1. ' MUHAMMAD ALI MAZHAR, J.---This petition is brought under section 309 of the Companies Ordinance, 1984 in which the petitioner has submitted that the respondent company was incorporated on 27 September, 1993 under the Companies Ordinance, 1984 as public limited company. The balance sheet of the respondent company as of June 30, 2002 shows accumulated losses of PKR 32,296 million. The fixed assets of the respondent company stood at PKR 71.75 million.
2. The respondent had sustained losses of PKR 21.02 million during the year, 2002. It is further stated in the petition that the company had suspended its operation since 2000 and also failed to hold AGM since 2003.
3. ' The learned counsel in support of petition argued that the respondent company failed to hold its Annual General Meeting since 2003 and a company which fails to hold its two consecutive Annual General Meetings or keeps suspended its business for a whole year is liable to be wound up so that the available assets of the companies are distributed amongst its shareholders before such a company becomes an empty shell in the hands of an inefficient management. The learned counsel for the petitioner has also referred to clause (c) of section 305 of the Company Ordinance, 1984 and submitted that since the company has suspended its business for a whole year, hence it is liable to be wound up. Section 305 of the Companies Ordinance, 1984 provides different circumstances for winding up as under:-- 303 Circumstances in which company may be wound up by Court.---A company may be wound up by the Court--
(a) ................
(b) ...............
(c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year;
(d) ................
4. (e)
(I) if the company is-- (i)
5. (ii)
(iii) ..........
(iv) ..........
6. (v)
(g) ............
7. (h)
8. (1)
9. Explanation-I.-- The promotion or the carrying on of any scheme or business, except the business carried on under the provisions of the Insurance Act, 1938 (IV of 1938), howsoever described, whereby, in return for a deposit or contribution, whether periodically or otherwise, of a sum of money in cash or by means of coupons, certificates, tickets or other documents, payment, at future date or dates of money or grant of property, right or benefit, directly or indirectly, and whether with or without any other right or benefit, determined by chance or lottery or any other like manner, is assured or promised shall be deemed to be an unlawful activity.
10. Explanation II.--"Minority shareholders" means shareholders together holding not less than twenty per cent of the equity share capital of the company.
11. ' In addition to the aforesaid section, the learned counsel further relied upon section 309 of the Companies Ordinance which pertains to the provisions for winding up as under:--
309. Provisions as to applications for winding up.--An application to the court for the winding up of a company shall be by petition presented, subject to the provisions of this section, either by the company, or by any creditor or creditors (including any contingent or prospective creditor or creditors), or by any contributory or contributories, or by all or any, of the aforesaid parties, together or separately, or by the Registrar, or by the authority or by a person authorized by the authority in that behalf:- ' Provided that:--
(a) a contributory shall not be entitled to present a petition for winding up a company unless-
(I) either the number of members is reduced, in the case of a private company, below two, or, in the case of any other company, below seven; or
(ii) the shares in respect of which he is a contributory or some of them either were originally allotted to him or have been held by him, and registered ' in his name, for at least six months during the eighteen months before the commencement of the winding up, or have devolved on him through the death of a former holder;
(b) the registrar shall not be entitled to present a petition for the winding up of a company unless the previous sanction of the authority has been obtained to the presentation of the petition: ' Provided that no such sanction shall be given unless the company has first been afforded an opportunity of making a representation and of being heard;
(c) the authority or a person authorized by the authority in that behalf shall not be entitled to present a petition for the winding up of a company unless an investigation into the affairs of the company has revealed that it was formed for any fraudulent or unlawful purpose or that it is carrying on a business not authorized by its memorandum or that its business is being conducted in a manner oppressive to any of its members or persons concerned in the formation of the company or that its management has been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; and such petition shall not be presented or authorized to be presented by the authority unless the company has been afforded an opportunity of making a representation and of being heard;
(d) the Court shall not give a hearing to a petition for winding up a company by a contingent or prospective creditor until such security for costs has been given as the Court thinks reasonable and until a prima facie case for winding up, has been established to the satisfaction of the Court;
(e) the Court shall not give a hearing to a petition for winding up a company by the company until the company has furnished with its petition, in the prescribed manner, the particulars of its assets and liabilities and business operations and the suits or proceedings pending against it.
12. ' The learned counsel for the petitioner contended that in view of the clear provisions of law and its blatant violation by the respondent, the winding up petition has been rightly moved by the petitioner under section 309 of the Companies Ordinance, 1984 as it is evident and apparent from the Audit Report of the respondent company that it is dormant and not functional since the year, 2000. According to the proviso attached to clause (b) of section 209 of the Companies Ordinance, 1984, the Registrar cannot file the petition for winding up unless the previous sanction of the authority has been obtained, and the same proviso further made it a mandatory requirement that no sanction shall be given unless the company has been afforded an opportunity of making a representation and of being heard. The petitioner approached to the SECP for sanction in terms of proviso (b) of section 309 of the Companies Ordinance, 1984. The SECP had issued a show-cause notice to the respondent company on 15th August, 2003 as to why Additional Registrar, Companies Registration Office, Karachi may not be given sanction to present the petition for winding up. After issuance of show-cause notice and providing ample opportunity of hearing, the SECP had passed an order on 2nd May, 2005 and concluded that the respondent company has suspended its business for five years, hence the authority is of the opinion that it would be appropriate to initiate winding up proceedings against Messrs Tri Star Power Ltd. And thereafter, in exercise of powers conferred upon the authority under section 309 of Companies Ordinance, 1984, the petitioner, (Additional Registrar of Companies, Karachi) was authorized to file winding up petition in this Court.
13. The Order of SECP was assailed by the respondent in an appeal under section 33 of the Securities and Exchange Commission of Pakistan Act, 1997, which was heard and vide order dated 8 September, 2009, the appeal was dismissed. The order of appeal is reported in 2010 CLD 162. The appellate authority minutely considered the arguments of the respondent in appeal and held that the argument of counsel for the appellant that the company is operational and it has never suspended the business is against the stated position in the audited accounts of the appellant for the year ending 30-6-2007. It is further mentioned in the order that the appellant was provided sufficient opportunity to show that it was operational, however, the annual audited accounts for the years, 2002 to 2007 provided by the appellant in April. 2009 and the audited accounts for the year, 2001 already available with the department clearly shows that business has remained suspended since the year, 2000. Finally, the appellate bench held that the appellant was directed to file its audited accounts in order to confirm, whether or not the appellant had suspended its business. The filing of accounts has made it clear that the appellant has not been functioning and has suspended its business as stated in the impugned order. The appellant also failed to respond the query of the appellate bench that regarding non-filing of the annual accounts of 2008 within the stipulated time. The bench further observed that the appellant in complete disregard of the requirements has consistently failed to file the requisite accounts and have failed to hold AGM's. This kind of conduct cannot be tolerated from a listed company, whose shares continue to be traded on the stock exchange, resulting in fraud being perpetuated on the public at large who have been led by the appellant into believing that it is operational. Finally, the impugned order of SECP was upheld by the Appellate Bench. The learned counsel for the petitioner stated at bar that the order passed by SECP, Appellate Bench was not assailed by the petitioner in any Court of law and for all intents and purpose the entire controversy has attained finality and no other proceeding is pending in this regard in any Court of law.
14. ' The learned counsel for the petitioner has also invited the Court's attention to the Auditor's Report as on June, 30, 2007, available at page 261 of the Court file in which the auditors themselves observed in clause (c) of the report and also referred to a Note 1.1 annexed to the Financial Statement that the respondent company has not started its production since 2000. Note 1.1. At page 281 under the head "Going Concern Assumption" provides that the company has incurred a net loss, after tax, of Rs,5,094,939 during the year ended on June 30, 2007 and as of that date its accumulated losses are Rs,52,542,508. The Company has closed down its operation and commercial activity since 2000. No production activity has been done in the company during the year, the management feels the stoppage of operational activities is temporary and not permanent and when the condition of the business and market will be favourable the company will start its operation in near future. Furthermore, no employee is working in the company since the year 2000. The learned counsel for the petitioner urged that since the company has already suspended its operation since 2000 which is a clear violation and contravention of section 305 of the Companies Ordinance, 1984. The entire process necessary for initiating this winding up proceedings has been done purely in accordance with law. Appropriate show-cause notice was issued to the respondent company and after giving an ample opportunity of hearing; the order was passed by the authority whereby the petitioner was allowed to move the petition in this Court.
15. The respondent company challenged the order of the authority to the Appellate Bench, which was also dismissed. The impugned order passed by SECP and the Appellate Bench, both have attained finality and no proceedings in any Court of law are pending or sub judice.
16. ' Learned counsel for the petitioner also invited Court's attention to the publication of winding up proceedings in Daily JANG and Daily DAWN both dated 20-1-2010. The notice was also published in the Gazette of Pakistan on November 4, 2009. Besides above, a notice was also issued to the respondent which was served upon the respondent on 6th October, 2009 but nobody appeared.
17. Lastly, the matter was fixed before the Additional Registrar on 26th January, 2010 and since no objections were received from any quarter, the matter was placed in Court for hearing of main application. Learned counsel for the petitioner in support of his arguments relied upon judgment of this Court reported in titled Additional Registrar of CoMpanies v. Messrs Noorie Textile Mills Ltd. 2010 CLD 147 in which also learned Single Judge of this Court has held that the company has suspended its business for last several years and is liable to be wound up under clause (c) of section 305 of the Ordinance. It was further held that the substratum of the respondent company has disappeared and it is just and equitable to wind up the company in terms of clause (h) of section 305 of the Companies Ordinance, 1984. In another judgment reported in Additional Registrar Companies v. Karim Silk Mills 2009 CLD 124, the single Bench of this Court has held that winding up of company was filed on the grounds of its being non-functional since 2003, failure to maintain its accounts, non-submission of statutory returns and selling of plant and machinery way back in year, 1999. Security and Exchange Commission of Pakistan was empowered under S.309 of Companies Ordinance, 1984, to seek winding up of a company either by itself or through an authorized person or through Registrar of Companies. All facts against the company had gone unchallenged and it was a fit case where provisions of S.305(c) and (f) (iv) read with section 309 of Companies Ordinance, 1984, could be invoked for winding up of company.
18. For winding up of a company, the Court may consider the following grounds:--(a) whether the substratum of the company is deemed to be gone(b) the object for which it was incorporated, had substantially failed: (c) whether it is impossible to carry on the business of the company except a loss: (d) there is no reasonable hope that the object of the trading at profit can be attained, or (e) existing or probable assets are insufficient to meet the existing liabilities. Before final order of winding up. Court remains under legal obligation to form an opinion under clause (h) of section 305 of the Companies Ordinance, 1984 whether it is just and equitable that company should be wound up. The words 'just and equitable' are words of the widest significance and do not limit the jurisdiction of the Court to any case. It is a question of fact and each case must depend on its circumstances.
19. ' The whys and wherefores lead to the conclusion that the petitioner has raised lawful grounds for winding up of respondent company and there is no opposition. I am of the view that it would be just and equitable that company should be wound up. The application is allowed. Let the respondent company be wound up. Official Assignee of the Court is appointed official liquidator. He shall submit preliminary report in terms of section 329 of the Companies Ordinance, 1984 and will be paid fee in accordance with Rule 820 of Sindh Chief Court Rules (O.S.)