1. TUFAIL H. EBRAHIM, J.--- This petition for winding up has been filed under Section 305 read with Section 309 of the Companies Ordinance, 1984 by the Additional Registrar of Companies Securities & Exchange Commission of Pakistan (petitioner) against M/s. Noorie Textile Mills Ltd. (respondent company) on the following grounds:---
(a) The company has made default in holding seven (7) Consecutive Annual General Meetings A.G.Ms. and is liable to be wound up under clause (b) of Section 305 of the Ordinance.
(b) The company has suspended its business for the last about (12) years and is liable to be wound up under clause (c) of Section 305 of the ordinance.
(c) The company has failed to pay any dividend to its shareholders since long. It is not maintaining its registered office at the notified address in terms of Section 142 has failed to hold election of Directors since 1997 as required by Sections 178-180 of the Ordinance. The shareholders' equity is negative to the extent of Rs. 79,364,740/-. It exists only on papers. The substratum of the company has disappeared and it is just equitable to wind up the company, in terms of clause (h) of Section 305 of the Ordinance.
(d) Such other additional grounds as may be submitted at the time of hearing the petition.
2. It is an admitted fact that the nominal capital of the respondent company is Rs. 50,000,000/- divided into 5,000,000 ordinary shares of Rs. 10/- each and the paid up capital of the respondent company is Rs. 48,600,.000/-divided into 4,860,000 ordinary shares of Rs. 10/- each.
3. The learned counsel for the respondent company candidly admitted that the respondent company had failed to hold the Statutory Meetings as stated in ground No. (a), but states that after receipt of the objection/notice dated 27.6.2006 from the petitioner, the Annual General Meetings were held and directions were fully complied with by the respondent company vide letter dated October 4, 2006 and therefore, winding up of the company should not be ordered on this ground.
4. The learned counsel for the petitioner has pointed out that the said notice dated 27.6.2006 was without prejudice to the Penal and Civil consequences of the default on the part of the company and its management in making statutory compliance. He emphasized that the requirements of holding such meetings are mandatory under Section 158 of the Companies Ordinance, 1984 and filing of Annual Accounts under Section 233 of the Companies Ordinance. The wilful default/failure of the respondent company to hold statutory meeting within the meaning of Section 158 and filing of Accounts under Section 233 are lawful grounds for passing of winding up orders against the company.
5. As to ground No. (b), the learned counsel for the respondent company, argued that the company had to suspend its business due to various legal disputes including taking over assets of the company by Official Assignee in some litigation instituted by National Bank of Pakistan against the company and investigation by N.A.B. The learned counsel for the respondent company states that the dispute between National Bank of Pakistan has been settled under State Bank of Pakistan Circular No. 29, dated 15.10.2002 and some payments of instalments had been made to the Bank and possession of the assets of the company had been taken over from the Official Assignee on 21.6.2006. The learned counsel for the petitioner submits that no documentary evidence has been filed by the respondent company to show that the company has commenced its business and the liability of the respondent company to the National Bank of Pakistan has been fully settled. The suspension of its business for such long time is a lawful ground for passing of winding up orders against the respondent company, within the meaning of clause (c) of Section 305 of the Companies Ordinance, 1984.
6. As to ground No. (c), the learned counsel for the respondent company has stated that the election of the company was valid for the year ending 2000 and since the Official Assignee had taken over the charge of respondent company in another litigation, therefore no such election could be held.
7. As soon as the possession of the respondent company was handed over by the Official Assignee in the month of June, 2006 the requirement of election was Complied with and when the notice was received from the petitioner the compliance was also intimated to the petitioner. The learned counsel also admits the share holders equity is negative, which was also due to the reason that the respondent company was taken over by the Official Assignee and due to investigation by N.A.B., no business was conducted by the management of the respondent company. The learned counsel for the petitioner argues that the substratum of respondent company has disappeared and the respondent company has not given any dividend to its shareholders and the share holders equity is negative and it would be just an equitable if the respondent company is wound up in terms of clause (h) of Section 305 of the Companies Ordinance, 1984.
8. The learned counsel for the petitioner has also empathetically argued that after filing the petition, serious fraud has been committed by the respondent company. Counsel for the .petitioner further states that the respondent company and its directors have grossly abused the concession given by this Court by setting aside the ex parte in order of winding up earlier passed by this Court by making a fraudulent scheme to deprive the general public and investors in Stock Market as well as the Certral Depository Company of Pakistan Limited (C.D.C.), Karachi Stock Exchange (K.S.E.) and National Clearing Companies of Pakistan Limited (N.C.C.) by flung false declaration dated 29.2.2008 and Issuer Admission Form before the Central Depository Company of Pakistan Limited under Regulation 5.11 (b) of the Central Depository Company of Pakistan, Limited, wherein the paid up capital of the respondent company was falsely shown as Rs. 598,600,000/- instead of Rs.
9. 48,600,000/- whereby new shares were transferred in C.D.C. Account in collusion with their Share Registrar Company and Corporate Broker for which separate action has already been commenced by SECP.
10. The learned counsel of the respondent company has argued that such fraud has not been committed by the respondent company and has put the blame on its Share Registrar and Corporate Broker, namely First Invetec Modaraba and Al Mal Securities and Services Ltd. The learned counsel further states that the investigation has not been completed but the 'signatures of the Chief Executive of the respondent company has not been denied on the said declarations dated 29.2.2008 and Issuer Admission Form. The learned counsel emphatically states that the fraud is under investigation and, therefore, it would be premature to order winding up on this ground.
11. The learned counsel of the petitioner argues that the respondent company has filed false declarations before the Central Depository Company of Pakistan Limited under Regulation 5.11(b) of the Central Depository Company of Pakistan Limited on 29.2.2008 and subsequent forms, wherein it has been fraudulently stated that the total paid up and issued capital of the company is Rs.
12. 598,600,000/-divided into 59,860,000 shares of Rs. 10/- each. It is amply proved that the respondent company is being used for fraudulent purposes and is being managed and run by a person who committed fraud with general public. The induction of the fictitious/non-existing shares in Central Depository System by making false declaration must have certainly caused serious loss to the general public and investors in Stock Exchange and it is a fit case of winding up of respondent company on the grounds appearing in sub section (f) (1) (iv) & (v) of Section 305 of the Companies Ordinance.
13. In view of the above discussion the petitioner has made out a fit case for winding up the Company on the grounds of:---
(a) The respondent company has made default in holding seven (7) Consecutive Annual General Meetings A.G.Ms. and is liable to be wound up under clause (b) of Section 305 of the Ordinance.
(b) The respondent company has suspended its business for the last several years and is liable to be wound up under clause (c) of Section 305 of the Ordinance.
(c) The substratum of the respondent company has disappeared and it is just equitable to wind up the company, in terms of clause (h) of Section 305 of the Ordinance.
(d) The respondent company is being used for fraudulent purposes and is being managed and run by a person who have committed fraud with general public and it is just equitable to wind up the company within the meaning of sub-section (f) (i) (iv) & (v) of Section 305 of the Companies Ordinance.
14. The petition is allowed with costs and the respondent company is ordered to be wound up. The Nazir is appointed as Liquidator of the respondent company in terms of Companies Ordinance, 1984.
15. 1&2. In view of the order passed hereinabove, the listed applications have become infructuous and are accordingly dismissed.