' SYED HASAN AZHAR RIZVI, J.---By this order I would decide the present petition filed under section 152 read with sections 7 and 9 of the Companies Ordinance, 1984.
2. The petitioner claiming shareholder of 200 shares from the time of establishment and incorporation of Messrs Munawar & Company (Pvt.) Ltd. Registered under the Companies Ordinance 1984 in the year 1989 and the Certificate of Incorporation was issued on 7-1-1990 to the petitioner's company. The main purpose for which the petitioners company was established was to carry on the business of builders/contractors and to lay out develop construct buildings and erect various industrial units/ commercial buildings etc. The capital of the company consisted of Rs, 500,000 divided into 5000 shares of Rs, 100 each.
3. At the time of establishment and incorporation of the company following persons were the members/ shareholders:--
(i) Saleha Beguni wife of Al-Haj Hafiz Munawar 300 shares
(ii) Saleh Munawar son of Haji Yaqoob Munawar 200 shares
(iii) Shahnawaz Munawar son of Al-Haj Hafiz Munawar300 shares
4. The affairs of the company were being run by the respondent No,1 throughout including the filing of the returns in the Joint stock company now Securities and Exchange Commission of Pakistan.
The record of the company maintained with respondent No,4 includes Forms 'A' from the year 2000 to 2006 which has been obtained by the petitioner. On perusal of the Form-A it transpires to the petitioner that the shareholders of the members/ shareholders remained the same at the time of incorporation of the company till 2003 but in the Form-A of 2003 it has been mentioned that the petitioner resigned on 30-8-2003, according to the petitioner no resignation was however tendered by him and that was a fraudulent act on the part of the respondent No,1, who maneouvered to pass an illegal Board Resolution in respect of resignation of the petitioner which is a fraudulent act and in order to deprive the petitioner from not only being one of the directors of the company but also from taking part in the affairs of the company. In Form-A of 2004 there is an entry that petitioner transferred his 200 shares on 31-8-2003 to respondent No,2. The petitioner pleaded that the entries made In Form-A of 2003, in respect of the resignation and transfer of shares of the petitioner was made frauduleatly by respondent No,1 by issuing forged/fabricated and illegal documents.
5. The petitioner further submits in the petition that Hajiani Saleha Begum mother of respondent No,1 'expired on 16-7-2004 and her shareholding of 300 shares as mentioned in Form-A for the year 2004 were transferred to respondent No,3 on 24-7-2004. It is pleaded that although the petitioner has no concern with those shares, yet it is necessary that respondent No,1 must produce the documents for such transfer of shares from a dead person to one of the legal heirs by excluding all other legal heiRs, According to the petitioner these acts inferred with respondent No,1 was controlling the company and was preparing the Resolutions/documents according to his own will and desire detrimental to other directors/shareholders more specifically the petitioner. The petitioner further stated that by committing fraud the respondent No 1 ousted the petitioner from the shareholding of the company. The petitioner has further stated that the respondent has manipulated assets and liabilities of the company and the petitioner is entitled for his shares upto the market value of such assets of the company. It is further stated by the petitioner that the company has filed a Suit bearing No,574 of 1996 in this court for declaration and permanent injunction against the Government of Sindh and City District Government Karachi on the ground that Plot bearing No, ST-4-A, admeasuring 3 acres situated in Block-14, Federal B Area, Karachi was allotted to Munawar & Company on 30-9-1964. The City District Government approved building plan for construction of ground plus four storeys on the said plot. However, subsequently the allotment was cancelled although some structure was built. The said plot and structure thereon is the asset of the company and the petitioner is entitled thereto.
6. It is also stated in the petition that Forms A starting from 2004 to 2008 filed by the respondent No,1 are under objection and have not been accepted for filing by the respondent No,
1. It is further mentioned by the petitioner that he never resigned from the directorship of the company , thus Board Resolution, if any, is illegal and has no legal effect, the petitioner has been ousted fraudulently from the directorship/management of the company of respondents Nos. 1 to 3 and 200 shares in the name of the petitioner in the company were fraudulently transferred without consent/knowledge of the petitioner.
7. The petitioner submits that in the year 2007 the petitioner came to know about the fraudulent act of respondents Nos. 1 to 3 and on enquiries it transpired that the shareholding as well as resignation by the petitioner from the directorship of the company was fraudulently mentioned in Form-A submitted with respondent No,
4. The petitioner issued legal notice to the respondent No,4 on 13-4-2007 stated the real facts of the case and whereafter certified copies of the documents were obtained by the petitioner. The petitioner has filed the present petition on the, following prayers:--
(i) Declaration that petitioner is director of Munawar & Company (Pvt.) Ltd., who has never resigned from the directorship of the company,
(ii) Declaration that the petitioner is holder of 200 shares in the above mentioned company and petitioner never transferred such shares to anyone including the respondent No,2.
(iii) Declaration that all Forms-A from 2003 onwards wherein the alleged resignation and transfer of shares has been mentioned are fake and illegal and therefore have no legal effect.
(iv) Direction to respondent No,4 to rectify register and add the name of the petitioner as a director/ shareholder accordingly.,
(v) Declaration that all Board Resolutions from 2003 onwards are illegal.
(vi) Cost of the petition.
(vii) Any other/further/additional relief/reliefs, which this Hon'ble Court may deem fit and proper in the circumstances of the case.
8. Notices were issued to the respondents on 29-5-2009 and on 31-8-2009 parawise comments of the Additional Registrar of Companies (respondent No,4) on behalf of the Securities & Exchange Commission of Pakistan were filed in the present petition. On 27-10-2009 the respondent No,1 filed objections to the present petition and respondent No,1 personally appeared before this Court in the present petition on 29-10-2009 supplied copies of objections to the counsel for the petitioner and on 12-1-2010 the respondent No,1, who is also attorney of respondents Nos.2 and 3 has filed an application under section 151, C.P.C. Bearing CMA No,25 of 2010 and the petitioner filed counter affidavit to the said CMA, thereafter, the respondents filed application under Order VII, Rule 11, C.P.C.
Bearing CMA No,1080 of 2010 on 14-10-2010 when the matter was fixed petitioner completed the arguments on the petition and the counsel for respondent No,1 sought time to pursue the comments filed by the Securities & Exchange Commission of Pakistan as he was agitating with no documents are lying under objection. On 7-12-2010 when the matter was fixed before this Court, this Court directed the Securities & Exchange Commission of Pakistan, respondent No,4 to submit the entire relevant record pertaining to the transfer of the petitioner's shares in favour of respondent No,2 and also in respect of his removal from the directorship of the company and adjourned the matter for 13-1-2011. On 13-1-2011 Mr. Imran Shamsi, the Law Officer of the respondent No,4 was present and submitted that he has already filed parawise comments before this Court which are already on record. He further submits that he has brought the entire record but since the counsel for the petitioner was busy before another bench the matter was adjourned.
9: Mr. Tasawar All Hashmi learned counsel for the petitioner draws the attention of this Court towards section 152 of the Companies Ordinance, 1984, which is reproduced hereinbelow for ready reference:--
152. Power of Court to rectify register.- (1) If-
(a) the name of any person is fraudulently or without sufficient cause entered in or omitted from the register of members or register of debenture-holders of a company; or
(b) default is made or unnecessary delay takes place in entering on the register of members or register of debenture-holders the fact of the person having become or ceased to be a member or debenture-holder; The person aggrieved, or any member or debenture-holder of the company, or the company, may apply to the Court for rectification of the register.
(2) The Court may either refuse the application or may order rectification of the register on payment by the company of any damages sustained by any party aggrieved, and may make such order as to costs as it in its discretion thinks fit;
(3) On any application under subsection (1) the Court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or debenture-holders or alleged members or debenture holders, or between members or alleged members, or debenture-holders or alleged debenture-holders, on the one hand and the company on the other hand; and generally may decide any question which it is necessary or expedient to decide for rectification of the register.
10. Learned Counsel for the petitioner states that the entries made in the Form-A in year 2003 in respect of resignation of the petitioner and then transfer of his shares of Messrs Munawar & Company (Pvt.) Ltd., were made fraudulently by the respondent No,1 by preparing forged, fabricated and illegal documents. He further submits that no such documents have been produced by any of the respondents along with their objections and comments.
11. Counsel for the petitioner has referred averments of memo of petition as well as comments and objections to the petition that the petitioner never resigned as Director and or C.E.O. Of the company and further stated that Mr. Shahbaz Munawwar son of petitioner was never in any way associates with the company neither as director nor as shareholder. However, the business of the company was being run by the father of the respondent No,1, in partnership with the petitioner. The petitioner further stated that petitioner never sold his shares to respondent No,2 and never resigned from directorship of the company.
12. Learned counsel for the plaintiff urged that no copy of alleged resignation of the petitioner or any document whereby the petitioner allegedly sold his 200 shares to the respondent No,1 has either been filed along with the objection to the petition by the respondents or with the parawise comments filed by the respondent No,4 Securities & Exchange Commission of Pakistan in this case.
The petitioner counsel submits that C.M.A. No,25 of 2009 filed by the respondents is a prayerless application, however petitioner has filed counter affidavit to the said application and has vehemently denied that on 30-8-2003 the petitioner tendered any resignation and has stated on oath that it was fraudulent act on the part of the respondent No,1 who maneouvered to pass illegal board resolution in respect of the resignation of the petitioner in order to deprive the petitioner from not only bind one of the director of the company but also from taking part in the affairs of the company. It is stated in para-4 of the counter affidavit of the petitioner that the entries made in Form-A in respect of 2004 were made fraudulently by the respondent No,1 by preparing forged/fabricated and illegal documents.
13. Learned counsel for the petitioner has relied upon the following judgments: --
(i) PLD 2008 SC 707 (Lahore Race Club v. Raja Khushbakht-ur-Rehman) authored by the Divisional Bench of Supreme Court consisting upon Mr. Justice Muhammad Akhtar Shabbir and Mr. Justice Syed Sakhi Hussain Bokhari, the relevant portion is as under:- "10. The plaintiff is aggrieved of removal of his name from the register of membership and prayed for declaring this act as illegal, void and unwarranted, mala fide, etc. Keeping in view the prayer clause of the plaint and section 152 subsections (1)(a)(b), it can easily be inferred that the rectification can be made by the Court if the name of any person is fraudulently or without sufficient cause entered in or omitted from the register of members of register of debenture-holder of a company.
15. So far as taking the cognizance of the matter is concerned, it is provided in the Ordinance, 1984, that an application shall be preferred before the Court (the High Court) by the aggrieved person or any member of the company for "rectification" of the register. Though section 152 of the Companies Ordinance, 1984 gives wide power to the High Court to rectify the register of members, yet, the jurisdiction of the High Court is summary in nature, as emerges in section 9 subsection (3), which reads as under:- "in the exercise of its jurisdiction as aforesaid, the Court shall in all matters before it, follow the summary procedure".
20. Having dealt with the matter in hand, in the manner discussed above, we hold that the High Court being the Court of "original jurisdiction" under the Companies Ordinance, 1984, is empowered under section 152 of the Ordinance to entertain the application for correction/rectification of the register of members", in the first instance, and thereafter if reached to the conclusion by taking into consideration the application, reply thereto and the documents produced before it, that the matter is out of the purview of the summary procedure as provided under section 9(3) of the Ordinance, it may refer/advise the party to approach the Civil Court for resolution of the disputed controversies."
(ii) 2003 CLD 1429 (Muhammad Hussain v. Dawood Flour Mills and others) authored by the Divisional Bench of this Court consisting upon Mr. Justice S. Ahmed Sarwana and Mr. Justice M.
Mujeebullah Siddiqui, the relevant portion is as under:- "---Ss. 152 & 305---Winding up petition on ground of fraudulent transfer of petitioner's shares in favour of third persons---Maintainability---Remedy of petitioner was to the application under S.152 of Companies Ordinance, 1984 for rectification of register of members---Petition for winding up of company was patently not maintainable in law."
14. The counsel for the respondents argued that the petitioner resigned in consideration of US$ 2500 paid by the respondent No, 2 to the son of the petitioner namely Shehbaz Munawar under his instructions. Learned counsel submits that there is no commission of any fraud and petitioner has not been ousted as alleged but he sold his shares to respondent No, 2 and resigned from the Directorship of the company in 2003. Learned counsel for the respondents further submits that the petitioner has no concern with the assets and liabilities of the Bank prior to 1-1-1990 and after 30-8- 2003. Learned counsel for the respondents further submits that when the petitioner admittedly learnt the alleged commission of fraud in 2007 as to why he remained silent since then and has filed the present petition after a long unexplained delay. Learned Counsel for the respondents submits that along with C.M.A. No, 25 of 2009 he has annexed photocopy of the letter of the petitioner dated 30-8-2003 whereby the petitioner tendered his resignation from the directorship of the company and further informed that he sold the entire shareholdings in the company Messrs Munawar & Company (Pvt.) Ltd. To Mr. Tajammul Munawar son of Al-Haaj Hafiz Munawar. Counsel for the respondents has also referred photocopy of Resolution of Messrs Munawar Company (Pvt.)
Ltd. Dated 30-8-2003 as Annexure A-1, which bears signature of respondent No,1 and deceased mother Hajiani Saleha Begum. Learned Counsel for the respondents submits that the issue of fraud cannot be decided under summary proceeding. The petition has been filed under section 152 of the Companies Ordinance, 1984, which relates to summary procedure. Learned counsel for the respondents placed reliance upon:--
(i) 1986 CLC 2560 (Manzoor Ahmad Bhatti and 4 others v. Haji Naval Khan and 5 others) authored by Mr. Justice Saeeduzzaman Siddiqui, the relevant portion is as under:- "---S. 38---Civil Procedure Code (V of 1908), O. XXXIX, R. 4---Rectification of register of company-- -Application for---Questions of fact-Determination of Question of fact requiring detailed inquiry by appropriate civil proceedings, held, could not be determined under summary procedure available under Companies Act, 1913---High Court stayed the proceedings of application till parties obtained decision from civil Court on disputed question of fact raised on application proceedings."
(ii) PLD 2008 SC 707 (Lahore Race Club v. Raja Khushbakht-ur-Rehman) authored by the Divisional Bench of Supreme Court consisting upon Mr. Justice Muhammad Akhtar Shabbir and Mr. Justice Syed Sakhi Hussain Bokhari, the relevant portion is as under:- "Section 152 empowers the Court to decide any question relating to "rectifitation" of the Register including the law. There can be no doubt that any question raised within the peripheral field of rectification, it is the High Court under section 152 alone which has the exclusive jurisdiction.
However, the question raised does not rest here. In case any claim is based on some seriously disputed civil rights or title, denial of any transaction or any other basic facts which may be the foundation to claim a right to be a member and if the Court feels such claim does not constitute to be rectification but instead seeking adjudication of basic pillar some such facts falling outside the rectification, its discretion to send a party to seek his relief before Civil Court first for the adjudication of such facts, it cannot be taken away merely on account of that no such language is provided in the section. For instance, if under the garb of rectification one may lay claim of many such contentious issues for adjudication not falling under it, in other words, the Court under it has discretion to find whether the dispute raised are really for rectification or is of such a nature, unless decided first it would not come within the purview of rectification. A plain reading of the word "rectification" itself connotes some error, which has crept in requiring correction. Error would only mean everything as required under the law has been done yet by some mistake the name is either omitted or wrongly recorded in register of the company.
15. I have heard Mr. Tasawar Ali Hashmi learned counsel for the petitioner, Mr. Habibullah Jatol, learned Counsel for the respondent, Mr. Syed Imran Shamsi, Assistant Director Law SECP and have perused the relevant documents/record and the case-law cited by the counsel for the parties.
16. It is not disputed that at the time of establishment and incorporation of the Messrs Munawar Company (Pvt.) Ltd., the petitioner was member/share holder of 200 shares of the said Company.
However, in the Form-A of 2003 of that company it has been mentioned that the petitioner resigned on 30-8-2003 and in the Form-A of 2004. There is an entry that the petitioner transferred his 200 shares on 31-8-2003 to respondent No,2. The alleged resignation of petitioner and the transfer of the 200 shares has been challenged and impugned in the present petition. Respondent No,1 in his objection to the present objection has not enclosed any copy of resignation of the petitioner and any document establishing the fact how and to whom 200 shares were transferred on 31-8-2003 however, the respondent No,1 in the objections filed in this Court on 27-10-2009 for self as well as Attorney of the respondents Nos.2 and 3 stated that petitioner was CEO from the year 2000 till his resignation and after his resignation the respondent is maintaining record. It is further stated in para-5 that petitioner resigned in consideration of $2,500 paid by the respondent No,2 to petitioner's son Mr. Shahbaz Munawwar under petitioner's instructions. However, no such documents establishing that the petitioner resigned or paid any amount by the respondent No,2 has been enclosed or even referred to in the objections of the respondents Nos.1 to 3.
17. The petitioner in his comments on objections filed on 18-11-2009 stated that Shahbaz Munawar son of petitioner was never in any way associated with the company neither as director nor as shareholder. The petitioner further stated in the comments to the objections that he never resigned as Director and/or CEO from the company and had never sold his shares to respondent No,2. He further averred in paragraph-4 of his comments that the assets of the company belongs to the company which is the subject matter in Suit bearing No,574 of 1996 pending before this Court. The Plot bearing No,ST-4/A, admeasuring 14,400 square yards, with F.B. Area Karachi was transferred to Munawar & Company (Pvt.) Ltd., and therefore, the petitioner is entitled to the asset of the company.
18. Respondents Nos. 1 to 3 have on 12-1-2010 filed an application under section 151, C.P.C. Bearing C.M.A. No, 25 of 2009 without any prayer therein and has enclosed photocopies of resignation from directorship of the company dated 30-8-2003 by the petitioner and a resolution dated 30-8-2003 without having any resolution number thereon. The petitioner filed counter affidavit to the said application on 13-2-2010 wherein the petitioner categorically denied that he ever tendered resignation and submitted that it was a fraudulent act on the part of the respondent No, 1, who maneouvered to pass an illegal Board Resolution in respect of resignation of the petitioner which is a fraudulent act and in order to deprive the petitioner from not only being one of the directors of the company but also from taking part in the affairs of the company. The petitioner further stated in his counter affidavit that the resignation and then transfer of 200 shares in 2004 were made fraudulently by the respondent No,1 by preparing forged/fabricated and illegal documents. The petitioner categorically stated that annexures 'A & B' annexed with the application are forged and fabricated documents, Annexure 'A' does not bear signature of the petitioner and the Annexure 'B' the alleged Resolution was neither passed in accordance with law nor it is on the letter head of the company. Respondents have not filed any affidavit-in-rejoinder to the counter affidavit of the petitioner to C.M.A. No,25 of 2009.
19. I have also perused the statement and documents enclosed therewith filed by Mr. Usama Ahmed Osmani, Assistant Registrar, Securities & Exchange Commission of Pakistan respondent No,4 on 18-1-2011 on the direction of this Court and no resignation of the petitioner and resolution dated 30-8-2003 has been filed or any of document by the respondent No,4 in the statement filed in this Court by respondent No,4. Even the same have also not been filed along with the comments filed by the respondent No,4.
20. The respondent No,4 has not filed any resignation of the petitioner and the resolution dated 30- 8-2003 and learned counsel for the respondents have failed to satisfy the Court that as to why such important documents by which the petitioner was removed from the Directorship of the company and from taking part in the affairs of the company and his 200 shares in the company were transferred in the name of respondent No,2 without production of any document before this Court or before the respondent. No,4. Non-production of the resignation of the petitioner and proof of transfer of shares at the time of filing objection of the present petition filed on 27-10-2009 and 31-8-2009 by the respondent No,4 and even thereafter, the prima facie establishing that name of the petitioner has been fraudulently or without sufficient cause omitted from the shareholding of the company.
21. The honourable Supreme Court of Pakistan in the judgment reported in PLD 2008 SC 707 has held that if a person is aggrieved of his removal of his name from the register of membership and prayed for declaring this act as illegal, void and unwarranted, mala fide, etc. The honaurable apex Court has held that under section 152 subsections (1)(a)(b) rectification can be made by the Court if the name of any person is fraudulently or without, sufficient cause entered in or omitted from the register of members and further held that in exercise of its jurisdiction as aforesaid the Court shall, in all matters before it, follow the summary procedure. It is further observed in the said judgment that section 152 of the Companies Ordinance, 1984 gives wide powers to the High Court to rectify the Register of members, yet, the jurisdiction of the High Court is summary in nature as emerges in section 9 subsection (3).
22. The Divisional Bench of this Court in 2003 CLD 1429 has held that fraudulent transfer of petitioner's share in favour of third person, remedy of petitioner was to the application under section 152 of the Companies Ordinance, 1984 for rectification of the register of membeRs,
23. Arguments of the learned Counsel for the respondents Nos.1 to 3 that there is no commission of any fraud and that the petitioner had resigned from the Directorship of the company in 2003 and sold his 200 shares to the respondent No,2 without even production of the same before competent Authority i.e., respondent No,4 cannot be considered. Learned counsel for respondents Nos.1 to 3 has placed reliance upon photocopies of the Annexures 'A & A-1' filed with C.M.A. No,25 of 2009 and submits that issue of fraud cannot be decided under summary procedure. Learned counsel for the respondents has also placed reliance upon PLD 2008 SC 707 and submits that matter may be referred to the Civil Court for adjudication of commission of fraud. The contention of the learned Counsel referring the matter to the civil court for determining as to whether fraud has been committed in the matter is unjustified and is made in order to linger on the proceedings. On the face of record, commission of fraud is apparent as no documentary evidence regarding the resignation of the petitioner from CEO/ Directorship of the company and transfer of 200 shares has been produced by the respondents Nos. 1 to 3 before this Court or before respondent No,4. At a belated stage the respondents Nos. 1 to 3 have tried to fill lacuna by producing photocopies of documents regarding resignation by filing a prayerless application bearing C.M.A. No,25 of 2009 and has enclosed photocopies of the alleged resignation and resolution both dated 30-8-2003 but the same were never filed along with the objections to the petition filed by the respondents on 27- 10-2009 the respondent No,4 SECP has also not produced such documents before this Court. The petitioner categorically stated in his counter affidavit that photocopies of those documents are forged.
24. Respondent No, 4 has filed parawise comments but photocopies of documents filed by respondents No,1 with C.M.A. No, 25 of 2009 were also not found in the record of respondent No, 4.
Even otherwise, the respondents Nos.1 to 3 have failed to bring any document whereby the petitioner transferred his 200 shares in the name of the respondent No,2 and no personal affidavit of the respondent No,2 in that respect has been filed in the present petition that he has paid $ 2,500 to the petitioner or to his son.
25. For the facts, circumstances and case-law referred to above I hereby allow the present Petition as prayed for with costs.