1. ' C.M. No, 584 of 2016 ' AAMER FAROOQ, J.---This is an application under Order VII, Rule 11, Code of Civil Procedure, 1908 (C.P.C.) through which the applicant i,e, respondent No,1, seeks rejection of winding up petition filed by Trek, Technologies Limited primarily on the ground that the same has been filed on behalf of petitioner company without due authority, therefore, is barred by law.
2. ' Learned counsel for the applicant, inter alia, submitted that the petition has not been filed by a person duly authorized and neither is instituted without due authorization, therefore; suffers from legal infirmity which cannot be cured nor ratified, hence petition is barred by law. In support of his contentions learned counsel placed reliance on cases titled "Khan Iftikhar Hussain Khan Mamdot v.
3. Messrs Ghulam Nabi Corporation Ltd." (PLD 1971 SC 550), "GOP v. Premier Sugar Mills and others"
4. (PLD 1991 Lahore 381), "Dr. S. M. Rab v. National Refinery, Limited "(PLD 2005 Karachi 478) and "Abdul Rahim and others v. UBL" (PLD 1997 Karachi 62) "Qamran Construction (Pvt.) Limited v. Saleem Ullah and others" (2008 CLD 239 Karachi), as well cases reported as 2015 YLR 1105, PL D 2012 Lah. 52, 2015 CLC 1 and 2005 CLD 1208.
5. ' Learned counsel for the petitioner, inter alia, submitted that the instant application is not maintainable and is liable to be dismissed. It was further contended that bare reading of the petition shows that the same has been instituted by a duly authorized person. It was further contended that even otherwise the defect, if any, is curable. Reliance was placed on 2005 MLD 1165, 2000 CLC 866, 2011 CLD 1062, PLD 1971 SC 550, 1982 CLC 1275, PLD 1985 Lah. 491, 2000 MLD 587 and 2011 CLD 1062.
6. ' The instant petition has been filed by the petitioner, i,e, Trek Technologies for winding up of respondent No,1 Company/applicant. The application has been filed by respondent No,1 under Order VII, Rule 11, C.P.C. For rejection of the petition. This court under section 9 of the Companies Ordinance, 1984 has the jurisdiction to entertain different kinds of petitions as provided in the referred law. Winding up petition can be instituted before this Court under the said Law. Under Companies, (Court) Rules 1997; Rule 7 provides that the practice and procedure of the Court shall apply and provisions of the Code (C.P.C.) so far as applicable shall apply to all proceedings under the Companies Ordinance, 1984. Winding up petition is to be drafted/prepared, under Rule 75 of the rules ibid in forms Nos.24, 25 and 26 with such variations as are applicable. In view of the Companies (Court) Rules 1997, the Code of Civil Procedure, 1908 has been made applicable so far as the circumstances permit.
7. ' The grounds for rejection of the plaint in Civil Procedure Code, 1908 (C.P.C.) are provided in Order VII, Rule 11 ibid. For the sake of brevity Order VII, Rule 11, C.P.C. Is reproduced below: "11. Rejection of plaint.- The plaint shall be rejected in the following cases:-
(a) where it does not disclose a cause of action;
(b) where the relief claimed is undervalued, and the plaintiff, on being required by the court to correct the valuation within a time to be fixed by the court, fails to do so;
(c) where the relief claimed is properly valued, but the plaint is written upon paper insufficiently stamped, and the plaintiff, on being required by the court to supply the requisite stamp paper within a time to be fixed by the Court, fails to do so; and
(d) where the suit appears from the statement in the plaint to be barred by any law".
8. ' The instant application has been filed primarily on the ground that the petition has been instituted by a person not duly authorized by the Company inasmuch as affidavit appended with the petition was sworn on 28.09.2015 whereas the resolution appended with the petition authorizing Mr. Muhammad Oubay Atasis to file a winding up petition before this Court was passed on 06.10.2015 and the winding up petition was filed on 17.10.2015. The application under Order VII, Rule 11, C.P.C.
9. Also alleges that the petition does not disclose cause of action, however, during the course of arguments this ground was not pressed.
10. ' As stated above, the grounds for rejection of the application are provided under Order VII, Rule 11, C.P.C. Includes, inter alias where the plaint does not disclose cause of action or where the suit appears from the statement in the plaint to be barred by law.
11. ' In the winding up petition it has been stated that the resolution authorizing Mr. Muhammad Oubay to file the petition has been appended with the petition. The said resolution was passed on 06.10.2015. It is an established principle that while deciding an application under Order VII, Rule 11, C.P.C. The petition/plaint and its annexures are to be taken into consideration. Reliance is placed on case titled "Allah Baksh v. Abdur Rehman" (1995 SCMR 459). In the referred judgment the Hon'ble Supreme Court oaf Pakistan observed that in order to press in Service provisions of Order VII, Rule 11, C.P.C. The averments in the plaint are to be presumed to be correct. On the above assumption the plaint is to be examined and if the case falls under any of clauses of Order VII, Rule 11, C.P.C. The plaint is liable to be rejected. The instant petition was filed before this Court on 17.10.2015 through Mr. Muhammad Oubay Atasis who was authorized to do so on 06.10.2015. For the purposes of deciding instant application under Order VII, Rule 11, C.P.C. The sole element that needs examination is that whether from statement made in the winding up petition 'it is evident that the same is barred by law. The resolution appended with the petition provides authority to the above named person to institute the petition. 'The thrust of the arguments by the learned counsel for the applicant, was that the affidavit was sworn by the person on 28.09.2015 and power of attorney in favour of the lawyer was executed on the referred date as well, therefore, the same are without authority. However, when the petition was filed on 17.10.2015 the above named person had the authority in terms of resolution dated 06.10.2015.
12. ' The Hon'ble Sindh High Court in case titled "Abdul Rahim and others v. UBL" (PLD 1997 Karachi 62) laid down the principles on the authorization or competence to file the suit on behalf of a juristic entity. In this behalf it was observed as follows: "37. From the analysis of the above decisions the following principles can be extracted:-
(i) 0.29, R.1, C. P. C. Only deals with signature and verification of pleadings by the persons mentioned therein. The said rule is completely irrelevant to gauge a person's competence or authority to institute a suit on behalf of a company;
(ii) for a suit to be valid it had to be shown that firstly, it was verified and signed by the proper person in terms of 0.29, R.1, C.P.C. And secondly, it was instituted by a competent person having the power and, authority to do so;
(iii) in case there is default in compliance of 0.29. R. 1 the same is not a M fatal defect and can be cured even after the suit has been instituted (See M All India Reporter Limited v. Ram Chandar Dhondo Datar, AIR 1961 Bom. 292);
(iv) however, in case there is any defect in institution of the suit i,e, it is instituted unauthorisedly and incompetently the said defect remains incurable even by a subsequent ratification (See Punjab Livestock and Saleh Hayat, referred supra);
(v) there appears to be some inconsistency as to how competence/authority of a person to institute a suit has to be determined. In Muhammad Siddiq a Full Bench of the Supreme Court clearly stated that it is the articles of the company which have to be seen to assess as to whether a person filing the suit was properly authorized, while the requirement to produce a resolution of the Board of Directors could be dispensed with. In Iftikhar Mamdot, the earlier case of Muhammad Siddiq was not referred therein, a Full Bench of the Supreme Court took the view that in case a resolution from the Board of Directors is not passed and proved after a duly convened meeting, a suit filed even by a director incharge is to be taken as an incompetently instituted suit. In the subsequent case of Central Bank of India the learned Judge of a Division Bench of the Supreme Court followed Muhammad Siddiq, however, no reference was made to Iftikhar Mamdot. In Central Bank of India it was emphatically stated that there was no requirement of law to prove resolution passed by the Board of Directors. In Green Garments a learned Single Judge of this Court made an attempt to reconcile Muhammad Siddiq and Iftikhar Mamdot by holding that in case a suit is filed in consequence of a power of attorney no resolution of Board of Directors is required. With due respect we cannot subscribe to this distinction or reconciliation as the same is not borne out from the principles of law extracted in the two decisions of the Supreme Court (referred supra).
13. We would reconcile the two decisions of the Supreme Court on another plane. It is settled that the business and affairs of a company are to be conducted strictly in consonance with the articles of association subject of course to the operative laws. The business and affairs of a company include the power, competence and authority to institute legal action (See H. M. Ebrahim Saith v.
14. South India Industries Ltd, AIR 1938. Mad. 962). By deduction, the factum of competence and authority to institute legal proceedings would also have to be determined strictly in consonance with the articles of the company. Such interpretation would also be in consonance with Muhammad Siddiq and Central Bank of India wherein it has been categorically stated that where the competence to institute legal action is challenged reference has to be necessarily envisaged to the articles. Where articles of the Company confer power on a particular person or director to institute legal action and that person or director institutes the suit there can be no additional requirement of a resolution of the Board of directors for the simple reason that such powe) is to be exercisable by a real person. However, where the power to institute the suit is conferred upon an artificial person or body e.g. The Board of Directors or a Committee (as in Premier Sugar Mills supra) the requirement to produce and prove the resolution passed by that artificial person or body cannot be dispensed with since such a person can only take a decision as a body through a resolution passed in a duly convened meeting and not otherwise. The above principles would also become applicable in the case of delegation or sub-delegation of powers i,e, in case the delegator is a real person (when articles confer the powers to institute legal action on a real person) all that would be required would be to scrutinize the articles and then the power of attorney to see whether it has been properly executed and confers the power so claimed. There would be no requirement to produce or prove the resolution from the Board of Directors in this regard. If on the other hand, the delegator is an artificial person/body (when the articles confer the power to institute legal action on e.g. The Board of Directors or some committee) the resolution cased by that artificial person/body i,e, the Board/Committee shall become indispensable. However, there would be no requirement to produce or prove a separate power of attorney. In this backdrop we would venture to reconcile Muhammad Siddiq, Iftikhar Mamdot and Central Bank of India by presuming that in Muhammad Siddiq and Central Bank of India the articles conferred the power to institute or defend legal proceedings to a real person i,e, a director.
15. Thus the requirement to produce or prove a resolution from the Board of Directors was dispensed with. However, in Iftikhar Mamdot the articles referred the power to institute or defend legal M proceeding upon an artificial person/body i,e, the Board of Directors M in view whereof the requirement to produce and prove the resolution thereof authorising institution of the suit was found to be indispensable;
(vi) it is not only the principal who can challenge the agent's power and competence to institute/defend legal action. Khayam Films in this regard cannot be considered as good law any more since in Muhammad Siddiq the Supreme Court has taken the view that a person dealing with a company must know that any action by the company is in consonance with the articles;
(vii) objection regarding competence to institute/defend legal action can only be entertained where such a plea is taken in the pleadings or where request is made to frame additional issues or any evidence or additional evidence is led in respect thereof, or where the court suo Motu raises an objection in this regard: viii) a plaint can be rejected on grounds of competence to institute the same."
16. ' The perusal of the above principles shows that distinction is drawn in signing and verifying pleading's which is governed under Order XXIX, C.P.C. And any defect with respect thereto is curably while I the authority to file petition/suit is governed under the Articles of Association of the Company and filing of Board Resolution. Similarly, in case titled "WAPDA v. Messrs Ghulam Rasool & Co. (Pvt.) Limited" (2005 MLD 1165) The Division Bench of Hon'ble Lahore High Court observed as follows: "9. A private limited company is established by joining two or more persons to run a joint business in the name of a company by getting it registered under the Companies Ordinance, 1984. In this way, the c private limited company acquires the status of a juristic person. The object of having an authorization of the Company through a resolution for the institution of a suit is that all the share holders/directors are involved for taking a decision as to whether the Company as a whole intends to institute legal proceedings or not. A Director or a Principal Officer of the company on his own without authorization of the Company cannot take a decision for institution, of a legal proceedings/suit. However for the purposes of signing and verification of pleadings such a person can act as permitted by Order XXIX, rule 1, C.P.C."
17. ' It has been submitted that the petitioner Company is a single member Company and the petition has been singed and verified (By swearing affidavit as to facts) by Mr. Oubay Atassi being the. Sole Member Director of the same. Under Order XXIX, C.P.C., in suits by or against corporations the pleadings may be signed or verified by inter alia a Director of the same. Therefore, the signing of the petition and its verification is valid under the law and even otherwise if there is any defect in the same, it can be cured in light of the judgment of the Hon'ble Sindh High Court (PLD 1997 Kar. 62 supra).
18. ' In so far as the authority to file the winding up petition is concerned the matter is governed differently under the law. This Court in case tilted "Great Bear International Services (Pvt.) Limited v.
19. Pakistan Telecommunication Authority" (F.A.O. No,33/2012) vide judgment dated 06.02.2015 after examining the case on the subject including some of the judgments relied upon by the applicant, observed as followed: "13. As a corollary to the above discussed law, a suit or legal proceedings invalidly or incompetently instituted in the name of an incorporated company, a juridical person, cannot be, treated as legal proceedings by that company. It may be added that since these are not valid legal proceedings instituted by the company, therefore, even a subsequent ratification would not cure the defect by making the proceedings valid and competent. The wisdom behind the principle that the defect is incurable seems to be the intention to protect the juridical person on the one hand, and on the other, to safeguard any attempt to circumvent the period of limitation. It may be possible that the defect is pointed out before the expiry of the period of limitation, thus enabling the juridical person to cure the defect by withdrawing the suit and filing it afresh, or filing it after the dismissal on the ground of it being invalid or incompetent. This course can obviously not be resorted to after the limitation period has lapsed. However, if no limitation is prescribed, then the company will be entitled to institute legal proceedings, even if the earlier suit or application has been dismissed on the sole ground that its institution was not valid or competent. Furthermore, producing an extract of a Board Resolution after the expiry of the limitation period for filing an appeal would, in my humble opinion, not cure the, institution of the appeal on the analogy that such a defect cannot be cured even a if subsequently ratified."
20. In the instant case the question of ratification does not arise as the. Resolution was passed and appended prior to the filing of the winding up petition; whether the Resolution was in accordance with Articles o f Association cannot be determined while deciding application under Order VII, Rule 11, C.P.C. Even otherwise the authorization to the Attorney/Lawyer for filing the petition is a matter between the client and lawyer under Order III, C.P.C. In case titled "Khyam Films v. Bank of Bahawalpur" (1982 CLC 1275), the Hon'ble Lahore High Court observed as follows: "In my opinion the fact that the person did or did not have authority can effectively be challenged only by the principal. If in spite of the objections taken the principal continues to recognise the authority of the agent to institute the suit I am inclined to think that this would amount to a ratification and the suit would still be a validly instituted suit. I am further clearly of the opinion that it is wrong on the part of the Court below to promptly frame a preliminary issue on such questions and then go on with it for a couple of years before the main claim comes to be considered. Such a practice is to be deprecated, if the plea of the kind as taken in this case is raised it may be tried along with the whole suit. I say so because my impress is that these pleas are taken recklessly and most of the time the idea is to delay the decision of the suit. These delays are detrimental to a healthy commercial practice."
21. ' Similar observations were noted by Division Bench of Hon'ble Sindh High Court in case titled "Tahir Anees v. Messrs City Bank" (2011 CLD 1062) in the following terms: "12. So far as the second argument of the learned Counsel for the appellant is concerned that the person who has signed the documents submitted before the Banking Court was not an authorized person, we would like to state that perusal of the record clearly shows that the person who has signed the documents was an authorized person and no interference in this regard is warranted.
22. Moreover at this juncture we would like to reproduce the observations made by the bench of this Court in the case of Karim Dad as under: "As regards the ' plea of the appellant that suit was not competently filed, the plaint itself shows that it is signed by Safeer Ullah Abbasi and Rizwanul Haq Siddiqui, who are Attorneys of the respondent. Merely for the reasons that copies of power of attorney were filed subsequently will not make the suit incompetent as it is now established law that even if the plaint is not competently filed, such anomaly can be rectified subsequently. Reference in this regard is made to the case of Habib Bank Ltd, v. Messrs ESS EMM ESS Corporation Pakistan Ltd. And 5 others 2005 CLD 854".
23. ' There is no cavil with the principles laid down in the case law relied upon by the learned counsel for the applicant/respondent No,1, however the same are not applicable in the facts and circumstances.
24. In view of above case law and facts no case for rejection of petition is made out, therefore, the instant application is dismissed.
25. ' Main Case: ' To come up for reply .Of respondent No,1 in third week of January, 2017.