' MUNIB AKHTAR, J.---The petitioner seeks the winding up of the respondent No.1 ("company") in the following circumstances. Learned counsel submitted that the petitioner owned the plot more particularly described in para 1 the petition ("Plot"). The petitioner was interested in developing the Plot so as to be able to obtain a steady income from it. The company is an oil marketing company engaged in the business, inter alia of operating petrol pump and CNC stations. The petitioner and the company entered into an arrangement whereby it was agreed that the petitioner would lease out the Plot to the company, which would construct the facilities for operating a petrol and CNG station thereon ("Filling Station"). The permissions and NOCs required for this purpose were the responsibility of the petitioner, who would be entitled to receive rental payments for the lease of the Plot and also certain payments for the operation or the Filling Station. Learned counsel submitted that an MOU was signed between the parties on or about 15-3-2006 stating the terms agrees upon.
A sub-lease for the Plot was executed between the petitioner and the company on 16-3-2006. This provided for a monthly rental of Rs.
70.000 to be paid by the company for every following month after execution/registration of [the] lease deed". Although the lease deed provided that the rental amount was payable on a monthly basis a is not in dispute that the company paid three years' rent in advance on or about 18-5-2006.
On 12-9-2006, the parties also entered into a Dispensing Pump and Selling Licence ("Licence Agreement").
2. Learned counsel submitted that thereafter the petitioner made hectic efforts and obtained the necessary permissions, approvals and NOCs for operation of the Filling Station, but the company for one reason or another kept delaying matters despite repeated reminders from the petitioner.
Finally, an agreement was entered into between the parties on 6-5-2008 ("Agreement"). While the relevant terms are considered in detail below, here it suffices to note that the petitioner's grievance is that no payment was made to him thereunder. The petitioner's case is that he was entitled to receive a total sum of Rs. 480,000 per month under the Agreement. This sum in fact comprised of two separate payments, each of Rs, 240,000. One was in respect of the operation of the petrol pump and the other in relation to the CNG facility. Learned counsel referred to the many reminders and letters that were written to the company for payment of the amounts outstanding from time to time, but to no avail. It suffices to refer to one such letter dated 22-7-2009. In this letter the petitioner made a claim of Rs. 31,20,000. This comprised of an amount of Rs.19,20,000 for the petrol pump business and Rs.12,00,000 on account of the CNG facility. (The difference between the two was because the petitioner computed the amount payable for the petrol business from a date earlier than that payable for the CNG facility.) This letter was followed almost immediately, on 23- 7-2009, by a legal notice served by the petitioner on the company. The company replied through counsel, denying any liability as claimed by the petitioner. It was contended that payments under the Agreement were only to be made from the commissioning of the Filling Station but that had not happened till then. Reference was also made to the three years" advance payment of rent under the lease deed.
3. Being dissatisfied with the company's reply, the petitioner filed a suit in this Court, being Suit 1789 of 2009 on or about 17-12-2009, which is still pending adjudication. The case made out in the present petition is the same as in the suit. The unpaid amounts that form the basis of the present petition are the same as those claimed in the suit. Learned counsel for the petitioner vehemently submitted that the company had defaulted in payment of the amounts due and must be held unable to pay its debts for purposes of the Companies Ordinance, 1984. It was therefore liable to be wound up. No plausible, good faith defense had been nut up. The debts in question were not bona fide disputed and the petitioner was entitled to an order of winding up ex debilo justitine. Learned counsel submitted that the Plot was the petitioner's sole substantial asset on which he had relied in vain as it turned out for a steady source of income by means of the arrangement with the company. The petitioner was a senior citizen, who essentially had no other source of income. The three years' advance rent had more or less all been consumed in obtaining the permissions, approvals and NOCs. Learned counsel also submitted that the filing of a suit was not fatal to the presentation of a winding up petition. Although some reference was made to other litigation, by way of recovery suits by financial institutions and other matters, against the company, the case sought to be made out was on the basis of the company's inability to pay the debts claimed by the petitioner. Learned counsel prayed accordingly.
4. Learned counsel for the company strongly opposed the petition. Learned counsel submitted that there was a distinction in law between being unable to pay a debt and being unwilling to do so.
The company was solvent and in good financial shape and in a position to meet its debts. The debt claimed by the petitioner was strongly contested and bona fide disputed. Learned counsel submitted that the possession of the Plot was in dispute. Furthermore, the entire dispute between the parties, in all its aspects, was pending adjudication in Suit 1789 of 2009. The present petition was an afterthought and an abuse of the process. It was intended to put pressure on the company.
It was contended that in fact the petitioner was in possession of the Plot and was carrying on some sort of business there. Therefore, his claim of financial distress was incorrect and denied. Learned counsel submitted that the correspondence being relied upon related to the period from 2006 to 2009. It was not denied by the petitioner that the company had paid three years' advance rent on the lease. The amounts claimed on the Agreement were not payable since the Filling Station was never commissioned for which the responsibility lay on the petitioner. Learned counsel submitted that in such circumstances no case for winding up on any ground was made out and the petition merited dismissal.
5. Learned counsel for the petitioner exercised his right of reply. It was submitted that the company was bound by the contracts entered into between the parties. There was a clear liability to make payment in terms thereof, which had admittedly not been done. The company was unable to pay its debts and the distinction between unable and unwilling sought to be made by learned counsel for the company was not applicable. The company was not a going concern and was liable to be wound up. At the conclusion of the heating, I gave permission to learned counsel to file synopses.
Learned counsel for the petitioner filed copies of the case-law relied upon along with a brief description of the salient point in each decision. Learned counsel for the company tiled a written synopsis in which reliance was placed on certain cases.
6. I have heard learned counsel as above, examined the record and considered the case-law. As noted, winding up is sought on one ground alone, the company's inability to pay its debts to the petitioner. The debts claimed arise under two separate agreements, in each of which the petitioner's legal position is distinct. The first is the lease deed in respect of the Plot. Here, the petitioner appears as the lessor vis-a-vis the company. The company was to pay rent under the lease in terms that have been set out in Para 2 above. As noted, although the company was bound to pay rent on a monthly basis, it in fact paid three years' rent in advance. This is expressly admitted. That payment, made in Maya 2006, took the matter of the rental payments to May, 2009.
Insofar as the second contract, the Agreement, is concerned, clause 3-a(i) related to payments and was as follows ("second party" meaning the company and "first party" referring to the petitioner):- "The Second party shall pay to the first party Rs.
480.000... On account of retail outlet, CNG and other allied services in which Rs.
240.000 ... Shall be paid from the date of commissioning of fuel (PMG and HSD) sales and Rs.
240,000 ... To be paid from the date of commissioning of CNG facility which be arrange[d] to install within 3 months i.e. 15th February, 2009 subject to delay from any Govt. Departments/Authority thus a lump sum fixed profit share of Rs. 480,000 ... To be paid to the first party on a monthly basis by 15th of every calendar month."
' Reference must also be made to clauses 3(1) and (h), which as presently relevant were as follows:-- "(f) This agreement shall be valid and binding upon the parties from the date of commissioning of the retail outlet which will not be later than 15th November, 2008 for a term of Twenty (20) years hereof.
(h) In all circumstances the date of commissioning of retail outlet shall be 15-11-2008 positively, in case of any delay from any Govt. Agency/department or force majeure, both the parties will mutually decide the time period of completion."
' Retail outlet was a term defined in the first recital of the Agreement and essentially meant the Filling Station. From the claims made by the petitioner (of which one has been referred to in detail in Para 3 above) it appears that he regarded the petrol business (i.e., fuel sales) as having been commissioned from 15-11-2008 while the CNG facility was regarded as having been commissioned from 15-2-2009. As noted above, the company disputes this position: its case is that the Filing Station was not commissioned at all. It is to be noted that clause 1 of the Agreement provided that the petitioner was to hand over the retail outlet to the company, inter alia after having obtained all governmental approvals, permissions, etc. Clause 2 provided that the retail outlet would be constructed and/or completed by the company at its own expense. Finally, clause 2 also provided that the retail outlet would be run by the company itself or through a third party of its choice, with the condition that if the latter option was exercised the petitioner would have the 'right of first refusal to operate the outlet "on prevailing market rates".
7. It will be noted that there was a period of about six months from the execution of the Agreement (6-5-2008) till 15-11-2008, when clauses 3(f) and (h) became applicable. In my view the proper interpretation and application of the Agreement is that while the parties expected that the retail outlet could be commissioned earlier, it would in any case be regarded as having been commissioned from 15-11-2008 onwards, with the CNG facility being regarded as installed from 15- 2-2009. Thus, learned counsel for the company was not quite correct when he submitted that the payment of the amounts under the Agreement was conditional on commissioning. It was, but this was subject to the outside limit of 15-11-2002 set by the Agreement itself. In other words, if the retail outlet was commissioned prior to 15-11-2008 then the amounts under the Agreement would become payable from that date. But in any case, they would become payable from 15-11-2008 and 15-2-2009 onwards in respect of the fuel sales and CNC, facility respectively. Thus, the effect of the conditionality was actually the reverse of what was submitted by learned counsel. Of course, if there was any event of force majeure or any delay on account of any government department or authority, these deadlines could be reset. However, no such event has been pleaded nor has it been shown that there was any delay of the nature contemplated. It is important also to note that as specifically provided in clause 2 the construction and/or completion of the retail outlet and the operation of the Filling Station, either by the company or through some third party, was in the hands of the company. Viewed from the foregoing perspective, the "deemed" commissioning of the retail oulet from 15-11-2008 and 15-2-2009 for purposes of payments under clause 3-a(i) makes commercial sense. The petitioner was entitled to a return on account of the operation of the retail outlet. The exact point in time that the retail outlet became operational (i.e., was commissioned) was entirely in the hands or the company, save that it was clear that it could not be commissioned immediately; However the company could (but I do no ascribe any bad faith to it) delay or be unable to commission the retail outlet for a prolonged or even an indefinite period. Thus, while the petitioner was not entitled to immediate payment of the amounts under clause 3-a(i), the date of commencement of payment could not also be left wholly indeterminate. The Agreement balanced the needs of the company and the petitioner by providing a period of around six months to the company to enable it to start operations but imposed 15-11-2002 (read with 15-2-2009) as the final date from which amounts under clause 3-a(i) would become payable. It follows that in my view the petitioner was correct in claiming that he was emitted to the monthly payments for the fuel sales from 15-11-2008 and the payments for the CNG facility from 15-2-2009. As provided in clause 3-a(i), these payments would become due by the 15th day of each month.
8. Learned counsel has however submitted that the company was in any case not obliged to make the foregoing payments, for two reasons; firstly, the possession of the Plot is in dispute and secondly, the petitioner has already filed Suit 1789 of 2009, claiming the same amounts on exactly the same basis. As to the first point, I am not satisfied that this has been established by the company. In the objections taken by the company to the winding up petition, it is averred that "physical possession of the site has not been with the respondent Company since many years". The use of the word "since" is revealing and significant. It is further averred that the petitioner is "operating a bus stand and a service station at the site" and copies of certain photographs have been annexed to the objections to substantiate this assertion. However, the date stamped on the photographs shows that they were taken on 30-4-2013. As will presently become clear in my view the crucial period for purposes of the present petition is up to the date of the filing of the suit, which was instituted on 17-12-2009, i.e., several years prior to the photographs. In the suit (which was before me during the hearing, and was fixed along with the petition by order of 3-5-2013), the company was debarred firm filing its written statement by the Additional Registrar (OS) on 12-8- 2010. Against this order the company has filed an application, C.M.A. 9933 of 2011, which is contested by the petitioner and is pending adjudication. In the said application, in para 4, it is stated that during the same period, the defendant [i.e.. Tile company] was in financial crises and was struggling to complete his incomplete projects including the site in dispute". The preceding paras of the application show that the "same period" referred to was the period up to at least 7-4- 2010. Thus, the company was in possession of the Plot till at least the filing of the suit and thereafter.
Even in the written synopsis filed by learned counsel for the company, it is staled that possession of the Plot was with both the company and the petitioner under the Licence Agreement. It is further stated' there that the company "invested huge amount of money in building the structure of the petrol/gas station". Although it is asserted that "due to global recession, the said structure could not be completed" and it is alleged that the petitioner taking advantage of the situation, started the aforementioned business of bus parking and service station, the crucial point as regards the company's possession, i.e. Up to the filing of the suit is undeniable. In my view the first point taken by learned counsel cannot therefore be accepted.
9. I turn to the second point, which requires some detailed consideration. However, before I embark on this exercise, it is necessary to ascertain in greater detail the debts claimed by the petitioner as relevant for purposes of the petition: As noted above, these debts arise out of two agreements, the lease deed and the Agreement. Now, in the suit the petitioner has sought a number of reliefs, which include a declaration that the agreements between the parties be rescinded. Thus, by the institution of the suit and at least from the date thereof, it is the petitioner's own case that the agreements came to an end. In my view, this means that for purposes of the present petition the debts that the petitioner can plead for the winding up are only those due and payable up to the institution of the suit. Thereafter, the petitioner's claim sounds only in damages. Even if the measure of damages (if any) is ultimately found to be the same as the basis on which amounts were payable under the agreements, they cannot be taken into consideration. I turn therefore to consider what amounts, if any, were due and payable as on the date of institution of the suit. As regards the lease deed the company had admittedly paid three years' rent in advance, up to May 2009. This meant that the rent for June till November 2009 was payable at the time the suit was instituted. (The suit was filed on 17-12-2009, i.e., after the rent for November had become due). This rent has admittedly not been paid, and the total comes to Rs. 420,000. Insofar as the Agreement is concerned I have, for the reasons stated above, accepted the petitioner's case that he was entitled to payments in respect of fuel sales from 15-11-2008, and for the CNG facility from 15-2-2009, onwards. Since these payments were due by the 15th of each month, the company was liable on both counts also up to November 2009 by the time the suit was filed. These payments came to Rs.
31,20,000 for the fuel sales (13 months) and Rs.24,00,000 (10 months) for the CNG facility. In grand total therefore, insofar as the present petition is concerned, the amount owed by the company to the petitioner comes to Rs. 59,40,000.
10. Learned counsel for the petitioner submitted that the law was well settled that the pendency of a suit or other such proceedings to recover the same debt as formed the basis of the winding up petition was no bar to the latter, and the company could be wound up if a case was otherwise made out. He relied on a number of decisions, which will be considered presently. With respect, in my view, the principle is stated too broadly. It ought to be regarded as more nuanced. This is so because it must be kept in mind that ultimately the making of a winding up order is discretionary: section 305 uses the word "may" in relation to all of the grounds given therein, and not "shall". It is well settled that even if the Court concludes that a company is unable to pay its debts within the meaning of the Companies Ordinance it may yet, in its discretion, refuse an order of winding up.
Now, company law is in many respects the child of equity. The discretionary powers conferred on the Court ought generally to be exercised consistently with, and should certainly be informed by, equitable principles. Of course, it is a fundamental rule that discretionary power is not exercised in an arbitrary, perverse or capricious manner, but is guided by sound judicial principles. At the same time, it must also be remembered that 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 such as hardship, laches, unfairness, the lack of clean hands, and so on, 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" (Equitable Remedies by Dr. I.C.F. Spry, 9th ed. (2014), Pg.4).
11. In my view, it is in the foregoing context that the principle relied upon by learned counsel for the petitioner is to be understood and applied, if the winding up petition cannot be dismissed simply on account of a suit having earlier been filed on the same debt, the fact that such a suit was filed cannot also be ignored altogether. It must he taken into consideration by the Court while deciding whether to exercise its discretion to wind up the company. In my view, three factors in particular ought to be regarded in this context: (a) the nature of the earlier proceedings and the stage reached therein by the time the winding up petition comes to be heard: (b) the length of time that elapsed between the filing of the earlier proceedings and the institution of the winding up petition and (c) any acts or developments that occurred in the intervening period (or the absence of any such), particularly as between the creditor and the company as the court ought to regard as relevant, especially in explaining or justifying any delay or the need to file the winding up petition.
Of course, a case for winding up must otherwise be made out. In the present case, I have concluded that for purposes of the petition, the debts owed by the company come to Rs. 59,40,000.
The only ground, other than the one under consideration, for not paying this amount has been examined and found wanting. The submission by learned counsel for the company that it is only unwilling, and not unable, to pay its debts to the petitioner cannot be accepted. To be given any, consideration, such unwillingness must be backed by some cogent reason acceptable to the Court. A mere statement can never be enough; otherwise hardly any company would ever be wound up on the basis of inability to pay its debts. Such reason is missing in the present case. In the written synopsis, learned counsel relied on Platinum Insurance Co. Ltd. v. Daewoo Corporation PLD 1999 SC 1 and Muzaffar Abbas Malik and others v. Pakistan PVC Ltd. PLD 1998 Karachi 71 (SB) in support of the foregoing submission. In the first mentioned case, it is pertinent to note that a conditional order of winding up was made/maintained. The specific passage cited by learned counsel was from that part of the judgment where the various propositions of law laid down in earlier cases were collated. With respect, the actual application of any given principle depends on the facts and circumstances before the Court; a somewhat abstract reference to a legal principle or an observation in a judgment does not assist. In the second cited decision also, a learned Singh Judge made a conditional order of winding up. It is clear that this order was made taking into account all the relevant factors and then exercising the discretionary power of the Court. Again, the actual passage cited (from para 14 of the judgment) is a collation of the principles derived by the learned Single Judge from the cases cited before him. It is the actual application of those principles that is crucial. In the present case, in my view, it has been shown by learned counsel for the petitioner that the company is unable to pay its debts to the petitioner. The only question therefore is whether, by reason of the earlier filed suit, the Court in exercising its discretion should grant relief absolutely or conditionally or refuse it altogether. I turn to consider whether, and if so how and to what extent, any of the factors described above that ought, in particular, to be regarded in this context is applicable.
12. Insofar as the first factor is concerned, the earlier filed proceedings are by way of an ordinary civil suit for recovery of amounts due, damages and various declaratory and injunctive reliefs. As noted above, the company was debarred from filing its written statement on 12-8-2010. The suit was thereafter fixed for final disposal and the petitioner has filed his affidavit in ex parte proof. The company has filed an application against the aforementioned order, but only on 3-10-2011, i.e., after more than one year. This was the stage of the proceedings in the suit when the petition came to be heard. In my view, this state of affairs can and ought to be taken into consideration, but it is not of such significance and weight that it should prevent the Court, in its discretion, from winding up the company or from making a conditional order if such be deemed more appropriate.
13. I turn to the second factor. The suit was filed on 17-12-2009 and the petition for winding up was presented on 9-8-2012, i.e., after almost 2 years and 8 months. There is a reason why I have computed the time elapsed with some precision. In my view, a creditor who seeks to recover a debt owed by filing a civil suit cannot subsequently file a winding up petition on the same debt whenever he so chooses, after howsoever long a time. The reason is that it is well settled that winding up proceedings are not a substitute or vehicle for realizing the debt due. Thus, in one of the cases relied upon by learned counsel for the petitioner, Sindh Glass. Industries Ltd. v. Notional Development Finance Corporation and others PLD 1996 SC 601, the Supreme Court observed that "the winding up petition is not a substitute for a suit" and that if "the object of the creditor applying for winding up a debtor-company is to bring pressure on it, then it is an abuse of legal process and by itself sufficient to displace the prima facie position that a creditor is entitled ex debito justitiae to a winding up order" (pg. 609). It is of course well known that ordinary civil litigation in this country can drag on for years on end. If therefore a creditor who already has a civil suit pending subsequently files a winding up petition, the time elapsed becomes relevant in assessing whether the creditor is genuinely seeking the winding up or is merely (perhaps frustrated by the long delay in the pending matter) attempting to find a alternate "solution" to recover the debt. This assessm ent is in turn relevant when the Court is deciding whether to grant or refuse the winding up order.
14. This leads naturally to the question, how much time must elapse for it to become relevant?
Obviously, no inflexible rule can be laid down since the answer ultimately goes to the exercise of discretion, which as explained above is of an equitable nature. To rephrase the question in the language of equity, what delay in the filing of the winding up petition would be regarded as so unreasonable as to constitute laches and hence satisfy the Court that the winding up ought to be refused or, at best, a conditional order be made? Although there is a difference between the equitable doctrine of laches and the law of limitation, in my view some assistance can nonetheless be provided by the latter in the present context. In a recent decision, in J.M. 9 of 2013 (titled South Asia Geophysical Services v. New Horizon Exploration and Production Ltd., decided on 11-4-2014) I have held that if the debt on which winding up is sought is barred by limitation on the date when the petition is presented, it must be dismissed. Now, in the sort of situation that is presently being considered that would not be the case: the suit filed for the recovery of the debt would necessarily have been brought within the period of limitation. In my view, if the time elapsed is such that but for the filing of the suit the debt would have become barred by the time the petition was presented, then such delay should be regarded as so unreasonable that the petition ought, prima facie, to be regarded as hit by laches. In such a situation, there would prima facie be good reason for the Court, in its discretion, either to refuse the winding up or at most to make a conditional order. Of course, it would be wrong to regard what has just been said as laying down a rigid and inflexible rule, to be applied mechanically in all cases and under all circumstances. Such conclusion would conflict with the equitable principles that lie at the heart of the Court's discretionary powers. It is of the essence of equity that all the relevant factors must be considered and given due weight.
According to the circumstances of the case. But the rule just stated does provide, in my view, a convenient and sound basis for enabling the Court to determine whether, and if so how, the discretion under section 305 ought to be exercised.
15. It was implicit in the discussion in the last paragraph that the company owed a single debt to the creditor. What of the situation where the amount claimed by the creditor is in fact an aggregate of several debts owed to him by the company? That of course is the case at hand; each monthly payment is, in law, a separate debt owed by the company to the petitioner. In such a situation each of the debts may need to be examined to determine which are the ones that would, but for the filing of the suit, have become barred by limitation by the time the winding up petition is presented. If such debts constitute a large portion of the amount claimed, then in accordance with what has been stated heretofore the Court may, in its discretion, be less inclined to order the winding up, even on a conditional basis, than if such debts constitute only a small part of the overall claim. However, no definitive rule can be laid down, if for no reason other than that many intermediate positions can be readily imagined. The matter being of the Court's discretion much would depend on the actual circumstances of the case.
16. Insofar as the third factor is concerned, it might be that during the intervening period certain acts occurred or developments took place, especially between the creditor and the company, that explain or justify any delay in the filing of the winding up petition or satisfy the court of the need to file such petition at the time that it came to be instituted. But equally and perhaps more importantly, if no such acts or developments can be pleaded and matters remained in all material respects as they were at the time of the filing of the suit, that in my view would be something for the Court to keep in mind when considering whether and if so how the discretionary power ought to be exercised. If nothing has changed in any material or relevant sense, then the Court ought, other things being equal, to be less inclined to order a winding up (even conditionally) as more and more time elapses.
17. It is in the foregoing terms that I turn to consider the situation at hand. As noted, the present petition was presented around 2 years, 8 months after the filing of Suit 1789 of 2009. This is close to the time (3 years) by which all debts relevant for present purposes (see para 10 above) would have become time barred. When the debts are examined in closer detail, it appears that only those for the months of August to November 2009 would not have been time barred when the petition was presented on 9-8-2012. It will be recalled that in terms of the rule described above, the petition ought prima facie to be regarded as having been filed with such unreasonable delay as would amount to laches in respect of those debts that would have become barred by limitation by the time it was presented. In the present case, such debts would aggregate Rs. 37,40,000. As is clear, this is a substantial portion of the total relevant amount Rs. 59,40,000. Thus, only debts totalling Rs.22,00,000 would not have become barred by limitation by the time the petition was filed. In my view, applying the principles noted above, this is a significant factor that ought to be taken into account, and given due weight, by the Court. To the extent that the petitioner is entitled to any relief, it ought to be moulded appropriately to reflect this position.
18. The case-law cited by learned counsel for the petitioner, with regard to the submission that an earlier filed suit is no bar to a winding up petition, may now be considered. Learned counsel relied on Sindh Glass Industries Ltd. v. National Development Finance Corporation and others PLD 1996 SC 601, Industrial Development Bank of Pakistan v. Modern Poultry Farm Ltd. 1990 CLC 1030 (SHC: SB), Industrial Development Bank of Pakistan v Sheikh Impex 1994 CLC 2334 (LHC; SB), United Bank Ltd. v.
Pak Wheat Products Ltd. PLD 1970 Lahore 235 (SB), 21st Century Management Services Ltd. v. Gujarat Industrial Investment Corporation Ltd. [2011] 162 Comp Cas 206. Guangdong Fuwa Engineering Manufacturing Co. Ltd. v. Ang Auto Ltd. [2011] 162 Comp Cas 65 and Amupama Wine Distributors v.
Tilaknagar Industries Ltd. [2009] 151 Comp Cas 395. I have gone through the cited authorities and while I may note with the utmost respect, that only one of the judgments, that of the Supreme Court, is as such binding on me I have not found any observation in any of the cases as would contradict the analysis and discussion in the paragraphs herein above. While the proposition sought to be relied upon by learned counsel has been stated in general terms m the cited case, it appears that what I would venture to describe as its nuances especially in relation to how the Court should exercise its discretion, have not been considered or explored. In the Supreme Court decision, which has already been cited above, there is a reference (at page 610) to a point taken by the appellant-company that one of the creditors who had filed for winding up had already filed a recovery suit. This submission was not accepted but the Supreme Court reiterated what it had said earlier at pg. 609, to which reference has been made. In my respectful view, nothing that I have said herein above contradicts or is inconsistent with what has been held by the Supreme Court. Indeed, I respectfully venture to submit that what has been said herein in a sense emanates from what the Supreme Court has observed. Cases other than the ones mentioned above were relied upon as regards other propositions, such as what constitutes a debt, or is a bona fide dispute in relation thereto and so on. These do not need to be considered in detail since I have already concluded (see para 12 above) that it has been shown that the company is unable to pay its debts to the petitioner.
19. The case-law cited by learned counsel for the company, other than the decisions already considered above, may now be examined. Learned counsel relied on Sindh Glass Industries Ltd. v.
National Development Finance Corporation and others PLD 1996 SC 601. This decision has already been considered above. Learned counsel relied on Humera Abdul Aziz Essa v. Al-Abbas Cement Industries Ltd. 2008 CLD 214 (SHC; SB) to submit that the amount of the debt should be "determined and not disputed". In this case, the dispute arose in relation to a share purchase agreement with regard to the company's shareholding. One of the terms of the agreement, was that the incoming shareholders would, after the close of the transaction, arrange for the company to settle certain loans that had been given to it by the outgoing shareholders. It appears that the dispute was in relation to the loans, which were not settled. The company, inter alia, took the objection that it was not a party to the share purchase agreement and hence had no liability in terms thereof. There was already a reference to arbitration in the matter. In such circumstances winding up was refused. As is clear, the facts of the cited decision are far removed from those at hand. Learned counsel also relied on Agricultural Development Bank of Pakistan v. Abid Akhtar and others 2003 SCMR 1547 to contend that the claimed amount had to be determined by a competent judicial forum and not by the creditor. The cited decision was in relation to a matter entirely unrelated to the winding up of companies. If the proposition were applicable to winding up on the ground of inability to pay debts, hardly any company would ever be wound up. The reliance placed on this decision is with respect, wholly misconceived. Learned counsel also relied on Creek Marina (Pvt.)
Ltd. v. Pakistan Defence Officers' Housing Authority 2012 CLD 1525 (SHC; SB). In that case, decided by me, the issue was whether the defendant (which threatened to initiate winding up proceedings, which were sought to be restrained by the plaintiff) was an actual, as opposed to a conditional or contingent (or as learned counsel put it in the written synopsis, a prospective) creditor. I concluded that the defendant was not an actual creditor and granted the interim iunction in the acts and circumstances of the case. In the case at hand, I have already held that the debts relevant for present purposes are only those up to the filing of Suit 1789 of 2009. Any damages that may be granted in the suit are not to be taken into consideration. In respect of the relevant amounts, the petitioner is certainty an actual creditor. This decision does not therefore assist the, company.
Learned counsel also relied on Syma Mahnaz Vayani v. Molasses Export Co. (Pvt.) Ltd. 2013 CLD 1229 (SHC; SB) and cited the passage where a learned Single Judge of this Court explained the object of winding up proceedings. I note that the learned Single Judge observed in the cited passage that the Court has a discretionary power under section 305 (even when read with section 306, which was also invoked in that case) and such discretion had to be exercised after taking the relevant facts into consideration. This is, with respect, what I have endeavored to emphasize in the paras herein above and attempted to do in the present facts and circumstances. Even otherwise, the facts of the cited decision were different from those at hand. Finally, learned counsel relied on Pakistan Industrial and Credit Investment Corporation Ltd. v. Bawany Industries Ltd. PLD 1998 Karachi 45 (SB). There, the creditor had filed a banking suit for recovery of the debt, in which unconditional leave to defend had been granted and evidence was being recorded. The learned Single Judge observed that in such circumstances, any expression of opinion about the liability of the company to pay the debt would "neither be just nor proper" and dismissed the petition. I have expressed similar views in relation to banking suits filed under the special legislation applicable thereto in a recent decision, J.M.18 of 2011 (titled. United Bank Ltd. v. Pak Leather Crafts Ltd., decided on 3-4-2014). In that case, the petitioner bank had earlier filed a banking suit in which leave to defend was granted after a contested hearing, and thereafter issues were framed, one of which related directly to the debt on which the company was sought to be wound up. I dismissed the petition. The facts and circumstances of the present case are however rather different.
20. The discussion in the paras herein above may be summed up in the conclusion that in my respectful view the options before the Court in a situation such as the one at hand are not limited to either disregarding the earlier filed suit altogether (and ordering the company to be wound up even if by a conditional order) or to regard the subsequent petition as an abuse of the process and dismiss if as filed only to put undue pressure on the company to pay or settle the claim. As I have endeavored to show the correct approach is more nuanced than that. It ought to reflect the fact that the power conferred on the Court is discretionary, and that the discretion is to be exercised on the basis, and in the light, of equitable principles. This requires that all the relevant factors be taken into consideration, given due weight and only then should the Court decide on the justice or injustice of granting the remedy of winding up either absolutely or conditionally, or refusing it altogether.
21. After considering the matter and taking into account the relevant factors I am of the view that in the present case, while the company ought to be wound up it would be appropriate to make a conditional order. This is so primarily for two reasons. Firstly, the present petition was filed after such a prolonged period of the institution of Suit 1739 of 2009 that a substantial portion of the relevant debts would have become barred by limitation. In respect of such debts there has therefore been such unreasonable delay as would amount to laches. This is a factor that in my view must be given due weight. Secondly, there has been no material change in the intervening period, especially insofar as the petitioner and the company are concerned. In all respects relevant for present purposes, matters appear to have been the same on the date when the petition was filed as they were on the date on which Suit 1789 of 2009 was instituted. This also is a factor that needs to be given due consideration. The discretionary power of the Court ought therefore to be exercised accordingly.
22. In view of the foregoing, I hereby order that the respondent company be wound up subject to the condition that if a sum of Rs.22,00,000 is deposited with the Nazir of the Court within a period of 45 days, then the petition shall be deemed to have been dismissed; otherwise, the order shall take effect and the official/assignee shall act as the official liquidator. If the aforesaid sum is deposited, it shall be held pending the outcome of Suit 1789 of 2009. If that suit is decreed and a sum of money is awarded as part of the decree, then the aforesaid amount of Rs. 22,00,000 (plus accrued markup/profit) or such portion thereof as is relevant shall be released to the petitioner and the balance, if any, be returned to the company. If however, Suit 1789 of 2009 is decreed and no sum of money is awarded as part of the decree or the said suit is dismissed, then the aforesaid amount shall be returned to the company.