' SYED HAMID ALI SHAH, J.---Respondent is a private company limited by shares, incorporated on 27-5-1993 with authorized capital of Rs,500,00,000 (Rupees five crore only) divided into 50,000 shares of Rs,1,000 (Rupees one thousand only) of which paid-up capital was Rs,2,00,00,000 (Rupees two crore only). Respondent-Company approached the petitioner for a Usance Letter of Credit, on 180-Days basis, for the import of RBD palm oil. The respondent executed various security documents including Trust Receipts, Promissory Note, Memorandum of Deposit of Title deeds and Guarantees, besides registration of charge under section 127 of the Companies Ordinance, 1984.
The loan was converted into PAD and the same was rescheduled through letter dated 15-11-1990.
The respondent after paying Rs,3,00,00,000 (Rupees three crore only) as down payment undertook to pay Rs,7,50,000 (Rupees seven lac fifty thousand only) per month from 1-7-2000. Respondent- Company failed to pay even a single instalment and as such total amount of Rs,26,40,00,000 (Rupees twenty six crore forty lac only) became payable towards instalments. Respondent and the guarantors were reminded of their liability through letters dated 10-7-2000, 20-7-2000 and 31-7- 2000. The respondent responded to these letters and conveyed through letter dated 1-8-2000 that default in payment of the liability under rescheduling agreement dated 15-11-1999 is due to an export of a heavy consignment to India where consignee got the consignment cleared through its own sources from the Indian Port, without releasing the documents from banker, which caused a financial loss and problem to the company. The respondent, however, acknowledged its liabilities in terms of the rescheduling agreement. Petitioner wrote letters dated 3-8-2000, 16-8-2000 and 12- 9-2000 to the respondent-Company, demanding therein, the payment of the liability, failing which the respondent was informed about the legal action. On failure of the respondent to liquidate their liability as per terms of the settlement. The petitioner made a demand of payment in terms of section 306 of the Companies Ordinance, 1984 for the payment of outstanding liability of Rs,3,497.07 million, on 19-10-2000. The respondent replied to the demand of payment, wherein the respondent denied the liability. The petitioner thereafter filed the instant petition for the winding up of the respondent-Company.
2. Learned counsel for the petitioner has argued that the respondent, in response to the letters of the petitioner, had written letter dated 1-8-2000 wherein the liability of the petitioner was admitted and it was undertaken that the same shall be paid within a period of three months. Learned counsel then submitted that the petitioner required the respondent, through notice of demand under section 306 of the Ordinance to pay the admitted liability but the respondent has neglected to pay the same within the stipulated period of 30 days. The reply to the notice was evasive which does not make the demand of the petitioner within the meaning of bona fide dispute, which itself is sufficient to prove that company is deemed to be unable to pay its debts for the purpose of the winding up of the Company. Learned counsel has further submitted that the company has become commercially insolvent, the management of the company has defrauded other creditor banks, statutory returns have not been filed and the project is closed. It was further added by the learned counsel that the financial assistance has been misutilized and the company is run and managed by persons who have committed acts of malfeasance and misfeasance with regards to the affairs of the company. Learned counsel in support of his contentions has referred to the cases of Trade and Industry Publication Limited v. Industrial Development Bank of Pakistan" PLD 1990 SC 768; "Habib Bank Limited v. Messrs Golden Plastic (Pvt.) Limited" 1991 MLD 124; "PICIC v. Indus Steel Pipe Limited" 1993 MLD 94; "Sindh Glass Industries Limited v. National Development Finance Corporation and others" PLD 1996 SC 601; "Habib Bank Ltd. v. Hamza Board Mills and others" PLD 1996 Lahore 633; "Banker's Equity Limited v. Balochistan Coaters Limited" PLD 1997 Karachi 416; "ICP v.
Sindh Tech. Industries Limited" 1997 MLD 2609; International Finance Corporation v. Hala Spinning Ltd." PLD 2000 Lahore 323; "Deutsche Bank A.G., Lahore v. Messrs Farm Aids (Pvt.) Ltd." and 3 others 2004 CLD 449; "Ghulam Hussain Ahmedalli and Co. v. Canhag Private Ltd." (1972) 42 Company Cases 136; "G. Calridge and Company Ltd. v. Nav Bharat Investments Ltd." (1977) 47 Company Cases 428; (1962) 1 All ER 121 (Re. Tweeds Garages Ltd.); "Ali Woolen Mills Limited v. Industrial Development Bank of Pakistan and others" PLD 1990 SC 763.
3. Learned counsel for the respondents, on the other hand has submitted that the petitioner has failed to make out a case of winding up; the petition is mala file and is filed to coerce the respondents for unreasonable terms. He has contended that mere issuance of notice does not entitle the respondent for a winding up order. He has contended that when the amount is unascertained and is disputed, winding up order cannot be made. He in support of his contention has relied upon the case of "Messrs Platinum Insurance Company Ltd. v. Daewoo Corporation" PLD 1999 SC 1.
4. Heard learned counsel for the parties and perused the record.
5. Claim of the petitioner is based on various documents including the trust receipt dated 2-11-1998, agreement for documentary credit dated 23-4-1998, bill of exchange dated 15-5-1998, letter dated 15-5-1998, whereby the respondent accepted the bill of exchange and on the basis of these letters, the Letters of Credit bearing No,LCT/LHR/2497/1998, LCT/ LHR/4941/1998, LCT/LHR/5230/1998, LCT/LHR/5276/1998 and LCT/LHR/3497/1998 were established. The respondent-Company mortgaged its property through equitable mortgage by way of memorandum of deposit of title deeds dated 22-8-1997. The loan was further secured by mortgage of the properties of Razia Yaqoob, Muhammad Naeem, Saleem Yaqoob and Seith Muhammad Yaqoob. The charge under section 127 of the Companies Ordinance, 1984 was also registered and credited in favour of the petitioner (sic) was issued by Companies Registration Office, on 25-8-1997. These documents sufficiently prove the existence of finance facility. The respondent-Company has paid a sum of Rs,3,00,00,000 (Rupees three crore only) and acknowledged its liability under the rescheduling agreement dated 15-11-1999, through letter dated 1-8-2000. These documents prove the existence of the outstanding liabilities A against the respondents-Company. The reply filed by respondents is not supported by any evidence to the effect that the loan facility which admittedly was utilized stands paid off. The petitioner has served upon the respondent, notice/demand of payment under section 306 of the Companies Ordinance, 1984. The notice was duly sent to the company at its registered office, which was received by the company and no amount, qua the debt due, was paid within the stipulated period of thirty days, which gave adverse presumption against the respondent as to its inability to pay off its debts.
6. The respondent-Company has simply denied its liability in an evasive manner, which cannot be considered sufficient to make the debt disputed. Mere denial is not sufficient to make the debt disputed. The respondent-Company is under an obligation to prove with cogent evidence that the demand raised B by the petitioner, who is seeking the winding up of the company, is illegal and there is a bona fide dispute in this regard. Mere disputing the debt in words is not a sufficient ground to resist the winding up order. If any case-law in this respect is needed reference can be made to the cases of (1962) 1 All ER 1211, "Union Bank Ltd. v. Pak Wheat Products" PLD 1970 Lahore 235 and United Western Bank Ltd. And "Paramount Enterprise v. Re Champse" (1985) Companies Cases 57.
7. The respondent-Company was directed through order dated 24-2-2005 to furnish the balance- sheets for the past three years and proof of submission of statutory returns to SECP. Learned counsel for the respondents undertook to produce these documents but subsequently showed his inability to place these documents on record. In the absence of such record, it cannot be ascertained that the company is commercially solvent and is capable of paying its debts. The respondent-Company in order to rebut, the assertions of the petitioner made in the petition, was to prove the commercial solvency of the company by submitting duly audited annual balance- sheets. An adverse inference can be drawn regarding non-submission of the balance-sheets and other relevant record.
8. For the foregoing, I have no hesitation to hold that the respondent is commercially insolvent and is unable to pay its debts. It has failed to maintain its record and the dispute raised in reply to demand under section 306 of the Ordinance is manoeuvred and not bona fide. In the result the respondent-Company is ordered to be wound up and Messrs Tebseen Kazmi and Faisal Raza Bokhari, Advocate Iram Building, 13-Fane Road, near Punjab Bar Council, Lahore are appointed as joint official liquidators of the company to carry out the same.
' Now to come up for report of the official liquidator on 25-1-2006.
Company woaad-up