Thursday, 31 May 2012

What is cause of Action?

PLJ 2011 Karachi 52

Present: Muhammad Ali Mazhar, J.

NORMEEN SHAFI--Applicant

versus

AMJAD SHAFI and 5 other--Respondents

C.R.A. No. 27 and C.M.A. No. 146 of 2007, decided on 16.5.2011.

Cause of action--

----Right to judgment--Term cause of action refers to every fact which if traversed it should be necessary for plaintiff to prove in order to support his judgment and which if not proved, give defendant a right to judgment.         [P. 58] A

Civil Procedure Code, 1908 (V of 1908)--

----S. 20(c)--Cause of action arises in whole or in part--Essential facts which was necessary to prove--Suit can be filed in a Court within local limits of whose jurisdiction cause of action arises in whole or in part and in cases covered by S. 20, CPC the suit can be instituted where even a part of cause of action arises regardless of place of residence of defendant.       [P. 58, 59] B

Civil Procedure Code, 1908 (V of 1908)--

----Ss. 16(d) & 17 and O. VII, R. 10--Suit for declaration, cancellation accounts--Executed transfer deeds--Plaint was returned without notice--Territorial jurisdiction of trial Court--Courts below failed to exercise its jurisdiction and without assigning any valid reason passed the order for returning the plaint--Validity--Trial Court had failed to consider that plaintiff was claiming her share which was a private limited company and not in Tures Motel--When property in which plaintiffs claims her share was situated at Islamabad and defendants were resident of Islamabad, therefore, suits would have been filed at Islamabad--Concurrent findings of facts were not sacrosanct and can be examined in light of record of the case and if found suffering from legal infirmities and jurisdictional errors, can be declared as illegal without jurisdiction, eventually, can be set aside--If revisional Court finds any violation of provision of law or ignorance of law by Court then it is vested with authority to set aside concurrent findings and substitute its own findings.          [P. 59 & 61] C & J

Civil Procedure Code, 1908 (V of 1908)--

----S. 20--Cause of action--Claim from Court in whose jurisdiction head office of company was situated--Validity--Corporation can be said to carry on business at head office or at the place where it has a branch in respect of a cause of action which arises, wholly or in part, at the place where branch office is situated--If no part of action arises at the place of branch office, the corporation cannot be said to transact business at that place.        [P. 60] D

Cause of action--

----Relief was required to prove for obtaining judgment--Not only the party seeking relief should have a cause of action when transaction or alleged act is done but also at time of institution of claim.           [P. 60] E

Right to relief--

----When an action is brought--No right to seek remedy when right was infringed--Validity--Not only a right has been infringed in a manner to entitle to a relief but also that when he approached the Court the right to seek relief was in existence.         [P. 60] F

Civil Procedure Code, 1908 (V of 1908)--

----S. 20, O. VII, R. 10--Return of plaint--Cause of action--Question--Whether cause of action wholly or in part arose within territorial of Court--Validity--All classes of suits could be filed in a Court within local limits of whose jurisdiction the cause of action arose either wholly or in part. [P. 60] G

Cause of action--

----Every act which if traversed should be necessary for plaintiff to prove in order to support his right to judgment and if no proved, would give defendant a right to judgment and for that purpose only facts stated in plaint are to be considered to determine whether those facts state cause of action or not.       [P. 61] H

Words and Phrases--

----Cause of action--According to Black's Law Dictionary, Sixth Edition, cause of action means the fact or facts which give a person a right to judicial redress or relief against another.         [P. 61] I

Mr. Sundardas, Advocate for Applicant

Mr. Azhar Mehmood, Advocate for Respondents No. 2 to 5.

Date of hearing: 01.04.2011

Order

This Revision Application is brought to challenge the judgment passed by the VIth Additional District Judge Hyderabad on 6.12.2006 in Misc. Civil Appeal No. 70 of 2005 and the order passed by Vth Senior Civil Judge Hyderabad on 22.11.2005 in F.C Suit No. 93 of 2005, whereby, the plaint was returned.

1.  The facts forming the background of the case are that applicant/plaintiff filed a Suit for Declaration, cancellation, Accounts and Permanent Injunction against the respondents/defendants on the ground that she has 9% share holding (434 shares) in the Defendant No. 2, which is a private limited company, having its registered office at Hyderabad within the territorial jurisdiction of Trial Court. In January 2004, the Respondent/Defendant No. 1 who is real brother of applicant offered to purchase the shares of the applicant/plaintiff and delivered four cross cheques of Rs.12 lacs as part payment of the shares and obtained signature of applicant on blank papers.

2.  The Respondent/Defendants No. 3, 4 and 5 are not known to the applicant. The applicant never entered into any agreement to sell with the Respondents No. 3 to 5. The Respondent No. 1 while betraying the trust of applicant and being in collusion with Respondents No. 3 to 5 prepared transfer deeds of 434 shares of the Respondent No. 2, possessed/owned by applicant in favour of Defendants No. 3 to 5 on the blank forms and papers on which the Respondent No. 1 had obtained the signatures of applicant. In the suit, the applicant/plaintiff had prayed as under :--

(i)         Declare that the plaintiff is the lawful owner of 434 shares of the Defendant No. 2 company.

(ii)        Transfer deeds of 434 shares of plaintiff in favour of Defendants 3, 4 and 5 may be adjudged void and may be ordered to be delivered up and cancelled or in the alternate the Defendants 1, 3, 4 and 5 do pay the balance amount after ascertaining the correct value of the shares of plaintiff.

(iii)       Direct the defendants to declare all the assets in the name of the defendants and to give complete accounts of the Defendant No. 2 i.e. Sindh Travel Services (Pvt.) Ltd. for the last five years and make the payment of the amounts due to plaintiff.

(iv)       Issue interim and ad interim injunction restraining the defendants from encumbering, disposing off or creating any third party interest in all the assets of the Defendants No. 2 i.e. Sindh Travel Services (Pvt.) Ltd. particularly Tures Motel on Plot on Muree Road Islamabad in any manner whatsoever.

(v)        Award any other relief deemed fit.

(vi)       Award costs.

3.  On 25.10.2005, the applicant appeared in Court and verified the plaint on oath and sworn her affidavit. The learned Trial Court heard the advocate for plaintiff on the point of jurisdiction and fixed the matter for orders. It is further averred that the applicant's counsel approached many times to the trial Court for knowing the order, ultimately, the trial Court announced the order on 22.11.2005 and returned the plaint to applicant. The applicant filed Misc. Appeal which was also dismissed.

4.  The Respondent No. 5 filed his counter affidavit in this revision application in which it was inter alia contended that the plaint was returned without notice to him and Respondent Nos. 2 to 5. He denied all the allegations and also filed certain documents which were allegedly executed by the applicant. According to the Respondent No. 5, the applicant sold and transferred her shares to the Respondent No. 3 to 5 as far back as 30.1.2004 and also received the payment through pay orders at Islamabad and after receiving the payments, the applicant executed Transfer Deeds. After purchase of the shares, the Respondent No. 5 along with Respondent Nos. 3 and 4 applied for the transfer of shares and the shares were transferred in their names. At the time of transfer of shares, the applicant also wrote letters to Chairman NAB, Deputy Registrar Companies, SECP, Chairman CDA, Member Income Tax, All Pakistan Women Associations, Hyderabad, Secretary Hyderabad press Club and informed that all disputes had been settled and she withdrew all her letters previously written by her. Since January 2004, the applicant is neither shareholder nor Director even not a member of the company.

5.  On 16.3.2005, the applicant had filed a winding up petition in this Court but the same was withdrawn on 1.2.2006. All the documents were signed at Islamabad, the Respondent resides at Islamabad, the cause of action, if any accrued at Islamabad and fraud as alleged, if any committed at Islamabad by the Respondent No. 1, hence the Trial Court had no jurisdiction to entertain the suit and it was rightly returned.

6.  The learned counsel for the applicant argued that both the Courts below have ignored the relevant law and the facts of the case. The office of the Respondent No. 2 is situated at Hyderabad which is within the territorial jurisdiction of Trial Court. He further argued that trial Court failed to exercise its jurisdiction and without assigning any valid reason passed the order for returning the plaint and the learned appellate Court has also failed to consider the law and affirmed/upheld the order passed by the trial Court.

7.  He further argued that the prayer clause is not in respect of property which is situated outside the jurisdiction of the learned Trial Court. The provisions of Sections 16(d) and 17 CPC are not applicable to the facts of the case. The learned Appellate Court committed illegality in applying the said provisions and dismissing the appeal on its erroneous assumptions. The suit of the applicant was in respect of 434 shares of Defendant No. 2 Company which has its registered office at Hyderabad.

8.  The learned counsel appearing for the Respondents No. 2 to 5, reiterated the pleas raised in the counter affidavit. He argued that the applicant has already sold out and transferred her shares and also received the payment and thereafter, she had executed Transfer Deeds. Since January 2004, the applicant is neither shareholder nor Director even not a member of the company. He further averred that all the documents were signed at Islamabad, the cause of action, if any accrued at Islamabad, hence the Trial Court had rightly returned the plaint and the learned appellate Court has also rightly affirmed and upheld the order. In support of his arguments, he relied upon following case laws:--

1.         2005 CLC 1659 (United Distribution Pakistan Ltd. v. Al-Syed Agrochemicals Services and others). In this case the learned Single Judge of this Court held that suit to be instituted where defendants reside or cause of action arises. Plaintiff according to S.20 CPC, has three options to sue, (a) where the defendant or each of the defendants actually resides, caries on business or personally works for gain or (b) in case there are more than one defendants any of them resides, carries on business or personally works for gain or (c) at the place where the cause of action, wholly or in part, arises. Where the defendants are neither residing in place at "K" where the plaintiff lived, nor they are carrying on business or having their sub-office at place "K", suit can be filed where the cause of action wholly or in part, arises. Explanation II of S.20, CPC is not applicable to such a case.

2.         2010 CLC 389 (Messers Apollo Textiles Mills Ltd. vs. Mian Farhat Iqbal). In this case, the learned Single Judge of this Court held that plaintiff filed a suit for recovery of money at place "K" where defendant was neither residing nor he was doing any business. Agreement relied upon by plaintiff against defendant was not arrived at place "K" nor any payment was made there. Plaintiff filed suit at place "K" on the basis of issuance of notices to defendant and also issued delivered/gate passes where his registered office was located. In determining whether any part of cause of action had accrued, averments of plaint were to be read with relief sought by a party in the suit but such reading of plaint should be meaningful and rationale to the controversy. Issuance of alleged notices to defendant and preparation of delivery/gate passes from registered office of plaintiff at place "K" could not be considered as accrual of cause of action to plaintiff within territorial limits of Court at place "K". High Court returned the plaint to plaintiff for presenting the same to the Court in which suit should have been instituted. Application was allowed accordingly.

9.  After hearing the pros and cons of the matter, I have reached to the conclusion that in the plaint the plaintiff/applicant has only claimed the ownership of 434 shares of the Defendant/Respondent No. 2 with the further prayer for cancellation of transfer deeds or in alternate the Respondent Nos. 1, 3, 4 and 5 be directed to pay the balance amount after ascertaining the correct value of the shares. The applicant has also prayed for the declaration against the defendants to declare all the assets in the name of defendants and to give complete account of the Defendant/Respondent No. 2 i.e. Sindh Travel Services (Pvt.) Ltd. for the last five years and make the payment of the amount due to the plaintiff/applicant. It is clearly transpiring from the contents of the plaint that the plaintiff/applicant had only claimed the declaration as to her ownership of the shares and permanent injunction but no declaration or any right was sought for Tures Motel which is situated at Islamabad and owned by Respondent No. 2, the learned trial Court suo moto returned the plaint without issuing notices to the defendants and the main cause of returning the plaint as mentioned in the order is as under:--

"After perusal of plaint it reveals that the shares 434 of plaintiff in Tures Motel on plot admeasuring 10000/-sq.yards near Rawal Dam Muree Road Islamabad free from all encumbrances is owned and possessed by Defendant No. 2. The market value of the property in the year 2003 was more than Rs. 100 million is situated Muree Road Islamabad the Province Punjab, therefore, this Court has got no jurisdiction to entertain or proceed with this matter."

10.  On the basis of above findings the plaint was returned keeping in view the provision of Order VII, Rule 10 CPC. Similarly the learned Appellate Court relied upon Section 16(d) and Section 17 CPC and dismissed the appeal on the basis of following findings:

"In the instant suit the suit property as mentioned in Para-2 of the plaint in Suit No. 93 of 2005 is situated near Rawal Dam Muree Road Islamabad, in which the plaintiff/appellant claims her shares, which according to the contents of plaint were sold by the Defendant/Respondent No. 1 in favour of Defendants/ Respondent Nos. 3 to 5, who are shown in the plaint as residents of Islamabad. In the circumstances, when the property, in which the plaintiff/appellant claims her shares, is situated at Islamabad and the Defendants/Respondents No. 1 to 5 are residents of Islamabad, which is not within jurisdiction of trial Court. The suit should have been filed at Islamabad."

11.  The term cause of action refers to every fact which if traversed it should be necessary for the plaintiff to prove in order to support his judgment and which if not proved, give the defendant a right to judgment. It is the bundle or totality of essential facts which is necessary for the plaintiff to prove before he can succeed. In accordance with clause "c" of Section 20 of CPC, the suit can be filed in a Court within  the  local limits of whose jurisdiction, the cause of action arises in whole or in part and in cases covered by this section, the suit can be instituted where even a part of the cause of action arises regardless of the place of residence of the defendant. It is an admitted fact that the head office of Respondent No. 2 is situated at Hyderabad and in Paragraph 12 of the plaint in question, the plaintiff has asserted that the Defendant Nos. 1 and 2 have failed to pay the rightful share of the rents, profits, dividends and income due to the plaintiff since July 2001 and they are liable to account for the same.

12.  In Paragraph 15 of the plaint, the plaintiff has described the cause of action which allegedly accrued to the plaintiff after 1st July 2001, when the plaintiff was denied her rightful share in the profits of Defendant No. 2 and in prayer clause III, the plaintiff has prayed for the direction against the defendants to declare all the assets in the name of defendants and to give complete accounts of the Defendant No. 2 for last five years and made the payment of the amount due to the plaintiff. It is also an admitted fact that the plaintiff had filed J.M No. 07 of 2005 at the Principal seat of this Court which was withdrawn on 1.2.2006 by the plaintiff on the ground that she has filed a civil suit at Hyderabad which has been dismissed and appeal is pending and she stated before the Court that she is going to avail remedy in the appeal and on this ground J.M was not pressed, the copy of order is available as annexure "R-20" which is attached with the counter affidavit filed by Respondent No. 5 in this revision application.

13.  The plaint shows beyond any shadow of doubt that the plaintiff did not claim 434 shares in the Tures Motel rather her claim of share holding was related to Defendant No. 2 company but the trial Court in its order dated 22.11.2005 observed that the Tures Motel owned and possessed by Defendant No. 2 is situated at Islamabad therefore, he has no jurisdiction to entertain or proceed the matter. The Trial Court has failed to consider that the plaintiff was claiming her share in Defendant No. 2 which is a private limited company and not in Tures Motel. Similarly the Appellate Court has also observed that when the property in which the plaintiffs/appellant claims her share is situated at Islamabad and the Defendant/Respondent Nos. 1 to 5 are resident of Islamabad, therefore, the suit should have been filed at Islamabad.

14.  Both the Courts below have failed to consider that the plaintiff was not claiming her 434 shares in the Tures Motel but her claim was against the company and other defendants in the suit. Though the Tures Motel is owned by the Respondent No. 2 company but for the purposes of deciding the jurisdiction for filing the suit, the Situation/location of Tures Motel is not the alone criteria to decide the matter. The head office of the company which owns the Tures Motel is situated at Hyderabad in which besides claiming the shares, the plaintiff had also lodged her claim regarding the unpaid profits/dividends which could only be claimed from the Court in whose jurisdiction the head office of the company is situated. Explanation II attached with Section 20 C.P.C, provides that a corporation shall be deemed to carry on business at its sole principal office in Pakistan or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. In the judgment reported in 1981 SCMR 494, the Honorable Supreme Court has held that an Explanation is enacted by the Legislature to explain what otherwise would be doubtful or ambiguous. To the extent that it explains a stipulated situation its function is definitive inasmuch as it clarifies or defines the legal position in a supposed state of facts. It is therefore, clear that the corporation can be said to carry on business at the head office or at the place where it has a branch in respect of a cause of action which arises, wholly or in part, at the place where the branch office is situated. If no part of action arises at the place of the branch office, the corporation cannot be said to transact business at that place. This is the only possible interpretation of Explanation II.

15.  At this juncture, I would like to refer my own judgment reported in 2010 CLC 1603, (Muhammad Shabbir versus Mrs. Faraha Bibi), in which I have discussed that the word "cause of action" means bundle of facts which if traversed, a suitor claiming relief is required to prove for obtaining judgment. Nevertheless, it does not mean that even if one such fact, a constituent of cause of action is in existence, the claim can succeed. The totality of the facts must co-exist and if anything is wanting the claim would be incompetent. A part is included in the whole but the whole can never be equal to the part. It is also well understood that not only the party seeking relief should have a cause of action when the transaction or the alleged act is done but also at the time of the institution of the claim. For example, there may be a case where at the time when an action is brought, there is no right to seek the remedy though the remedy was available when the right was infringed. A suitor is required to show that not only a right has been infringed in a manner to entitle him to a relief but also that when he approached the Court the right to seek the relief was in existence. Similarly the Privy Council in another case had summed up that cause of action means every fact which will be necessary for the plaintiff to prove if traverse in order to support his right to judgment. It has no relation to the defence that may be set up nor does it depend upon the character of the relief prayed. Similarly, in my another judgment reported in 2010 CLD 760. (Pakistan Kuwait Investment Company (Pvt.) Ltd. versus Saadullah Khan & Brothers). I have held that for the purposes of Order, VII, Rule 10 and Section 20, C.P.C., it is very much relevant to decide whether cause of action wholly or in part arose within the territorial jurisdiction of the Court. It is also clear that all classes of suits could be filed in a Court within the local limits of whose jurisdiction the cause of action arose either  wholly  or in part. Term "cause of action" refers to every act which if traversed should be necessary for the plaintiff to prove in order to support his right to judgment and if not proved, would give the defendant a right to judgment and for that purpose only the facts stated in the plaint are to be considered to determine whether those facts state cause of action or not. Even a fraction of cause of action is a part of cause of action. According to Black's Law Dictionary, Sixth Edition, cause of action means the fact or facts which give a person a right to judicial redress or relief against another. The legal effect of an occurrence in terms of redress to a party to the occurrence. A situation or state of facts which would entitle party to sustain action and give him right to seek a judicial remedy in his behalf.

16.  Since the applicant/plaintiff prayed in the suit that the transfer, deed of 434 shares be adjudged void and may be ordered to be delivered up and cancelled and also sought directions to produce the complete accounts of the Sindh Travel Services (Pvt.) Ltd. and also alleged in the plaint that she has not been paid dividend by the said company. If the suit is decreed then it would be the responsibility of company to make necessary changes in its record and to restore the share register in its original position in case the Court orders for the cancellation of transfer deeds and restoration of plaintiffs shareholding. Another prayer is also against the company for the production of accounts to make payments of the amount due to the plaintiff, therefore, for all intent and purposes and in all fairness, I am of the firm view that the plaintiff has a cause of action against the company and keeping in view, Clause (c) of Section 20 C.P.C. read with Explanation-II, the suit was rightly instituted in the trial Court and both the orders passed by the Courts below are liable to be set aside.

17.  The case law relied upon by the learned counsel for the respondent are distinguishable as in no case, the question of any payment of unpaid profit or dividend was involved nor the plaintiff in that cases sought directions for filing the details of assets and accounts of company nor sought cancellation of share transfer deeds.

18.  At this point in time, I would also like to hold that the concurrent findings of facts are not sacrosanct and can be examined in the light of the record of the case and if found suffering from the legal infirmities and jurisdictional errors, can be declared as illegal without jurisdiction, eventually, can be set aside. If revisional Court finds any violation of provision of law or ignorance of law by Court then it is vested with the authority to set aside concurrent findings and substitute its own findings. The Honorable Supreme Court in its judgment reported in 2010  SCMR  1630,  (Sultan Muhammad and another versus Muhammad Qasim and others), held that the concurrent findings of three Courts below on a question of fact, if not based on misreading or non-reading of evidence  and  not  suffering  from  any  illegality or material irregularity affecting the merits of the case, are not open to question at the revisional stage, but where on record the position is contrary to it, then the revisional Court in exercise of its jurisdiction under Section 115, C.P.C. or Supreme Court in exercise of jurisdiction under Article 185(3) of the Constitution, are not denuded of their respective powers to interfere and upset such findings. In another judgment on the same point reported in 2004 SCMR 1668, (Habib Khan versus Mst. Bakhtmina & others), the Honorable Supreme Court held concurrent findings of facts of the Courts below cannot be reversed in exercise of revisional jurisdiction as conferred upon the High Court under Section 115, C.P.C. but it should not be ignored that such concurrent findings cannot be termed as "sacrosanct" and can be reversed, if the same are based on insufficient evidence, misreading of evidence, non-consideration of material piece of evidence, erroneous assumption of facts and patent error of law.

19.  The upshot of this discussion is that the impugned judgment dated 6th December 2006 passed by the VIth learned Additional District and Session Judge, Hyderabad in Misc. Civil Appeal No. 70/2004 and the order dated 22nd November 2005, passed by the Vth learned Senior Civil Judge, Hyderabad in FC. Suit No. 93/2005, both are set aside. The matter is remanded to the trial Court with the direction to decide the suit on merits. Since it is an old litigation, therefore, it is expected that the learned trial Court will decide the suit on merits within a period of six months.

Revision Application disposed of in the above terms along with listed application.

(R.A.)  Application disposed of.


No comments:

Post a Comment

Contact International Lawyer

If you have any queries related with this post you can contact at internationallawyerinfo@gmail.com

Regards,
Salman Yousaf Khan
Chairperson
International Lawyer
+92-333-5339880