OILBOY (PVT.) LTD. vs PAK QATAR INVESTMENT (PVT — 2025 CLD 852 KARACHI-HIGH-COURT-SINDH

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OILBOY (PVT.) LTD. VS PAK QATAR INVESTMENT (PVT.) LTD. S. 28---Civil Procedure Code (V of 1908), O.XXXVII, Rr. 1 & 2---Summary suit for recovery on the basis of dishonored cheques filed by the respondent against the CEO of the appellant company---Application for leave to defend by the CEO was dismissed on account of admissions and as a result the appellant company filed the appeal before the High Court---Appellant company took a plea that suit was filed against CEO instead of the company---The central moot point for determination by the High Court was whether a company, as a separate legal entity, could be held liable for a dishonored cheque issued in its name when the suit was filed against the CEO rather than the company itself---Specifically, the issue was whether the CEO, acting as an agent for the company, could be personally liable in such a suit or whether the company must be made a party to the suit, considering that the company was a distinct legal entity, and the CEO's actions were carried out in his capacity as the company's representative---Whether the failure to name the appellant company as a party to the suit, and instead filing the suit against the CEO, renders the suit fatal or defective---The appellant company sought to separate itself from its CEO at the appellate stage, claiming the CEO's actions were not representative of the company, despite previously accepting his role as the company's representative---Validity---It is settled law that company is a separate juristic entity from its employees and its employees / directors cannot be held responsible for the contractual obligations incurred by a company (with certain exceptions of personal guarantee, fraud etc. which are irrelevant for the instant purposes), but each case must be viewed on its own merits and circumstances---The summary suit was filed in the name of CEO but a perusal of the title page in the summary suit showed that the appellant company being named as the address for the CEO---The normal format would be to name the company first, being served through its CEO, but in the present case the respondent / plaintiff appeared to have done the opposite---Further perusal of the contents of the plaint revealed that the CEO and the appellant company, in essence, appeared to be one and the same---The CEO also never denied the liability being claimed by the respondent and answered the allegations as if he was the appellant company---The CEO was also instrumental in all proceedings throughout, including signing the agreement between parties, signing cheques, as well as putting up defence on the appellant's side---Perusal of leave to defend filed by CEO on behalf of the appellant company unequivocally showed that he was acting on behalf of the appellant company---Prayer clause of leave to defend also showed that CEO accepted liability on behalf of the appellant company---Such actions of the CEO appeared to have been endorsed by the appellant company as throughout the memo of appeal before the High Court the appellant company referred to the leave to defend application (filed by the CEO) as the appellant company's own---It was an imperative aspect of the matter that given such acknowledgment and endorsement by the appellant company regarding the acts of the CEO i.e. filing leave to defend by CEO on behalf of the company, and owning the same as if the same was filed by the company itself, at a later stage when final order had also been passed, backtracked by attempting to create a juristic person separation between the appellant company and its CEO---Moreover, such plea was only taken by the appellant company in appeal and not before the Trial Court---Such belated argument being submitted by the appellant company in itself was self-defeating inasmuch as on one hand the appellant company was claiming relief based on the separation from its CEO and on the other hand it was claiming enforcement of the same leave to defend application filed by their CEO---The appellant company attempted to thwart judicial proceedings by raising an issue of 'legal entity v. company employee' at such a belated stage---The appellant company could not blow both hot and cold i.e. accept the CEO as the appellant's representative when it suited them and then deny his authority when it did not---High Court also made emphasis on s.28 of the Negotiable Instruments Act, 1881 which provided that an agent acting on behalf of another by signing a cheque could also be held liable---In the pleading of the instant case the CEO acted on behalf of the appellant company and same was never denied by the appellant company---In view of the above the High Court rejected such contention of the appellant company as being without merit---Appeal was dismissed.

OILBOY (PVT.) LTD. vs PAK QATAR INVESTMENT (PVT — 2025 CLD 852 KARACHI-HIGH-COURT-SINDH

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