1. NADEEM AZHAR SIDDIQI, J.---This is a petition under sections 305/321 of the Companies ordinance, 1984, filed by the petitioner Fysal Bank Limited against respondent, Southern Networks Limited with the following prayers:--
(i) "to direct that the respondent-Company be wound-up on account of its inability to pay its debts;
(ii) to appoint an Official Liquidator acceptable to the petitioner to take charge of the assets and properties, accounts and management of the respondent company with full powers under the Companies Ordinance, 1984 to liquidate the Respondent Company;
(iii) to grant any other/further/better relief which this Honourable Court may consider fit and proper in the circumstances of the present case; and
(iv) cost of the petition."
2. Brief facts of the case are that the petitioner is a banking company conducting business of banking and the respondent is a Public Limited Company engaged in business of Digital Wireless Television Service using Multi-point Multi channel Distribution System technology. The petitioner entered into to agreement with the respondent for the financing of 12,000 subscribers to the extent of a maximum amount of Rs,72,000,000. The obligations under this agreement were secured by an irrevocable and unconditional guarantee of the respondent. Accordingly, between July, 2004 and March, 2005, the petitioner disbursed various amounts to the customers of the respondent to maximum limit of Rs,72,000,000. The respondent was to repay the said amount in monthly instalments of Rs,1,933,613. Till September 2004 respondent made its monthly payments regularly, however, thereafter the respondent started delaying the same. Finally, since April, 2006 the respondent completely ceased to make any payment of the plaintiff.
3. Petitioner served legal notice dated 11-9-2006 in terms of section 305/306 of the Companies Ordinance, 1984 in response to which respondent issued three cheques each amounting to Rs,1,933,614. However on presentation all the three cheques were dishonoured. Thereafter, the petitioner served another legal notice dated 7-12-2006 upon the respondent for payment of the outstanding amounts. However the respondent failed to pay the outstanding amounts to the petitioner. Hence this petition for winding-up the respondent company under sections 305/321 of the Companies Ordinance, 1984 on the ground that the respondent is unable to pay its debts and, therefore, it is just and proper and in the interest of justice that the respondent company be wound-up.
4. On 5-9-2007 notices were issued to the respondent as well as Register, Joint Stock Companies. On the said date learned counsel for the petitioner clarified that originally respondent's registered office was situated as Islamabad, however, subsequently it was shifted to 5-Y, Block-6, P.E.C.H.S. Karachi. It was therefore ordered that the notice be issued to the respondent at its Karachi address.
5. For correction of the address of the respondent an application bearing C.M.A. No,892 of 2007 was filed which was allowed vide order dated 22-10-2007 and the amended title was taken on record.
6. The Additional Registrar of Companies filed comments on 23-11-2007.
7. Although notices were served upon the respondent through bailiff, however, when one appeared on its behalf in the interest of justice it was ordered on 27-11-2007 that notices may also be issued through publication in the daily "JANG" and the daily "DAWN". Accordingly, notices were 5-12-2007.
8. The notice was also published in Official Gazette dated 26-12-2007. Even after the publication of the notices in the said newspapers none appeared on behalf of the respondent. The Additional Registrar of Companies filed his comments on 23-11-2007.
9. I have heard Mr. Arshad Tayebly, learned counsel for the petitioner. However, none has appeared on behalf of the respondent to defend the present petition despite service of notice upon it in accordance with law.
10. As per the agreements entered into between the petitioner and the respondent, the Petitioner Bank provided financing to the 12,000 subscribers to the tune' of Rs,72,000,000 which the respondent was required to pay back to the petitioner in monthly installments of Rs,1,933,613. Such monthly instalments were paid till September, 2004 and thereafter the respondent started delaying the payments and, finally, since April, 2006 the Respondent completely stopped the monthly payments to the petitioner. The respondent issued three cheques which were dishonoured. A legal notice under sections 305/306 of the Companies Ordinance was served on September 12,2006. Thereafter, in order to give another chance to the respondent, the petitioner issued another legal notice dated October 7,2006, however, the respondent failed to pay the outstanding amount to the petitioner.
11. Issuances of cheques, prima facie, shows admission on the part of the respondent in respect of the amounts due by it to the petitioner.
12. Since the respondent has not filed any reply it appears that there is no dispute that the respondent has obtained financial facilities and thereafter has failed to repay the amount to the petitioner despite service of notice under section 306 to the Companies Ordinance 1984.
13. Subsection (e) of section 305 of the Companies Ordinance 1984 provides that a company may be wound up by Court if the company has failed to repay its debts. Subsection (a) of section 306 of the Companies Ordinance 1984 provides that a company shall be deemed to be unable to pay its debts if a demand requiring the company to pay sum due has been served and the company has for thirty days thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor. The Court before passing the winding up order has to satisfy itself and to form an opinion in terms of subsection (h) of section 305 of the Companies Ordinance that it is just and equitable that the company should be wound up. The object of the proceedings appears to be to A find out solvency or insolvency of the company and not to settle the claims of creditors. The object is also not to coerce the company to make payment to unpaid creditor but to secure discontinuation of functions of such company, which had ceased to be commercially solvent and viable.
14. The petition has been filed on the ground that the company is unable to pay its debts and that it is just and equitable that the company should be wound up. Subsection (1) of section 314 of the Companies Ordinance 1984 provides that even if the Court is of the opinion that the facts justified in making a winding up order, Court could pass other order as it may deem fit. The respondent has not come forward with any defence and the amount claimed by the petitioner appears to be not disputed. However, keeping in view the provisions of subsection (1) of section 314 of the Ordinance I, instead of directly ordering for winding up of the company directed the respondent to pay the undisputed amount to the petitioner B within eight weeks from today and on failure of the respondent to pay the said amount within the above stipulated period the company/respondent is directed to be wound up. In case the winding-up order is to be drawn the Official Assignee is appointed as Official Liquidator to carry out the winding-up of the respondent company as provided for under the Companies , Ordinance 1984.
15. Copy of this judgment be sent to Registrar of Companies and to the Official Assignee for compliance.
16. The petition is disposed of in the above terms.