' NADEEM AZHAR SIDDIQI, J.---The petitioner has filed the present J. Misc. For winding up of respondent No,1 under sections 26, 31, 158, 173, 265 (a)(ii), (b) (iv)(vii), 297(a), 305 (e)(h) and 309 of the Companies Ordinance, 1984 read with section 151, C.P.C.
2. The facts of the case, as stated in the petition, are that the petitioner is a shareholder of respondent No,
1. On 12-1-2007 the petitioner went to the registered office of the respondent No,1 to deliver a letter and to inspect the accounts, his letter was received but accounts were not provided to him for inspection. The accounts were, however, received on 22-1-2007. The petitioner further claims that he was not provided with copy of minutes of the 40th, 41st, and 42nd Annual General Meetings of the respondent No,
1. That notice for the 42nd AGM was issued on 10-1-2007 while the meeting was to be held on 30-1-2007 as such it is in violation of provisions of section 65 of the Association of the respondent No,
1. It is further alleged that the closed it registered office at Habib Square without informing its members. The respondent No,1 was 'warned' to postpone its 42nd AGM scheduled to be held on 31-1-2007, however, the meeting was held on the said date. There were no proper arrangements for members to put questions during the AGM. It is also alleged that the new management had called another AGM of their group mill on the same place and as such there was very little time to finish the AGM of the respondent No,1 properly and satisfactorily. That during the 42nd AGM one of the Directors of the respondent No,1 stated that "the co. Has supplied minutes of 04" which was denied by the petitioner. The objections 'raised by the petitioner during the course of the 42nd AGM were not replied and the AGM was called off. The accounts were not approved by the AGM, auditors were not appointed nor their remuneration fixed by the AGM. The petitioner was "advised, pressurized, physiologically, religiously to withdraw" his objections. The matter was reported to Security and Exchange Commission of the Pakistan but no action was taken by the said Commission. The petitioner also claims that there were some discrepancies in the accounts of the respondent No,
1. That the profit and loss account is not showing the true and fair value of the state of the respondent No, l's affairs. The respondent No,1 had paid a sum of Rs,3,253,052 to Reliance Insurance Company on the advice of the Honourable High Court but the final order had been with- held by it. That the Commission had failed to inform the petitioner what action they had taken against the respondent No,
1. It is further alleged that the respondent No,1 has appointed auditors without approval of the AGM which is illegal.
3. It is in the above background that the petitioner has filed the present petition with the following prayer:- "It is prayed as under:--
(1) That Bawany Sugar Mills Ltd. Be wound up as per law.
(2) That the 42nd AMG may be declared null and void.
(3) That direction to the co. Be given that no further AGM, if any, be held till the final determination of the legality of 42nd AGM.
(4) That necessary conveyance be allowed to all the members attended this 42nd AGM.
(5) That the co. Be directed to supply the true and fair recorded copy of the 40th, 41st and 42nd Annual meetings.
(6) That the co. Be directed to supply the copy of the so called "lease agreement" or Toll agreement to the petitioner/produce before this Honourable High Court.
(7) That the SECP be directed to investigate the violations, under the supervision of this Honourable High Court, as per various reports submitted before them.
(8) That necessary action be taken against the respondent No,2.
(9) That necessary action be taken against the respondent No,4.
(10) That necessary action be taken against the respondent No,5.
(11) That the appointment of auditors for the year ending Sep. 2007, be declared null and void and no remuneration be paid till approval by the AGM.
(12) That the cost of this petition be allowed.
(13) Such order may be made in the premises as shall be just."
4. I have heard the petitioner in person and Mr. Naveedul Haq, Advocate for the respondents Nos.1, 4 and 5.
5. The petitioner, who argued the matter in person, stated that the 42nd AGM was not convened properly; the company is running in losses therefore it would be prudent to close it down to save further losses; property of the company was not properly leased; in the accounts secured amount was converted into un-secured amount and recovery of debt was shown as income and that the profit and loss account is not showing the true and fair value of the state of company's affairs as at September 30, 2006. Finally the petitioner submitted that the company is not even recovering the cost of goods sold and that it is against the prudent business policy to carry on loss making business as such the respondent No,1 can save this gross loss by discontinuing its operation.
6. Mr. Naveedul Haq, learned counsel for respondents Nos.1, 4 and 5, states that the petitioner only holds 36 shares in respondent No,1 company and, as such, is not qualified to file a petition for winding-up of the said company. He submitted that if the petitioner is aggrieved, the respondent No,1 is ready and willing to purchase his shares and in connection had already served a notice under section 289 of the Companies Ordinance.
7. The petitioner has filed this petition for winding of respondent No,1 company under sections 26, 31, 158, 173, 265(a)(ii), (b)(iv)(vi)(vii), 297(a), 305(f)(iii), (e)(h) and 309 of the Companies Ordinance, 1984 read with section 151, C.P.C. It will be advantageous to scrutinize the provisions of the above mentioned sections of the Ordinance.
' Sections 26 and 31 of the Ordinance deal with registration of articles of a company and effect of memorandum and articles and, thus, are not relevant for the purpose of filing a petition for winding up of a company.
' Section 158 of the Ordinance provides for holding of the Annual General Meetings of a company and default in complying with the same is visited by penalties enumerated in subsection (4) thereof which is in the form of fine. This also is not a provision which can be called into service for filing a winding up petition.
' Section 173 of the Ordinance deals with recording of minutes of proceedings of general meetings and directors' meetings. The penalty in failing to comply with the provisions of sections 173(1) to (4) and (6) to (8) is mentioned in subsection (5) of the said section in the form of fine as prescribed therein.
' Section 265 of the Ordinance empowers Security and Exchange Commission of Pakistan to investigate a company's affairs in other cases by appointing one or more inspectors. This can be done either by a resolution of the company or by order of the Court. Neither any order for such inspection has been passed by this Court nor any resolution to the said effect has been approved at any AGM of the respondent No,1 company.
' Section 297 of the ordinance does not contain any clause (a)." Even otherwise, the section provides modes of winding up and is not a penal section.
' Section 309 of the Ordinance is again a section which lays down procedure for filing of a winding up petition and is not a charging section.
' Provisions of sub-clause (iii) of clause (I) of section 305 of the Ordinance provide one of the grounds on which a company may be wound up by Court which lays down that if a company is conducting its business in a manner oppressive to any of its members or persons concerned with the formation or promotion of the company or the minority shareholders the same may be wound up by the Court.
' Admittedly, the petitioner holds only 36 shares out of the total share of 87,24,591 shares of the respondent No,1 company. There must be shareholders of the company holding substantial shares none of whom has come forward to file a winding up petition. When an offer was made to the petitioner for selling his shares to the respondent No,1 he should have sold the shares held by him.
He did not avail this option.
8. In the case of Shaukat Ali v. Amin Fabrics Limited and other 2008 CLD 837, also filed by the present petitioner, I have held as under:-- "Section 290 of the Companies Ordinance, 1984 provides for filing of application by member/members holding not less than 20% of the issued share capital of a company on the grounds mentioned in the petition. In this matter the petitioner only held 78 shares in the issued capital of the company which shareholding is much less than 20% shares required for filing application to the Court. The purpose of this section appears to keep the company going while at the same time secure the interest of the minor shareholders from acts of oppression and mismanagement. Since the petitioner has not possessed qualified shares he cannot maintain the petition."
9. Subsection (1) of section 290 of the Ordinance states that "If any member of members holding not less than twenty per cent of the issued share capital of a company,---may make an application to the Court by petition for an order under this section." Thus, it is a statutory requirement that a member or members of a company to be able to file a petition for winding B up of a company on the ground of oppression and mismanagement must be holding at least twenty per cent of the issued share capital of the company otherwise the petition would not be maintainable.
10. In the present case the petitioner holds only 36 shares in the respondent No,1 company, which is even less than 0.001% of the issued share capital of the respondent No,1, but wants the company to be wound up against the wishes of those share-holders who hold bulk of the shares in respondent No, 1.
11. In view of the observations made in the above reported case of Shaukat Ali, and for the reason that the petitioner does not hold qualifying shares to file a petition for winding-up, this petition is not maintainable and is dismissed.
12. ' Before parting with the judgment it may be observed that during the course of arguments, which were heard on a number of days, the petitioner was given the option to sell his shares to which he always gave an evasive reply and never opted for the only viable solution of the dispute i,e, to sell his shares and quit the company. The conduct of the petitioner was not upto the required standard and his attitude depicted that he was bent upon settling some private score with respondent No,1 company. Filing of a winding up petition against a running company is not a matter which can be easily ignored. It affects the reputation of the company in the business circle and is not to be resorted to in a light manner.