1. ORDER NADEEM AZHAR SIDDIQUI, J. - By this application under Section 319 of the Companies Ordinance, 1984 (hereinafter referred to as "the Ordinance") the applicants, who are the share-holders/contributors of the respondent company (hereinafter referred to-as "the applicants"), have prayed for revoking the winding-up order dated 10.3.2005. Alternatively, they have prayed that the winding-up order may be stayed on such terms and conditions as may be considered appropriate and reasonable by this Court.
2. In the application it has been submitted that the respondent company had improved its commercial viability with a track record of outstanding export performance and unparalleled distinction of earning highest export trophies for fourteen consecutive years, It was further submitted that during the year 1996, suddenly, the management of the respondent company, became victim of political discrimination forcing the applicants to leave the country 200S Additional Registrar Companies suspending their business including operation of the respondent company, and on account of victimization, the record of the company was seized by the FIA and some criminal cases were also lodged. Consequently, the statutory meetings of the respondent company and its Share-holders could not be- held nor were the returns, submitted in accordance with law. }t was further stated that after repeated representations the National Accountability Bureau undertook investigation and a Settlement Deed dated 25.10.2005 was executed with the applicants. As a .Result of the said agreement, the applicants have arranged for depositing of substantial amount with, the National Accountability Bureau.
3. The petitioner has filed his objections to the application under Section 319 of the Ordinance in which it has been stated that the winding-up petition was filed so that available assets of the company are distributed among the share-holders before such company become empty shell in the hands of inefficient management, It has further been stated that the accumulated loss of the company stood at Rs. 2,65,40,000/-. It was also stated that this Court has no jurisdiction to entertain the said application under Section 319 of the Ordinance.
4. The Official Liquidator/Official Assignee, has also filed his reply to the said application.
5. In compliance of the order dated 26.3.2007 the Annual General Meeting of the respondent company was called on 12.4.2007 and a new Board of Directors was elected and the report about, suspension of business since 1996-1997 was presented and it was resolved that the accounts for the company for the years 1996-1997 to 2005- 2006 be audited, In the statement it was further stated that the statutory returns and reports have been submitted to the Registrar of the Companies, Karachi with payment of requisite fees.
6. During the course of hearing on 19.9.2007, Mr. Mushtaq A. Memon has made a suggestion that the respondent is prepared to run the affairs of the company under the supervision of SECP and Official Liquidator to show its bona fide and that the. Company has the means to revive and it is also commercially viable to revive the company which will also in the interest of the Share-holders as well as in the interest of the economic growth of the country.
7. For considering the above suggestion of Mr. Mushtaq A. Memon, Mr. Muhammad Jawed, Additional Registrar of SECP was called on 3.10.2007, who without assigning any reason has declined to accept the suggestion of Mr. Mushtaq Memon, Advocate for respondent and insist that the application may be decided on merits.
8. The learned counsel for the applicant submits that the statutory returns and reports have been filed with the required fees. He submits that while passing the winding up order no efforts has been made to provide an opportunity to the respondent to file the statutory returns and reports. He further submits that under Section 319 of the Ordinance the Court after passing of the winding-up order can stay, withdraw, cancel or revoke the winding-up order. He further submits that this power under Section 319 of the Ordinance can be exercised even after filing of the appeal and its dismissal on merits.
9. The learned counsel for the applicants has relied upon following reported cases:--
(1) National Bank of Pakistan v. The Punjab National Silk Mills Ltd. (1989 M LD 2963);
(2) Messrs Aeroflot Russian International Airlines v. Messrs Gerry's International (Private) Ltd. (2003 CLD 1075);
(3) Messrs Consolidated Exports Ltd. v. Messrs Dyer Textile and Printing Mills Liu. (PLD 1984 Kar. 541); and
(4) Rauf B. Kadri v. State Bank of Pakistan (PLD 2002 S.C. 1111).
10. The leamed counsel for the petitioner has vehemently opposed for recalling the winding-up order on the ground that since last more than 10 years the operation of the respondent company has been suspended and no statutory returns and reports have been filed. He submits that the grounds taken in this application has been taken in the objections and on the same ground this application is not maintainable. He further submits that the winding-up order was challenged before the Hon'ble ' Supreme Court of Pakistan, which was also dismissed. A copy of the said dismissal order has been placed on record. He further submits that the SECP is a regulatory authority and it is its responsibility to safeguard the interest of the Share-holders, creditors and investors. He further submits that the power under Section 319 of the Ordinance can only be exercised !n extraordinary circumstances, which were not brought on record. He further submits that the Annual General Meeting held on 12-.4.2007 was not validly called and the same was held on a shorter notice against the requirement of law. He further submits that the .Revival plan produced by the applicants, appears to be only a paper work and there is no reasonable prospect of the company reviving it normal operation and business. He further submits that the winding- up order cannot be stayed unless the interest of the shareholders is safeguarded by depositing the entire paid-up share capital in Court.
11. The learned counsel for the petitioner has relied upon the reported case of Ibrahim Shamsi v.
12. Bashir Ahmed Memon (2005 SGMR 1450).
13. In reply, the learned counsel for the respondent submits that only condition for filing an application under Section 319 'of the Ordinance is that the same is to be filed ' within three years of the winding-up order; He submits that no prejudice will be caused to anyone, if the winding-up order is stayed and the company is ready to revive its operation under the direct supervision of the SECP and the Official Liquidator.
14. The petition under Section 305 read with Section 309 of the Ordinance and Rule 75 of the Companies (Court) Rules, 1997 has been filed on the following grounds:--
(a) On. The date of filing of petition the respondent has failed to hold its six consecutive Annual General Meeting i.e. For the years 1997 onwards and to present therein its annual audited accounts for the years ended 30.6.1997 to 30.6.2002' as required by Sections 158 and 233 of the Ordinance;
(b) the respondent has suspended its business for the last seven years;
(c) The company has failed to hold the election of directors since 1998 as required by Sections 178, 180 of the Ordinance;
(d) The company is not maintaining its. Registered Office at the notified address in terms of Section 142 of the Ordinance and has not filed any statutory returns after 1996;
(e) The accumulated loss of the company stood at Rs. 2,65,40,000/-; and In the matter the winding-up order was passed on 10.3.2005 and the Official Assigns was appointed as Official Liquidator. From the report submitted by the Official Assignee it appears that till to-date he could not takeover the affairs of the company. The company has also paid fine imposed by SECP for not holding Annual General Meeting from the year 1997-1998.
15. The main thrust of the objection of the learned counsel for the petitioner is that after filing of the appeal this application is not maintainable, In this regard, the learned counsel for the applicants has relied upon the case of National Bank of Pakistan v. The Punjab National Silk Mills Ltd. (1989 M LD 2963) in which the winding-up order was recalled under Sections 162, 162 of the Companies Act- 1913 after dismissal of the appeal against winding-up order.
16. In the reported ease of Messrs Consolidated Exports Ltd. v. Messrs Dyer Textile and Printing Mills Ltd.
17. (PLD 1984 Kar. 541) a Single Bench of this Court has stayed the winding-up order for a period of two years on the following conditions:-
(1) That the applicants/share-holders shall satisfy the dues of the petitioners with interest at 10 percent annum from. The date of filing of the petition till payment of dues' out of their own funds within .Two months from the-date thereof. This condition I, am imposing because payment Should not be made out of the assets of the respondent-Company on which Habib Bank Ltd. Has first charge-as secured creditors, as - otherwise the petitioner would have undue preference over the other creditors.
(2) The Official Liquidator shall act as receiver of the respondent for a period of two years for which I have stayed the. Winding-up proceedings for the purpose of implementation of the scheme.
(3) . The amount of Rs. 24,15,677/- claimed by the Income. Tax Department shall be paid by the Official Liquidator/Receiver subject to right of appeal or other, proceedings, if any. By the Official Liquidator Or the Habib Bank Ltd. And Order passed thereon.
(4) Excise. Dues would be paid- before the commencement of the business according to law.
(5) Ex-Managing Director and/or the applicants/share-holders/contributors . Shall produce the books of the respondent-Company within one month before the Official Liquidator and assist him in the preparation of the statement of affairs and shall sign the same."
18. The powers contained in Section 319 of the Companies Ordinance appear to be independent and not subject to any order in appeal and the same can be exercised irrespective of filing of appeal.
19. The only condition is that the application has to be made within three years of the order.
20. However,^the Court while revoking the winding-up order may put conditions to safeguard the interest of the creditors/contributors. In the reported case of .Ibrahim Shamshi it was held that once a winding-up order has been passed, all orders passed in the proceedings thereafter shall have under Section 10(1) of the Ordinance and be appealable before the Supreme Court.
21. After the winding-up order the respondent has entered into an agreement with NAB and has agreed to pay the dues of the banks. As per the Agreement the only creditor of the respondent is Habib Bank Limited and its interest has been secured by entering into agreement and payment to NAB. Now the question remains to safeguard the interest of the Share-holders, In this regard, under the Court orders an Annual General Meeting of the respondent was convened on 12.4.2007.
22. In the scheme of revival the fixed assets of the company have been shown as under:-- Land 70.000 (M)
23. Building (Double Storey) 35.000 (M)
24. 45 Knitting Machines 25,000 (M)
25. Total: 1,30.000 (M)
26. From the above it appears that the respondent has sufficient fixed assets and the interest of the Share-holders can be safeguarded by imposing restriction upon the company not to dispose of the. Fixed assets without the permission of the Court.
27. At this stage, if the winding-Up order is maintained the Share-holders will get a meager amount on account of their investment. However, if the company is allowed to function under the supervision and control of SECP and Official Liquidator this will be beneficial to the share-holders and there is a Chance that by revival of the. Company the value of the shares will be increased and the share holders will be .Benefited. ' .
28. The bona tides of the company .Can also be judged by suspending the winding-up order and to allow the .Respondent company to. Implement the scheme of revival under the supervision of Official Liquidator and the Additional Registrar, SECP.
29. Section 320 of the Companies Ordinance, 1984, provides that the Court shall as to all matters relating to winding-up, have, regard to wishes of creditors or contributors and for that purpose d special General Meeting can be called. To. Ascertain the wishes of creditors and contributors.
30. In view of the above, before suspending the winding- up order it is appropriate that. The company is directed. To call Special General Meeting of the creditors and contributors in accordance with the provisions of Companies Ordinance for placing .The scheme of revival of the company before the.
31. Special General Meeting of the Company for its approval. The Official Liquidator and-the Additional Registrar will also attend the said meeting, for which, the notice will be served upon them well in advance. The Chairman of the Meeting, the. Official Liquidator and the Additional Registrar will submit their separate reports in this regard for consideration.
32. The applicants are also required to furnish the details of- funds required for revival of the company and its availability with the company.
33. Further orders on this C.M.A, will be passed after receipt of the reports as above.