' SYED HAMID ALI SHAH, J.---Through filing instant winding-up petition under sections 305 and 309 of the Companies Ordinance, 1984, Joint Registrar of Companies, SECP, seeks winding up of Sh.
Fazal Rehman & Sons (Pvt.) Limited, on the ground that the company has suspended its business for a period over ten years. The company has neither paid nor declared dividend. The substratum of the company has gone, as it is running into losses and there is no chance of revival of the company.
2. Mr. Liaqat All Dholla, Joint Registrar, has submitted that various opportunities were granted to the respondents before filing of this petition, but the company has not recommenced its business. He has submitted that the company was earlier a listed company and various share-holders have been deprived of the dividend, which has not so far been paid. The management of the company has failed to buyback the shares of certain shareholders, despite a clear undertaking.
3. Syed Safdar Imam Bokhari and Mr. Riaz Hussain Sial, Advocates for the respondent have vehemently contested this petition and have submitted the reply, wherein the assertions made in this petition, were controverted. The management of the company comprises of Ch. Naseer Ahmad, Abdul Rashid, Ishtiaq Ahmad, Imtiaz Hussain Shamsi, Malik Niaz Ahmad, Hameed-ud-Din and Muhammad Islam. The equity of the company mainly vests with Messrs Nishat Sons (Pvt.)
Limited, (holder of 94.02% shares). Messrs Nishat Sons, after purchase of the majority shares of the company, has paid Rs,36.633 million to the Privatization Commission, Rs,13.500 million to the workers and employees. Rs,7 million were paid to the various creditors of company. After making these payments, the share-holders of the company have invested Rs,13 millions, on construction for the establishment of Dying and Printing Project of a Textile Unit. Respondents are raising construction, which fact is apparent from the photographs placed on record as annexure `D' to 'F'.
Both learned counsel representing the respondents have stated at bar, that annual returns are being submitted without any default and corporate personality of the company has it's existence.
4. Heard Joint Registrar and learned counsel for the respondents.
5. Record reflects that huge investment has been made, which runs into millions by the existing management. Company faced successive failure in the past. Outstanding liability of Privatization Commission, was paid off by the current management. Former employees, who purchased the unit from Privatization Commission, were paid adequately the sale consideration of the project. The management has invested huge sum and bought back the shares from open market.
(Respondents have, however, undertaken to buy back the A shares of any member of the company, who has not as yet sold his shares to the company at a rate on which they have earlier purchased shares from the stock market. The management has emphasized that number of these shares is negligible and the share-holders were not traceable nor they came forward to offer their shares for sale to the respondents).
6. Provisions of section 305(c) of the Companies Ordinance, 1984 provide that a company is liable to be wound up, when it suspends its business for whole of the year. The term `suspend' has not been defined by the Ordinance itself. The dictionary meaning of term `suspend' has, therefore, been resorted to. 'Suspend' has been defined in Black's Law dictionary (Sixth Edition) as under: "To interrupt; to cause to cease for a time; to postpone; to stay, delay, or hinder; to discontinue temporarily, but with an expectation or purpose of resumption. As a form of censure or discipline, to forbid a public officer, attorney, employee, or ecclesiastical perform from performing his duties or exercising his functions for a more or less definite interval of time.
' To postpone, as a judicial sentence. To cause of temporary cessation, as of work by an employee; to lay off."
According to the, The Encyclopaedic Law Dictionary, the meaning of 'suspend' is as under:-- "To delay; to debar from any privilege, office or emolument, for some time; to interrupt; to cause to cease for a time; to stay and delay; to hinder the proceeding or a time."
7. The definitions bring me to conclude that `suspend', within the contemplation of provisions of section 305(c), will mean that the business is completely set at naught for a certain period. The reply submitted by the respondents reflects huge investment, made by the respondents. The management of the company is improving the project, installation of Dying and Printing Unit, paying of liabilities, seeking credit lines from banks and raising constructions are acts in furtherance of the business. These activities are business activities and in presence thereof, it cannot be said that business is suspended. Business will be deemed to be suspended, when there is no business activity at all or when there is complete cessation of business for a certain period.
' So far as losses are concerned, it is admitted by the management that due to closure of Ghee Unit, the company is E running into losses. Mere running into losses does not justify a winding up order.
8. The scheme and philosophy of section 305(c) of the Companies Ordinance, 1984 is that the company is ordered to be wound up, only when its substratum has gone. It has been observed in various decisions by the superior Courts, within the country and abroad, that substratum is gone, only when there is no hope of business of the company to be run on profits. The company is desirous of running its business and there is a hope F of its running into profits. There is another aspect of the matter that the notice under Rule 78 Form No,XXVII of the Companies (Court) Rules, 1997, was cited in daily "Nawa-e-Waqt" and "The News", but none has come forward to support this petition. Court leans in favour of a company to be going a concern and winding up order is justifiable only when there is no hope that company will recommence its business.
9. For the foregoing this petition has no merit and is accordingly dismissed. The petitioner/Joint Registrar can however, file a fresh petition, if he finds that the respondents are not complying with the mandatory requirements of law and annual returns are not submitted and there is complete cessation of business.