed Ahmed Khan, Advocate has invited our attention to section 230 of the Companies Ordinance 1984 to which the learned Counsel representing the respondent has taken exception and submitted that this plea was neither raised before the learned Single Judge nor found mentioned in the pleadings filed before this Court. Hence according to the learned Counsel for the Respondent the decision given by this court in the case of T. Motandas, mentioned above, is squarely applicable to the present case. As per the said decision “No evidence can be allowed or looked into in support of the plea which had not been pleaded in the proceedings”.

15. We have considered the arguments of both the learned Counsel and tend to agree with the submissions of the learned Counsel for the Respondent that the reliance of the learned Counsel for the appellant on section 230 of the Companies Ordinance is misplaced as this issue was neither raised before the learned Single Judge nor found mentioned in the pleadings before this Court. The Hon’ble Supreme Court of Pakistan in the case of Hakim Ali by placing reliance on another decision of the Hon’ble Supreme Court in Government of West Pakistan V/s Haji Muhammad PLD 1976 SC 469 quoted as under:-

“It is well established rule that if a plea of fact is not pleaded no case could be founded on it”.

Hence in view of the explicit findings of the Hon’ble Apex Court, we agree with the contention of Mr. Zafar Alam Khan, Advocate that a person could not be allowed to argue something which it is not part of the pleadings, until and unless the facts so warrant.

16. It is also seen from the record that the appellant had not been sending the correct state of affairs of the accounts to the Head Office and had been concealing the true financial status of the Company from the Head Office. It is also a matter of record that the documents produced by the Respondent before the learned Single Judge had proved the active participation of the present appellant in misappropriating the funds of the Company.

17. The learned Counsel of the appellant could not controvert the fact that the disputed amounts were neither withdrawn by the appellant nor could controvert the fact that the appellant had been sending incorrect statement of accounts of the company in his own handwriting to the Head Office, which amply proves that the appellant had misappropriated the amounts of the Company and had failed to substantiate with cogent material, that the amounts withdrawn by him were paid to some other traders on the instructions of the Company as no cogent material had been produced by the appellant in this regard. We therefore in view of the specific observations that the appellant had not disputed that the amount were not withdraw by him, have come to the conclusion that the appellant had miserably failed to discharge the onus lies on him to prove that he had neither misappropriated nor embezzled the amounts of the Company.

18. Hence in our considered view the judgment passed by the learned Single Judge does not require any interference from our part as the appellant has miserably failed to produce any cogent material or evidence that the amounts withdrawn by him were for business of the Company as neither any plausible explanation to substantiate his assertion nor any evidence in support of the claim thereof has been produced by the appellant.

19. We therefore in view of the uncontroverted facts are of the considered view that the learned Single Judge has reached the correct conclusion and the suit was rightly allowed and decreed in favour of the Respondent/Company. We therefore uphold the order of the learned Single Judge, with the result that the present High Court Appeal being devoid of any merit is hereby dismissed alongwith the pending application.

Judge

Karachi

Dated ______ April 2011.