Appeal Under Order 43 Rule 1(r) PME

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IN THE COURT OF DISTRICT JUDGE LAHORE

IN THE COURT OF DISTRICT JUDGE LAHORE

Misc. Appeal No.____________/20081. Autotechnik (Pvt) Limited, a company incorporated under the Companies Ordinance, 1984, having its registered office at 29-C-II, Gulberg III, Lahore, through its director Attique Ahmed.

2. Attique Ahmed s/o Shafeeq Ahmed resident of House #126-A, Ahmed Block, New Garden Town, Lahore3. Faisal Farooq s/o Farooq Ahmed resident of House #161, Shadman II,

Lahore

4. Farooq Ahmed s/o Taj Din resident of House #161, Shadman II, Lahore

5. Mrs. Naseem Akhtar w/o Farooq Ahmed resident of House #161, Shadman II, Lahore

. Appellants/plaintiffs

VERSUS

1. Porsche Middle East & Africa, a company incorporated under the laws of United Arab Emirates having its registered office at P.O. Box 54299, Dubai Airport, Free Zone, Dubai, United Arab Emirates.

2. Syed Abuzar Bokhari son of Syed Manzoor Hussain Bokhari resident of House no. 11/B-2, Asad Jan Road, Lahore Cantt. Lahore.3. Naureen Khalid wife of Mr. Syed Abuzar Bokhari resident of House no. 11/B-2, Asad Jan Road, Lahore Cantt. Lahore.4. Performance Automotive (Pvt) Ltd, having its registered office at 23 Tipu Block, New Garden Town, Lahore

. Respondents/defendantsAPPEAL UNDER ORDER 43 RULE 1(r) CPC AGAINST THE ORDER DATED 21/07/2008 PASSED BY MR. IFTIKHAR AMED, LEARNED CIVIL JUDGE, LAHORE.

Respectfully Sheweth;

1. That the appellant No. 1 is a company incorporated under the Companies Ordinance and has been conducting business as an established agency/importership of Porsche vehicles. The appellant No.1 has been marketing and selling Porsche vehicles in Pakistan and for this purpose had established after sales services for Porsche customers. The appellant No. 2, 4 & 5 are directors and shareholders of the appellant No. 1 while appellant No. 3 is its Chief Executive Officer. Appellant No. 1 is acting through its duly authorized director Attique Ahmed who is well conversant with the facts of the case. (Copy of the Board resolution is attached as Annex A)2. That the respondent No.1 is a company registered under the laws of United Arab Emirates and is engaged in the business of selling Porsche vehicles in Middle East and African countries. Respondent No.2 is a director and shareholder of appellant No.1, while respondent No.3 is a previous director and shareholder of appellant No.1. The respondent No.4 is a company incorporated and established by respondent No.2 and respondent No.3. The respondent No.1 has been the principal of appellant No.1 and the agency relationship between the principal and appellant No.1 is coupled with interest. The respondent No.1 in 2005 partnered with appellant No.1 to tap the Pakistani market and met with resounding success as sales of respondent No.1 Porsche vehicles reached unimaginable levels considering the conditions at Pakistani luxury vehicle market.

3. That in February 2008, the respondent No.1 attempted to terminate the agency of appellant No.1 in an unceremonious and suspicious manner. Since the attempted termination was outrageously repudiatory of the commitments between the parties, the appellant No.1 was forced to institute a suit for permanent injunction on 06/02/2008 in the court of Senior Civil Judge, Lahore, against the respondent No.1 along with other respondents. In the suit, the appellants sought a declaration that the letter dated 04/02/2008 from respondent No. 1, purportedly terminating the appellant No. 1s agency coupled with interest, is illegal, void ab nitio and nullity in the eyes of law. The appellant No.1 also sought permanent injunction against respondent No. 1 restraining it from appointing respondent No.4 or any other person as its agent of Porsche vehicles in Pakistan. The afore-said prayer required framing of issues and recording of evidence. The appellant No.1, along with the suit, also filed an application under Order 39 Rule 1 & 2 for interim injunction, seeking the suspension of the termination letter dated 04/02/2008. It was also prayed that the purported appointment of respondent No. 4 as the new Porsche agent in Pakistan should also be suspended during the pendency of the suit. The suit was entrusted to the court of Mr. Iftikhar Ahmed, Civil Judge Lahore, who after hearing appellants counsels arguments granted an ad interim injunction against the respondents and suspended the operation of the termination letter dated 04/02/2008. The ad interim order passed on 06/02/2008 also suspended the appointment of respondent No. 4 as the new agent of Porsche vehicles. (Copy of the interim order of the learned judge is attached as Annex B)4. That subsequently written statements were filed by the respondents. The appellant No.1 had to file a rejoinder to the written statement filed by respondent No.1 in order comprehensively rebut the contentions raised by respondent No.1 against appellant No.1. The learned court fixed a date for arguments on the application under Order 39 Rule 1 & 2. Detailed arguments ensued on the application by appellants and respondents counsels. The appellant argued and claimed that it had a prima facie arguable case and had every likelihood of success. It was also argued that the balance of convenience and inconvenience lies in favor of the appellants and if an interim injunction was not granted the appellant would suffer irreparable loss and damage.

5. That after hearing the arguments of the counsels for the parties to the suit, the learned judge reserved a date on which the order was to be announced. The learned judge was now required to decide whether the appellants satisfied the requirements of Order 39 Rule 1 & 2. The learned judge did not announce the order on the date fixed by him. There after many dates were given, but no order was announced by the learned judge. Finally on 21/07/2008 the learned judge orally delivered the order, announcing the vacation of the ad interim injunction granted on 06/02/2008. The written order was delivered on 28/07/2008. The learned judge while delivering the order stated, inter alia, that the appellants relationship was not governed by a written agreement; that there was no agency relationship between appellant No. 1 and respondent No. 1; and no agency coupled with interest exists in favor of the appellant No. 1 as appellant No. 1 was never an agent of respondent No.1. The learned civil judge held that the Letter of Intent was the sole document governing the relationship between the parties, which in any event was not a contract; and that that too expired. 6. That the order dated 21/07/2008 (the Impugned Order) is bad in law, illegal, void ab inito and liable to be set aside, on inter alia, the following:GROUNDS

a) That under the principles governing an application under Order 39 Rule 1 & 2, the court is required to decide whether the petitioner has made a prima facie arguable case, whether the balance of convenience and inconvenience is in favour of petitioner and lastly whether the petitioner would suffer irreparable loss and injury if the temporary injunction is not granted. The order dated 21/07/2008 passed by the learned civil judge completely failed to adjudicate any of the afore-referred ingredients required under Order 39 Rule 1 & 2. The Impugned Order on the other hand decided the case on its merits. The Impugned Order is liable to dismissed on this ground alone. b) That the Impugned Order completely failed to address the first and foremost requirement of an application under Order 39 Rule 1& 2 in so far as it did not address the issue of prima facie arguable case. The learned judge manifestly failed to take cognizance of the facts which so clearly and evidently depicted a prima facie arguable case. The learned civil judge also failed to take account of those facts which were not denied or controverted by the respondents. For instance was an admitted and established fact that the appellant No. 1 was appointed as the sole importer of Porsche vehicles and parts on 24/08/2008 through a joint press conference in Lahore. It was explicitly stated in the press release that the status of appellant No.1 was: Sole importership of Porsche automotive products, parts and accessories and driver selection products It was also clearly stated that the purpose of the agency was To represent all commercial interests of Porsche AG for Pakistan. The press release also said: Porsche sets up operations in Pakistan, Partnering with such a resourceful company such as Autotechnik etc. These statement which were jointly made by appellant No. 1 and respondent No.1, provide sufficient basis for a prima facie case and for a temporary injunction to be granted. There were also numerous exchanges of emails, letters and other business documents which clearly showed that an agency relationship existed. One such important fact which testified the prima facie basis of the appellant No.1s case was the celebrated event in Lahore where the Managing Director of respondent No. 1 in his speech on 08/04/2006 said: Our partnership with Autotechnik is definitely on the right track and Porsches future in Pakistan is looking very positive indeed. As usual, Porsche Middle East and Africa would provide full support to Autotechnik to ensure another success for Porsche in another promising market. Similarly another prima facie basis of the existence of agency was the fact that appellant No.1 was always represented as Porsche Pakistan on the official shields given to the customers of Porsche. These shields were also given jointly by respondent No. 1 and appellant No.1. The Impugned Order is liable to be set aside on this ground alone.

c) That the Impugned Order also failed to address the second important requirement of temporary injunction, in so far as it did not address the issue of balance of convenience and inconvenience. The learned civil judge failed to appreciate that the balance of convenience and inconvenience lied in favor of the appellant No. 1. It failed to acknowledge that the appellant No. 1 had established Porsche business which was built over a period of time and appellant No.1 would face more inconvenience than respondent No.1 if temporary injunction was not granted. This fundamental test for the grant of temporary injunction was completely ignored by the learned civil judge. The Impugned Order is liable to be set aside on this ground also.d) That the Impugned Order also failed to address the third important requirement of temporary injunction, in so far as it did not address the issue of irreparable loss and injury. The learned civil judge failed to appreciate that the investments worth millions made by the appellants would be completely ruined if the injunction is not granted during the pendency of the suit. In particular, the learned civil judge did not even take into account the fact that if injunction is not granted the entire investments, effort and time spent by the appellant No.1 will go to waste, the show rooms and services centres, the plant and equipment, office and machinery, promotional data, furniture and fixtures etc will also all be completely worthless and useless. In particular the appellant No.1 would be in serious breaches of its commitments to third parties and will have to pay unprecedented damages for the land agreements relating to show rooms and service facilities. Similarly the reputation built among the customers and the customer base would also be destroyed. The learned judge has also failed to take cognizance of the fact that appellant No.1 is continuously suffering loss and damage and its reputation being tarnished. The appellants would now, never be able to get any similar importership or agency of any luxury brand, as, would be principals of such brands will be hesitant in having any business relationship with appellants. The Impugned Order is liable to be set aside on this ground also. e) That the learned judge fundamentally erred in holding that Letter of Intent did not give rise to a concluded contract. The learned judge failed to appreciate that the term Letter of Intent is not a term of art and does not refer merely a future intent to enter into a contract. The Letter of Intent was a binding understanding between the parties and required from appellant No.1 meeting of certain performance standards. The ruling of the learned judge that Letter of Intent expired on 31/07/2005 misses the whole point of appellant No.1s argument in the suit. It is submitted that the appellant No.1s agency coupled with interest existed independently from the Letter of Intent (the LOI) dated 12/04/2005. The LOI which was to expire 31/07/2005 was never intended to be the sole document which governed the relationship between the appellant No.1 and respondent No.1. It is an admitted fact that the marketing and promotion of Porsche vehicles, hiring and training of professional staff as per Porsche standards, setting up of show rooms and service facilities and the substantial investments made by the appellant No.1 would never have taken place were the agency relationship governed solely by LOI. The Impugned Order is liable to be set aside on this ground also.

f) That the Impugned Order went completely out of context when, referring to a particular clause of the LOI, it held that no relationship of agency existed. The learned judge completely erred in holding that clause m of the LOI depicts that the relationship of the parties was not that of principal and agent. While the learned judge has not explained the reasons for arriving at such conclusion, there are many other clauses of the LOI which clearly show that the relationship between appellant No.1 and respondent No.1 was essentially that of principal and agent. For instance clause a of the LOI clearly state that Porsche business of the appellant No.1 should exist independently of any other business interest and no change in shareholders can be made without prior approval of the respondent No.1. Similarly, clause c required approval from respondent No.1 regarding appointments to all management and customer facing personnel. Such an interdependent relationship can only be contemplated in an agency situation. Similarly the requirement to strictly follow Porsche CI guidelines (clause e), to cater for a full service facility for Porsche-fully complying Porsche CI guidelines (clause f), to provide financial, staffing and marketing back-up to ensure the foundation and success of Porsche business (clause i), to launch Porsche as a brand within Pakistan and develop the market so that the projected volumes are achieved (clause j), maintaining marketing spending of at least 3% of the total Porsche sales turnover (clause j), to keep harmonized prices of Porsche vehicles in agreement with the respondent No.1, to ensure training of staff as required by respondent No.1 (clause l), all indicate undoubtedly that the relationship between appellant No.1 and respondent No.1 was that of agent and principal. The logic of the learned judge in choosing clause m and making it the basis of the ruling that there was no relationship of principal and agent, is, to say the least, unfathomable. The Impugned Order is liable to be set aside on this ground also. g) That the learned civil judge completely failed to appreciate the fact that the relationship between appellant No.1 and respondent No. 1 was not of sale and purchase of vehicles on behalf of defendant No.1 but also involved a complete package to the customers in the shape of Porsche vehicles along with warranty and a commitment of full after sales services and facilities. The sale of a Porsche vehicle was inclusive of the commitment by defendant No.1 that the customer shall receive full after sales services and parts during the warranty period. The agency aspect of the relationship is patently clear from this arrangement, whereby appellant No.1 provides warranty services, including spare parts not on it own but on behalf of the respondent No.1.

h) The learned judge erred on facts, when it held that there was no such course of dealing between the parties which gave an inference that the relationship between the parties was that of principal and agent. As stated above, the fundamental aspect of the agency relationship related to the warranties/guarantees given by appellant No.1 on behalf of the respondent No.1. The appellant No.1 invested in parts and labor services and latter got compensation from the principal (respondent No.1) for the warranty. The appellant No.1 was bound to provide warranty services to the Porsche customer for a period of two years free of cost and held no discretion to do otherwise. An elaborate online IT system has been specifically designed to process the warranty contract and transactions after the customer has purchased a vehicle. This arrangement clearly builds a nexus between respondent No.1, appellant No.1 and the customer. It is pertinent to mention here that the appellant No.1 has over fifty tri-party contracts (between respondent No.1, appellant No.1 and the customer) running all the way to the year 2010. It is pertinent to mention here that the warranty book refers to this relationship as partnership. It states: The liability for defects is based on the conditions according to the Purchase Agreement concluded between the initial purchaser and the Porsche Partner Therefore the Impugned Order is liable to be set aside on this ground also. i) That the learned civil judge erred on facts when it failed to appreciate that the appellant No.1 as agent of respondent No.1 was required to account for sales proceeds. Each month, the appellant No.1 was bound to submit a monthly sales and stock report detailing each sale. Similarly, the warranty services carried out by the appellant No.1 had to be invoiced within the stipulated period and reported to the respondent No.1 through the elaborate IT systems for processing and credit. The Impugned Order is liable to be set aside on this ground also.j) That the learned judge erred in law when it held that appellant No.1s agency was not coupled with interest. He failed to take account of fact where the agent has developed an interest in the subject matter of the agency, then the agency is coupled with interest and is not terminable. The Impugned Order failed to appreciate that there was no termination clause in the LOI. The investments and time and effort of appellant No.1 in the Porsche business secured by the agency itself. The Impugned Order is liable to be set aside on this ground also. k) That the learned civil judge failed to appreciate the fact the agency was so evident from relationship between the appellant No. 1 and respondent No. 1. The probationary LOI dated 12/04/2005 and joint announcement at the press release on 24/09/2005 all required the appellants to make huge investments in the infrastructure and marketing of the Porsche vehicles. It is evidently clear from the record that the return on these investments would have to be at a much later date. The security for these return lay in the agency itself. The Impugned Order is therefore liable to be set aside on this ground alone. l) That the learned civil judge failed to take cognizance of the fact that the agency was integral to the relationship between appellant No.1 and respondent No.1. It is almost inconceivable for any businessman to make huge investments on the promotion and establishment of a brand without any sort of security for its investments. The security for the investments made by the appellant No.1 was the agency itself. The learned judge complete failed to realize that respondent No.1 cannot just terminate the agency at its whim and fancy, and leave the plaintiffs high and dry and bankrupt. It would be unjust and inequitable, if respondent No.1 is allowed to terminate the agency coupled with interest of appellant No.1. The Impugned Order is therefore liable to be set aside on this ground alone. m) That the learned trial court failed to apply its judicial mind and proceeded absolutely in arbitrary and capricious manner while passing the order which in fact was the ultimate relief prayed for by the respondents in their suit.

n) That the Impugned Order is not sustainable in the eyes of law and is something unprecedented and unusual in as much as the Impugned Order has given the ultimate relief which was subject matter of the suit and which could only have been granted after a thorough trial of the suit.o) That even otherwise the Impugned Order is too harsh, oppressive and tends to completely damage the established business of the appellants and therefore is liable to be set aside. q) That the learned civil judge has exceeded its lawful jurisdiction while issuing the Impugned Order in as much as the said order tends to conclusively determine the rights of the parties with regard to the matter in controversy in the suit which could have only been the result of final adjudication in the form of final judgement and decree. In this respect the Impugned Order dated 21/07/2008 is patently contrary to law.PrayerIn view of the afore-said it is humbly prayed that the order dated 21/07/2008 may kindly be set aside being illegal, void ab initio and contrary to law.

It is further prayed that the:1. The operation of the advertisement dated 04/02/2008 appearing in the business recorder and other newspapers and the so called letter dated 03/02/2008 attempting to terminate the appellants agency coupled with interest may be suspended; and

2. Respondent No. 1 may be restrained during the pendency of the suit from terminating the plaintiff No. 1s agency coupled with interest relating to Porsche Business;

3. Respondent No. 1 be restrained from stopping plaintiff No. 1 from conducting Porsche Business

4. Respondent No.1 be restrained from appointing respondent No. 4 or any other person as its agent/importer in respect of the Porsche Business in Pakistan and/or allowing respondent No. 4 and/or any other person from doing or conducting Porsche Business in Pakistan

5. Respondent No. 4 be restrained from claiming himself as the agent of Porsche and carrying on the Porsche Business in Pakistan.

Any other relief which is deemed fit and proper may also be awarded to the appellants.

APPELLANTS

Through

(Syed Ali Zafar)

Barrister at Law

(Zahid Nawaz Cheema)Advocate High Court

(Mohammad Saqib Jillani)Advocate High Court

Mandviwalla & Zafar

Zafar Chambers

7/B-1, Aziz Avenue

Canal Bank, Gulberg V

Lahore

IN THE COURT OF DISTRICT JUDGE LAHORE

Misc. Appeal No.____________/2008Autotechnik (Pvt) Limited Vs. Porsche Middle East & Africa APPEAL UNDER ORDER 43 RULE 1(R) CPC AGAINST THE ORDER DATED 21/07/2008 PASSED BY MR. IFTIKHAR AHMED, LEARNED CIVIL JUDGE, LAHORE.

Affidavit of:-Attique Ahmed s/o Shafeeq Ahmed resident of House #126-A, Ahmed Block, New Garden Town, LahoreI, the above deponent, do hereby solemnly affirm and declare as under:-

1.That the above named deponent has filed accompanying Appeal in this hon' ble court and the contents of the same may kindly be read as an integral part of this affidavit.

2.That the contents of the accompanying Appeal are true and correct to the best of my knowledge and belief and nothing has been concealed thereof.

Deponent

VERIFICATION

Verified on oath at Lahore on this _______ day of July 2008 that the contents of the above affidavit are true and correct to the best of my knowledge and belief.

Deponent

IN THE COURT OF DISTRICT JUDGE LAHORE

In re:

Autotechnik (Pvt) Limited Vs. Porsche Middle East APPLICATION FOR THE GRANT OF STAY/SUSPENSSION OF OPERATION OF THE IMPUGNED ORDER DATED 21/07/2008 PASSED BY IFTIKHAR AHMED, LEARNED CIVIL JUDGE, LAHORE.

Respectfully Sheweth;

1. That the petitioners have filed the titled appeal in this Honble Court in which no date for hearing so far has been fixed.

2. That the petitioners have good prima facie case in their favour.

3. That the balance of convenience also lies in favour of the petitioners as well as in favour of the grant of stay/suspension against the operation of impugned order dated 21/07/2008.

4. That the contents of accompanying appeal may kindly be read as an integral part of this petition.

5. That the impugned order dated 21/07/2008 is contrary to the established principles governing grant of temporary injunction and there is likelihood of irreparable loss and damage being caused to the petitioners if the impugned order is allowed to remain in field.

PRAYER

In view of the above it is most respectfully prayed that the impugned order dated 21/07/2008 may kindly be suspended during the pendency of the accompanying appeal and the petition may kindly be accepted.

Any other relief which is deem fit and proper may also be awarded to the appellants.

APPLICANTS

Through

(Syed Ali Zafar)

Barrister at Law

(Zahid Nawaz Cheema)Advocate High Court

(Mohammad Saqib Jillani)

Advocate High Court

Mandviwalla & Zafar

Zafar Chambers

7/B-1, Aziz Avenue

Canal Bank, Gulberg V

Lahore

IN THE COURT OF DISTRICT JUDGE LAHORE

In re:

Autotechnik (Pvt) Limited Vs. Porsche Middle East

APPLICATION FOR THE GRANT OF STAY/SUSPENSSION OF OPERATION OF THE IMPUGNED ORDER DATED 21/07/2008 PASSED BY IFTIKHAR AHMED, LEARNED CIVIL JUDGE, LAHORE.

Affidavit of:-Attique Ahmed s/o Shafeeq Ahmed resident of House #126-A, Ahmed Block, New Garden Town, LahoreI, the above deponent, do hereby solemnly affirm and declare as under:-

1.That the above named deponent has filed accompanying application in this hon' ble court and the contents of the same may kindly be read as an integral part of this affidavit.

2.That the contents of the accompanying application are true and correct to the best of my knowledge and belief and nothing has been concealed thereof.

Deponent

VERIFICATION

Verified on oath at Lahore on this _______ day of July 2008 that the contents of the above affidavit are true and correct to the best of my knowledge and belief.

Deponent

NOTICE

UNDER ORDER XLIII RULE 3 CPC

In Re:

Autotechnik (Pvt) Limited and others

Versus.

Porsche Middle East & Africa and others 1. Porsche Middle East & Africa, a company incorporated under the laws of United Arab Emirates having its registered office at P.O. Box 54299, Dubai Airport, Free Zone, Dubai, United Arab Emirates.

2. Syed Abuzar Bokhari son of Syed Manzoor Hussain Bokhari resident of House no. 11/B-2, Asad Jan Road, Lahore Cantt. Lahore.3. Naureen Khalid wife of Mr. Syed Abuzar Bokhari resident of House no. 11/B-2, Asad Jan Road, Lahore Cantt. Lahore.4. Performance Automotive (Pvt) Ltd, having its registered office at 23 Tipu Block, New Garden Town, Lahore

Sir,

Please take notice that I am filing an appeal against order dated 21/07/2008 passed in the titled suit.

COUNSEL

Mandviwalla & Zafar

7-B/1 Aziz Avenue, Canal Bank,

Gulberg V, Lahore

(042) 5715479-82 IN THE COURT OF DISTRICT JUDGE LAHORE

In re:

Autotechnik (Pvt) Limited Vs. Porsche Middle East & AfricaINDEX

Sr. No.Documents

Dated

Pages

1.Appeal with affidavits

31/07/2008

2.Copy of the memorandum of appeal

3.Impugned Order

21/07/2008

4.Stay Application with affidavits

31/07/20085.Notices with receipts

6. Power of AttorneyAppellants

Through

Counsels

Mandviwalla & Zafar

Zafar Chambers

7/B-1, Aziz Avenue

Canal Bank, Gulberg V

Lahore