Employee share option plans (ESOPs) are increasingly used by Pakistani companies, but disputes can arise when an employee leaves and the question becomes what happens to the shares. In an order of 28 February 2025, the VII Additional District Judge (Model Civil Appellate Court), Karachi South dealt with one such dispute at the threshold stage. Mr. Amjad Ali appeared for the former employee.
The dispute
As recorded in the order, the employee claimed that under the company’s ESOP policy an amount was deducted from his salary every month and in exchange he was given common shares, which were to be bought back. After he resigned or was terminated, he filed Civil Suit No. 160 of 2024 for declaration, damages for breach of contract and permanent injunction against Trellis Housing Finance Limited.
The company’s objections
The company applied under Order VII Rule 11 CPC to have the plaint rejected. It said there was no written acknowledgment or promise to buy back the shares, and that the claim was barred because of conditions under the Companies Act, 2017 and SECP regulations of 2023. The trial court dismissed the application on 28.08.2024, and the company filed Civil Revision No. 128 of 2024.
What the court held
- Revision lies, but is narrow. An order on an Order VII Rule 11 application is a “case decided” under section 115 CPC, but revision targets jurisdictional errors.
- The plaint is read as true. Rejection is available only where the plaint’s contents, taken as true, fall within the rule’s clauses.
- Factual controversy needs evidence. Employment and the giving of shares were admitted. Whether a buy-back obligation existed or was broken, and whether section 88 of the Companies Act, 2017 or the regulations barred the claim, needed evidence and could be framed as issues.
- Merits over technicalities. The court quoted the Supreme Court in PLD 2023 SC 174 that procedural rules are “the tools to advance the cause of justice”.
The revision was dismissed and the suit continues. Read our summary: Trellis Housing Finance Limited v. Muhammad Atif Hussain (Civil Revision No. 128 of 2024).
Practical points for employers and employees
These are general points drawn from this order, not a prediction for any other case.
- Document the scheme clearly. Whether a buy-back promise existed was the central disputed fact.
- An early rejection application has limits. Where facts are disputed, courts tend to send the matter to trial.
- Statutory bars may need evidence too. Here the Companies Act objection was treated as a matter for issues and evidence.
- Employees should keep records. Salary slips showing deductions and scheme documents matter.
If you have an ESOP or share buy-back dispute with an employer, bring the scheme documents and your salary records for a review.
Related judgment
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Frequently asked questions
Can a company get an employee’s suit thrown out at the start?
Only in limited cases. As this order explains, a plaint can be rejected under Order VII Rule 11 CPC only if, taking its contents as true, it falls within one of the rule’s clauses. Disputed facts are left for trial.
Did the court decide whether the shares must be bought back?
No. It held that whether a buy-back obligation existed or was broken, and whether section 88 of the Companies Act, 2017 or the regulations barred the claim, required evidence.
What can a revision court correct under section 115 CPC?
The order describes it as directed at jurisdictional errors, not every error of law or fact.
What should employees in an ESOP keep?
Salary slips showing deductions, the scheme documents and any communications about buying back shares.
Disclaimer: General information only, not legal advice. This article summarises a civil revision order as at the date shown and does not create a lawyer-client relationship. The underlying suit is still pending and no finding has been made on the merits. Every case depends on its own documents and facts; please take advice before acting.