1. ' This is an application under Order XXXIX, rules 1 and 2 read with section 151, C. P. C. Praying for temporary injunction restraining Synthetic Chemical Co. Ltd., defendant 1 from taking any steps or action whatsoever for implementation of the special resolution passed at the extraordinary general meeting held on 25th September, 1979 for winding up of defendant 1 for the reason that defendant 1 company cannot by reason of its liability continue its business.
2. ' The plaintiff who claims to be a small shareholder of defendant 1 filed a suit in this Court for declaration that the proposed extraordinary general meeting to be held on 25-9-1979 or any other date thereafter for the passing of the special resolution specified in the notice dated 3-9-1977 (Annexure 'A' to the plaint) is illegal, unlawful mala fide and of no legal effect, and for a permanent injunction restraining the defendants, their officers, executives, agents and servants from taking any action whatsoever, to hold an extraordinary general meeting for the purpose of passing a special resolution for winding up of defendant 1 on the ground that defendant 1 cannot by reason of its liabilities or any other reason whatsoever continue to function and carry on business as a Company.
3. ' Alongwith the suit the plaintiff had filed an application under Order XXXIX, rules 1 and 2 read with section 151, C.P.C. Praying for temporary injunction restraining defendant 1 from taking any action whatsoever for holding an extraordinary general meeting on 25th September, 1979 or any other date whatsoever for the purpose of passing of special resolution for winding up of defendant 1.
4. ' On 24-9-1979, I had ordered notice of this application for 27-9-1979. On 27-9-1979 the Advocates for defendants appeared and stated that the meeting was already held on 25th September, 1979 and took time to file affidavit in support of the above statement. Accordingly, the hearing was adjourned to 6-10-1979. On this date at the request of Mr. Liaquat Merchant Advocate for the plaintiff the hearing was adjourned to 7-10-1979.
5. ' Meanwhile on 4-10-1979 the learned Advocate for the plaintiff had filed two applications, one for amendment of the plaint and the other under Order XXXIX, rules 1 and 2 which is presently under consideration. Hearing of these applications was fixed for 7-10-1979. On this date, the amendment application wherein following paragraph and prayers were sought to be added, was allowed :- "14-A. That on 27-9-1979 the Advocate for defendant 1 appeared before this Hon'ble Court pursuant to a notice/summons issued in the above suit and received by defendant 1 prior to 25-9-1979 and made a statement to the effect that the extraordinary general meeting of defendant 1 was, in fact held on 25-9-1979 and a resolution contained in the notice (Annexure 'Al was passed. The plaintiff thus, came to know that the defendant 1 which is a public company controlled and managed by the Government of Pakistan had held an extraordinary general meeting on 25-9-1979 which was a declared 'Public Holiday' for whole of Pakistan and which meeting was not attended by the plaintiff and several other shareholders for the reason that it was a public holiday declared by the Government of Pakistan. That the action and conduct of defendant 1 in holding the said meeting and passing the special resolution on 25-9-1979 after receipt of notice/ summons from this Hon'ble Court and in spite of 25th September, 1979 being a public holiday is clearly mala fide, ultra vires, illegal, void and bad in law. That the said meeting held and the resolution passed on 25-9-1979 was evidently held and passed pendente lite and, therefore, the legal rights of the plaintiff and other shareholders must be adjudicated according to the legal position prevailing on the date of institution and not on the basis of changes mala fide introduced pendente lite unilaterally by other parties/shareholders without the consent of the plaintiff who had instituted the above suit prior to the date of the meeting."
6. ' Additional prayers : "and/or taking any steps or action whatsoever for implementation of special resolution proposed and/or passed at the extraordinary general meeting held on 25th September, 1979 as contained in Annexure `A'."
7. "For the declaration that the extraordinary general meeting held on 25-9-1979 and the resolution passed at the said meeting is contained in Annexure 'A' are both illegal, unlawful, mala fide, ultra vires, void and without lawful authority and jurisdiction." "and/or taking any steps or action whatsoever for implementation of special resolution proposed and/or passed at the extraordinary general meeting held on 25-9-1979 as contained in Annexure `A'."
8. ' I have heard Mr. Liaquat Merchant Advocate in support and Mr. Qamar Hussain Advocate in opposition of the present application. Before I deal with the contentions raised by the learned counsel for the parties I may mention that the plaintiff in the suit as amended, has challenged the convening of the meeting and passing of the resolution dated 25th September, 1979 for winding-up of defendant 1 by the High Court of Sind at Karachi on the grounds, as stated in paragraphs 13 and 14 of the plaint, that voluntary winding-up of defendant 1 is totally illegal, unlawful, mala fide and in clear contravention of the Economics Reforms Order, 1972 (hereinafter called Order I) and that no decision for voluntary winding up of defendant 1 could be taken in the extraordinary general meeting and no special resolution could be passed as it is only the Managing Director of defendant 1 duly appointed by the Federal Government of Pakistan defendant 2 who has been conferred with full powers of administration and function of the Board of Directors of defendant I.
9. ' By the amendment of the plaint the only other issue raised is that the action and conduct of defendant 1 in holding the extraordinary general meeting on 25th September, 1979 and passing special resolution on that date after receipt of notice and summons from this Court on a public holiday is void, mala fide, illegal and ultra vires.
10. ' At the hearing of the application under consideration Mr. Liaquat Merchant Advocate however, contended that the special resolution passed for winding-up of the company by the Court on 25th September, 1979 is ultra vires Order No, 1 and it is also illegal, void and mala fide. He further contended that the holding of a meeting on public holiday is also mala fide, ultra vires, illegal and void.
11. 1, therefore, propose to examine these contentions in detail. In support of the first contention that the decision of voluntary winding-up company through the Court is ultra vires Order I, of defendant 1, the learned counsel relied on the following recitals in the Preamble of Order I : "(a) The benefit of economic development had remained confined to a privileged few to the detriment of the common man ;
(b) That Islam enjoins equal distribution of wealth ;
(c) That it is the duty of the Government to ensure that wealth and economic resources of the country are exploited to the maximum advantage of the common man ; and
(d) That it is necessary to safeguard the interest of the small investors."
12. ' Before I examine this contention, I think it necessary to refer here to the letter of the Government of Pakistan in the Ministry of Production, dated 19-7-1979, addressed to the Chairman to the Federal Chemical and Ceramics Corporation Limited, a photostat copy whereof is annexed to the counter affidavit filed by the Managing Director of defendant 1 in reply to the first application which is also relied on in support of this application which reads as follows :- "Subject : Synthetic Chemicals Company Limited. My dear Chairman, ' Kindly refer to your letter No, C/MIN, dated the 1st July, 1979 on the subject mentioned above. #TBS (1) 132 U S 174 #TBE
(2) I would like to inform you that the Economic Co-ordination Committee decision (copy enclosed) is clear in so far as liquidation of the Company by the Court is concerned. I shall be grateful if the Economic Co-ordination Committee's decision is implemented in letter and spirit and an implementation Report furnished to the Ministry."
13. ' I shall also quote in extenso the resolution passed in the meeting held on 25th September, 1979, which reads as follows :- "Resolved that it having been proved to the satisfaction of the meeting that the Company cannot by reason of its liabilities continue its business the Company be wound-up and that an application be made to the High Court of Sind for the winding up of the Company by the Court."
14. ' I may also note below the relevant portion of the minutes of the meeting held on 25th September, 1979, a copy whereof is annexed to the second counter affidavit dated 2-10-1979 of the Managing Director of defendant 1 :- "Managing Director's report and Audited Account for the year ended on 30th June, 1978 were taken up for adoption.
15. ' Mr. Abdul Sattar raised the point- that when the Company had been incurring heavy losses from year after year, why not the Company be liquidated. He also got support from the majority of the share holders present for Liquidation of the Company. He, alongwith other members present in the meeting, insisted the Chairman to convey to the Government their proposal of the liquidation.
16. ' The Chairman explained that if the Company was to be liquidated a number of cumbersome and time consuming formalities were to be completed. Apart from this, the shareholders would get nothing because the employees of the Company and secured creditors would have priority in realising their dues. The amount thus realised could not make good, even the payable dues of the secured creditors."
17. ' A perusal of the aforementioned letter, resolution and minutes shows that the Company has been incurring heavy losses from year to year and the shareholders might get nothing after satisfying the claim of the employees of the company and secured creditors. Under these circumstances how the interest of small shareholders or for that matter any shareholders could be advanced or safeguarded if defendant No, 1 carries on the business and is not liquidated.
18. ' It appears under the circumstances the Federal Government being a major shareholder, took right- step when they directed for taking necessary steps for winding-up of the Company. It was submitted by Liaquat Merchant Advocate that the decision for winding-up of defendant No, 1 is ultra vires Order I because it runs counter to the objectives of Order I quoted above.
19. ' However, a preamble is not an essential part of the law of the status and the scope of a statute could not be enlarged by the preamble especially , when the statute is unambiguous and clear (see Yazoo etc., R. Co. v.' Thomas (1).
20. ' Here I may also refer to a passage from the 'Statutory Construction of Statutes by Crawford, 1940 Edition, page 355 : "The Preamble.-If the enacting part of the statute is ambiguous, resort may be had to the preamble for assistance in the ascertainment of the statute's meaning. Conversely, if the body of the statute is clear and explicit, its meaning cannot in any manner be affected by the preamble. And more specifically, where the enabling part of a statute is clear, it is not to be restrained by the preamble.
21. This is true because the preamble is not an essential part of statute."
22. ' I may also refer to the pronouncement of the Supreme Court of Pakistan in State v. Ziaur-ur- Rehman and others (1) wherein Hamoodur Rahman, C. J. (as his Lordship then was) ruled at page 71 of the report as follows:- "If it appears only as a preamble to the Constitution, then it will serve the same purpose as any other preamble serves, namely, that in the case of any doubt as to the intent of the law-maker, it may be looked at to ascertain the true intent, but it cannot control the substantive provisions thereof."
23. ' I may also refer to a Full Bench Decision of this Court in Dewan Textile Mills Limited v. Pakistan and others (2) wherein Abdul Kadir Sheikh, C. J. (as his Lordship then was) conserved at page 1394 of the report as follows :- "A preamble, as Dr. Wynes said, represents, at the most, only an intention which an Act seeks to effect and it is a recital of the present intention (See : Wynes, "Legislation Executive and Judicial Powers in Australia (4th Edition 506). Story views the function of the Preamble as being key to open the mind of the makers as to the mischiefs which are to be remedied and objects which are to be accomplished by the provisions of an Act or Constitution. There is, however, no need to cite any case-law, for, our own Supreme Court has laid down in State v. Ziaur Rahman that Preamble cannot have the same status or authority as the operative part of the constitution itself, unless it is incorporated therein and included in it its substantive part. The purpose of a Preamble, however, is that, in case of any doubt as to the intention of the Law Makers it may be looked at in order to ascertain a true meaning of a particular provision but cannot control the substantive provisions of the enactment."
24. ' The learned counsel for the plaintiff has not pointed out any provision; in the order which prohibits the winding-up of defendant No, 1 under they conditions in which the resolution has been passed.
25. Further, under prevailing conditions it will be in furtherance of the objects of the order namely, safe- 1 guarding the interest of small shareholders that a company which is incurring loss year after year and which appears to have been left with not much assets " even to pay all its creditor should be wound up. Indeed it will be for the learned Company Judge to examine all the aspects of the case when a petition for winding up of the company pursuant to the special resolution is filed and heard by him and the plaintiff shall also have an opportunity to present his case. The learned counsel for the plaintiff further submitted that the special resolution is illegal, void being against the public policy. In this regard the
(1) PLD 1973SC49 (2) PLD 1976 Kar. 1368 learned counsel submitted that the special resolution is oppressive of the interest of the minority shareholders, the plaintiff Company being one of them, for if it is given effect to it will cause total loss of their shareholdings. However, the expression 'public policy' has not been defined but this expression finds places in section 23 of the Contract Act which provides that the consideration or object of an agreement is lawful unless inter alia it is opposed to public policy. I would, therefore, refer to a passage from the Indian Contract Act and Specific Relief Act, by Pollock and Mulla, 8th Edition, which appears at page 179 and is as follows :- "The general head of public policy covers, in English law, a wide range of topics. Agreements may offend against public policy by tending to the prejudice of the State in time of war (trading with enemies, etc.), by tending to the perversion or abuse of municipal justice (stiffiing prosecutions, champerty and maintenance) or, in private life, by attempting to impose inconvenient and unreasonable restrictions on the free choice of individuals in marriage, or their liberty to exercise any lawful trade or calling."
26. ' The doctrine of public policy, it was held, should not be extended beyond the classes of cases already covered by it, and no Court can inven c a new head of public policy. (See : Vasrandmal Devaldas v. Hiromal Mohanlal and another (1).
27. ' I may also here refer to the observations of Lord Halsbury, Lord Davey and Lord Lindley in Janson v.
28. Driefonte in Consolidated Mines (2).
29. ' Lord Halsbury at page 491 of the report held : "I deny that any Court can invent a new head of public policy, so a contract for marriage brokerage, the creation of a perpetuity, a contract in restraint of trade, gaming or wagering contract, or, what is relevant here, the assisting of the King's enemies, are all undoubtedly unlawful things; and you may say that it is because they are contrary to public policy they are unlawful; but it is because these things have been either enacted or assumed to be by the common law unlawful, and because a Judge or Court have a right to declare that such and such things are in his or their view contrary to public policy."
30. ' Lord Davey at page 500 of the report observed : "Public policy is always an unsafe and treacherous ground for legal decision, and in the present case it would not be easy to say on which side the balance of convenience would incline. On the one hand, such an extention of the law as your Lordships are invited to lay down would certainly lead to interference with the lawful contracts and commercial pursuits of the King's subjects."
31. ' Lord Lindley at p age 507 of the report observed : "My Lords, one ground only, is invoked to show that it is, and that ground is the ground of public policy. A contract or other transaction which is against public policy, i,e, the general interest of this country, is illegal (4 H L C 161, 195-6), but public policy is a very unstable and dangerous foundation on which to build until made safe by decision."
32. ' I doubt the ground urged namely, special resolution is oppressive of the interest of minority shareholders is hit by the doctrine of public policy even if I assumed it to be correct for only a contract or transaction would come
(1) AIR 1947 Sind 94 (2) (1920) A C 484 within its mischief and not a resolution of the nature impugned in these proceedings. Then it is not shown or explained as to how the resolution is oppressive of the minority shareholders at all or at least in the circumstances of this case. Another reason urged by Mr. Liaquat Merchant Advocate for his contention that special resolution passed by the Company for its voluntary winding up by the Court is against the public policy is that it is against the objectives of Order I. However, I have already stated while dealing with the question of vires of the resolution that the impugned resolution is not against the objectives of Order I and therefore in the absence of alleged reason the contention becomes devoid of any substance.
33. ' Lastly, it is well settled that a Court cannot interfere in the internat management of the company unless the act complained of is ultra vires, mal fide, fraudulent or against the principle of natural justice. However, in the present case it is not prima facie established that the resolution is ultra vire Order I. The resolution does not appear to be mala fide either. The other grounds are not even mentioned. Remedy against any other grievance or action of a Company by a member has to be sought within the four come of the Companies Act, 1913.
34. ' Now, I would consider the attack against the extraordinary general meeting held on 25th September, 1979 which was declared to be a public holiday in Sind on account of Local Bodies Elections. It was contended by Mr. Liaquat Merchant Advocate that the holding of such a meeting on public holiday is clearly mala fide, ultra vires and illegal. I am not referred to any provisions in the Companies Act, 1913 or in any other law or in the Articles of the company under which the company is prohibited from holding a meeting on a day which is or is declared to be a public holiday. Therefore, such a meeting cannot be ultra vires or illegal. Date of a meeting of the shareholders of a company is normally fixed taking into consideration the con Evenience of the company as well as its shareholders. Sometime holding of a meeting of shareholders on a holiday may be more convenient to the shareholders. Sometime it may be more convenient when it is held on working day. Therefore, it cannot be said that if a meeting is held on a holiday it must necessarily be mala fide. Further, in the present case notice of the meeting, which is Annexure 'B' to the plaint, is dated 3rd September, 1979. It was published in The Pakistan Times, Lahore, in the issue of the same date. Till then 25th September, 1974 was not declared a public holiday and it was so declared only a few days before the date fixed for holding of the meeting.
35. ' It was also urged that bolding the meeting and passing the resolution pendente lite was ultra vires, illegal and mala fide but it is not possible on the facts of this case to hold so for the same reasons as mentioned in respect of holding the meeting on a public holiday. Moreso when the resolution itself provides that the company will be wound up under the orders of the Court which necessarily means that the matter has to be adjudicated upon by the Court when such a petition is filed.
36. ' Therefore, it cannot be said that the holding of a meeting on a public holiday and passing of the resolution was mala fide, ultra vires, and illegal.
37. ' I may mention that in the plaint the plaintiff has also urged that no decision for voluntary winding- up of defendant 1 could be taken in the extraordinary general meeting and no special resolution could be passed as it is only the Managing Director of defendant 1 who has been conferred with the full powers of administration and functions of the Board of Directors. Although this point was not urged at the time of hearing of this application but even otherwise it would not have made any difference for the company is still being managed in accordance with the Articles of Association and Companies Act, and the Managing Director himself is a party to the decision as the meeting was held under his chairmanship and he was acting under the directions of the Federal Government who, it is stated, hold the majority shares.
38. ' Further, it was stated at the Bar that the plaintiff holds 100 ordinary shares of the total face value of Rs, 1,000 only in the company. I am unable to understand as to why the plaintiff has filed this suit and paid Court fee of Rs, 2,000 when company is running into losses year after year and has not paid any dividend for the last many years as stated at the Bar. Significantly the plaintiff has not mentioned in the plaint the number of shares held by him.
39. ' Even if it is assumed that the plaintiff has made out a prima facie case, it is not shown that the plaintiff will suffer any loss much less irreparable loss for the shares have already become worthless even if the contents of minutes and the resolution depict correct state of affairs of the company.
40. ' The balance of convenience is also not in favour of the plaintiff because it will still be open to him to urge the points now urged in the proceedings when petition for winding-up is filed.
41. ' I, therefore, dismiss the application with no order as to costs, with this note that all observations made herein are only in relation to the application under consideration.