1. ANWARUL HAQ. C J.-This petition seeks leave to appeal against an order made by a learned Judge of the Lahore High Court on the 29th of August, 1978, whereby a constitutional petition filed by the present petitioner, namely, Government passed under section 138 (iv) of the Companies Act was dismissed in limine.
2. The petitioner-Company was incorporated in 1973 as a private limited Company with its head office at 94-B Gulberg Colony, Faisalabad. It commenced production on the 20th of February, 1977.
3. It appears that one Mahmood Ahmad, claiming to be a share-holder of the Company, filed a complaint before the Registrar of Joint Stock Companies, and in connection thereof the petitioner was summoned by an Assistant Registrar. Omitting the details of these proceedings, we can straightway come to the letter written by the Registrar to the petitioner-Company on the 17th of May, 1978 to clarify certain points and to produce certain documents so as to enable the Registrar to satisfy himself that the affairs of the Company were being properly run. The petitioner-Company sent a detailed reply to this letter on the 1st of June, 1978. Thereafter the petitioner received an order dated the 19th of August, 1978, that the Central Government had appointed an Inquiry Officer, namely, Mr. Mushtaq Ahmad, Inspecting Assistant Commis--sioner Income-tax, Faisalabad, under section 138 (iv) of the Companies Act to investigate into the affairs of the petitioner-Company. The Company was further directed to deposit Rs. 3,000 as remuneration of the Inquiry Officer.
4. It was contended in the High Court that the order of the Central Government was invalid as it had been issued on the basis of a report of the Registrar, Joint Stock Companies which had been made without affording the petitioner an opportunity of being heard in its defence ; that the proper course for the Registrar was to proceed in accordance with the provisions of subsection (6) of section 137 of the Companies Act ; and that, in any case, the Registrar as well as the Central Government were not competent to take action against the petitioner-Company during the pendency of civil litigation between the petitioner-Company and the complainant Mahmood Ahmad. The learned Judge repelled all these contention;, observing that the action taken by the Registrar of Joint Stock Companies properly fell under subsection (5) of section 137 of the Act, and, therefore, there was no occasion for invoking subsection (6) thereof ; that the provisions of .The Companies Act were not controlled by the pendency of proceedings in any other forum ; and that the Registrar had properly complied with the provisions of law before submitting his report to the Central Government.
5. The same contentions have been repeated before us by the learned counsel for the petitioner, and, in addition, it is submitted that it was open to the Registrar to condone the defects or deficiencies noticed by him in the working of the Company or to impose a fine in this behalf, but he chose to adopt the drastic remedy of having an Inquiry Officer appointed by the Central Government. Lastly, it is submitted that the petitioner has no confidence in the Inquiry Officer appointed by the Central Govern--ment, and, therefore, he should not conduct the inquiry.
6. It will be seen that the grievance that the Registrar, Joint Stock Companies, could have taken a more lenient view of the matter, has no bearing on the validity of the report submitted by him to the Central Government or of the order passed by the latter thereon. Similarly, the submission that the petitioner has no confidence in the Inquiry Officer is irrelevant for the purpose of deciding the present petition. This matter ought to be raised by the petitioner before the appropriate authority in the first instance.
7. Turning to the submissions which were made before the High Court, and which have been reiterated before us, we find that the learned Judge in the High Court has. Rightly held that the action taken by the Registra of the Joint Stock Companies fell under subsection (5) of section 137 of the Act, and there was no occasion to invoke subsection (6) thereof. W have already stated that on a complaint having been received, the Registra had called upon the petitioner-Company to furnish an explanation and t produce certain documents as required by subsection (1) of the aforesaid section. On receipt of the petitioner's reply the Registrar apparently form the opinion mentioned in subsection (5) of the section, namely, that the documents in question disclosed an unsatisfactory state of affairs, and, therefore, it was his duty to report the matter in writing to the Federal Government. On receipt of the Registrar's report it was open to the Federal Government, under section 138 of the Act, to appoint one or more competent inspectors to investigate the affairs of the Company and to report thereon in such manner as the Government may direct. It seems to us that in the procedure followed by the Registrar in this case all the requirements of section 137 were fully satisfied, and there was, therefore, no question of issuing any further notice to the petitioner- Company, or giving it any further opportunity of being heard. It is also clear that the petitioner- Company will have proper opportunity of defending itself before the Inquiry Officer if and when he enters upon hi,: functions.
8. Reference to subsection (6) of section 137 of the Act appears to be entirely misconceived, as this provision of law relates to a case where it is, represented to the Registrar that the business of the Company is carried on in fraud of its creditors or in fraud of persons dealing with the Company or for a fraudulent purpose, but there was no such allegation against the petitioner-Company.
9. Subsection (6) was, therefore, not attracted in this 'a case. If, however, the allegations had been in the nature specified in this subsection, even then the action permitted to the Registrar under sub-- section (5) of section 137 could be taken, as subsection (6) itself makes it clear that the Registrar may in such a case processed under the provisions of subsections (2), (3) and (5) of this section.
10. However, there was clearly no occasion for resorting to the provisions of subsection (6), as the matter clearly fell under subsections (1) to (5).
11. The learned Judge in the High Court also appears to us to be right I saying that the pendency of civil litigation between the petitioner and the complainant Mahmood Ahmad was no bar to the initiation of proceeding under the Companies Act, for the reason that the provisions of the Companies Act are not subservient to proceedings in any other forum including civil litigation.
12. Nothing was said at the Bar against this position in law.
13. As a result, the petition is without merit and is hereby dismissed.