MUNIB AKHTAR, J.---C.M.A. 390 of 2009, which falls for determination, has been filed by persons ("Applicants") who are all related, being members of the Schon family, and are the majority shareholders of National Fibres Ltd. ("Company"). The application is for restitution (under section 144, C.P.C.) of the Company's property (being, essentially, its entire undertaking) that has been sold in an auction undertaken in the present execution proceedings. The auction-purchaser has paid the price and has been put in possession of the property, but the sale proceeds have not yet been disbursed. There are a number of claimants to the said proceeds, not least being the various banks that are the Company's creditors. The auction purchaser and some at least of the banks strongly oppose the present application.
2. Before proceeding further, certain preliminary points need to be made since, as ill appear shortly, the present C.M.A. Has been filed out of tangled circumstances and multiple proceedings. Firstly, the suit out of which the present execution proceedings arose, Suit B-85/2000, was filed by Habib Bank Ltd. ("HBL"). It was filed against the Company as the sole defendant. The suit was decreed ex parte, as prayed. Thus, HBL was the decree holder. In a manner and for reasons that need not detain me, that decree now vests in the National Bank of Pakistan ("NBP"). References to the decree-holder can therefore be to HBL or NBP but there is no material difference for present purposes. Secondly, the erstwhile National Development Finance Corporation ("NDFC") had filed a petition against the Company and others (including the applicants) under section 290 of the Companies Ordinance, 1984. This petition is material for present purposes. It is to be noted that, again in a manner and for reasons that need not be elaborated, NDFC has long since been absorbed into NBP. Thirdly, the applicants have, by way of abundant caution, moved an application (C.M.A. 8376 of 2009) in Suit B-85 of 2000 that is identical to the one at hand. Learned counsel for the parties were agreed that the outcome of this application will determine the fate of the other.
Finally, since the narrative of the facts and the proceedings tends (unavoidably) to get rather mixed up, I have in an Annex to this decision set out the material details relating to the proceedings, as a sort of quick reference guide.
3. Learned counsel for the applicants referred to J.M. 39 of 1997, the petition filed by NDFC (and others, not now relevant) against the Company and the applicants under section 290 of the Companies Ordinance. I may note that the petitioners therein were the minority shareholders of the Company. At the time the petition was filed, the applicants constituted the Company's management. Learned counsel submitted that on 4-12-1997, by way of an interim order, the Court was pleased to displace the existing management and appoint NDFC's nominee as the chief executive till further orders. The order took effect from 5-12-1997. Learned counsel drew attention to that portion of the order where it was stated: "Besides NDFC and two other petitioners appear to be deeply interested in the revival of the company by [injecting] huge finances which would advance the interest of the company, its share holders and creditors therefore this order would be just, fair and equitable...." However, learned counsel submitted, none of this ever came about. No funds were provided and the Company was, essentially, left to die commercially. Thereafter, Suit B-85 of 2000 was filed by HBL against the Company. Learned counsel emphasized that at that time NDFC was in control of the Company and contended that although the Company was duly served in the suit, NDFC expressly chose not to oppose it. The suit therefore proceeded against the Company ex parte, and was so decreed, as prayed, on 7-12-2000 (with reasons following a few days later on 11- 12-2000). Thereafter, the present execution proceedings, Ex. 36/2001, were filed on 8-2-2001. The writ of attachment was issued on 26-3-2001 and the Nazir of the Court appointed as receiver of the Company's property with directions to sell the same. On 20-4-2001 the Official Assignee took over this role and assignment. The sale/auction proceedings went ahead and the sale was confirmed on 2-11-2001 to the highest bidder. However, a few months later the bidder, in effect, backed out and on 15-1-2002 it was ordered that the Company's property be again put up to sale/auction. In the second round, the offer of the present auction purchaser was accepted on 18-3-2002 and on 29-4-2002 the sale was confirmed. As already noted, the auction purchaser has paid the price (amounting to Rs, 452.5 million or thereabouts) and has been put in possession.
4. Learned counsel submitted that while all this was going on, the applicants filed an application in Ex 36/2001 on 20-6-2001. The application was under sections 12 and 18 of the then applicable loans/finances recovery legislation (Act XV of 1997) read with Order XXI, Rule 58, C.P.C. By this application, the applicants sought to have the ex parte decree in Suit B-85/2000 set aside. On 6-8- 2001, the Court observed that the application be treated as one under section 12(2), C.P.C., and since such application ought to be filed in the suit that had been decreed, directed that it be transferred to the file of Suit B-85/2000 and decided therein. The application was so transposed, and permitted to be formally substituted with an application under section 12(2), C.P.C., being C.M.A. 7799/2001. This application was decided by order dated 25-10-2001, and was dismissed.
Against this dismissal, the applicants preferred an appeal, being Sp. H.C.A. 291/2001, which was filed on 30-10-2001. I may note that in the execution proceedings (Ex 36/2001) during the first round of auction/sale (which, as noted, proved abortive) on 2-11-2001 it was specifically brought to the Court's attention that Sp. 291/2001 had been filed.
5. It will be recalled that the sale of the Company's property was confirmed in favour of the present auction purchaser on 29-4-2002. Learned counsel for the applicants submitted that on 7-8-2002, on an application made by the applicants, it was ordered in J.M. 39/1997 that the sale proceeds obtained from the auction/sale of the Company's property not be disbursed. J.M. 39/1997 was ultimately disposed off by order dated 3-12-2004. This order needs to be described in some detail.
By the order, the Company's board of directors, as had existed before the order of 4-12-1997 (as to which see above), was "revived". The petitioners (i,e, NDFC and others) did not oppose this, and it was expressly noted in the order that this "concession" was made by them "as the company no longer has any tangible assets". As regards the interim order of 7-8-2002, it was noted by the Court that it was stated that there was a possibility of a compromise. Reference was also made to Sp.
HCA 291/2001. Keeping these factors and the submissions of learned counsel in mind, the Court ordered as follows: "In the circumstances, the order dated 7-8-2002 to remain intact till the final disposal of the said appeal or for a period of three months from today whichever is earlier. Subject to the above, the Petition is dismissed as not pressed".
6. Since, as it were, the clock was now ticking against the applicants insofar as the disbursement (or otherwise) of the sale proceeds, they made an application in Sp. H.C.A. 291/2001 seeking to have any disbursement stayed. On this application by order dated 22-3-2005 a learned Division Bench was pleased to direct that the sale proceeds should not be disbursed. Thereafter, on 25-4-2008, a compromise application (C.M.A. 615/2008) was presented in Sp. H.C.A. 291/2001. This sought to compromise the matter between the applicants (who were of course the appellants), NBP and the Company in terms as therein stated. This application was disposed of in terms of an order dated 7- 10-2008. Since both the application and the order are of importance, they need to be described in detail. The application recited that the Schon family (i,e,, the applicants) had entered into an agreement on 25-10-2005 with the National Accountability Bureau (NAB). A copy of the agreement was annexed to the application.
It stated that the Schon family and the creditors of various companies under its ownership/management/control had settled the outstanding liabilities on the basis of an aggregate payment of Rs, 1.225 Billion Rupees, to be made by the Schon family in terms as stated therein. Insofar as the Company was concerned, the application recited that it was "a unit owned by the Schon family", and after referring to various creditors of the Company, stated that "to get back the vacant possession of the project", the Schon family had offered to pay collectively to NBP, Allied Bank Ltd. ("ABL") and all other creditors "a total sum of Rs, 475.125 million (which is 5% above the highest bid received for the project of Rs, 452.500 million)". It was stated that this offer had been accepted by the creditors. The application then set out the terms of the compromise as it applied, in particular, to NBP. The first clause set out the total settlement amount (the aforementioned Rs, 475.125 million) of which NBP's share (as given in clause 2) came to Rs, 262.208 million. Clause 3 set out the repayment schedule: "20% of the said amount to be paid to [NBP] shall be paid out of the amount available with NAB, and immediately upon the "Schon Family" being handed over the vacant and peaceful possession of entire assets of National Fibres Limited.
Balance 80% to be paid as per Clause 3(b) of the agreement dated 25-10-2005 between NAB and the "Schon family" in 5 years after the Schon, Family receiving the vacant possession of Messrs National Fibres Limited."
Clause 8 of the compromise, which bore the heading "condition precedent", needs to be set out in full: "The parties agree that upon acceptance of this compromise, the decree in Suit B-85 of 2000 and Suit No,B-79 of 2001 shall stand fully satisfied and be reversed with consent of the parties hereto and the Decree holder-NBP hereby consents and agrees that any amount received from any Bidder/Auction Purchaser by the Commissioner for sale shall be returned and vacant possession of all the assets of National Fibres Limited will be handed over to the "Schon Family". NBP would provide its NOC to High Court of Sindh, with regard to handing over the unit of National Fibres Limited to Schon Group and shall have no responsibility for providing vacant possession of the unit."
(I may note that Suit B-79/2001 was apparently another suit filed by HBL against the Company. That suit does not require any separate consideration, and none was given to it by learned counsel.)
7. When the foregoing application C.M.A. 615/2008 came up before a learned Division Bench on 7- 10-2008, both ABL and the present auction purchaser were represented by counsel. Learned counsel for ABL submitted (as recorded in the order) that it was "mortgagor and secured creditor and their right may not be effected by the compromise". As regards the auction purchaser, learned counsel submitted that "their right may also not be effected". The learned Division Bench ordered as follows: It appears that the compromise is in between .NBP and the appellant, who are the only parties to the appeal, with no mention in it to effect any right of third party. Learned counsel of the parties to appeal submit that whatever right has already been accrued or there is any entitlement, then it will not be effected by compromise. In such circumstances, there should be no apprehension in the mind of third parties against the compromise.
Mr. A. I. Chundrigar [counsel for ABL] submits that there are some disputes in respect of the Execution Application No, 36 of 2001. Mr. Mushtaq Memon [counsel for the appellants, i,e,, the applicants] submits that the Execution application may be decided on its own merits in accordance with law. He further submits that there are interim orders, which may be recalled. Since the compromise is apparently proper and is being entered into in accordance with law, while no mala fide or illegality has been pointed out or appears on the scene, hence C.M.A. No,615 of 2008 is accepted and appeal is disposed of in terms of condition laid down in the said CMA while interim orders pass earlier are recalled." (Certain typographical errors as in original)
A compromise decree was drawn up accordingly in Sp. HCA 291/2001.
8. It is in the foregoing backdrop that the application presently under consideration (and the corresponding application in Suit B-85/2000) came to be filed. As noted, it- seeks an order and direction from the Court by way of restitution under section 144, C.P.C. It is prayed as follows: "... That this honourable Court may be pleased to order recall of sale proceedings and set aside the sale of property of the defendant Company which can be revived upon restitution of the immoveable property owned by it".
9. Learned counsel for the applicants relied upon three grounds in support of the application. Firstly, it was contended that the sale was void by reason of section 410 of the Companies Ordinance.
Secondly, it was contended that the decree stood satisfied by reason of the compromise recorded in Sp. H.C.A. 291/2001 and that therefore there could be no sale of the Company's property and, in particular, no sale as presently at hand could be concluded. It was submitted that the sale was reversible inasmuch as it had not yet attained finality and the sale proceeds had not been disbursed. The amount could be returned to the auction purchaser and possession of the Company's property retaken. Thirdly, it was contended that since the auction purchaser had, at all material times, knowledge of the challenge to the decree, it could be set aside as his position was not of a bona fide purchaser for value without notice.
10. In support of his case under section 410 of the Companies Ordinance, learned counsel referred to section 294 thereof. This provides as follows: "In relation to an application under section 290, sections 410 to 415 shall mutatis mutandis apply as they apply in respect of winding up". Referring to the section 290 proceedings filed by NDFC against the Company, i,e, J.M. 39/1997, learned counsel relied on the order dated 4-12-1997 made therein (see above). By this order the then existing management of the Company (being the applicants) was displaced and a chief executive appointed by order of the Court. The person so appointed was the nominee of the petitioners in the JM. Learned counsel submitted that after the takeover by NDFC, it ensured that the subsequently filed Suit B-85/2000 was not defended or contested, which led to the (present) ex parte decree in favour of HBL. NDFC thus acted to facilitate the creditors and not the Company. It was on such decree that the execution proceedings (Ex 36/2001) were filed, which led to the sale now under challenge. Since the Company had been stripped of its property, NDFC then not press J.M. 39/1997, which was ultimately dismissed as not pressed on 3-12-2004. When the Court made the order of 4- 12-1997 directing that the then management be displaced, NDFC was allowed to take over the Company because it had undertaken to provide the necessary financing as would lead to a revival of the latter. This however, never came about. Learned counsel submitted that the order of 4-12- 1997 was a substantial order, the making of which brought section 294 and hence section 410 into play. Section 410 provides in material part as follows: "410. Avoidance of certain attachments, executions, etc .---(1) Where any company is being wound up by or subject to the supervision of the Court, any attachment, distress or execution put in force without leave of the Court against the estate or effects or any sale held without leave of the Court of any of the properties of the company after the commencement of the winding up shall be void."
(Subsection (2) merely states that the section does not apply to proceedings by the Government.)
It was contended that since section 410 was, by virtue of section 294, to apply "mutatis mutandis" to section 290 proceedings, and the former applied "after the commencement of the winding up", and a winding up was deemed to commence on the date when the winding up petition was presented (section 311), section 294 became applicable (at the very least) when a substantive order in relation to the affairs and management of the company was made under section 290. In the present case, that was the order of 4-12-1997, already referred to above. From that date, section 410 became applicable and any attachment of or execution on or sale of the Company's property thereafter without the permission of the Court was void. "The Court" here meant the Court while exercising its jurisdiction under the Companies Ordinance. Since admittedly no such permission had been obtained the entire sale/auction proceedings of the Company's property in Ex. 36/2001, which were of course after 4-12-1997, were void. Learned counsel submitted that section 294 could become applicable even during the pendency of the petition under section 290. In support of his case regarding the applicability of section 294 learned counsel relied on certain case-law which will be considered at the appropriate stage below. It was contended on the foregoing basis that the sale to the present auction purchaser had therefore to be declared void, with consequential relief in relation to the Company's property.
11. As regards his other grounds, learned counsel submitted that the auction purchaser had full knowledge at all material times of the challenge to the decree under which the sale/auction was proceeding. In this regard reference was made to the order dated 2-11-2001 in Ex. 36/2001. It was submitted that on that date the present auction purchaser was represented before the Court, and the order specifically noted that it was brought to the Court's attention that the applicants had filed Sp. HCA 291/2001 challenging the dismissal of their application under section 12(2), C.P.C. In terms as stated above. Reference was also made to the order dated 7-2-2002 in Ex. 36/2001, as also to the order dated 18-3-2002. On the latter date the auction purchaser was declared the successful bidder. The applicants were again represented before the Court and the order noted their appeal (i,e, Sp. HCA 291/2001). Learned counsel submitted that the rule of caveat emptor also applied to sales in execution proceedings. Now, in the very proceedings of which the auction purchaser throughout had notice and knowledge, i,e, Sp. H.C.A. 291 of 2001, the decree had been reversed by means of the compromise recorded by order dated 7-10-2008. The auction purchaser had therefore to face the consequences and could not be allowed to claim that he was a bona fide purchaser of the Company's property, who remained unaffected by the reversal of the decree.
Certain case-law was relied upon but it is not necessary to set it out at this stage.
12. As regards section 144, C.P.C. Itself, learned counsel referred in detail to the compromise that had been decreed in Sp. HCA 291/2001. Learned counsel submitted that the decree had been expressly and specifically reversed, and thus section 144 was fully applicable. Referring to the scope of section 144, learned counsel submitted (relying on certain case-law) that it conferred vast powers on the Court and had to be construed and applied accordingly. The basis of the section was that an act of the court could not prejudice or cause injury to anyone and that the Court was bound to give such directions and make all necessary orders as resulted in the rectification of the situation that had been brought about by the decree that had been reversed. Restitution followed automatically. Learned counsel prayed that the application be allowed and the sale set aside, which consequential relief to follow accordingly.
13. Learned counsel for the auction purchaser opposed the application. Learned counsel submitted that, keeping in mind the relief sought in the application, two points required consideration. Firstly, what was the effect of the compromise decree in Sp. HCA 291/2001 that was said to have reversed the decree in execution? Learned counsel contended that the compromise did not at all affect the sale proceedings in the execution. Indeed, his case was that the applicants had never opposed the sale as such; their only issue, if at all any, had been with the manner of the sale. Secondly, it was submitted that a reversal of a decree did not necessarily mean or lead to a reversal of any sale under the decree. Referring first to the decree as made in Suit B-85/2000, learned counsel submitted that there had never, as such, been an appeal against the decree itself. It will be recalled that the applicants had first filed an application ("first application") in the execution proceedings (Ex. 36/2001), which was directed to be transferred to the suit and was then substituted by the application under section 12(2), C.P.C. (that was dismissed, leading to Sp HCA 291/2001). Learned counsel referred to the first application and to another application filed in the suit, under Order I, Rule 10, C.P.C. Learned counsel submitted that both these applications were not pressed by the applicants, and were dismissed as such in the suit by order dated 5-10-2001.
Learned counsel then referred to the application under section 12(2), C.P.C. As filed in the suit and to its dismissal, as just noted. Learned counsel also referred to various orders in the execution proceedings, while the sale/auction was underway. He referred in particular to the order dated 18- 3-2002, where it was recorded as follows: "Mr. Mahmood A. Khan, Advocate for the Intervenor [i,e, the applicants] makes a statement at the bar that if the property is divided then it would fetch more price. According to him this is the only objection which he likes to place before this Court. His objection is acknowledged." Learned counsel submitted that the stance taken by the applicants kept changing and no consistent position was adopted. Reference in this context was also made to para 14 of the affidavit in support of the first application. Learned counsel submitted that although the auction purchaser has paid the entire sale price and the sale has been confirmed by the Court, no appeal was filed nor any challenge mounted to any of these matters or any order relevant thereto.
14. Referring to the proceedings in Sp HCA 291/2001, learned counsel submitted that those proceedings in fact reinforced the point that the applicants had consented to the sale. Reference was made to para 6 of the "grounds" of the memo of appeal, as well as the prayer therein. In the former, the objection taken by the applicants was the property had not been sold in a "professional manner and as such the recovery from the sale of the property in [piecemeal] form or by dividing the immoveable property into small plots can be increased substantially". The relief sought in the appeal was that the decree be set aside or varied "to the extent of the actual outstanding and that the property should be sold in a manner whereby all persons having any interest in the property of the [Company] will be benefited to its maximum". This, learned counsel submitted, clearly showed that the applicants were only interested in and concerned with the manner in which the decree was executed. Learned counsel referred to the agreement dated 25-10-2005 that had been arrived at between the Schon family and NAB. Reference was also made to an addendum, dated 18-7- 2008, to the agreement. Clause 6 of the addendum provided as follows: "In the event of sale of any asset mentioned in the Agreement as a result of any act of any bank, and other creditors the proceeds of sale shall be considered as full and final settlement of liabilities of Schon Family and its directors in respect of assets". Thus, learned counsel contended, the sale in the present case was not disputed but rather recognized and its effect on the settlement or compromise specifically provided for. Referring to the compromise application that was filed in Sp HCA 291/2001, which led to the order of 7-10-2008 and the compromise decree, learned counsel relied on clause 8 thereof and to the observations in the order (set out above) to submit that the rights of the auction purchaser were recognized and preserved. It was submitted that the compromise decree could not be used to upset the sale proceedings and the rights that had accrued to the auction purchaser.
15. Continuing with his submissions, learned counsel referred to the objections filed by the auction purchaser to the present application and submitted that the factory/undertaking that had been disposed off- was being operated. It was submitted that section 144, C.P.C. Had no application to the facts and circumstances at hand. Learned counsel emphasized that all that the applicants were aggrieved of was the manner in which the property was disposed off, and nothing else. As regards the averment that the auction purchaser had knowledge of the applicants' various applications, it was submitted that that could not affect the auction purchaser's position or rights.
In support of his various submissions, learned counsel relied on case-law, which it is not necessary to set out at this stage Learned counsel submitted that no case had been made out by the applicants and that the application ought therefore to be dismissed.
16. Learned counsel for ABL, submitted that it had filed a recovery suit against the Company and its directors (i,e, the applicants) as guarantors. That suit had been decreed ex pane. The Bank was a secured creditor and it had a mortgage decree in its favour. There was no application for restitution or otherwise in relation to the Bank's decree. ABL had filed its own execution proceedings on its decree, in which certain proceedings had been taken. It was submitted that rights had accrued to the Bank, which could not now be defeated and certainly not by means of the application at hand. It was prayed that the application be dismissed.
17. Learned counsel for NBP submitted that the dispute at present was between the applicants and the auction purchaser. Insofar as NBP was concerned, the matter had been compromised as per the compromise. Decree in Sp HCA 291/2001.
18. Learned counsel for the applicants, exercising his right of reply, submitted that insofar as ABL was concerned, its claim was based on section 73, C.P.C. And it would be entitled, if at all to anything, if the application was not allowed. Therefore, its stand had no bearing on the disposal of the application. As regards the auction purchaser, learned counsel submitted that the sale in the execution proceedings was dependant on the decree and was consequential thereon, and that had been disposed off by the compromise reached and recorded in Sp. HCA 291/2001. Therefore, section 144, C.P.C. Was fully attracted in the facts and circumstances of the present case. The only question was whether the decree had been varied or reversed, which question had to be answered in the affirmative. The compromise had expressly and specifically reversed the decree. The section was not concerned with, nor could its operation or effect be nullified by, any sale in consequence of execution .Proceedings. It was submitted that an appeal was a continuation of the trial proceedings and any proceedings under section 12(2), C.P.C. Also had to be so regarded. Such an application had to be filed in the suit in which the decree was made. It was emphasized that the auction purchaser all along had full knowledge and notice of the appeal, and he carried the burden of proving that he had acted bona fide. As regards the statements made (including those recorded in various orders) regarding the manner of the sale of the property, that did not amount to consent to the decree or any sale in terms thereof. The appeal had remained pending at all material times, and as recorded in the compromise (and therefore entered in the compromise decree), the decree in the suit had been reversed as a result thereof.
19. I have heard learned counsel as above, examined the record and considered the case-law. It will be convenient to first set out section 144, C.P.C.: "144. Application for restitution.--- (1) .Where and in so far as a decree is varied or reversed the Court of first instance shall on the application of any party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree of such part thereof as has been varied or reversed; and, for this purpose, the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are properly consequential on such variation or reversal.
(2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under subsection (1)."
20. I begin with the objection taken to the sale on the basis of section 294 read with section 410 of the Companies Ordinance. Section 410 is of course neither new nor unique to the Companies Ordinance. It is to be found in Part XI of the Ordinance, which relates to winding up and is grouped with those provisions that apply to every mode of winding up. As applicable in winding up proceedings the section appears in more or less similar form in all statutes modeled on UK legislation. Thus, it was section 232 in the Companies Act, 1913 and section 537 of the (Indian)
Companies Act, 1956 (now section 335 of the (Indian) Companies Act, 2013) and is section 128 of the (UK) Insolvency Act, 1986. (Its equivalent was of course also to be found in earlier UK legislation.)
The rationale behind the rule is well known, and has been explained as follows in a leading treatise (McPherson's Law of Company Liquidation, 3rd ed. (2013), pg. 400): "The principal object of the statutory scheme which regulates winding up is to ensure that the property of an insolvent company shall, on its winding up, be applied according to the statutory scheme and once that is done for the assets to be applied in satisfaction of corporate liabilities equally. Quite obviously it is totally inconsistent with this policy that creditors should retain the right of enforcing their claims in the ordinary way, and it is with the object of preventing the scramble for assets which would otherwise ensue that section 128(1) expressly declares void any attachment, sequestration, distress or execution put in force against the property of the company after the commencement of winding up." (Emphasis supplied; internal citations omitted)
21. The foregoing passage makes clear why section 410 applies automatically from the date the winding up commences, and in all modes. What is less apparent is why it should similarly apply (if it does indeed so apply) to a petition under section 290 by reason of section 294. Though the remedy provided by section 290 is well known, and has its equivalent in company law statutes in different jurisdictions, section 294 appears to be new. Research did not reveal its equivalent in other jurisdictions. What is one to make of it? In considering this question there is another point which is to be kept in mind. As just noticed, section 410 applies only when a winding up has commenced, and although section 311 deems such date to be that on which the petition for winding up was presented, the section can only apply if, in fact, the company is being wound up. It does not apply if the petition seeking winding up is, e.g., dismissed, either in contested proceedings or on being allowed to be withdrawn. Now, section 294 applies the section mutatis mutandis in relation to section 290 proceedings. It would therefore seem to follow, at least at first sight, that section 410 can apply in relation to a petition under section 290 only if, in fact, such a petition succeeds and the Court exercises its powers in terms thereof. It ought not to apply if the petition is dismissed, either in contested proceedings or on being allowed to be withdrawn. That was exactly what happened to the petition at hand, J.M. 39/1997. It will be recalled that it was dismissed as not pressed on 3-12-2004. Learned counsel for the applicants however submitted that section 294 applied even during the pendency of the section 290 proceedings, if a substantive order was made by the Court. It was in this manner, and relying on the order of 4-12-1997, that it was contended that section 410 applied. Since that order was in the field when the auction/sale proceedings took place, it was submitted that the same were void. In support of his submissions, learned counsel relied on three judgments of the Lahore High Court, all of the same learned single Judge, and reported as Registrar of Companies v. Taj Company Ltd. 1993 CLC 1413, In the matter of Taj Company (Muhammad Yousaf applicant) 1994 CLC 403 and In re: Taj Company Ltd. 1994 CLC 2197. As the titles indicate, all the cases related to Taj Company Ltd., against which a petition under section 290 had been presented by the Registrar of Companies. The decisions were given in quick succession, being handed down on 27-2-1993, 26-3-1993 and 22-9-1993 respectively. In the first mentioned case proceedings under sections 412 and 413 (both made applicable by section 294) were taken against certain directors of the Taj Company during the pendency of the section 290 proceedings.
The second case essentially followed on from the first. It was an order on an application moved by one of the "affectees", Mr. Muhammad Yousaf. Learned counsel relied in particular on the following passage (at pg. 405): "2. The reason for making this application to this Court is that proceedings instituted by the Registrar of Companies under section 290 of the Companies Ordinance, 1984, are pending in this Court. It may be pointed out that proceedings under section 290 are resorted to when it is complained that affairs of the Company are being conducted in an unlawful or fraudulent manner or in a manner not provided for in the Memorandum of the Company or in manner oppressive to the members or creditors or are being conducted in manner prejudicial to the public interest.
Moreover, sections 410 to 415, which provide for determination of liability, civil and criminal, of the Directors etc. Of the Company with a view to recover the ascertained amount of liability, have been made applicable in relation to the application submitted under section 290 of the Ordinance. Such a determination under these Sections is to be made in accordance with procedure laid down in section 9 of the Ordinance."
The third order did not as such deal with any of the sections made applicable by section 294 and need not therefore be considered. Learned counsel also relied on a decision of a learned Division Bench of this Court, National Bank of Pakistan v. Banking Tribunal No, 1 and others PLD 1994 Kar. 358.
Interestingly, that case also arose in relation to the Taj Company. The context was a suit brought by NBP against the company under the then applicable law relating to recovery of loans and finances, which was pending in the banking tribunal at Karachi. The Lahore High Court had appointed a board of administrators to take over the management of the Taj Company. The banking tribunal was of the view that the suit before it could not proceed until leave to continue the proceedings had been obtained from the Lahore High Court. Pending such leave the suit was stayed. This order was challenged (in constitutional petition) by the bank before this Court. It was contended on behalf of the bank that since the Taj Company had not been put in liquidation, and there was no provision equivalent to section 316 in relation to section 290 proceedings, the suit ought not to have been stayed. The learned Division Bench observed as follows in a passage relied upon by learned counsel (pp. 361-2): "Now, in the memo of petition, all that the petitioner says is that it believes that no winding up order of respondent-Taj Company Limited has been passed by the High Court at Lahore. Such is clearly an indefinite statement. The true position may be different. Assuming, however, that it is not and what the petitioner believes is the actual factual state, that may still not alter the incidents at law.
Sections 290 to 294 in the Companies Ordinance, 1984, occur in Part X of the statute under the title: Prevention of Oppression and Misma nagement and confer vast and undefined powers on the Court dealing with the matters visualized by the provisions. Such powers, unless the contrary is established, should include, essentially as interim but rarely as ultimate measures, jurisdiction to prohibit any proceedings against the Company, except with the leave of the Court. This would, ex facie, be necessary to prevent oppressive or mismanaged conduct of the Company's affairs; for in any other case an ill-disposed management may collude to suffer decrees in other jurisdictions effectively and unilaterally applying checks to the benevolent exercise of the Court's functions. It is such a prohibition which the Lahore High Court has, apparently, directed to be issued, upon which the Tribunal has stayed the proceedings instituted before it." (Emphasis supplied)
The learned Division Bench concluded that no prejudice had been caused to the bank and all that was required was a procedural step, namely obtaining leave from the Lahore High Court. It was observed that "the Banking Tribunal, on any line of reasoning, was bound to give effect to the observations of the High Court at Lahore concerning the respondent-Company" (pg. 362). It was also observed as follows: "... No harm is likely to be caused to the [bank] if it approaches the Lahore High Court for requisite permission to proceed before the Tribunal; if such permission is granted the dispute would end and, if not, the controversy should take the [bank] to the Supreme Court, where the same can best be resolved" (pg 363).
22. Learned counsel for the applicants also relied on a decision of a learned single Judge of this Court, Shaheen Foundation v. Capital F.M. (Pvt.) Ltd. 2002 CLD 188. Three petitions, under section 290, were disposed off by the common judgment. The petitions were dismissed. Learned counsel relied on certain passages from pp. 210-212, where the learned single Judge considered the scope and nature of proceedings under section 290. Reference was there made inter alia, to the judgments cited above.
23. When the sections made applicable by section 294 (i,e, sections 410 to 415) are considered it is to be noted that each applies only if a company is ordered to be wound up (or, as the case may be, is otherwise in winding up). However, as is obvious, the sections cannot apply if the winding up petition is dismissed. The position in winding up is therefore straightforward. However, how are these sections to apply to section 290 proceedings? In my view, the answer to this question lies in that the sections are to apply "mutatis mutandis". This phrase is of course well known to the law. It means: "the necessary changes having been made". Section 294 thus recognizes that sections 410 to 415 may not, ought not, or cannot (as the case may be) apply to section 290 proceedings as they stand. What however are the "changes" to be made for these sections to apply to section 290 proceedings? In my view, the answer lies in the observations of the learned Division Bench as set out above. In particular, the learned Division Bench has observed as follows: "Sections 290 to 294 ...
Confer vast and undefined powers on the Court dealing with the matters visualized by the provisions" (emphasis supplied). It is this characterization-treating the sections mentioned as powers-that is crucial to a proper understanding and application of sections 410 to 415 to section 290 proceedings via section 294. It is of course well known that the jurisdiction exercised by the Court under the Companies Ordinance is equitable in nature. It is of the essence of this jurisdiction that it is discretionary. The characterization of sections 290 to 294 as conferring powers on the Court therefore accords with this fundamental attribute of company law jurisdiction. It is of course trite law that a power may or may not be exercised. I have had occasion elsewhere (Nazeer Ahmed Khan v. Admore Gas (Pvt) Ltd. And another 2015 CLD 203, para 10) to comment on the nature of the equitable jurisdiction (or power) conferred on the Court in the context of company law: "... The hallmark of equity jurisdiction is the flexibility inherent in the discretionary nature thereof-flexibility and discretion, that is, to decide the case after taking into consideration 'all relevant matters that tend towards the justice or injustice of granting the remedy that is sought ... And by weighing them against each other in order to decide whether the particular relief that is in question should be granted in an absolute, partial or conditional form or else refused'. In my view therefore, section 410 applies in respect of section 290 proceedings only as a power, i,e, only if the Court, while making an order also directs that the section is to apply to the company in question. In other words, section 410 does not apply automatically in the manner as it does in winding up proceedings. This approach is also consistent with the rationale, set out in para 20 herein above, behind making section 410 automatically applicable in winding up proceedings. While such rationale always exists (or at least cannot be precluded) when a company is being wound up, it may well be that it simply does not apply in the facts and circumstances of the section 290 petition before the Court. Indeed, experience suggests that an section 290 petition seldom unleashes a creditors' "scramble for assets" that may well otherwise ensue in winding up proceedings, and which section 410 is designed to prevent. To regard section 410 as automatically applicable to every section 290 petition may well therefore work or tend towards injustice rather than the other way around.
24. The conclusion just arrived at accords also with what the learned Division Bench observed in respect of the matter actually before it. It will be recalled that section 316 applies automatically once a winding up order is made. Perhaps even more pertinently for the present context, it also so applies as soon as a provisional manager is appointed, when of course the winding up petition is still pending. Yet, in finding a corresponding jurisdiction vesting in the Court in section 290 proceedings, the learned Division Bench regarded it as a power, i,e, as enabling the Court to direct, if It so chose, that other proceedings pending against the company would not proceed except with the leave of the Court. In my view, the approach to be taken as regards section 410 (and the other sections made applicable by reason of section 294) must be on the same footing. It confers a power on the Court, if it so chooses, to make the section applicable, so that any attachment, distress or execution cannot be levied or put in force against the company except with the leave of the Court. However, until and unless the Court so directs, the section does not in and of itself become applicable.
25. There is also an important difference between a winding up on the one hand, and section 290 proceedings on the other that is relevant for present purposes. When a winding up order is made, the statutory scheme set out in Part XI becomes applicable. At around 140 sections, this is one of the longest parts of the Companies Ordinance. The statutory scheme for winding up is fully articulated and contains many detailed provisions. It is in this part that sections 410 to 415 find their natural home, being well integrated components of an overarching scheme in which they perform their designated and intended role. It is also to be noted that of these, only sections 410 and 411 become applicable automatically. The others remain entirely at the discretion of the Court. Part X, the home of sections 290 to 294, on the other hand comprises of but 7 sections. There is, as Rich, no statutory scheme that comes into operation if an order is made under section 290. In that section almost full play is given to the discretionary and flexible nature of company law jurisdiction: the Court may "make such order as it thinks fit" in order to bring an end to the matters complained against. The context in which section 410 becomes automatically applicable (the winding up) is therefore quite distinct and different from the one to which it, is applied mutatis mutandis. If section 410 were to be automatically applicable on any order being made in terms of section 290, that may well undermine the near complete autonomy of action conferred on the Court under the latter section. It may impede or restrict the Court from making that order, in the amplitude and the flexibility of its discretion, which is best suited to bring an end to the matters complained against. It is here that the wisdom behind the learned Division Bench's characterization of sections 290 to 294 as conferring "powers" becomes apparent. It is to be noted that, as applicable in a winding up, section 410 does confer discretion on the Court to, in effect, suspend its operation in respect of specific attachments, executions, sales, etc. In view of what the learned Division Bench has held section 410, as applicable to section 290 via section 294, therefore confers discretion (or power) on the Court at two levels. Firstly, it is for the Court to decide whether the section is to become applicable at all. And even if it so decides, it then, secondly, retains the further power of, in effect, suspending the section's operation in respect of specific cases.
26. In the present case of course, no order or direction of any nature in relations, or relatable, to section 410 was made or given by the Court, either on 4-12-1997 or at any time thereafter up to 3- 12-2004 when J.M. 39/1997 was disposed off as withdrawn. In other words, the Court never chose to exercise the power conferred upon it by section 410 read with section 294. It follows that the objection to the sale taken on this basis cannot be accepted. The ground taken must, with respect, be rejected.
27. I turn to consider section 144, C.P.C., under which restitution is sought. Learned counsel for the applicants relied on Abdul Bari v. Muhammad Rasheed Khan 1995 SCMR 851, Zubaida Bai v. lInd Rent Controller Karachi and another PLD 1981 Kar. 82 (DB) ("Zubaida Bai"), Meraj Din v. Ghulam Muhammad PLD 1965 Lah. 374 (SB), Lakhsmi Narayan and others v. Surath Lal Chakraborti and others PLD 1964 Dacca 177 (SB) and Badaruddin v. Maniruddin PLD 1961 Dacca 686 (SB) to explain what was submitted was the vast scope of section 144 and the powers thereby conferred. In particular learned counsel emphasized a passage at pp. 377-378 from the decision of the Lahore High Court, and the following sentence: "The restitution has to follow automatically from the fact that the order is reversed on appeal and in such a case the duty is cast upon the Court to put the parties back to their original position" (emphasized by learned counsel). I may also note the following passage from Zubaida Bai, where the learned Division Bench observed as follows: "The power of restitution is not derived from section 144 of the Code of Civil Procedure as the power of Court to direct restitution [vests] in the Court itself. Section 144 merely specifies one of the methods by which the right of restitution can be enforced. The fundamental principle of law is that act of Court should not injure any person. It is the duty of the Court to order restoration where circumstances so demand and to restore the parties to the same position they were in prior to the order that has been varied or reversed" (pp. 83-4; emphasis supplied). (I may note that I have inserted the word "vests" since in my view, with respect, in the absence of this (or an equivalent) word the sentence is incomplete.)
28. The views expressed in the cited decisions are of course well settled and unexceptionable (and indeed, in the case of the Supreme Court and Division Bench judgments, binding on me). However, for reasons that will presently become clear, it is still necessary to examine section 144 since there are two crucial aspects of the circumstances of the present case which require such consideration.
29. I begin by focusing on the opening words of subsection (1): "Where and in so far as a decree is varied or reversed the Court of first instance ...." The opening word "where" is clearly used in the sense of "if". The words immediately following, "in so far as", establish that the restitution is only to go as far as is required by reason of what follows in the subsection, and no further. This conclusion is buttressed by the concluding words of the subsection, "which are properly consequential on such variation or reversal". The case-law shows that the courts have laid some emphasis on these words: the relief by wag/of restitution must not only be consequential, it must be "properly" so. The section is activated (as it were) when the decree is "varied" or "reversed". Finally, the last words from the opening, "the Court of first instance", suggest (at least at first sight) that such variation or reversal must be by an appellate (or other equivalent) court, since it is only in relation to such a court that another can be described as being that of "first instance". (While the case law does indicate that a broader view has been taken, there appears to have been a certain conflict in the views taken by different High Courts: see Mulla's Code of Civil Procedure, 18th ed. (2011), Vol. I, pp. 1326-7. The particular controversy there identified was settled in India by amendments made to section 144 in 1976.) Now, the question that comes to mind is this: what kind of variation or reversal is covered by the section? Is it any and every sort, or can there be a variation or reversal of a decree such that section 144 (and indeed, more generally, restitutory principles) are not attracted?
More precisely, is a "variation" or "reversal" of a decree by a compromise, which is recorded in the (appellate) court, within the meaning of the section? In my view, this question goes to the root of the legal issue arising out of the facts and circumstances of the present case. It will do well to pause here to recall the precise manner in which the decree in Suit B-85/2000 is stated to have been reversed. In the said suit, there was an application filed by the applicants, who were not party to the suit, under section 12(2), C.P.C. That application was dismissed. They filed an appeal against this dismissal, being Sp HCA 291/2001. It was in this appeal that the compromise was recorded vide order dated 7-10-2008, on the basis of which the compromise decree was drawn up. The compromise agreement (and hence the compromise decree) stated, in clause 8 (reproduced above), that "upon acceptance of the compromise the decree passed in Suit No, B-85 of 2000 ...
Shall stand fully satisfied and be reversed with consent of the parties hereto" (emphasis supplied).
It is also pertinent to note that the application filed in the appeal, C.M.A. 615/2008, prayed as follows: "It is therefore prayed that this Honorable Court may be pleased to pass a decree for dispose off the compromise matter between the parties and on the terms and conditions hereof". I may note that the words struck through appeared in typed form in the application, but were then struck out and the words underlined inserted in manuscript (i,e, by hand). The application that was considered by the learned Division Bench was as so altered. In other words, although the application was initially drafted as a compromise application, it was, before presentation, "toned down" such that the relief sought was only to "dispose off" the "matter". It was on the foregoing basis that the order of 7-10-2008 (reproduced above) was made.
30. Having carefully considered the point, I am of the view that section 144 can have no application in the facts and circumstances of the present case. This is so because firstly, in my view the section cannot and ought not to apply to a decree being "varied" or "reversed" by a compromise arrived at, even if it is before, and is recorded by, an appellate court, and secondly, even if the section does so apply, it cannot and ought not to apply to the "compromise" at hand. As to the first point, this follows from the fundamental principle on which restitution is based: an act of the court should not cause injury to any party. This is a broad and general principle. The phrase "act of the court" is comprehensive in nature. The "act" here relevant is the decree subsequently found to be erroneous. Of course, it is not enough simply or only that the decree is found to be erroneous; the error must have caused injury to (and, correspondingly, conferred an advantage or benefit, presumably undue, on) one of the parties. But who can conclude that the decree was erroneous? A decree is after all a judicial determination, which is specifically defined in the C.P.C. Can the parties subsequently (i,e,, while an appeal is pending) themselves conclude that the "act" of the court (i,e,, the decree) was erroneous by means of an agreement arrived at between them? And, when the parties present their agreement to the court for its imprimatur, is any decree that follows on the compromise on the same footing as a judicial determination, as relevant in the present context, i,e, as amounting to a determination that the decree being "varied" or "reversed" was erroneous? In my view the answer to this question must be in the negative. As presently relevant, the distinction is clear: the decree being "varied" or "reversed" is an act of the court, while the compromise is an act of the parties. No doubt there is a decree in the latter case, but that is only "the compromise agreement to which the Judge's order has been superadded" (see my judgment in Pakistan Industrial Credit and Investment Corporation Ltd. V. Khairpur Sugar Mills Ltd. And another 2012 CLD 1192, para 17). It is of the essence of restitution that it redresses an injury caused by the erroneous decree. But that the decree was erroneous must also be a finding arrived at by judicial determination. The court (using this term for the moment in the larger sense of the judicial system) makes amends for its error, but it is for the court itself to determine that such an error was made.
No one else, and certainly not the parties by private bargain, can come to such a conclusion or decision. The private bargain (i,e,, compromise) may well do away with the decree. But that is not the same thing at all as holding or concluding that the decree done away with was an error of the court, let alone one that caused injury to a party, such that the principle of restitution ought to be invoked. In the leading case of Rodger v Comptoir D'Escompte de Paris (1871) L.R. 3 P.C. 465, it was observed in the Privy. Council as follows: "Now, their Lordships are of opinion, that one of the first and highest duties of all Courts is to take care that the act of the court does no injury to any of the Suitors, and when the expression "the act of the Court" is used, it does not mean merely the act of the Primary Court, or of any intermediate Court of appeal, but the act of the Court as a whole, from the lowest Court which entertains jurisdiction over the matter up to the highest Court which finally disposes of the case. It is the duty of the aggregate of those Tribunals, if I may use the expression, to take care that no act of the Court in the course of the whole of the proceedings does an injury to the suitors in the. Court." (pg.
475)
It is clear from this passage that what is being referred to throughout are the successive judicial determinations whereby an error is made (at first instance or perhaps even at an intermediate level), which it then recognized and rectified (either, as the case may be, at the intermediate or the final level), and then the court sorts out, by way of restitution, the matter of any injury caused.
31. It is only proper to note that there is case-law, in which the contrary view has been expressed, i,e, that section 144 does apply to compromise decrees. This view appears have found favour principally with the Madras High Court and its decisions in Sevatha Goundan v. Pappammal and others AIR 1935 Mad 476 and Kandula Sudarsana Rao v. Uppulury Gopala Rao (1933) MWN 641 may be referred to in this regard. I am, with respect, unable to agree.
32. Coming to the compromise actually at hand, it will be recalled that clause 8 recorded that on account thereof, the decree stood "fully satisfied and ... Reversed". Now, this certainly creates an anomaly. The reason is that if the decree is "fully satisfied", then there is nothing left to reverse. On the other hand, if the decree is being reversed then it cannot be satisfied. In my view, this apparent, confusion is in fact a deliberate contrivance. It is recognition that, in reality, what was happening was simply (and only) a compromise that sought to satisfy the decree. However, by the time the compromise came about, the Company's property had been sold in the auction proceedings and the price had been received from the auction purchaser who had been put in possession. To get around this "problem", the compromise added the words "and be reversed" in order to create some basis for invoking restitution by making an application under section 144. This is also clear from the last sentence of clause 8: "NBP would provide its NOC to High Court of Sindh, with regard to handing over the unit of National Fibres Limited to Schon Group and shall have no responsibility for providing vacant possession of the unit". Thus, NBP (as it were) washed its hands off the entire matter after receiving the settlement amount from the applicants. This is hardly consistent with a party (i,e, NBP) making "restitution" on a putative reversal of the decree. Thus, whatever may be the sense in which the compromise has resulted in the "reversal" of the decree in Suit B-85/2000, it is not a sense relevant for restitution, or as makes section 144 applicable. Whatever may be the relief, if any, to which the applicants may be entitled on the basis of the compromise decree, they are not entitled to relief under section 144.
33. This brings me straight to the second aspect (see para 27 above) arising out of the present circumstances for which section 144 must be examined. Quite independently of what has just been said, are the applicants entitled to restitution under section 144 on the basis of the compromise decree? It is clear from the language of subsection (1) that the restitution seeks to "place the parties in the position which they would have occupied but for such decree". As noted by the learned Division Bench in Zubaida Bai, "[it] is the duty of the Court to order restoration where circumstances so demand and to restore the parties to the same position they were in prior to the order that has been varied or reversed" (emphasis supplied). The question is whether this principle would apply to the applicants. It will be recalled that while the applicants were (or are) the majority shareholders of the Company, they were never party to Suit B-85/2000. Now, it is one of the fundamental principles of company law that a company is a person in its own right, distinct from its shareholders. There is a "veil" of incorporation separating the two. While there are well known exceptions to this rule (i,e,, where the veil is "pierced") they are precisely that: exceptions that only reinforce the general (and foundational) rule. The rule is so well established that there is hardly any need to cite authority. However, reference may be made to a decision cited by learned counsel for the applicants (in another context), Anjum Rasheed and others v. Shehzad and others 2007 CLD 1210, where a learned Division Bench of this Court observed as follows: "... [a] company is a separate entity distinct from its Director and no shareholders/or Director of a company can be said to be the owner of any particular piece of a property in which the company has an interest. Such distinction has to be clearly observed between the company as a legal entity and its rights on the one hand and individually shareholders and their right[s] on the other...." (pg. 1225).
34. When the compromise decree is examined and the "restitution" sought on its basis considered, it is quite clear that what is to happen is for the Company's property is to be transferred to the Schon family, i,e, the applicants. However, if such a result were to obtain, that would not be restitution at all. It would be the creation of an entirely new situation. A reversal of the decree ought to result in the Company, in its own right and as the party to Suit B-85/2000, being restored to its original position, i,e, for its property to revert to it. However, this result would never come about.
What would happen is that other persons (the applicants), who are (to use the technical term) strangers to the suit, would be "restored" to the position to which the Company would be entitled. In other words, the positions of the applicants and the Company are being conflated. But this would be flagrant breach of the fundamental principle of company law. The principle of restitution, whether applicable generally (see the Privy Council decision cited above, where reference is made to the "suitors") or as embodied in section 144, does not permit any such result. I accept that the class of persons who may obtain restitution under section 144 is somewhat broader than the parties to the suit stricto sensu. However, the section certainly does not extend to or include the shareholders of a company pressing a claim in the manner such as the applicants. Under the guise of the application at hand, an attempt is being made to establish a new situation, which is substantially different from the one that would have prevailed in Suit B-85/2000 if the decree made in terms thereof was actually being reversed. What is sought is not restitution but enforcement of the compromise decree, which is a different thing altogether. I may note that although the application at hand is couched in terms that appear to suggest that what the applicants are seeking is to have the Company's property returned to it, it is clear from the actual manner in which they have conducted themselves and sought to make out their case that they seek enforcement of the compromise decree. That decree makes it clear that the property is to be handed over to the Schon family, i,e, the applicants.
35. In my view therefore, for both the reasons given above, i,e, that the principle of restitution (and in any case section 144) does not, and ought not, to apply to a compromise decree, and that the restitution actually being sought is in fact not a reversion to or restoration of the status quo ante but the creation of a new situation, this application cannot succeed. Section 144 cannot, does not and ought not to apply. In view of the conclusion arrived at it is not necessary for me to consider the other ground taken by learned counsel for the applicants, that the auction purchaser had knowledge of Sp. HCA 291/2001 and therefore was not a bona fide purchaser for value without notice. The case law cited and relied upon by the contesting sides in this regard does not therefore need to be considered.
36. In my view, for all of the reasons as stated above, this application cannot succeed. It is therefore hereby dismissed.
IN THE HIGH COURT OF SINDH AT KARACHI Execution No,36 of 2001 C.M.A. 390 of 2009 Annex.
Proceedings Parties Some material orders (by date)/C.M.As etc. (not strictly chronologically arranged)Brief Notes J.M. 39/1997 (instituted 6-10- 1997NDFC (and others) v. The Applicants and the Company4-12-1997: By interm order the existing management displaced and NDFC's nominee appointed as chief executive: 7-8-2002: disbursement of sale proceeds obtained in the execution stayed; 3-12-2004: petition dismissed as not pressed.Filed by NDFC and others (not now relevant) as substantial (though minority) shareholders of the Company under Section 390, Companies Ordinance. The Applicants (holding/controlling and majority shares) has constituted the management of the Company Suit B-85/2000 (instituted: 31-5- 2000)HBL v. The Company7-12-2000: suit decreed ex parte 25-10-2001: Applicants application under section 12(2) C.P.C. dismissedSuit under the recovery of finance/loans legislation. The Company was the sole defendant. The applicants were never party to this suit.
Ex 36 of 2001 (instituted: 8-2- 2001)HBL (now NBP) seeking execution of the forgoing decree.26-3-2001: writ of attachment issued and auction/sale proceedings ordered; 20-4-2001 to 15-1- 2002 first abortive round of auction/sale proceedings second round in which the presentCompany's property auctioned off. The auction purchaser has paid the price and has possession of the property. However the sale proceeds have not been disbursed by reason of interim orders of various auction purchaser declared successful and sale confirmed: 18-3-2002 and 29- 4-2002: 6-8-2001: an application filed by the applicants seeing have the decree set aside this application ordered to be transferred to Suit B-85 of 2000.dates in different proceedings.
Sp. H.C.A. 291 of 2001 (instituted 30-10- 2001)The Applicants v.
HBL and the Company22-3-2005: Disbursement of sale proceeds in the execution proceedings stayed.
7-10-2008: Sp HCA disposed off by means of a compromise recorded on application C.M.A.
615 of 2008Arose out of the dismissal of the Applicants application under Section 12(2), C.P.C. in Suit B-85 of 2001.