NASIM SIKANDAR, J.---This is an application under section 152 of the Companies Ordinance, 1984 seeking rectification of register of members of respondent No.3, Messrs Bafex Limited.
2. The respondent No.3, a public company limited by shares was incorporated on 18-2-1990 with 1000 shares of Rs.100 each. It is stated that respondent No.2, Mr. Majeeb ur Rehman Shami and the members of his family have been allotted shares without any contribution in cash or kind to the assets of the company, respondent No.3: that according to books of accounts Sardar Ahmad Khan Niazi and his wife paid a sum of Rs.10 million to respondent No.2 even earlier to the deal struck with Messrs Zindgi Publications (Pvt.) Ltd. And the declaration of daily (Pakistan); that after transfer of originally allotted 14000 shares earlier held by the previous management Mr. Abdul Rashid Bhatti and other members of the his family, respondent No.2 got himself issued 250,000 shares of Rs.100 each without any subscription to the company in cash or kind; that respondent No.2 committed a fraud on the company by severing its assets in the form of declaration of the said daily newspaper by delivering it to his son Mr. Umar Majeeb Shami without having transferred any benefit to the company; that all these transactions were against the mandatory provisions of section 73 of the Companies Ordinance, 1984: that respondent No.1 the Registrar of companies, Securities and Exchange Commission of Pakistan unlawfully accommodated the returns of the allotment of shares of the value of Rs.2,50,00,000; that the two returns of allotment filed with respondent No.1 are liable to be rejected and quashed being not reflective of the actual receipts of the assets by the company either in the form of cash or in the form of any property; that respondent No.2 in utter disregard of the relevant provisions of Companies Ordinance, 1984 further raised the issued capital of the company, respondent No.3, and has rather received additional amount from different persons without the permission and consent of the existing directors; that respondent No.2 is continuously further reducing the ratio of share holding of those who are not members of his family and in order to materialize his designs has arranged to further increase the authorized capital from Rs.40 million to Rs.50 million: that respondent. No.1's Lahore office has allowed the increase without verifying the genuineness of the special resolutions alleged to have been passed in that regard and that respondent No.2 is guilty of breach of trust in transferring the assets of the company in the form of declaration of daily "Pakistan" to his son without any consideration and without any authorization from the company. It is alleged that the issue of rectification of register of members in the given situation is capable of disposal in a summary manner. Accordingly a direction is sought to the Registrar of Companies to rectify/delete the name of respondent No.2 and his family members, which he had got entered in the record of the company without any receipt of cash or other consideration.
3. Respondent No.1, Local Office of the Registrar of Companies, as preliminary statement of facts has stated that respondent No.3 was incorporated on 18-2-1990 as public limited company with an authorized capital of Rs.1,00,000 divided into 1000 shares of Rs.100 each, which was fully subscribed.
Further that the authorized capital of the company was increased from time to time by passing special resolutions and finally it was pitched at Rs.50 million divided into 5 lacs shares of Rs.100 each. Also that the paid up capital of the company was increased from 1000 shares to 14000 shares by allotment of 13000 shares on 31-12-1992. On 2-2-1999 the company allotted 350,000 shares out of which 100,0(X) shares were allotted to Mr. Abdul Rashid Bhatti for consideration in cash and 150,000 shares to Mr. Akbar All Bhatti for consideration other than in cash. The allotment of 150,000 shares other than cash was made under sale agreement dated 3-9-1998. Earlier Mr. Majeeb ur Rehman Shami was appointed as Chief Executive of the company on 30-11-1998 in place of Mr. Akbar All Bhatti and subsequently change in the management took place on 20-2-1999 with the transfer of 250,000 shares. It is also stated that since the transferor never complained to respondent No.1 regarding non-payment of consideration against the transfer of shares, therefore, no action was taken in that regard.
4. Respondents Nos.2 and 3 in their written statement have objected to the maintainability of the petition under section 152 of the Companies Ordinance, 1984 on the ground that in view of the facts given and the allegations made in the petition it could not be disposed of in a summary manner. It is claimed that responde it No.2 and members of his family are genuine investors and share holders of the company who purchased the shares from the old management for a valuable consideration in pursuance of an agreement dated 3-9-1998; that none of these shares was issued by the company without consideration; that on 3-2-1999 the company allotted 250,000 shares out of which 100,000 were allotted to Mr. Abdul Rashid Bhatti for consideration in cash and 150,000 to Mr. Akbar All Bhatti for consideration other than in cash i.e. Transfer of a piece of land commonly known as 41-Jail Road, Lahore; that pursuant to the agreement dated 3-9-1998 the shares were transferred to respondent No.2 and other members of his family; that the petitioner could not challenge the issuance of shares to the previous management nor their transfer of shares in favour of respondent No.2 inasmuch as if at all any consideration was to be paid by respondent No.2 it was payable to the previous management/share holders as neither the company nor the petitioner were in any manner a party to the agreement dated 3-9-1998; that respondent No.2, who is a genuine investor in view of agreement dated 3-9-1998 purchased the entire holding of the company and the declaration of daily "Pakistan" and that the petitioner became share-holder of the company to the extent of shares worth Rs.1,000 only on 25-12-1999. The allegations of irregularities in the increase of authorized capital are totally denied. It is also denied that Sardar Muhammad Khan Niazi or any other person was ever associated with respondent No.2 in negotiation and purchase of the shares of the company or the declaration of the said daily "Pakistan", the receipt of any amount from Sardar Ahmad Khan Niazi or any other person by respondent No.2 is denied. The delay or inaction on the part of the petitioner to challenge the aforesaid transactions over the years is pointed out. It is repeated that the shares of the company and the declaration of daily "Pakistan" was exclusively purchased by respondent No.2 through the aforesaid agreement dated 3-9-1998 while Sardar Ahmad Khan Niazi and his wife Fehmina Gull Niazi made investment in the company much after execution of that agreement. The claim of issuance of shares of worth Rs.2,50,00,000 in favour of respondent No.2 and his family members is denied. It is rather submitted that shares were lawfully issued by the company for valuable consideration to Mr. Abdul Rashid Bhatti and Mr. Akbar All Bhatti. Who subsequently transferred the same to respondent No.2 and his family members in pursuance of agreement dated 3-9-1998 for which no consideration was required to be paid to the company by respondent No.2: that declaration of daily "Pakistan" was never a property of the company, which was owned by Mr. Abdul Rashid Bhatti and was transferred to respondent No.2 vide agreement dated 3-9-1998. Lastly, the persons whose names are sought to be deleted are claimed to be rightful shareholders of the company.
5. The petitioner in support of his averments has placed on record a copy of receipt detailing the documents registered/ recorded pursuant to the provisions of Companies Ordinance, 1984 with the Securities and Exchange Commission of Pakistan dated 3-5-2002, copy of Form-X dated 10-9-1991, copy of Form-X dated 3-11-1992 and audited accounts and balance sheet of Messrs Barex Limited as on 30-6-1995 prepared by Mr. Waqar A. Khan, Chartered Accountant.
6. Respondents Nos.1 and 2 in support of preliminary objections as well as the factual submissions made in their reply/written statement have placed on record copies of certain documents including a registered sale-deed dated 9-4-1999 from Majeeb ur Rehman Shami as attorney of Akbar Ali Bhatti in respect of two plots of land in favour of respondent No.3, Messrs Barex Limited, for a consideration of Rs.150.00,000, copy of order of the D.C.O., Lahore, dated 10-1-2004 recorded on the application of Sardar Ahmad Khan Niazi for cam ellation of declaration of daily "Pakistan", loan re-scheduling agreement between Messrs Barex Limited and Messrs UBL dated 15-4-1999. Copies of some negotiable instruments, instruments of guarantee, memorandum of deposit of title deeds dated 10-6-1999 between Mr. Akbar All Bhatti through General Attorney in favour of U.B.L. Bank Square, Lahore and a copy of report of investigation conducted under section 263 (Investigation of affairs of company on application by members or report by Registrar) of the Companies Ordinance, 1984 in the affairs of respondent No.3 carried out by Messrs Rehman Sarfraz Chartered Accountants on the direction of the Securities and Exchange Commission of Pakistan dated 4-5-2002. The Commission, on the complaint of said Sardar Khan Niazi had sought report from the Inspector (Mr. A. Rahman Mir, Chartered Accountant) on the following four points:--
(i) Circumstances leading to illegalities with regard to holding of elections of directors and continuation of Chief Executive in violation of the provisions of sections 180, 199 and 200 of the Companies Ordinance, 1981.
(ii) Alleged non-holding of AGMs, non-presentation of accounts in the AGMs and appointment of auditors in violations of provisions of sections 158, 233 and 252 of the Companies Ordinance, 1984.
(iii) Alleged dispute relating to transfer and allotment of shares, mismanagement and misappropriation of funds of the company.
(iv) Relationship between Messrs Barex Limited and the Daily Pakistan.
7. Learned counsel for the respondent in support of his submissions that complicated issues of fact involved in this case can be resolved only in a regular trial and that the jurisdiction of this Court under section 152 of the Companies Ordinance, 1984, though very wide, cannot be resorted to in such situation, relies upon re: Khurshid Ahmad Khan and another v. Pak Cycle Manufacturing Company Limited PLD 1987 Lahore 1; re: Sh. Mushtaq Ahmad v. Shaukat Soap Factory and others 1987 CLC 2079; re: Zakir Latif Ansari and another v. Pakistan Industrial Promoters Ltd. And 2 others 1988 CLC 1541 and re: Rohail Hashmi and others v. Nabeel Hashmi and others 2003 CLD 201.
8. After hearing the parties I will agree with the preliminary objection raised by the learned counsel for respondents Nos.2 and 3 and therefore, refuse to entertain this petition for the following reasons:- -
(i) As detailed in earlier part of the order a number of serious factual controversies are involved in this case. These can only be resolved through a regular trial as held by this Court in the aforesaid judgments relied upon by the learned counsel for the respondent. Mr. Khalil-ur-Rehman Khan, J. In re: Khurshid Ahmad Khan (supra) observed that the power vested in this Court under section152 of the Companies Ordinance, 1984 is to be exercised where legal title of the applicant is clear. In a complicated or doubtful case, summary jurisdiction of this Court as contemplated in section 9(3) of the Ordinance ibid cannot be resorted to.
(ii) Learned counsel for the petitioner is not correct in claiming that his only objection of lack of receipt of consideration for issuance of shares both in cash or otherwise can be resolved in summary jurisdiction. The matter is not that simple as is being alleged by the learned counsel. The defence taken in the case is based upon the agreement dated 3-9-1998 between respondent No.2 and the previous management. The times, which is sought to be supported by the returns submitted by the company before respondent No.1, Registrar of Companies, needs to be examined in a regular trial if the issuance of such capital was matched by the corresponding consideration both in form of money- or otherwise. The other facet of the defence taken by defendants Nos.2 and 3 also needs to be noted. It is that part of the shares were purchased from previous management for which there was no question of any payment to the company while rest of them were issued by the company for which adequate payment was actually made to the company.
(iii) The defence taken by respondent No.2 with regard to the transaction involving transfer of declaration of daily "Pakistan" is again a factual controversy, which cannot be resolved in the summary jurisdiction. The case of respondent No.2 that the company even under the Previous management had nothing to do with the declaration of daily "Pakistan" and that its transfer in favour of his son was not related to the dispute between the present parties again needs to be resolved after recording of evidence and appreciation of documents executed in that behalf.
(iv) Irrespective of the correctness or otherwise of the allegation that the present petitioner is re- agitating all issues, which were earlier resolved by the said Inspector appointed by the Securities and Exchange Commission of Pakistan under section 263 of the Companies Ordinance, 1984 on the complaint of Mr. Sardar Khan Niazi, the fact remains that on a detailed inquiry the Inspector by way of the said report did not agree to any of the allegations particularly those listed at (iii) and (iv) of the points set out for investigation by the Commission. Learned counsel for respondent No.2 has rightly pointed out that all transactions being challenged by way of this petition took place before transfer of 100 shares in favour of the petitioner, Inayat Ullah Khan Niazi, on 25-12-1999. Although the relationship between the present petitioner and the said Sardar Khan Niazi is hardly of any legal significance yet it does give weight to the defence allegation that using the petitioner as a front man Mr. Sardar Khan Niazi is seeking to achieve what he could not gain on his complaint before the Securities and Exchange Commission of Pakistan.
(v) Even if the dispute between the parties is looked at from the simplest possible angle as the petitioner desires, still the matter cannot be resolved in summary jurisdiction inasmuch as receipt of consideration by the company whose entitlement to such receipt is disputed by the defence will still need recording and appreciation of documentary evidence before coming to a conclusion.
9. Therefore, I will refuse to entertain this petition under section 152 of the Companies Ordinance, 1984 till the time the aforesaid contentious issues between the parties stand resolved by a competent forum. It goes without saying that once these issues are settled by a competent forum the petitioner can always approach this. Court for exercise of jurisdiction under section 152 of the Companies Ordinance, 1984. The proceedings intended by way of this application as said above, cannot culminate into a direction for rectification as prayed for without holding of a long drawn trial, which obviously is not possible in summary jurisdiction of this Court.
10. At the end it needs to be mentioned that in case the petitioner does approach a civil Court for resolution of the aforesaid disputes, the report made by the Inspector under section 263 of Companies Ordinance, 1984 as well as the above observations shall be taken to be of tentative nature.
11. Disposed of. S.M.B./I-73/L .