' MUHAMMAD IQBAL KALHORO, J.---This appeal has been filed in the circumstances where through an injunctive order passed on C.M.A. No, 11200/2011 in Suit No, 1352/2011 for Declaration and Injunction filed by the respondent/Creek Marina (Pvt.) Limited, Pakistan (the company), the appellant/Pakistan Defence Officers Housing Authority (DHA) has been restrained from presenting or filing a winding up petition against the company.
2. Relevant facts are, DHA entered into an agreement with Meinhardt (Singapore) Pvt. Limited on 27.09.2004 for development of a high-rise project by the name "Creek Marina" at Creek City in DHA Phase-VIII, Karachi (the project). Later on, the company was formed and was incorporated in the terms of the agreement for the purpose of development of the project. That led to execution of several agreements between DHA and the company resultantly DHA executed a lease deed dated 05.05.2005 granting lease-hold rights to the company for the land admeasuring 92000 square yard in Zone-F Phase-VIII of DHA. The above stated agreements stipulated, among others, a point of time to start work on the project and the date for its completion. It is alleged that nothing much happened qua development of the project and the company failed to live up to its promises of completing the project and paying up to DHA. That actuated filing of various suits between the parties. Finally DHA served a notice under section 306 of the Companies Ordinance, 1984 (the Ordinance) on the company on 15.09.2011 postulating, inter alia, filing of a winding up petition against it. This notice actually prompted the company to file above stated suit along with application under Order XXXIX, Rules 1 and 2, C.P.C. Being C.M.A. No,11200/2011 seeking restraining order against DHA, its agents etc. From presenting or filing a winding up petition under the Ordinance. It was on this application, the impugned order was passed on 21.05.2012.
3. Mr. Khalid Mehmood Siddiqui, learned counsel for the appellant argued that the impugned order was against the relevant facts and law; that learned single judge erred while relying on the decisions of foreign jurisdiction, which had no relevancy with the circumstances prevailing in our country; that the order was patently erroneous on facts and the law; that the learned Judge while sitting on the original jurisdiction of this Court could not have restrained filing of proceedings in this Court before the Company Bench having equal jurisdiction. He next contended that the impugned order was based on conjectures and surmises about the bona fide of the appellant in presenting winding up petition against the company and it amounted to depriving the appellant from its constitutionally protected right of having access to justice. He further added that filing of the winding up petition did not mean an immediate action against the company, but a certain procedure was required to be followed before even issuing notice to the company or ordering its advertisement in the newspapers, therefore all the apprehensions shown by the company could be taken note of by the Company Bench in the winding up petition. According to him the company could move application in terms of section 313 (for stay against the petition) or 413 of the Ordinance (for dismissing the petition prematurely) on the same facts and grounds as were mentioned in the suit. He lastly contended that all the points raised by the company in the injunction application or in the suit and decided through the impugned order were actually the merits of the winding up petition and ought to have been left to be dealt with by the Company Bench. In support of his arguments he relied upon cases reported in AIR 1983 Sc /272 and (1983)
INSC 125 both from Indian jurisdictions.
4. Mr. Arshad Tayyabali learned counsel for the company however differed with the above contentions and while relying upon the decisions of foreign jurisdictions stated that the company was viable and admittedly there were more than Rs,1.5 billion in cash in its kitty but because of pending litigation and due to stay order operating against it from withdrawing the said amount from the bank, the progress in the project was being hampered; that in terms of second addendum to the main agreement, the company owed only Rs, 1 billion to DHA but it had more than that in its bank account. He further added that even that amount was to be paid to DHA only after collateralization of the land as per stipulation in the second addendum and since it was yet to be done, the company was not liable to pay any amount to DHA and, at the most, it was a bona fide dispute with regard to an amount; that in the circumstances the winding up petition was not the proper remedy for DHA and a suit for recovery, if at all, would suffice; that intention of DHA to file the petition was not to secure its debt but was to malign the company and to put pressure on it to give in to its illegal and unlawful demands. He further added that the company had invested huge capital over the project and it was serious to complete it but because of shenanigans of DHA and others as they had filed several suits against it, it was not able to accelerate the pace of work. He referred to an order dated 15.07.2011 passed on some miscellaneous applications moved in Suit No, 525/2011 pending between them before this Court on original side, with particular reference to para 15 whereof, to show that financial bungling alleged against the company by the appellant was held to be merely a matter of interpretation of its accounts rather establishing wrongdoing on its part.
He also stressed that in appropriate cases the filing of winding up petition could be stopped; and citing those circumstances he stated that when it was obvious to the court that intendment behind filing of the petition was to obtain undue and unfair advantage than to secure justice and to put pressure upon the company, the Court was competent to intervene even at initial stage before actual filing of the petition to protect the company from undue harassment and diminution of its business by a restraining order. According to him, in the present case simple presentation of winding up petition would be having very disastrous effect on the company and hundreds of its clients, who had made bookings in the said project, would not only suffer but lose faith in the company and in that scenario it would be impossible for the company to carry on further work in the project. In order to show viability and solvency of the company, he also referred to sub-paras
(m) and (n) of para 16 of the instant appeal to indicate that even the appellant was showing that the company was spending about Rs, 170 million on the miscellaneous expenses of the project. His argument was that then how under such circumstances the company could be ordered to be wound up.
5. We have heard the parties and perused the record including the case law cited at the bar. The question posed before us is not only interesting but in future would be having far-reaching implications on the controversies like in hand. Laws as they stand presently, ostensibly there is no provision to stop a person from filing proceedings in the Court of law. Nonetheless, it would not be impertinent to ask whether there could be a situation justifying granting an injunction to restrain the person from presentation of a winding up petition. And while exploring the answer, it would also lie on us to find out that whether such an order would be attuned to the commands of the Constitution or not particularly in respect of the fundamental rights enunciated in its Chapter 1 of Part II. Needless to say that the object of law, besides enforcing discipline in the society to tune lives of the people in accordance with its directives, is generally to facilitate them in achieving the maximum which is lawful. This in bare words is the simple goal every society is seeking to realize by enacting various laws that suit their own needs and requirements. People tend to protect their interests through these laws and in case of a clash of the interests between the two persons, the judicature comes into picture and in the circumstances it plays a pivotal role in resolving such difference. Therefore it is always felt necessary to make such laws which protect the right of a person to have an easy access to the Court where he could vent his grievances and expect in return their transparent adjudication. In our Constitution, it is reflected in several Articles found in fundamental rights' chapter. Article 10A, inserted through eighteenth amendment, needs a particular mention here, it not only communicates a right of a person to a fair trial for determination of his civil rights and obligations or in facing a criminal charge, but it converses about the "due process" in equal emphatic terms. It reads "Right to fair trial. For the determination of his civil rights and obligations or in any criminal charge against him a person shall be entitled to a fair trial and due process. " A right to a fair trial obligates that there must be an unhindered access to justice and due process, and it also necessarily includes a right to be treated according to law (Article 4 of the Constitution). This "due process" expression, mentioned separately and independently, although is relatable to expression "fair trial" here but it appears to speak of a right of an affected person to be presented before the Court which can competently pronounce judgment on the issue involved. Per Blank's Law Dictionary, the expression "due process of law" signifies, among others, "a course of legal proceedings according to those rules and principles which have been established in our systems of jurisprudence for the enforcement and protection of private rights. To give such proceedings any validity, there must be a tribunal competent by its constitution-that is, by the law of its creation-to pass upon the subject-matter of' the suit; and, if that involves merely a determination of the personal liability of the defendant, he must be brought within its jurisdiction by service of process within the state, or his voluntary appearance. Due process of law implies the right of the person affected thereby to be present before the tribunal which pronounces judgment upon the question of life, liberty or property in its most comprehensive sense; to be heard, by testimony or otherwise, and to have the right of controverting, by proof, every material fact which bears on the question of right in the matter involved An orderly proceeding wherein a person is served with notice, actual or constructive, and has an opportunity to be heard and to enforce and protect his rights before a court having power to hear and determine the case. Phrase means that no person shall be deprived of life, liberty, property or of any right granted him by statute, unless matter involved first shall have been adjudicated against him upon trial conducted according to established rules regulating judicial proceedings, and it forbids condemnation without a hearing. The concept of "due process of law" as it is embodied in Fifth Amendment demands that a law shall not be unreasonable, arbitrary, or capricious and that the means selected shall have a reasonable and substantial relation to the object being sought. Fundamental requisite of "due process" is the opportunity to be heard, to be aware that a matter is pending, to make an informed choice whether to acquiesce or contest, and to assert before the appropriate decision-making body the reasons for such choice. Aside from all else, "due process" means fundamental fairness and substantial justice. Embodied in the due process concept are the basic rights of a defendant in criminal proceedings and the requisites for a fair trial. These rights and requirements have been expanded by Supreme Court decisions and include, timely notice of a hearing or trial which informs the accused of the charges against him or her; the opportunity to confront accusers and to present evidence on one's own behalf before an impartial jury or judge; the presumption of innocence under which guilt must be proven by legally obtained evidence and the verdict must be supported by the evidence presented; the right of an accused to be warned of constitutional rights at the earliest stage of the criminal process; protection against self-incrimination; assistance of counsel at every critical stage of the criminal process; and the guarantee that an individual will not be tried more than once for the same offence) (double jeopardy). " The above commentary on the clause "due process of law" demonstrates that how important the right of a person is to appear before the court for defending himself in the face of charges or liabilities or obligations against him. This also means that a law shall not be unreasonable, arbitrary, or capricious and that the means selected shall have a reasonable and substantial relation to the object being sought; it also points out that the principles of fundamental fairness and substantial justice have to be adhered to while dealing with an issue substantially affecting the rights of the parties involved., Fundamental requisite of "due process" is to provide an opportunity to be heard, to be aware that a matter is pending, to make an informed choice whether to acquiesce or contest, and to assert before the appropriate decision-making body the reasons for such choice. It discourages the course whereby a person is condemned unheard. It is this scheme that is reflected in our Constitution as well. Expression "due process" appearing in Article 10-A therein has been inserted purposely to ensure that a right of a person to a fair trial includes his right to be present before the Court/Tribunal, which is competent to pass a determinative judgment on the issues involved and if that involves personal liability of the defendant, he must be brought before the Court. That any decision rendered in his absence, without adopting due process of law would be nullity in the eyes of law. Any capricious approach that does not commensurate with these principles and that of fairness and substantial justice in this regard would be read as coming in direct conflict with command of the Constitution and against the administration of justice, which primarily acts as a safeguard from arbitrary denial of life, liberty, or property. The right to life, liberty or property is always assumed to have included, inter alia, the right to justice as well. The fact that a person, if wronged, shall have an easy access to its remedy would be considered fundamental to any society which seeks to improve its stature amid comity of nations and is serious about uplifting the lot of its people, The society's well-being and progress materially depends upon its efforts and ability to acquire means to ensure administration of justice. In ours also a person's right to have an access to justice is constitutionally protected. The people here approach the courts to get decision of the disputes; and for the same the courts are adequately empowered under the relevant laws governing their jurisdiction to adjudicate and render authoritative decisions thereon to finally lay such controversies at rest. Laws here are cast in a way to facilitate this process and this approach appears to be based on the understanding that Court's door should always remain open for an aggrieved person to seek help. Any via media aimed at jeopardizing this process therefore has to be examined with care and caution, so that very fabric our laws have woven is not torn apart. In our laws section 56(b) of Specific Relief Act, 1877, can be counted as a meager measure as compared to corresponding law in India to ensure at least the proceedings that are pending in a Court that is not subordinate to that from which the injunction is sought are not stayed by that Court. It is, of course, different in its import and scope than its parallel section 41(b) of (Indian) Specific Relief Act, 1963, which specifically bars grant' of an injunction "to restrain any person from instituting or prosecuting any proceeding in a Court not subordinate to that from which the injunction is sought;... ". And the argument therefore can be raised here in the context of section 56(b) that since it does not speak of an injunction in personam but blocks Court's power "to stay proceedings in a Court not subordinate to that from which the injunction is sought; ", a person can be restrained though an injunction from filing a us in the Court not subordinate to the Court from which the injunction is sought. Despite the possibility of success of such an argument, if viewed through what it suggests simply; the fact that a Court cannot stay proceedings in a Court not subordinate to it fundamentally provides a base here in our arrangement of laws to at least cogitate implications of an injunction restraining a person from instituting or prosecuting any proceedings in a Court not subordinate to that from which the injunction is sought. This by natural corollary would imply a situation, and that necessarily has to be attended to here, where the High Court, while exercising the powers of a Civil Court, restrains a person from filing a winding up petition before the Company Judge that happens be to the High Court itself having coordinate jurisdiction.
6. Searching for guidance from the case of D. A. Desai v. Balakrishna supra, we have been able to note a very convincing trend and tenor of reasons which are very relevant to the controversy in hand. It is in Para No, 9 of the said judgment which for ready reference is reproduced herewith.
"9. Viewed from a slightly different angle, it would appear that the legal system in our country envisages obtaining of redressal of wrong or relief against unjust denial thereof by approaching the Court set up for the purpose and invested with power both substantive and procedural to do justice that is to grant relief against invasion of violation of legally protected interests which are jurisprudentially called rights. If a person complaining of invasion or violation of his rights is injuncted from approaching the Court set up to grant relief by an action brought by the opposite side against whom he has a claim and which he wanted to enforce through Court, he would have first to defend the action establishing that he has a just claim and he cannot be restrained from approaching the Court to obtain relief. A person having a legal right and complains of its violation or infringement, can approach the Court and seek relief. When such person is injuncted from approaching the Court, he has to vindicate the right and then when injunction is vacated, he has to approach the Court for relief. In other words, he would have to go through the gamut over again: When defending against a claim of injunction the person vindicates the claim and right to enforce the same. If successful he does not get relief but a door to Court which was bolted in his face is opened. Why should he be exposed to multiplicity of proceedings? "
' In our mind also this question has crept that whether a scheme, where a person is precluded through an injunction from presenting a petition for adjudication of seemingly invasion of his rights, is in accordance with our Constitution. Suppose the answer is in affirmative, the situation that will arise would be exactly the same as discussed by the Indian Supreme Court above. After a long litigation (that must extend to time consumed in exhausting the remedies in appeals etc.) to stop him from presenting the petition, if the person is successful at the end of day, nothing happens so long as any relief qua his grievances is concerned, it would virtually mean nothing for him and he would still be standing at point zero. He has to go through the whole range of litigation again to be able to get what belongs to him i.e, his right. In our estimation, this would not be compatible to what our Constitution prescribes and what we have discussed above. Either of the two situation i.e, a person stopped from filing proceedings in the court of law on the ground of it being mala fide and inspired by the ulterior motives and the other, the person not stopped to present his grievance in the Court (may be on false grounds), the later would be more close to scheme of our Constitution. Because the first one would result into multiplicity of litigation and a person who is otherwise lawfully entitled to a right or a relief would not be having an opportunity of hearing before the court. But if he is allowed to file a lis in the Court, it goes through a rigorous procedure of law before even the notice to the other party is ordered to be issued; it gets examined first by the Court and under several provision of law the Court can, for want of merits, dismiss it in limine without issuing notice to the defendant. Then after the notice, the opposite party is afforded a full chance to put up its defence or seek its dismissal prematurely by pointing it to be mala fide or motivated by foul designs. And then there are also several safeguards inherent in every law checking vigorously false and fabricated action by the plaintiff. In presence thereof, the approach that appears to be nearer to the interest of substantial justice would be not to injunct a person from filing the lis in the Court. Administration of justice, which is to protect right to life, liberty and property, would be seriously prejudiced, if a person is injuncted to approach the court for redressal of his grievances on the grounds as discussed above or on any other speculative expediency including mala fide of the intended action, or action is designed to put pressure on the defendant and/or it may cause an irreparable injury to the defendant; or (much like in the present case) the intended action of the appellant is bound to seriously reduce the value ranking of the company, its reputation and the confidence the company has built on its clients. It was also argued before us that if DHA was not injuncted to file winding up petition against the company, it would actuate a serious blow to the interest of the people who had already paid a huge capital to the company.
This argument intrinsically does not take into consideration the safeguards already in place in the Ordinance (that we have discussed and reproduced in para No,7) against the mala fide action or a concocted claim aimed at undermining the standing or reputation of the company, and protection against an action putting pressure on the company to give in to any illegal and unlawful demands of the petitioner. It also does not refer to the transparency and acumen with which the courts in our country are functioning and imparting justice. It appears to be by implication a harbinger of mistrust on the whole system of judicature and against what the law prescribes to be followed in the given situation. It justifies dubbing an action to be false, fabricated and mala fide before it is taken.
7. It was vehemently argued that even the presentation of winding petition could cost heavily on the company, it would make the company seem an unviable entity and its standing and stature in the public would get eroded beyond repair. We however fail to understand the nature of such anxiety or even its justification in presence of a well-defined procedure contained in 1997 Rules and the Ordinance, which, while providing for a comprehensive mechanism to deal with the winding up petition, seeks to allay also the fear and apprehension the company could face in the event the winding up petition is presented with mala fide and ulterior motive. In terms of rule 75 of the Company (Court) Rules 1997, the petition is required to be presented to the Registrar and not in the open Court; therefore it forecloses any chance of its news from being spread and immediately adversely affecting the company. Then there is no automatic process that takes place whereby notices are issued or advertisement in the newspapers is published, but the scheme enunciated in rule 76 intervenes, which has a vital relevancy to the controversy in hand, according to it, upon presentation of the petition it has to be placed before the Judge for its admission and fixing of its date for its hearing and for the directions as to its advertisement; and the persons, if any, upon whom copies of the petition are to be served. The Judge may, if he thinks fit, direct notice to be given to the company before giving directions as to the advertisement of the petition. We deem it conducive to reproduce the rule in verbatim for reference.
76. Admission of petition and directions as to advertisement.---Upon the filing of the petition, it shall be placed before the Judge for admission of the petition and fixing a date for the hearing thereof and for directions as to the advertisements to be published and the persons, if any, upon whom copies of the petition are to be served and the Judge may, if he thinks fit, direct notice to be given to the company before giving directions as to the advertisement of the petition.
' A bare reading of preceding rule indicates that mere filing of the petition is not going to cause encumbrance/embarrassm ent for the company. The Judge has the discretion to give notice to the company before deciding to order for advertisement of the petition. It affords an ample opportunity to the company to appear before the Company Judge and satisfy him (by relying on any ground or by producing any material) showing mala fide of the action against it. The company could contest the bona fide of the debt that is made basis of the petition or convince the Court that even prima facie presentation of the petition is influenced by the factors based on ulterior motives.
If it is so, the winding up petition would fail at its inception and the learned Ridge may pass appropriate orders directing the plaintiff to seek proper remedy provided to him under the law than pressing for the petition. But even before that, the mala fide action motivated by the ulterior designs could even be checked by the Company Judge himself instead of straightly admitting the petition or giving directions in respect of a notice to the company or as to its advertisement. The words "Upon the filing of the petition, it shall be placed before the Judge for admission of the petition and... " speak of wide discretion; the Judge has to exercise in order to infer presence of an arguable case in favour of the petitioner before admitting the petition and ordering Issuance of notice. The stage to order issuance of the process for service on the winding up petition cannot be read to flow voluntarily under Rule 76. The advertisement of the petition, which, as was argued, may destabilize the ranking of the company, is a subsequent step but that too is subject to the directions issued by the Company Judge under rule 78 of the 1997 Rules and these directions admittedly come only when the petitioner is able to show a prima facie case in his favour. The judge has all the powers to decline admitting the petition and he even may dismiss it where the petition is presented on the ground that it is just and equitable that the company should be wound up but the Judge is of the opinion that some other remedy is available to the petitioner and that he is acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy. For fortification of such view a reference to section 314(2) of the Ordinance can be made and its reproduction herein below will not be irrelevant.
314. Powers of Court on hearing petition.---(1) On hearing a winding up petition the Court may dismiss it with or without costs, or adjourn the hearing conditionally or unconditionally subject to the limitation imposed in section 9 or make any interim order, or an order for winding up the company or any other order that it deems just; but the Court shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged to an amount equal to or in excess of those assets, or that the company has no assets.
(2) Where the petition is presented on the ground that it is just and equitable that the company should be wound up, the Court may refuse to make an order of winding up, if it is of opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.
(3) Where the petition is presented on the ground of default in delivering the statutory report or in holding the statutory meeting or any two consecutive annual general meetings, the Court may, instead of making a winding up order, direct that the statutory report shall be delivered or that a meeting shall be held, and order the costs to be paid by any persons who, in the opinion of the Court, are responsible for the default.
'If, on hearing a petition, the Court is of opinion that, although the facts would justify the making of a winding up order, the making of such order would unfairly prejudice the members or the creditors, the Court may, instead of making an order for winding up the company, make such order as it thinks fit in the circumstances for regulating the conduct of the affairs of the company and bringing to an end the matters complained of, including an order for a change in the management of the company. Where the Court makes an order for the winding up of a company, it shall forthwith cause intimation thereof to be sent to the official liquidator appointed by it and to the registrar. (Emphasis added)
The powers vested in the Company Bench under section 313 of the Ordinance further prescribe that the Court at any time, upon the application of the company itself or of any its creditors or contributories, after presentation of the petition for winding up a company and before making an order for its winding up can restrain further proceedings in any suit or proceeding against the company, upon such terms as the Court thinks fit. Section 313 ibid reads like "The Court may, at any time after presentation of the petition for winding up a company under this ordinance, and before making an order for its winding up, upon the application of the company itself or of any its creditors or contributories, restrain further proceedings in any suit or proceeding against the company, upon such terms as the Court thinks fit. " These safety valves provided in the law itself in addition to court's inherent power to examine bona fide of an action before passing any of the orders sufficiently establish ample cautions against any mala fide action intended to be taken against the company. We are of the view, that an action cannot be determined to be motivated by ulterior motives before even it is initiated. The grounds and submissions urged by the respondent to justify thwarting the appellant from presenting the winding up petition in the Company Bench could at the most be raised before it in the petition itself and if the Judge is so satisfied, he can before proceeding to pass any winding up order dismiss the petition.
8. We have minutely examined the reasons in the impugned order and the facts obtaining in the present controversy. Admittedly the project, which was to be completed initially on 30.6.2009, has not been finalized yet. The parties have long gone into litigation and there are several cases pending in various courts between them. For the last many years the construction work of the project is wholly stalled and except one and half incomplete and unattended structures of towers, not a single brick fias been added or brought at the spot to assume that in near future work is likely to commence what to speak of completion. The terms of the original agreement dated 27.09.2014 and the second addendum to the agreement qua liability of the company to DHA and its clients have not been complied with. The second addendum dated 04.06.2009 clearly stipulates period of 18 months, after signing thereof, within which the company was required to pay to the DHA, PKR one billion being the price of saleable area of its share in the project, and the consequences are also clearly mentioned therein in case of default by the company. But, we were informed, the company did nothing to settle that amount nor was it making any serious efforts to restart the work in the project. And in the meanwhile, it was argued by the learned counsel of the appellant, millions of rupees were siphoned off by the company to its off-shore offices and accounts prima-facie indicating not only mala fide on its part but its designs to leave anything and everything about the project in the lurch. It was also stated that the people who had got the flats etc. Booked were in a serious quandary regarding any future chances of the project coming up any time soon and in a fit of gloom were looking for alternative options such as to get their money back. Since we are not dealing with any of the grounds justifying winding up of the company or any order arising therefrom, we restrain ourselves from making any absolute comment on the merits of any of such argument that may or may not be taken by the DHA. However, it may not be out of place to state here that with these grounds that are likely to be raised, DHA cannot be stopped from filing winding up petition against the company; or on any other speculative apprehensions of diminution in the business of the company, a right which is otherwise available in law cannot be denied to DHA. More so, as we have discussed above, the stance taken for winding up of the company by DHA would be subject to scrutiny by the Court itself, and its merit under sections 305 and 306 of the Ordinance would also be examined before its determination in favour of DHA. The facts and circumstances prevalent in the present case do not justify an injunction against DHA from filing a winding up petition, nor do they propose that the company would be adversely affected by mere presentation of such petition.
9. Resultantly, we do not see merits in the impugned order and set it aside. These are the reasons of our short order dated 08.10.2015 whereby we allowed the instant appeal with no order as to costs and made following observations.
"For reasons to be recorded latter this appeal is allowed and impugned order dated 21.05.2012 passed in Suit No,1352 of 2011 is set aside. However, winding up petition may not be filed within six weeks from the date hereof, so that an opportunity be given to both the parties to come up with a mechanism for settlement. In case parties do not reach any settlement within the prescribed period, then the appellant will be at liberty to file winding up petition before the competent court of law. "